Physical Therapist Looking for Office Space

August 11th, 2016

Looking for Office Space

Physical Therapist – Looking for Office Space

Exclusive Representative:  The Anthony Bolling Group

Call: (240) 737-5054

Requirements:

  • Suitable office space located in Washington, DC
  • Call for informatoin

BT Auto Looking for New Garage in DC

August 11th, 2016

Looking for Commercial Space

BT Auto – Looking for NEW Garage in DC

Exclusive Representative:  The Anthony Bolling Group

Call: (240) 737-5054

Requirements:

  • Commercial Garage Space located in Washington, DC
  • Call for information

HSCDC – Looking for Multifamily Apartments

August 11th, 2016

Looking for Multi-family Apartments

HSCDC – H Street Community Development Corporation

Exclusive Representative:  The Anthony Bolling Group

Call: (240) 737-5054

Requirements:

  • Multifamily Dwellings
  • Washington, DC

HSCDC

MISSION STATEMENT:  The H Street Community Development Corporation strives to create, preserve, and increase the availability of affordable housing and economic opportunities for the District of Columbia residents, through advocacy, investments, and partnerships.

 

American Best Wings is Looking for Retail Space

August 11th, 2016

Looking for Retail Space

American Best Wings

Exclusive Representative:  The Anthony Bolling Group

Call: (240) 737-5054

Requirements:

  • 2,2000 SF
  • MD, DC

Americas Best Wings

Greater Greater Washington – Affordable Housing

August 11th, 2016
The Washington, DC region is great >> and it can be greater.

DEVELOPMENT

Affordable housing agency surprises everyone by opposing more-affordable housing at one Eckington development

by Edward Russell   •   August 9, 2016

A large new development in Eckington will go up with fewer “deeply affordable” units than developers planned thanks to an unexpected objection from DC’s Department of Housing and Community Development. The agency didn’t want to have units doled out outside its existing system, even at the expense of some affordability.


Eckington Yards seen from Eckington Place NE. Image by JBG and Boundary.

At Eckington Yards, a 695-unit mixed-use development that will rise on a three-acre site stretching from Eckington Place NE to Harry Thomas Way NE in Eckington, developers JBG and Boundary wanted to offer more deeply affordable units—units for people who make well under the Area Median Income (AMI)—than what DHCD requires.

But the developer also wanted to manage the units on their own, with residents applying directly to them rather than to the agency’s program.

“DHCD vigorously objects to the premise that IZ [inclusionary zoning] requirements can or should be waived,” said Polly Donaldson, director of the agency, in a July 28 letter to Zoning Commission chairman Anthony Hood. “The fundamental issue before the Zoning Commission is… whether developers should be required to comport with existing law, policy and regulations.”

Donaldson repeatedly emphasized that the issue was about maintaining “uniform application” of the District’s affordable housing rules, and not an objection to creating more homes for lower income resident, in the letter.

In other words, the housing authority wanted JBG and Boundary to fit the affordable housing component of Eckington Yards into its existing boxes, with no exceptions.


The Eckington Yards development in relation to the surrounding buildings. Image by JBG and Boundary.

The Eckington Yards proposal

JBG and Boundary wanted to offer the 55 affordable units in Eckington Yards at 60% of AMI, which is $106,800 for the Washington DC region this year. Households that earn up to $64,080 would have been eligible for these apartments.

That proposal did not fit with the District’s existing requirements that large projects make eight percent of the floor area available to people making 50% or 80% of AMI.

In her letter, Donaldson said that DHCD “strongly agrees with and supports” efforts to “provide additional affordable housing, at levels of affordability greater than the required regulations.”

She pointed to other District programs, like low-income housing tax credits, that could be used to make housing in its existing IZ categories affordable at the level proposed for Eckington Yards.

DC’s AMI requirements may change

Just two days before Donaldson sent her first letter to Hood, the Zoning Commission approved a change in the inclusionary zoning regulations that would lower the top household income level to 60% of AMI.

The rule change undergo a 30-day comment period and then go to the District council for a vote before it can enter into force.

Donaldson acknowledged the change, which would bring IZ requirements in line with the affordability envisioned for Eckington Yards, in her letter. However, she said that the application must be viewed under the “current versions of the IZ statute and regulations.”

A compromise with less deeply affordable housing

JBG and Boundary compromised with DHCD in order to secure final approval for Eckington Yards. The Zoning Commission approved a revised proposal with the 55 affordable units split evenly between the housing authority’s two IZ buckets at its meeting yesterday.

