It's no boom market, but retail construction still strong

August 11, 2010

Through the first eight months of this year, an estimated $40 billion was spent in the retail building sector for either new construction or the reconstruction and of existing space. This total was 8.8 percent greater than during January-August of 1999, and better than the solid 6.6 percent construction spending increase recorded during 1999.

The supply-demand fundamentals of this market sector argue for at least some modest pullback in development during the months and years ahead. However, it hasn't materialized.

Given a longer-term perspective, it should be pointed out that retail construction spending growth has moderated considerably during the past three years. Following the 1990-1991 recession, construction spending for retail buildings grew at an average annual rate of more than 13 percent over the 1993-1996 period. But gains between 1997 and 1999 averaged a modest 5.9 percent a year. So the growth rates last year and this year don't exactly paint the picture of a boom market, just one that's not contracting to the point that had been expected.

A modest spending decline is forecasted for 2001 and into 2002, though nothing like the 26.7 percent plunge recorded in 1991.

         
 

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