“Grocery chain expansions are likely to spark robust construction in the coming years, analysts said, bucking the overall trend in retail development.
U.S. grocers Publix Super Markets Inc., Wegmans Food Markets Inc., Kroger Co. andSprouts Farmers Market Inc. as well as German grocery chains Aldi and Lidl are opening new stores and will absorb an estimated 25 million square feet of space over the next five years, according to calculations from commercial real-estate brokerage and advisory firmMarcus & Millichap Inc.
The expansion will be difficult without new development, because shopping centers in desirable locations still have strong occupancy rates and grocers are unlikely to expand in struggling areas, according to Marcus.
The national retail vacancy rate is at a relatively low 5.4% as developers have reined in construction of malls and strip centers since the recession, preferring to build only after securing leases from tenants. Builders have added an average of 48 million square feet of retail space a year since 2010, roughly one-third the annual average from 2000-08.
The grocery sector has been more immune than other retail segments to competition from e-commerce. Real-estate executives have said Amazon Inc.’s recent bid for Whole Foods Market Inc. underscores the need for retailers to have a bricks and mortar presence.”
Source: Wall Street Journal, July 11, 2017 2:53pm
Author: Esther Fung
Photo Credit: Cherie Diez/Zuma Press
Read More: https://www.wsj.com/articles/grocers-could-breathe-new-life-into-retail-property-market-1499799201