Oakbrook Terrace, Ill. -- A Friday report by Mid-America Real Estate Corp. found that 2012 shopping center construction in the Chicagoland area grew 10% year-over-year, after a four-year decline.
According to the 2012-2013 Chicagoland Shopping Center Report, square footage increased from 1.02 million sq. ft. of space in 2011 to 1.14 million sq. ft. – a difference of about 113,000 sq. ft.
“It’s a start,” said Mid-America principal and author of the report, Andy Bulson. “And shopping center development already in the pipeline for 2013 is expected to increase GLA by another 900,000 sq. ft., to 2.04 million. So it looks like we’ve bottomed out and are slowly starting to see the end of the recession that stalled the shopping center development business.”
However, Bulson cautioned against expecting the recovery to meet the peak of 2007, when new shopping center construction reached an all-time high of 8.4 million sq. ft. “That will not be achievable in the foreseeable future and may not even be desirable for the business as a whole when you consider that this period of over expansion led to vacancies that are just now being absorbed,” he said. “What we are hoping for is growth that hovers around the historical average over the long run.” That average is about 4.2 million sq. ft. per year.
The report showed that, once again, the grocery category led the way in new construction, responsible for six of the seven projects completed in 2012. As in 2011, Mariano’s Fresh Market was the single largest driver in the grocery category, building one project in Palatine and two in Chicago. “Mariano’s has also committed to develop 5 new projects in 2013, so they’ll be continuing their lead,” said Bulson.
The home-improvement category, which was a leader in new retail development before the recession, was completely on the sidelines in 2012. And while Walmart did not have any new construction-related openings in 2012, Bulson said they will continue to be an active player and are expected to open two new construction locations in 2013.
Mid-America’s 2012 Shopping Center Report, which contains figures from all of Chicago’s collar suburbs comprising the Chicagoland region, showed that the City of Chicago continued to be the hottest driver of new retail construction in 2012, with four of the seven new projects delivered. However, where the suburbs did best in 2012 was in densely populated in-fill areas such as Palatine and Lombard.