OAKBROOK TERRACE, IL-After three years of anemic retail construction activity, development will increase in 2012, according to a new report from Mid-America Real Estate Corp.
“We do expect a moderate increase in retail deliveries next year, as deliveries bottom this year at about 634,000 square feet,” says Andy Bulson, author of the Mid-America 2010-11 Shopping Center Report. “Most of the deliveries will be Wal-Mart stores. With their various sizes and formats, they are making a big push into the City.”
Bulson tells GlobeSt.com the increase will be driven by projects within the city of Chicago or in densely populated collar communities rather than suburban locales, where development has slowed markedly. "Currently, with the usual exception of Wal-Mart, there are nearly no new shopping center projects planned for development in suburban Chicago for 2011," he says.
Those projects planned within the city limits will be constructed through land assemblages rather than redeveloping existing retail. “We’re not looking at 350,000-square-foot power centers, but 85,000-square-foot grocery anchored and neighborhood centers,” Bulson explains, adding that Roundy's "Marianos' Fresh Market" anchors more than six urban planned or under construction projects – some of which are likely to see delivery in 2012 or 2013.
“Last year, we saw the lowest volume of new retail deliveries since the survey began in 1983,” Bulson says, adding that new shopping center development dropped to 1.18 million square feet, down 31% from 2009's 1.7 million square feet. He notes that nearly half of the total shopping center development in 2010 came from Costco, with three new centers in metro Chicago.
Although 2009’s volume seems robust compared to forecasted 2011 numbers, they actually represent a decline of 53% from 2008's 3.7 million square feet. In so-called “average” years, Bulson says Chicagoland usually adds 3 to 4 million square feet of retail space annually. He attributes the ongoing decline to decreased retailer demand and the abundance of retail vacancies left behind during the recession.
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