Jackson Hole Retail Market Overview: April 2007
With a population of less than 9,000 people, there is no published or comprehensive source of data regarding retail occupancy, rental, or absorption rates in the Town of Jackson. Due to its small size, no appraisal or brokerage firms track the market. The Town’s planning and zoning department has not kept track of the amount of commercial square footage in Jackson, and does not distinguish between retail, office, and industrial buildings in their building permit records. As a result, there is a very limited amount of data available, and a traditional retail market and submarket analysis is not possible. The data for the following analysis was obtained from my personal experience as a retail broker in Jackson and from interviews with landlords, tenants, and other brokers.
The retail market in Jackson can be broadly defined as consisting of four areas: Town Square, Downtown Local Retail, Highway, and Strip Center. Each is discussed in turn.
The market standard in Jackson is to quote retail rents on a NNN (triple net) basis, with the rental figures given as an annual amount per square foot. NNN expenses currently range from $3.00 to $5.00 per square foot per year, depending on the age and efficiency of the building.
The Town Square submarket consists of those retail properties lining the Town Square, and those within a block of the Square along either Broadway, Cache Street, Center Street, or Deloney. These four streets bracket the actual square. The retail uses in this submarket are primarily oriented toward the tourist trade, with a strong secondary emphasis on fine art galleries. Jackson is the southern gateway city for Grand Teton and Yellowstone National Parks, which receive nearly four million visitors each year, most of whom come in the summer months. Geographically, this is not a large area, consisting of a few blocks of retailers. These retailers typically achieve gross sales between $350 and $450 per square foot. National retailers in this submarket include The Gap, Eddie Bauer, Sunglass Hut, Chicos FAS, Pendleton’s, Coldwater Creek, Haagen-Dazs, and Ripley’s Believe It Or Not.
Rents within this submarket are directly related to proximity to the actual square. Recently executed rents for properties directly on the square range from $45 to $65 per square foot per year, plus expenses. Rents decline as one moves off the square, tapering down to $25 per square foot as little as one block away. There is currently no vacancy within the Town Square submarket, and vacancy historically is also virtually zero. The only retail vacancies observed within this submarket are caused by frictional vacancy, being the short time after one tenant has vacated and the space is being remodeled to accept the next. Generally, the incoming tenant will pay rent during this period, as demand for space on the square is so strong.
Downtown Local Retail
The Downtown Local Retail submarket encompasses all of the retail area within downtown, but outside the heavily trafficked pedestrian corridors of the Town Square itself. Retailers in this submarket are almost exclusively local in nature, and generally cater to the local resident of Jackson. Exceptions would be the restaurants found here, which also depend to a degree on the tourist trade in the summers. Rental rates in the submarket range from $25 to $35 per square foot per year, plus expenses. Vacancy is below 5%, and has remained at this level for the last decade. No new projects have been built in the past five years, although several projects are planned, including a mixed use plaza and a Marriott Courtyard.
The Highway submarket is a catch-all designation, encompassing all of those retailers located along West Broadway, South Broadway, and South Highway 89, all of which are the same road, which changes names as it traverses town to the west and turns south. Rental rates along this corridor can vary widely, based on the age and design of the building, accessibility of the highway, availability of parking, and size of the space. Rents range from $14 to $24 per square foot. Excluding the two newest developments (Hillside and Eagle Village), rents range from $14 to $18 per square foot, plus NNN charges. Rents at Hillside and Eagle Village range from $22 to $25 per square foot, plus NNN charges. Hillside, completed in 2003, is located on the north side of West Broadway at Scott Lane and is a mixed use development on three levels with approximately 25,000 square feet of retail. Most of this development is owner-occupied, as the building was designed and sold as commercial condominium units. Eagle Village is a three story mixed use building within the Smith’s Grocery Plaza at South Highway 89 and High School Road and was completed in 2004. Eagle Village contains approximately 21,000 square feet of retail on the ground floor. Both of these projects are 100% occupied. Occupancy within the entire submarket is estimated at 95%.
One other notable property in this submarket is the 2004 redevelopment of a former 46,000 square foot Albertson’s grocery store into a power center occupied by Dollar Tree, Staples, and Hoback Sports.
Excluding the Eagle Village mixed use center anchored by the Smith’s Grocery, there are four strip shopping centers in Jackson, all located in West Jackson or on the south edge of town. They are Grand Teton Plaza, Powderhorn Mall, Kmart Plaza, and Movieworks Plaza. All of these centers cater to the local resident population of Jackson and the surrounding areas. National tenants include Kmart, Sears, and Radio Shack. Rents within these centers range from $15 to $17 per square foot, NNN, and occupancy rates have remained above 95% for the past five years.
Retail occupancy rates in Jackson have held steady between 95% and 100% for the past five years. The highest rents and lowest vacancy is found in the Town Square submarket, which caters to the extremely high tourist traffic in the summers. There is little vacant land for new development within the Town of Jackson, and rental rates within the older centers and buildings are generally high enough to prevent demolition and redevelopment, as rents in the newer buildings do not command a great enough premium to justify the redevelopment, based on the prevailing land prices. Rents have increased apace with the general level of inflation over the past five years, and should continue to do so for the foreseeable future. No changes are foreseen that would adversely impact either the prevailing rental rates or the high occupancy rates in each of the submarkets.