By KATHY JUMPER Press-Register
Real Estate Editor
The troubles on Wall Street have shaken the local commercial real estate market, and it may be late 2009 before it rockets back, industry experts say.
“Things are slowing down, no question about it,” said John Peebles of Grubb & Ellis/Peebles & Cameron. “We hear the drumbeat of bad news every day, and people are sitting on the sidelines.”
Lease or purchase deals have been put on hold or canceled. National and regional chains have closed stores and slashed expansion plans. Everybody is waiting to see what happens after the election, according to commercial agents
Last month’s $700 billion taxpayer-funded bailout is supposed to inject fresh capital into financial institutions, with the government obtaining ownership shares in return. The real estate market remains sluggish and the stock market volatile while the plan’s details are being hammered out.
Both sides of the Bay
The slowdown has hit both sides of Mobile Bay.
At Spanish Fort Town Center, a 20,331-square-foot Circuit City building is finished, but center owners don’t know when the location will open, and the national store won’t comment.
Office Depot’s 20,958-square-foot location on 2.3 acres at U.S. 90 and Rangeline Road in Tillman’s Corner has been idle for months, and store officials say it won’t open until sometime next year.
Plans to build condominium units and retail stores next to BankTrust at McGregor Avenue and Old Shell Road were called off. Lenders wanted some of the 10 units to be presold, and the developer wasn’t sure that would happen in today’s market.
There are some positives as well.
A 14-screen Premiere Cinema will open in late fall at Eastern Shore Centre on Ala. 181 in Spanish Fort, and a 300-unit, upscale apartment complex is under construction behind the center.
Bass Pro Shops Outdoor World opened at Spanish Fort Town Center near the intersection of Interstate 10 and U.S. 90/98.
And a 1,500-square-foot Sephora store opened inside the brand-new J.C. Penney store adjacent to Bass.
Haverty’s furniture just finished building a 35,000-square-foot store at Airport Boulevard and Azalea Road, which should open in mid-November. The store will anchor a new strip center.
No turnaround till spring
But Don Epley, director of the Center for Real Estate Studies at the University of South Alabama, said it will be at least spring before things really turn around.
“We’ve got to have the election, Congress has to get back in place and get some money flowing again,” he said. “Then we’ll see some gigantic increases in the stock market, and the real estate market will come back.
Epley said the area’s relatively stable employment and recent economic development wins “gives us a defense for what’s going on nationally.”
The biggest correction in the market will be in 2009, said Josh Burmeister of Staubach Retail, who is the leasing agent for Spanish Fort Town Center. Many store deals are contingent on getting co-tenants first, he said. And to maintain store growth, some companies are considering building a free-standing store, he added.
“The power center pipeline across the country has dwindled,” he said.