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Retail Construction Set to Climb in 2016

Reports of brick-and-mortar’s demise have been greatly exaggerated.

According to the Association of Retail Environments’ (A.R.E.) economic advisors, growth in retail construction will pick up next year, with new luxury-brand locations and dollar stores leading the way.

While figures released by the Commerce Department Monday revealed shopping-center construction slipped 4.4% in June, A.R.E. said all signs point to a prosperous 2016.

“As an industry, we have been experiencing a recession hangover, where decisions to start projects come a bit slower than pre-recession practices,” said Todd Dittman, A.R.E. executive director, pointing out that while the rise of online shopping has reduced store traffic, it has proved a boon for the building industry: Warehouse construction is up 52.3% this year. Dittman added, “Retail construction trends continue to be smaller footprints in urban settings.”

These numbers jibe with an earlier report from the American Institute of Architects (AIA) which forecast retail construction to grow 10.1% in 2015, followed by a further 9 percent in 2016.

“The overall construction industry appears to be on very solid ground for the next two years,” AIA’s chief economist Kermit Baker explained. “That said, uncertainties in international economics, potential labor shortages, lower energy costs, rising interest rates and construction costs all are factors that we will be watching closely to see how they may adversely impact the marketplace.”