Retail Construction Across US Mirrors NYC Trends
The New York Building Congress notes nationally in 2018 retail construction dropped 21% and provides the numbers that point to telling trends.
NEW YORK CITY—The New York Building Congress Construction Outlook Update April 2019 for Retail published the following findings:
Across the US, retail construction grew moderately in 2012 and 2013 before slowing down from 2014 to 2016. Retail construction declined 5% in 2017 and experienced a dramatic 21% drop in 2018. The professional real estate and construction organization attributed this to the glut in retail space built during the last decade as well as the growth of e-commerce.
It notes about 69.5 million square feet of retail is in the construction pipeline, citing Dodge Data and Analytics.
However, NYBC reports overall in 2018, total construction starts across the US increased by .3% to $789 billion and that “New York City is in the midst of its second and most robust building boom of the 21st century.”
But the uptick was no thanks to retail construction. In New York City retail construction declined year-over-year. In 2015 it amounted to $1.9 billion, falling to $1.2 billion in 2016, $777 million in 2017 and $773 million in 2018. And over this four-year period, alterations and renovations which do not increase construction square footage, amounted to $2.5 billion from 2015 through 2018.
NYBC states despite New York City’s retail construction dropping in the five boroughs, the suburbs experienced a boom. Northern New Jersey and Long Island together have 7.9 million square feet of retail space under construction. The top US retail markets under construction are in TX, NJ, NY and FL:
- Houston, 4.1 million square feet.
- Northern New Jersey, 4.0 million square feet
- Long Island, 3.9 million square feet
- Dallas/Fort Worth, 3.3 million square feet
- Miami-Dade County, 3.2 million square feet
Finally, the NYBC highlights the following trends for retail:
Mixed-use projects are stepping up to fill the void with underperforming malls. Live-work-play activities are animating retail centers, moving away from the islands of traditional retail.
Large retailers nationwide are continuing to shutter their doors. In New York City, for the first time in a decade the number of national brand stores slid from 7,876 in 2017 to 2,849 in 2018. Also 124 retailers, a record number, reduced their real estate space.
Renovations are surpassing new construction. In New York City, last year they amounted to 51% of retail construction.
Developers are building more experiential retail. As one example, Nike’s “House of Innovation” at 650 Fifth Ave. features an expert studio, arena, lounge, membership products and digital services.