Retail Development Looking Brighter

LOS ANGELES—Retail development is expected to pick up over the next two years, according to Chris Wilson, chairman, and Scott Burns, president, of the Wilson Retail Group, who is one of the exhibitors at the upcoming ICSC Western Division Conference in San Diego October 1-2. There have been several shopping centers to come online in the Los Angeles area in recent months, but Wilson and Burns explain that most of these centers were built on legacy land, not market-rate land; however, it is a good indicator that retail development is picking up.

“A lot of the ground-up shopping centers that we’re seeing were built on legacy land, either developed by the same people that owned that land or recovered during the recession at an adjusted land-value basis,” Burns tells GlobeSt.com. “In 2012 and 2013, we we’re seeing developments on legacy land with no land value attributable to the land by the legacy builder. Now, we are seeing some land value attributable to it and some development on new land, but not much. What that shows you in that the rents that tenants are paying subject to the anchors have certainly come up from the discount rents that were being written in 2010-2012, but are not supportive of market land value yet. I think in 2015 and 2016 there will be a great deal more of new development on market-value land.”