Saturday, February 09, 2008

Retailers Closing Stores, Slowing Expansion Plans

by Bill McBride on 2/09/2008 11:44:00 AM

Sasha Pardy at Costar Group writes: Retailers Taking Their Medicine and Turning Cautious Over Growth

The past couple months in retail real estate have been laden with more store closing announcements and news of retailers slowing expansion plans than we've seen in a long time.
See the brief article for a list of recent announcements.

Meanwhile there is also a record amount of new retail space under construction.

Multi Retail Construction Spending Click on graph for larger image.

This graph shows multi-retail (General merchandise, Shopping center, Shopping mall) construction spending since 1993 (source: Census Bureau Construction Spending)

Note: Graph shows nominal dollars, not adjusted for inflation, GDP or population.

Retail construction boomed following the boom in residential construction with a lag of almost two years (it takes time to plan and build retail). Now, with the combination of slowing expansion plans (and store closings) and record new space already under construction, many new retail construction plans will be put on hold, and investment in retail structures will slow sharply in 2008.

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