News and Events
Tough Sell
Consumer doubts dampen retail growth.
May 1, 2008 Commercial Property News Paul Rosta
One day during a trip to Arizona in the middle of March, David Jacobstein, a senior retail advisor for Deloitte & Touche USA L.L.P., drove his rental car past a row of furniture stores in Scottsdale. He could almost count the cars sprinkling the acres of ghostly parking lots on the fingers of one hand.
The sparse turnout at those Scottsdale furniture stores symbolizes the toll that the consumer spending slowdown is taking on retail expansion and the retail real estate development pipeline. "It hasn't been shut off, but there's an enhanced filter that has been put in there," said Webber Hudson, executive vice president for Related Urban Development, the retail and mixed-use development affiliate of The Related Cos. "There's no risk tolerance in the market right now."
Retailers and shopping center developers alike are taking a hard look at their plans for adding stores and building new centers. As a general rule, only the surest bets among retail projects will go forward. "Anybody that was going to open 50 stores is going to open 10," said Ivan Friedman, president & CEO of RCS Real Estate Advisors, a consulting firm that specializes in retail expansion and disposition strategies. Rather than spend money to expand, retailers are generally holding on to their cash as a cushion against a worsening market, he explained.