April 29. 2011 2:00AM - Last modified: March 14. 2012 4:21PM

Retail development boom about to hit region

Real Estate

By Andrew Weiland

  
As the U.S. economy continues to slowly recover from the Great Recession, retail sales have improved. In March, U.S. retail sales were up 0.4 percent and in February retail sales were up 1.1 percent, according to the U.S. Commerce Department.

March was the ninth consecutive month of retail sales improvement in the U.S.

The improving job market is one reason that retail sales are improving. The U.S. unemployment rate, which peaked above 10 percent during the recession, has improved to 8.8 percent. Wisconsin's unemployment rate is at 7.4 percent.

Now that the economy and retail sales are improving, some retailers are making plans for new stores. Several major retail development projects are planned in southeastern Wisconsin.

"Some of these projects were in the planning stages before the recession hit," said Peter Glaser, first vice president of CB Richard Ellis' Milwaukee office. "Now that we're coming out of it, it's a good time to move these projects forward. Retailers are looking for opportunity. They need to grow."

Bentonville, Ark.-based Wal-Mart Stores Inc. is the most active retailer in southeastern Wisconsin right now. Already the world's largest retailer, Wal-Mart is planning to add several new stores in southeastern Wisconsin. Some of them are full-sized Walmart stores, which include a grocery department and general merchandise, but others are smaller Neighborhood Market stores, a new Wal-Mart concept focused on just grocery and pharmacy items.

Wal-Mart is finding more acceptance of the smaller store concept in some communities that were previously hostile to the retailer, said Cory Sovine, vice president of retail with Milwaukee-based Siegel-Gallagher Inc. The stores are easier to fit in higher-density areas, he said.

Wal-Mart is currently working on plans to add new stores in: Milwaukee, Kenosha, Menomonee Falls, Waukesha, Wauwatosa, South Milwaukee, Greendale and Caledonia. The company has plans for at least 11 stores in the region.

Other discount retailers are planning to add big box stores in the region.

Minneapolis-based Ryan Cos. plans to build a 136,000-square-foot Target store at the former Quebecor World printing plant site at 12821 W. Bluemound Road in Brookfield. The project still needs final city approval, but could break ground by the end of the year.

Issaquah, Wash.-based Costco Wholesale Corp. plans to build a 148,000-square-foot store at Capitol Drive and Highway 164 in the village of Pewaukee. Costco is finalizing its development agreement with village officials and plans to break ground soon.

Higher-end retail developments are also planned in the region.

In Greendale, Indianapolis-based Simon Property Group is planning a substantial redevelopment of Southridge Mall. Sources say Simon is negotiating with Cincinnati-based Macy's Inc. to open a store in the former Younker's space in the mall. The project would update and improve the appearance of the mall and would add new tenants, upgrading the quality of the tenant lineup.

"(A makeover for) Southridge was just a matter of time," said Sovine. "Traditionally, the owner of Southridge has been content to let it be the red-headed stepchild of Milwaukee shopping malls. Simon doesn't like to sit on their money. It is long overdue for some significant changes. They're definitely trying to take the mall to a different level."

In the Town of Brookfield, Milwaukee-based Marcus Corp. plans to build a 600,000-square-foot commercial real estate development with about 480,000 square feet of retail space southeast of Barker Road and Bluemound Road. The project will be anchored by a Von Maur department store. Von Maur is a Davenport, Iowa-based chain of upscale department stores compared by some to Nordstrom.

Speaking of Nordstrom, a Nordstrom Rack store, which sells discontinued merchandise at a discounted price, could be part of a redevelopment project planned by Chicago-based HSA Commercial Real Estate Inc. for the 69-acre Burleigh Triangle site northeast of Highway 45 and West Burleigh Street. HSA plans to demolish part of the former Roundy's Supermarkets Inc. distribution center on the site and convert the rest of the building into about 250,000 square feet of retail space. Additional retail space is planned in future phases of the project.

"Our goal is to attract exciting, upscale retailers that will compliment and even enhance the appeal of Mayfair Mall as a regional shopping destination," said Timothy Blum, executive vice president of HSA Commercial.

The site for the HSA project is about one mile northwest of Mayfair Mall, one of the region's top shopping destinations.

"There is still strong demand among best-in-class retailers for space on the perimeter of Mayfair Mall," said HSA spokesman Brenton Schrader. "Given the dense, built-out nature of the market, a lot of these retailers have been unable to find the right space in the past. Since many of these companies are operating under conservative expansion strategies, they may choose to prioritize other markets nationally under these circumstances. Through the adaptive reuse that we are proposing, we are offering these tenants the opportunity to locate in Wisconsin's premier trade area at a competitive rent, which creates a compelling value proposition."

Other than the Shoppes at Fox River project in Waukesha, there was virtually no retail development built in the region during the Great Recession. In the early stages of the economic recovery the reason so many retail developments are in the works is because retailers are planning ahead for later stages of the recovery, Glaser said.

"These stores aren't opening this year," he said. "They're opening next year or later when (the retailers) hope the economy will be in even better shape. They're planning ahead for 2012 and 2013. They don't want to wait for two years and miss out."

Nationally, retailers seem to be getting more optimistic, said Sovine. For the first time in a few years, there is genuine excitement about the annual International Council of Shopping Centers global real estate convention in Las Vegas (May 22-25), he said.

"There is a lot more activity going on from a national perspective certainly more than what I've seen for a couple of years," Sovine said. "I think they're just starting to rev up now for what they see as the start of an ongoing recovery."

Despite some concerns among retailers about inflation, including rising gas prices, and the slowly improving job market, Sovine said, "by and large, there is a lot of optimism."


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