Retail forecast for 2008

January 1, 2008 in Articles

Author: Matthew Cardente
Publication: Portland Press Herald

With the continuation of increases in construction costs, the aggressive pricing of commercial land, and the flattened commercial lease rates, developers are finding it more difficult to justify new construction.

All commercial sectors have been affected by the rise in development costs but the retail sector has been less affected than the office and industrial sectors.

This is due in part to the higher achievable lease rates of retail vs. office and industrial. Rough estimates suggest that a Class A office building and a retail complex cost about the same to build ($150- 165 per square foot). However, Class A office lease rates range from $15-20 per square foot NNN.

In 2007, new retail developments included the 520,000-square-foot Shops at Biddeford anchored by Target and Lowe’s; the 454,000-square-foot Augusta Crossing anchored by Lowe’s and Best Buy; and the Gateway Shoppes at Scarborough that will be anchored by a 130,000-square-foot Cabela’s.

Typically, these types of centers acquire big box tenants to support the development and then fill in the remainder of the space with small-to mediumsized retailers. (Continued on PDF)

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