More than 7 million square feet of retail projects slated for completion in 2010 were delayed or canceled. This pullback in construction led to only 4.1 million square feet of retail space coming on line, the lowest figure for annual deliveries in the 30-year history of Reis. The recovery prospects for the retail sector will depend critically on whether these properties are delivered in 2011, or have been canceled altogether.
From 2004 to 2008, an average of 26.2 million square feet of new strip mall space opened for business annually. It was only in 2009 when deliveries slowed to a trickle in response to challenging economic conditions that completions fell below 13 million square feet.
At the end of 2009, Reis expected more than 11 million square feet of new retail space at neighborhood and community centers nationally to come on line in 2010. Year-end 2010 vacancies were also expected to hit 11.3 percent, but with actual supply coming in at only 40 percent of projected deliveries, vacancies stabilized at 10.9 percent.
Many projects were canceled, whether in whole or in part. For example, the proposed 120,000-square-foot development of Westfield Commons Center in northeast Phoenix was postponed. Shops at Schmidt in Philadelphia was supposed to be a 100,000-square-foot retail center, but only 50,000 square feet was completed (now occupied by grocer Pathmark). Whether the rest will be built is to be determined.