Retail Construction Starts Surged in H1 2024

Retail construction starts exhibited a dynamic activity pattern in 2024, with sharp contrasts between the first and second halves of the year, CommercialEdge data shows.

Early in the year, construction starts surged, with February standing out for a staggering 164 percent year-over-year increase—or nearly 3 million square feet. March and May also posted significant growth at 80.6 percent (1.9 million square feet) and 139.4 percent (2.6 million square feet), respectively, reflecting strong developer confidence and efforts to meet pent-up demand.

Mid-year activity began to moderate, as June recorded a 35.3 percent rise, followed by July’s 64.5 percent growth, which translated into 1.7 million square feet. These figures, while positive, suggested a cooling trend compared to the earlier months. By August, the pace had further slowed, with a 44 percent year-over-year increase, or 1.1 million square feet in project starts.

September showed a significant decrease in pace, with a 53.3 percent decline in construction starts. The downward trend continued through the end of the year: October’s activity showed a 85.5 percent decrease year-over-year, while November’s 96 percent drop marked a dramatic near-halt in new projects.

The sharp second-half contraction may reflect economic pressures, including high interest rates, shifting consumer habits, or a pullback in retail demand. These patterns highlighted by CommercialEdge underscore a pivotal year for the sector, moving from optimism to caution as developers reassess future opportunities in an evolving retail landscape.

—Posted on December 27, 2024