According to a story in the September 29th, Charlotte (NC) Observer, retail sprawl is following the lead of massive residential developments in the Charlotte, North Carolina region. Nearly 1.35 million square feet of retail space is under construction region-wide, and more than 3.2 million square feet has been proposed.The paper reports that retail vacancy rates aren’t as high as office and industrial rates because retail developers typically don’t start construction without anchor tenants in hand. Retail developers generally won’t be able to secure lenders for a new shopping center without signed leases to show them, one researcher told the paper. On the other hand, office developers start building ‘on speculation’ that the tenants will follow later. “Retailers don’t lease any more space than they actually need,” the real estate researcher said. The article suggests that as more housing is built, with more roads, more retailers will follow the residential boom. Chain stores such as Target Wal-Mart, Lowe’s and Home Depot also want to be near fast-growing residential areas. Last week, a developer called Suisse Investors LLC disclosed that Target, which shut down a store in east Charlotte store at Independence Boulevard and Conference Drive in January 2000 citing poor sales, had purchased land for a new store on Albemarle Road across from a Wal-Mart.Target will be the first anchor tenant in a 340,000-square-foot shopping center due to be completed in July.
The general principle that “retail follows residential” should be remembered in areas of the country where population is not increasing. Many local officials in slow growth communities where population is not rising rapidly, forget this basic principle. Whenever retail is not following residential, it is displacing existing retail. This is what Wal-Mart has done in many slow growth areas — simply shifted sales for other merchants to their cash registers. This Charlotte story also illustrates how a company like Target will shut down one store, and move it a few miles away to a preferred location. These retailers often change their locations as casually as you and I change shoes. The other lesson from this story to remember is that retail developers do NOT build on speculation — they have leases from chain stores in their back pockets when they come to town. But they will publicly pretend that they don’t, so residents will not start to organize against a Wal-Mart or a Home Depot. But citizens can ask local officials how the developer got a loan to build if he did not have signed leases. The goal is to make the developer tell the truth about what he is building, so citizens can organize opposition more readily.