The compromise resulted in an average maximum household income of $70,590 for the affordable component of Eckington Yards, more than $6,000 higher than under the all-60% proposal.

While not a loss in the number of affordable units, it is a blow to creating more deeply affordable units in the community. Especially in a highly sought after location like Eckington Yards, which is walking distance to the NoMa-Gallaudet Metro station and adjacent to the Metropolitan Branch Trail and future large NoMa park.


Eckington Yards seen from the planned NoMa Green. Image by JBG and Boundary.

Posted on: greatergreaterwashington.org

 

Office Leasing Trends

August 11th, 2016

CCIM LogoJPG

Office Leasing Trends

What key points attract nonprofit tenant interest?

As traditional office tenants undergo a seismic shift in their space-using habits, office leasing professionals realize that less-well-known tenant groups, such as nonprofit organizations, are coming to the fore as office space users. Nonprofit organizations are a group that may be under the radar in many markets, but understanding what drives this growing field can help to meet their tenant needs.

Colliers Not-for-Profit Advisory Group based in Toronto works with a wide selection of nonprofit clients in such segments as charities, associations, and national/local health, educational, institutional, housing, and religious organizations. Colliers’ specialized group informs nonprofit clients how to reduce real estate costs, minimize risk, and maximize flexibility within their lease agreements and owned properties. It also assists clients to create workspaces that promote and support the organization’s culture, mission, and identity.

Earlier this year, Colliers’ nonprofit group conducted a survey of more than 50 senior executives of nonprofit organizations. The group released the results from its inaugural Not-for-Profit Office Trends Benchmarking Survey.

The report identified three key areas that nonprofits need to consider in their pursuit of maximizing capacity, optimizing impact, and ultimately increasing productivity within their real estate. Not surprisingly, these touchpoints – access, identity, and collaboration – mirror trends among general tenants in office-using space, but to vastly different degrees.

Can Location Affect Turnover?

For nonprofits, the old real estate motto of location, location, location has become transit, transit, transit. Of the survey respondents, 42 percent identified proximity to transit as the most important factor in choosing their office space.

The other most important considerations for office space included creating better efficiencies; promoting team collaboration; maintaining flexibility to downsize and expand; and attracting and retaining employees.

Posted in: CCIM

 

New Kids On The Block: Anacostia

August 11th, 2016

New Kids On The Block:  Anacostia

Residential home prices are beginning to rise in Anacostia, and that means retailers are beginning to take notice. The popular pharmacy will be making the iconic Anacostia building its newest location after the property is renovated.  Walgreens will be the latest national retailer, following 7-Eleven and Little Caesars, to put down some roots in Anacostia.

The Anthony Bolling Group exclusively represented Walgreen in this new lease transaction.

Read more at: New Kids On The Block: Anacostia

Walgreen Title

Walgreen

Casino Night

August 10th, 2016

Casino Night – Friends and family, all are welcomed to this months Keller Williams Preferred Properties community event!Aug2016

 

Better Than Average

June 1st, 2016

The seeds of a record U.S. expansion are blowin’ in the wind.

Midway through 2015 – year six of the current U.S. expansion – the economic data is once again making some real estate investors nervous. First-quarter real gross domestic product, originally estimated at a meager 0.25 percent growth rate, actually fell 0.7 percent, according to the second estimate from the Bureau of Economic Analysis in late May.

On top of the weak GDP numbers, we have had to endure lousy manufacturing trends, lousy consumer spending trends, lousy office absorption numbers, increased stock market volatility, and bumpy employment data for the first 100 days of the year. Indeed, based on the steady string of weak data, the U.S. economy looks tired. And in the back of our minds, we know the average length of an expansion post-World War II is just under five years. So is the U.S. expansion running out of juice?

Is a Weak 1Q the Norm?

For the last seven years, the data in the first quarter has generally been quirky and weak; however, that initial weakness has meant diddly-squat for the remainder of the year. Since 2009, first-quarter GDP growth has averaged -0.39 percent – brutal – versus 2.67 percent of solid growth for other quarters.

This time around the weakness was caused by three primary factors. First, the unseasonably cold and snowy weather – the coldest in more than 20 years in certain places – played a major role. People probably are sick of hearing about the weather from economists, but its economic impact is real. Severe weather delays consumption, investment, travel and tourism, and construction and will artificially make the economy appear weaker than it actually is.

