Is This The End Of The Big Box Retailer?

Shopping centre construction in the U.S. has hit a 40-year low, according to research from the CoStar Group.

From CoStar:

New data from CoStar shows the square footage of new shopping centres developed in 2010 was a 40-year low. Specifically, 12 million square feet of shopping centre space was completed in 2010, the slowest U.S. industry growth on record since at least 1971.

For comparison purposes:
– 184 million square feet of shopping centre space was developed in 2006
– The 40-year average of new shopping centre square footage developed each year in 132 million square feet.

Josh Brown asks whether this is a cyclical or permanent trend:

The question becomes one of permanence.  Have shopping trends changed to the point these feet ain’t coming back?  Or will development return once lending and borrowing gets back to a healthy level and businesses begin expanding again?

While it’s easy to say that this downturn is the result of a massive collapse in the U.S. real estate economy, it could also be the result of a new long-term economic reality (people shop online more, drive to malls/big box stores less due to higher gas prices, the consumer is deleveraging for the long-term).

Chart

Photo: CoStar

However, this chart does look like the beginning of something else we’ve seen before.

Note, this is real estate investment overall in Japan, but its collapse mimics that new development has started in the U.S. Whether our collapse will be similar is unknown, but this above could end up looking like this chart below.

Chart

Photo: Asterisk Realty

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