Rising construction costs push back new stores
The continuing rising costs of construction are making retailers push back or even back out of some shopping center projects. Major retailers such as Home Depot, J.C. Penney, Toys R Us and Michael’s stores do plan to continue with their expansion, although they are scrutinizing theiir plans more carefully now. Many markets just cannot take any new shopping centers. Take the Dallas market for example, where there will be more shopping centers than the market can support.
According to John Webber, president of Weber and Co, the rising construction costs are due to higher commodity prices and not labor costs. Michael Stores plan to have 45 new stores this year, which is the same amount that it has opened each year for the past ten years, but will be backing out of a project if it is the only retailer left in it.
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