Second, labor disputes at various West Coast ports jammed the U.S. economy in certain spots. For example, container traffic at the Port of Los Angeles was down 26 percent in January and another 10 percent in February compared to a year ago. There is clear evidence that when the supply chain is disrupted in this manner it drags down both consumer spending and trade.

Third, the plunge in oil prices curtailed new energy-related investment in the first quarter, at a -23.1 percent annualized rate, which directly hit the “nonresidential structures investment” component of the GDP calculation.  This drag will ultimately be more than offset by the positive multiplier low oil prices have on consumer spending – but that multiplier hasn’t kicked in quite yet.

In addition to the temporary drags, one has to be mindful of the soaring U.S. dollar and the weakened global economy. In its current state, neither the dollar nor the choppiness overseas will sink the U.S. expansion, but a dramatic move in either one could certainly cause problems.

Looking past the temporary drags, the core of the U.S. economy remains strong. Both households and businesses have done a tremendous job healing their balance sheets, as evidenced by low debt-service ratios, plunging delinquency rates on monthly mortgage payments, and near-record corporate profits. Consumer confidence, which correlates well with occupancy levels, has been inching its way back over 100 – as robust as it was during the strong real estate years of 2004-2007.

With lower gas prices effectively stuffing an extra $100 billion into Americans’ pockets this year and with the onset of warmer weather, consumer spending is poised to drive stronger economic growth. The signs of pushing past the first-quarter blues are already appearing. Retail sales in March were better (+0.9 percent over February), existing home sales in March were better (+6.1 percent year-over-year), job growth in April was better (223,000 net new nonfarm jobs versus 85,000 the month before). In summary, the strong economic DNA that has been driving the improvement in commercial real estate fundamentals for the past several years remains firmly intact.

Widespread Rent Growth Is Upon Us

For most owners, the bulk of this commercial real estate recovery has been less about growing rents and more about finding a way to lease up an empty building in what seemed like an endless fleet of empty buildings. There were a few exceptions, of course. Tech- and energy-fueled markets, such as San Francisco and Houston, began observing meaningful office rent growth in early 2011. Apartment rents have also been appreciating at decent clip in most cities since 2011. In general, high quality space across all sectors has seen some mild upward movements. But those were the aberrations. It was not widespread; just a few one-offs here and there. That is all about change. Let’s take the office and industrial sectors as examples.

Office. The U.S. office sector hasn’t had a robust recovery, but it has been consistent. Net absorption has been positive for four straight years, averaging 13 million square feet per quarter. Not great, but good enough to drive vacancy down almost 300 basis points to 14.4 percent as of 1Q 2015 from 17.1 percent in 2Q 2010. For context, vacancy is now lower than it was in 2005. In 2005, office rents grew by a solid 2.5 percent.

The rent growth story is no longer limited to tech and energy hubs or gateway cities. For example, asking rents in Atlanta grew by nearly 10 percent in 1Q15. Fort Lauderdale, Fla., Louisville, Ky., Nashville, Tenn., and Oakland, Calif., all have 5 percent rent growth or better.

Yes, tech markets are still leading the way. San Francisco put another 17 percent rent growth number on the board in 1Q15. And no, not every single market is going to see rental appreciation. Houston, which has led many markets in commercial real estate for the past five years, will be negatively impacted by the plunge in oil prices. Northern Virginia, the core of the private defense industry, is still recovering from the sharp federal budget cuts. But with new development across the country still 30 percent below its 2005 peak, and with office-using job growth the strongest it has been in 15 years, more than 80 percent of the U.S. office markets DTZ tracks will observe rent growth by the end of 2015.

Industrial. If there is any sector that can rival the top performer – the multifamily sector in this recovery – it is the industrial sector. Industrial is flat out booming. Last year the industrial sector absorbed 162 msf of space – the second highest pace on record dating back to 1990. Not even the unseasonably cold weather was able to slow industrial absorption in the first quarter – which registered another 38.8 msf of demand. U.S. vacancy currently stands at 7.6 percent and is 5 percent or less in nearly one-third of the country. Asking rents are starting to feel the pressure from this demand. Seven markets posted double-digit rent growth in the 1Q15 and another 12 saw 6 percent YOY growth or better.

A Record Year for Investment Sales?

So far this year, the U.S. is on pace to complete $618 billion in transaction volume, which would eclipse the 2007 high mark. Sales volume is up across all product types compared to a year ago, with 20 percent or higher gains in all product types except retail. Thus far, the composition of domestic buyers mirrors what we observed in 2014 with institutional investors, public real estate investment trusts, and private investors accounting for roughly the same share.

