There’s been very little retail real estate development in the Triad area in the recent past. The last major retail construction project was the 317,400-square-foot Tanger Outlet Center, which delivered in 2010 in Mebane (east of Burlington and outside of current submarket boundaries). In Burlington, meanwhile, a 70,000-square-foot expansion of the Alamance Crossing West regional center completed in September 2011. No retail space of any type has completed since; no projects were under construction as of late July and planning remains subdued. As part of a general development pattern taking shape in Kernersville, east of Winston-Salem (as described elsewhere in this report), retail projects could emerge as well. “Part of [apartment developer Chris] Parr’s enthusiasm for Kernersville stems from future job growth planned for the area along with several retail developments on the books,” the Journal reported in September. Reis’ July report on individual construction projects, meanwhile, reports the 160,000-square-foot Shoppes at Glenn Crossing neighborhood center planned for the town (a construction schedule was not specified). J&R Ventures Inc. is the developer. The project is less than half a mile from the 800,000-square-foot Caterpillar plant that opened in Union Cross Business Park in 2011 and stands adjacent to the Caleb’s Creek golf course community. J&R reports 5,000 to 6,000 new homes are in planning or construction phases in the area.
The local community and neighborhood center market, counted by Reis at 15.3 million square feet, remains unsteady. A strong performance for net absorption seen in the fourth quarter last year was followed by a slowdown. Indeed, while the total for first half of 2012 was positive 20,000 square feet the sum for second quarter alone was negative 50,000. Vacancy ended the latest quarter at 11.7%, up 40 basis points for the period, down 80 year-over-year and 90 points higher than the second quarter national community-neighborhood rate. July-August followed with net absorption at minus 9,000 square feet. Rents remain largely motionless. At $14.07 psf and $11.88 psf, second quarter mean asking and effective averages were unchanged and down 0.1% from the quarter preceding and were up 0.1% and unchanged since year-end 2011 following small losses in 2011. The July-August period brought additional losses on the order of 0.1% to both rates.
A flat performance is expected for absorption and occupancy in the community-neighborhood center sector over the remainder of the year while average rents muster small increases. Construction should remain subdued. Moderate improvement is expected for 2013. The Kernersville area bears watching.