If the mood at last month's ICSC Mid-Atlantic Idea Exchange in Washington, D.C., is indicative of the national picture, the industry has come to grips with the economic slowdown; however, it is not pessimistic about the prospect for continued growth.
The pace of-making at the show, which was attended by about 2,000 retail real estate pros, was down from a year ago. And, developers are more cautious when it comes to announcing or breaking ground on new projects. However, centers that were being built when the credit markets turned last year and are slated to open later this year or early 2009 are proceeding. Even with retailers' announced bankruptcies, store closings or scaled-back expansions there's enough to keep some leasing activity going.
However, the pullback has been so dramatic that now no projects are scheduled to debut in the next 24 to 30 months. Developers confident that the economy will have recovered by then might consider breaking ground today. “Look around Washington and you'll see all the new. About 85 percent of that is delivered. Of the rest, about 95 percent will be delivered in the next 12 to 14 months,” said Doug Olsen, head of leasing for Monument Realty. “If you have the opportunity to come on-line in 24 to 30 months, you may want to take it.”
There are areas that represent huge opportunities. “If you own a site on the edges of the suburbs, don't build it. But if you're in Arlington or Washington, I say, ‘Go,’” An example of where it could make sense to pursue development is the area surrounding the Washington Nationals' new stadium, which opens next month.