Despite a stronger U.S. dollar, foreign investors continue to place big bets on U.S. real estate. Throughout April, foreign investment in U.S. commercial real estate was up 90 percent compared to the same period one year ago. This foreign capital primarily targets the six global gateway cities (New York, Boston, Washington, D.C., San Francisco, Los Angeles, and Chicago) and office and multifamily assets.

Likewise, commercial real estate values continue to aggressively increase. In 1Q15, capitalization rates fell across all property types. That being said, six years into the recovery, there are still signs of unevenness in the capital markets. For instance, the multi­family sector and CBD office have both blown past pre-recession peak pricing. Per square foot pricing for apartments is up 26 percent from the 2007 peak, and CBD office is up 22 percent. Meanwhile, suburban office, retail (outside of downtown prime space), industrial (outside of bulk and built-to-suit) are still down from their peak highs.

Will these strong trends end anytime soon? That is unlikely. There is simply more capital in the global economy than there is real estate product to buy. The global central banks, through various forms of quantitative easing, have injected $9 trillion into the global economy since 2009. They have effectively printed the equivalent of China’s GDP and dropped it into the world economy. Thus far, only a small percentage of these capital injections have made their way to U.S. commercial real estate. Barring something unforeseeable, that alone suggests that there is still a tremendous amount of runaway left in the capital markets.

Plenty of Juice

There are still threats to global economic growth. Here in the U.S., we have yet to normalize monetary policy, and we will be doing so while other central banks continue their own quantitative easing policies. Oil prices, though stable now, could fall and rise rapidly given the right shock. And, despite the U.S. dollar’s slow appreciation rate, combined with another oil price shock, we could still see some harm to the U.S. economy.

But make no mistake, shocks are not the norm, and the Federal Reserve is being notably careful about its decision of when to raise interest rates. The underlying U.S. economic fundamentals are as solid as ever, suggesting there is still plenty of juice left in the current expansion. The average length of a business cycle should be perceived as nothing more than that: It is just an average.

Perhaps, given the slow developing nature of this recovery, and the unprecedented moves made by the central banks in shoring up the financial system, we are in the midst of the longest expansion in the history of the U.S. The longest post-WW II expansion was the 10-year growth cycle that spanned from 1991 to 2001. Midway through 2015, six years in, there is little evidence to suggest that this one can’t be longer.

 

Note: This article was originally posted on CCIM’s CIRE Magazine (http://www.ccim.com/cire-magazine/articles/323916/2015/07/better-average/?gmSsoPc=1) by Kevin J. Thorpe

 

 

Big Box Breakup

May 26th, 2016

Retail experts puzzle out shrinking store footprints and excess space.

As the economy has recovered, many in the retail industry were hoping to leave the deluge of store closings in the rearview mirror. Yet those objects are definitely closer than they appear. Despite the fact that the retail sector has once again found solid footing, retailers are continuing to shed excess stores, creating a steady supply of empty big box space.

Instead of declining, store vacancies have actually accelerated in recent years. U.S. retailers and restaurateurs closed 5,866 stores in 2015, which is up about 7 percent over the 5,483 stores that closed in 2014, according to a joint report by the International Council of Shopping Centers and PNC Real Estate Research. Cushman & Wakefield is estimating that store closings could rise even higher this year to reach 6,200 units.

“There is a lot of turmoil within the real estate market in general,” says Howard Meier, CCIM, MRICS, a vice president and commercial broker at Hummingbird Real Estate Brokerage in Toronto. Retailers are rethinking their brick-and-mortar strategies in light of competition from online shopping and expansion of their own e-commerce platforms. Retailers are closing underperforming stores, shrinking store footprints, or relocating to more favorable locations. Store closings run the gamut from department stores and grocers to apparel and electronics and include major big box retailers such as Office Depot/Office Max, Macy’s, Sears, and Barnes & Noble to name a few.

 

CIRE_MayJune16_p27a

 

For example, Sports Authority made headlines in March when it announced that it would be filing Chapter 11 bankruptcy and is considering closing about 140 of its 450 stores. Walmart has said that it would close 154 stores in the U.S. this year, primarily its smaller Walmart Express format. Best Buy is quietly closing stores as leases expire, including 30 stores that closed last year. And the store closures are not confined to the U.S.; Canada also is seeing its share of big box woes, including the exit of Target that resulted in about 130 store closings.

