Retail Construction Staying Strong
Investment in top-of-the-line retail outlets nudged the $160-per-square-foot mark in 2004, while other retail construction crept toward the $100-per-square-foot point last year.
Those numbers underline the steady growth in retail the region has been experiencing for quite a few years now, as the average property sales price for retail exceeded that for offices.
And at least one retail real estate expert sees the trend continuing this year. He even predicts that the market will have its own lifestyle center, which is considered to be retail-plus, in the not-too-distant future.
“We saw a lot of construction. We saw a lot of planned construction take shape. We continue to see people out there looking to buy sites to build on,” said Bill Bussey, a vice president at Grubb & Ellis/Paramount who specializes in retail and heads that firm’s retail division.
“We continue to see tenants that are looking for space.”
Bussey said consistent population growth in the area — which has averaged about 1.5 percent each year for the past two decades — is fueling the booming retail market. He said a steady escalation in people has created a strong demand for housing and has also convinced retailers to come here.
“If I had 200 acres, I could sell it tomorrow,” said Bussey. “If I had 50 acres that was permitted and ready to go, I could find five guys that would like to buy it.”
Retailers have also kept a close eye on the local economy and apparently they have liked what they’ve seen.
Bussey said even though the metro area has lost manufacturing jobs the past few years, those positions are being filled by the medical industry. Many of the jobs in that field are high-paying ones with a decent amount of discretionary income that merchandisers chase.
“We expect to hear an announcement that the Van Andel Research Institute is going to expand. A demand for more people to fill the buildings for institutional purposes continues to grow,” he said.
“The more highly educated and higher-income people that come here, the more the population will drive retail,” said Bussey.
The list of large retailers that built here last year, or are building here this year, is fairly impressive. Just a few are Burlington Coat Factory, Costco, CVS, Home Depot, Lowe’s, Meijer, Staples, Target, Wal-Mart and Walgreen’s.
New projects are underway at Knapp’s Corner,
Meijer Inc. is building in Standale,
Those retailers know what Bussey and his firm know — that the median household income for the metro area is higher than it is for the state and the nation.
The Grubb & Ellis/Paramount 2005 Real Estate Forecast reported the median annual household income for the Combined Statistical Area above $51,000, a number about $2,000 higher than the state’s figure and about $4,000 above the national one.
Bussey told the Business Journal that last year’s investment in retail wasn’t a fluky blip on the construction screen. He said he expects more of the same this year and even beyond.
“Oh, absolutely. It will continue to be the preferred investment because it’s a very stable investment and it is expected to be for the foreseeable future,” said Bussey.
He also felt that the news of a major development will come later this year.
“I believe in 2005, we’re going to see an announcement for a lifestyle center to be developed in
Bussey said the center will be larger than 200,000 square feet, will have upscale tenants not currently in the market, and will draw consumers from throughout the state.
The closest lifestyle center to the metro area is in Rochester Hills — smaller than the one Bussey feels will land here. The
Evergreen Properties is trying to develop about 40 acres along the
“A lifestyle center is a place where you can walk from store to store. It has statues. It has fountains. It has places to congregate. It might have places for bands in the summer,” said Bussey of the type of development that has become retail’s hottest trend.
“In a lot of cases, it has become a town center.”