Report: New Shopping Center Development Increases in '12

   CHICAGO – Development of new shopping centers in Chicagoland increased 10% in 2012 from 2011, according to a report by Mid-America Real Estate Corp., breaking a four-year string of declines.

   The “2012-13 Chicagoland Shopping Center Report” said that in terms of space, square footage rose slightly to 1.14 million SF in 2012 from from 1.02 million SF in 2011     “It’s a start,” says Mid-America Principal Andy Bulson, who authored the report. “…It looks like we’ve bottomed out and are slowly starting to see the end of the recession that stalled the shopping center development business.” Bulson cautions, however, against expecting the recovery to meet the peak of 2007.    The report showed the grocery category led the way in new construction and was responsible for six of the seven projects completed in 2012. The home improvement category, which was a leader in new retail development before the recession, basically stayed on the sidelines last year.     The report contains data from all the suburbs comprising the Chicagoland region. But it showed that the City of Chicago continued to be the hottest driver of new retail construction last year.     “This has been true throughout the recession,” says Bulson. “No one’s taking a chance building new projects in the outlying areas without the guarantee of new homes.”    The suburbs did well last year in densely populated in-fill areas, such as Palatine and Lombard. “We see this trend continuing in 2013 in places like Park Ridge, Skokie, Harwood Heights and Evergreen Park,” he says. “Growth will only spread to the outlying suburbs as new home construction there increases.”    Looking ahead for this year, Bulson sees the following trends:    -Shopping center development will continue to increase, to about 900,000 SF over 2012, marking the first year of significant increase in development since 2008;    -Grocery-anchored development will continue to dominate, as it has through the recession;    -The City of Chicago will continue to be the most active market for new development;    -Re-emergence of Chicago-based developers will lead to the creation and development of new projects, adding to the self-developed projects by retailers; and    -The trend toward smaller footprints for both anchors and junior anchors will continue.    “The report shows that we’ve rounded the bend to a slightly better year in shopping center growth,” Bulson says. “However, it’s good to maintain caution while planning new projects. Even with pent-up demand by some retailers, new projects are still going to be more difficult to create.”    Mid-America Real Estate Corp. is a member of Mid-America Real Estate Group and a ChainLinks affiliate.