JAN 2007 VOL. 2

Did You Know

 

…that construction of retail properties in the U.S. is expected to slow down this year—while development in Europe is heading for new records? Retail construction starts totaled about 300 million sq. ft. in 2006, a slight decline from the 306 million sq. ft. reported in 2005, according to Construction Outlook 2007, a report produced by McGraw-Hill Construction.

Retail Development: Top Five Markets

Russia 1,507,000 Poland 1,273,000 Italy 1,092,000 Spain 974,000 Germany 735,000 Source: Cushman & Wakefield

 

The reason? Retail development tracks residential development and housing starts have fallen off dramatically; on Jan. 18, the U.S. Census Bureau released yearend data, which show that issuance of new housing permits fell by nearly 15% from 2005. Another factor: a slowdown in expansion by big-box retailers. The net effect, according to McGraw-Hill estimates, will be a 7% drop in U.S. retail construction starts to 278 million square feet in 2007 — the lowest level since 2002 when construction activity totaled 257 million square feet.

On the other side of the Atlantic, however, Cushman & Wakefield is tracking what it says is a record boom in retail construction. During the 18-month period starting last July and ending this coming December, the broker estimates that nearly 14 million square meters of new shopping center space will be completed, pushing the European total to 107 million square meters. Russia and Poland are leading the action (see table), but there will be a lot of development in Western Europe as well, Cushman says, as developers start to bring modern retail projects to secondary cities in Italy, Spain and Germany.