Although small shop space often has a lengthy list of potential tenants waiting in the wings, big box stores pose a larger challenge. One hurdle is that there are fewer replacement options due to the consolidation and bankruptcies that have taken some players out of the market. In addition, many big box retailers that remain are not expanding as aggressively as they have in the past and/or they are downsizing their space requirements.

 

CIRE_MayJune16_28a

Even if the size is close to being a match, retailers have their own specific site selection criteria in terms of what works and what doesn’t. In Canada, for example, Saks and Nordstrom are both in expansion mode, but the former Target stores are not an option due to location or demographics. “As an owner you really have to think about the tenant mix. There may not be another retailer who can just step in,” says Meier. “So, you have to be very proactive and look at the opportunity for the project, and that may include other uses besides retail.”

Divide and Conquer

The list of alternatives to fill a vacant big box or anchor store is even shorter in secondary and tertiary markets. “Because of the size of our MSA, we are not candidates for some of the big box retailers,” says Richard Salem, CCIM, a vice president at NAI United in Sioux City, Iowa. “If we already have one of a big box brand, there is not enough population for them to have more than one store or location.”

One solution is to divide a large space into two or more smaller retail spaces that are easier to lease. For example, Salem worked on re-tenanting a former 50,000-square-foot Walmart in Le Mars, Iowa, which is a town of about 15,000 people just north of Sioux City. Walmart had built a new Super Walmart on the south side of town where more population growth had occurred. Salem represented a local tire company that was looking for 10,000 sf to buy. So, he approached the owner of the former Walmart building to see if he would be willing to split the building into condos and sell part of the building to the tire company. The owner agreed and also gave the tire dealer an option to buy the rest of the building.

 

CIRE_MayJune16_p29a

 

Wells Blue Bunny Ice Cream leased 20,000 sf at the rear of the building for warehouse space. A fastener company leased 10,000 sf of the frontage space. Based on securing those two new tenants, the tire dealer exercised his option to buy the whole building. The seller also leased the remaining 10,000 sf for his own use to display and restore his classic car collection. That example was a win-win for all parties, including Salem, who received the sales commission on the sale of the entire building and leasing commission on 40,000 sf of space.

“I definitely think cutting a big box up into smaller spaces is the most efficient way to help get these spaces leased,” agrees John B. Wright, CCIM, an agent at McCoy-Wright Realty in Anderson, S.C. It is easier to find tenants that are going to work in 10,000 to 20,000 sf than it is finding tenants who need 40,000, 50,000, or 60,000 square feet. “It allows you to cast that net wider and talk to more people,” he says.

Wright is involved in a partnership that recently acquired a former Winn-Dixie in West Union, S.C. The building is approximately 40,000 sf and half of the space had been leased by grocer Save-a-Lot. Wright and his partner were able to acquire the property at an attractive price per square foot, subdivide it, and separate the utilities, and then lease about 10,000 sf to Dollar Tree almost immediately.

“In order to attract a quality tenant like that, especially to second generation space with a dark anchor, we made some pretty aggressive concessions in terms of tenant improvements to help make the space work for them,” says Wright, who is finalizing a lease on the remaining 10,000 sf with a regional bakery concept.

Some of the biggest challenges in re-leasing are knowing what size spaces are in the greatest demand for that particular trade area, says Wright. Another major issue is managing the retrofit costs, such as building new storefronts and running new utilities to each space. The complex process also involves extensive demo, capping old plumbing lines, and having to upgrade bathrooms that may or may not be up to code, adds Wright. In addition, some retailers may be vacating a space at the end of a 20- or 25-year lease. Those older buildings may need new HVAC or roofing, and the layout or configuration of the space can be difficult for another user to modify.

 

CIRE_MayJune16_p29b

 

One of the keys to making repositioning projects work is acquiring a property at a price significantly below replacement cost. “There are a lot of moving parts and all of those types of things add up. So, you have to make sure you are doing everything the right way, and also that the work is feasible based on the rent you are going to be able to get from the new tenants for these second generation spaces,” says Wright.

Catalyst for Change

Spaces in A locations are often snapped up fairly quickly, but B locations or older buildings may need to consider alternative uses. Second generation big boxes are often attractive to bargain or discount retailers such as thrift stores, dollar stores, or discount furniture sellers. The large open space and high ceilings of some big box stores also work for entertainment uses such as rock-climbing gyms, laser tag, and mini-storage, notes John Rebori, CCIM, a broker with Coldwell Banker Commercial/Wallace & Wallace Realtors in Knoxville, Tenn.

