Retailers' New Cautiousness

The Dallas Morning News has an interesting write-up of a local ICSC event from last week where several retailers were very frank about their current approach to store openings. Many admitted what we've been hearing from developers for months: Retailers are expanding, but are not quite as quickly as before. Moreover, they are really trying to evaluate the viability of proposed projects before committing. That, in turn, is making it harder for developers to reach pre-leasing goals and qualify for financing. More here.

Still, major retailers such as Home Depot, J.C. Penney, Michaels Stores and Toys R Us say they want to hear about future projects but are scrutinizing the details more closely.

"We need a cooling-down period," said Hunter Stansbury, senior real estate manager for Home Depot Inc., which recently said it was closing 15 stores for the first time in the Atlanta-based chain's history.

But the Dallas area's population growth will create shopping center sites that the home improvement store expects to be in, he said during the event sponsored by the International Council of Shopping Centers.

Panel moderator John Weber Sr., president of Weber and Co., said construction costs are rising mostly from commodity prices rather than labor costs. It's a tough sell to explain to investors and lenders that prices have gone up 20 percent to 25 percent this year alone, he said.

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