Nearly one million sf of new construction was completed the first half of the year, and developers are racing to deliver the balance in time for the holiday retail-shopping season. The previous one-year retail construction high-water mark was set in 2003 when 2.2 million sf of space was completed.
The retail market recorded more than one million sf of positive absorption the first half of 2005, most due to pre-leased new construction delivered in the first half of the year. Overall vacancy declined 0.5 percentage points to 7.3%.
Fast-growing suburban communities such as Lakeville, Blaine, Shakopee, Rogers, Oakdale, Woodbury and Maple Grove are experiencing the majority of the new retail construction, as developers follow the residential rooftops to the outskirts of the 13-county metro area.
"In downtown Minneapolis, we're seeing a migration toward more convenience and service related retail to support the area's growing residential community," says Tricia Pitchford, United Properties retail brokerage senior leasing associate. "In the first- and second-ring suburbs, we're tracking the redevelopment of older office and industrial sites into retail uses."
Best Buy in Eden Prairie, and Lowe's and Schneiderman's in Plymouth each was a commercial building converted to a retail use, Pitchford said. South Robert Street, an older, defined commercial strip straddling West St. Paul and Inver Grove Heights, is a prime example of successful redevelopment, adding a new Wal-Mart this year, with a new SuperTarget, Starbucks and an expanded Menards under construction. Home Depot and Lowe's are also waiting in the wings with commitments to build, she says.
In all, more than nine million sf of new retail space under construction or in some phase of planning. Pitchford predicts that next year could top three million sf, posting yet another record in retail real estate construction.
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