Real estate development continues at a fast pace across the country for both residential and commercial properties but not all projects are created equal. The retail space has endured significant decreases as consumers move away for tradition in-store shopping behaviors and adopt more ecommerce consumption. This has had a direct impact on not only the store brands themselves but also the developers in the retail industry.
Marcus Hiles, CEO of Western Rim Properties
A report by an online analyst firm studied areas across the country such as the city of Chicago who are experiencing booms in warehouse, apartment, industrial and corporate construction while the trends in retail development is slowing down and underlines the change in behavioral consumption that is leaving developers behind. In a 2018 study the city was reported to have added a record low square footage to its retail market and predicts this year it will even be less, over 40% lower from 870,600 to 598,400 square feet.
More than the lack of build out for future space, retail vacancy rates have been reported to sit at levels that reflect recessionary economies. Both large retail chains and local shopping centers are closing their doors and leaving the properties empty for what can be several months or even years.
While the retail development market continues to reflect consumers’ interest in online commerce, other markets in these same cities are seeing all time high growth rates. “This has created an interesting relationship where retail spaces that are closing are now becoming opportunities for property developers focused in other industries.” shares Texas based entrepreneur and CEO of property firm Western Rim Properties Marcus Hiles. Property firms that are focused on renovating and reusing spaces rather than building from the ground up are spending less time and money on their projects and seeing faster returns on the bottom line. Old brick-and-mortar department stores are being turned into properties that house health clubs, apartments, and other commercial businesses. This has enabled areas that have suffered the loss of economic spend in the retail space to recoup through other areas.
Retail is not dead everywhere however. The relationship between shopping centers and real estate development are closely linked. Studies show retail locations in popular residential areas see consumers still making their purchases in-store and even have been reported to have all-time spend rates.
Although shopping center development and brick-and-mortar retail trends overall reflect the transition of consumers turning online for their purchases there are still locations where tradition buying patterns can survive. Property developers like industry veteran Marcus Hiles shares, “Building strategic locations into our apartment development strategy at Western Rim Properties helps us ensure there will be long-time tenancy. This takes a number of things into consideration including the business and retail districts in an area which can dramatically impact renter interest and market rates.”