Rebori is currently listing a 45,000-sf former Toys R Us store in Knoxville. He also recently brokered the sale of a former Kroger store after the grocer relocated to a new store just down the street. After two years on the market, a private college acquired the building and spent about $3 million to renovate it.

Losing an anchor can sometimes be a catalyst for revamping an entire shopping center, as it allows an owner to review all of the leases and re-merchandise the property with a better tenant mix, Meier says. “As you reconfigure the project you may be able to make it more efficient and add square footage or pad sites that were restricted by the major anchor,” Meier says. The loss of an anchor that had been struggling also presents the opportunity to bring in a new type of use that can drive more traffic to a center, such as a gym, entertainment use, or professional services, he adds.

 

CIRE_MayJune16_p30a

 

State College, Pa., is home to the Nittany Mall, which is anchored by Macy’s, Sears, and Boscov’s, a family owned department store. “When one of these boxes goes dark, such as J.C. Penney recently did, it can often be difficult to backfill the space with another large tenant,” says Thomas Songer, CCIM, PE, a principal at Gambone, Songer & Associates Realty in State College. Many larger retailers are going into power centers, large strip centers, or outside malls vs. the traditional enclosed mall. They also choose to be in newer areas of town where there are newer facilities, restaurants, housing, and traffic, he says.

Giving the shifting retail landscape, shopping center owners are more receptive to alternative uses that can help drive traffic to a center, especially entertainment or services that shoppers can’t get online, Songer says. He is currently working with a trampoline park and family fun center client interested in the vacant J.C. Penney space. There are some good synergies between a mall and a trampoline park, including cross-marketing and shared customers. Although the mall filled the Penney space with a new sporting goods retailer, the mall has another lease expiring that might create another opening that could be a fit for the trampoline park, notes Songer.

Many owners tend to react to a major tenant leaving by rushing to fill the space as soon as possible rather than researching how to add value, says Meier. Big boxes are often single story retail surrounded by a lot of parking, which may allow an owner to capture more density. An owner might be able to build vertically, such as with a residential tower, or create additional outparcels in the parking area. One of the first steps is to do an analysis of the area to determine what would be a good fit for the trade area and the demographics. Some of these centers need to be repurposed more as mixed-use centers to appeal to a younger generation who prefer to live, work, eat, shop all within a short walking distance, he says. “You have to think outside the box a lot of times at these centers, and look at it as an opportunity, because the highest and best use may not be a big box anymore,” he adds.

 

Retail Developers Battle Headwinds

by Beth Mattson-Teig

Despite improvement in the economy and real estate fundamentals, retail construction remains fairly anemic compared to the building boom that occurred prior to the recession.

For the past two years, retail completions have been hovering at just under 50 million square feet per year with the forecast for 2016 at 46 million sf, according to Marcus & Millichap. That is about one-third the volume of space being built between 2005 through 2008 when completions were at about 150 million sf per year.

Development has been slow to return for a variety of reasons, including a more challenging environment for construction financing. “You still have to jump through some hoops and have a pretty compelling story to get retail construction financing these days,” says Ryan Severino, CFA, senior economist and director of research at Reis. In addition, vacancy rates are still slightly elevated at 10 percent and rent growth is more muted, according to Reis.

Specific to neighborhood and community centers, Reis is forecasting that completions in 2016 will reach 10.4 million sf, which is about 25 percent higher than the 8.3 million sf completed in 2014. “That would definitely be the most that has been built since before the recession, but that is not saying much,” says Severino. The volume of neighborhood and community center construction is about one-third of pre-recession activity.

Another obstacle to development is the vacant space still available. There are a lot of centers that were built in the last decade in the run-up to the recession that should have never been built. In some cases, developers were going in ahead of housing demand that never materialized as some thought it would, and those centers are going to struggle for some time. In areas where the housing market eventually comes back, there are already centers that exist there. So, there will be no need to develop more in those areas for some time.

The smaller construction pipeline also reflects a retail industry that is in transition. A number of retailers are revamping their strategies related to both the size of store portfolios and the footprint of individual stores going forward. “Some of them are trying to figure out how to make their brick-and-mortar stores compatible and complementary to their e-commerce strategy,” says Severino. At the same time, shopping centers are moving away from a traditional model of serving consumers who need to buy things to hybrid destinations where people can shop, eat, and play. “They are migrating away from just being these pure retail centers into something that is a little more varied and dynamic,” he says.