Down, but not Out
Retailers push forward with new construction projects.
construction is a shadow of its former self with development activity falling
to its lowest levels in more than a decade.
pockets of construction persist. An estimated 32 million square feet of new
retail space is expected to be built this year, according to Marcus &
Millichap. Much of the new space is user-driven development fueled by continued
expansion from retailers such as Walgreens, Costco, and Sam’s Club.
are seeing development return with new Target- and Walmart-anchored
developments,” says Jonathan E.
Lindsey, CCIM, a broker with The Shopping Center Group in Birmingham, Ala.In
suburban Huntsville, a new Target is set to open in second quarter and a new
Walmart supercenter will be completed later this fall. In addition, smaller
strip centers sized at about 20,000 sf are occurring in select infill locations
throughout central and northern Alabama.
return of apartment development is sparking spin-off ancillary retail
opportunities in some metros. An estimated 85,000 apartment units are expected
to be completed this year, according to Marcus & Millichap. For example, a
156-unit apartment complex is underway in Kent, Wash. “That is going to bring
in a lot of people. So a lot of the activity that we’re seeing is coming from
tenants who can provide services, such as dry cleaners, insurance agents, and
restaurants,” says Chad Gleason, CCIM, a principal at Real Estate Investment Services
development is another niche that has seen an uptick in activity across major
markets such as Washington, D.C., Boston, and New York. “Urban and mixed-use
retail is hot, hot, hot!” adds Steven K. Graul, CCIM, president and principal
broker at Innovative Concept Associates in Reston, Va. Restaurants have been
boosting leasing at mixed-use projects such as The Wharf, a 335,000-sf
mixed-use redevelopment project proposed along Maine Avenue and Water Street in
Washington, D.C. The project, which is being developed by Madison Marquette, is
tentatively planned for completion in 2015.
is evidenced with these and other projects, talk is slowly turning to
development opportunities for 2014 and beyond. In the meantime, the lack of
significant completions in the near term has helped to accelerate recovery as
retailers continue to absorb existing space.
Beth Mattson-Teig is a freelance business writer based in
For more on the retail market, read “Rethinking
Retail” in the May/June 2012 issue of Commercial
Investment Real Estate.