In a tight market, only a handful of new developments are getting the green light. These seven recent groundbreakings show the kinds of retail projects that are actually moving dirt in today’s economy.

Verrado, Arizona: HCCJ Family Partners broke ground on Sunrise Market, a 35,000-square-foot mixed-use center scheduled to open in January. The project is already 65% pre-leased to local tenants, including a children’s apparel retailer, a bakery, and hair and nail salons, according to leasing agent Avison Young. The center, in a fast-growing Phoenix suburb, is near existing consumer draws Costco, Banner Health and Target.

Des Moines, Iowa: Target broke ground on its 148,000-square-foot anchor store at Pierson Cos.’ 62-acre, $100 million Waukee Towne Center. When complete, the center will have an eight-acre lake, an amphitheater and an ice skating rink.

Pascagoula, Mississippi: Noon Real Estate broke ground on a $21 million center on the site of a former flea market. Tenants will include Aldi, Burlington, Five Below, Rack Room Shoes and T.J.Maxx. The development is receiving some public funding.

Las Vegas: Gindi Capital kicked off construction on BLVD, a two-level retail development on the Strip. Gindi acquired the 9.5-acre site, which incorporates several existing buildings and the demolished Hawaiian Marketplace, in 2019 for $172 million. The redeveloped property will comprise 400,000 square feet of retail and will have 700 feet of street frontage. It also will include a 110,000-square-foot terrace for events.

Parsippany, New Jersey: A joint venture of Stanbery Development Group, Claremont Development and PCCP broke ground on The District at 15fifteen, a three-building, streetscape-style, mixed-use complex in Morris County. New York Life Insurance Co. is providing a construction loan for the project, which will feature 60,000 square feet of local, high-end retail; full- and quick-service restaurants; boutique fitness; specialty services; and a 498 luxury apartments. The retail and restaurant portion is slated for completion in fall 2025.

Owasso, Oklahoma: Criterion broke ground on a $10 million retail center near Tulsa. Phase I will include an 11,000-square-foot center that will open this fall housing Floyd’s Barbershop, Orangetheory Fitness, Mod Pizza, Cava and Salad and Go. Phase II will include two more restaurants.

3 Deals That Show Where the Market Is Moving

Shopping center deals keep closing despite tighter financing terms, high cap rates and rising interest rates. Three recent deals exhibit the type of prime product that’s drawing interest and financing in the current market.

A global real estate investment management firm sold a four-property, 592,000-square-foot, grocery-anchored retail portfolio in Richmond, Virginia, to H.I.G. Realty Partners, FarmViewVentures LLC and Rosenthal Partners. Tenants include grocers like Aldi, The Fresh Market, Walmart and Wegmans. JLL represented the seller and helped arrange acquisition financing.

Meanwhile, Bristol Place, a 61,454-square-foot, Target-anchored center in Santa Ana, California, sold for $36.5 million. “With one of the lowest vacancy rates in California and on track to post a sixth consecutive year of positive rent growth, Orange County remains one of the most desirable markets for retail investors in the nation,” said Ron Duong, senior managing director of investments in Marcus & Millichap’s Orange County, California, office. He represented the buyer, a private investor. “Bristol Place is located a block from one of the nation’s top-grossing shopping centers, South Coast Plaza, and is across the street from the upcoming 41-acre mixed-use development, Related Bristol, which looks to reshape the landscape of the South Coast Metro region for years to come. These conditions and the property’s enormous growth potential attracted our buyer.” Hanley Investment Group represented the seller. Marcus & Millichap also arranged acquisition financing for the buyer.

Even spec development is finding financing, albeit in a prime retail corridor. Sonnenblick-Eichner Co. has arranged a $27.4 million nonrecourse construction loan from a private debt fund for the speculative development of a three-story 25,000-square-foot retail building on the Third Street Promenade in Santa Monica, California. The property will include 50 feet of retail frontage along the high street. One of the retail building’s more distinctive characteristics will be a 2,500 square-foot roof deck with unobstructed views of the Santa Monica Mountains and the Los Angeles Basin. The construction replaces a 77-year-old mixed-used building that developer Blatteis & Schnur razed last year.

Special Receivership for Malls

Westfield San Francisco Centre owner Unibail-Rodamco-Westfield announced plans to default on its $558 million mortgage and turn management and ownership of the vertical urban mall over to a special servicer hired by its lenders. “San Francisco Centre’s debt is nonrecourse, and this action has no impact on the rest of URW’s debt,” the landlord wrote in a press release. Westfield reported that sales and traffic at the property have decreased by half since the pandemic, despite strong performance at the company’s other California malls.

URW already had announced more than two years ago it wanted to sell all its U.S. properties. Now, a receiver will oversee sale of San Francisco Centre, and a buyer likely can snap it up at a big discount.

URW decided to give the keys back after Nordstrom, the mall’s anchor, announced it would shut down its location in the property, citing crime as one the factor. The landlord and tenants at the property had complained of rampant shoplifting and crime there, according to the San Francisco Chronicle.

Large Rent Increases Helped Landlords Boost Income in Q1

Rental rates at U.S. marketplaces jumped 9.8% year over year for the first quarter of 2023, according to the U.S. Shopping Center Performance Benchmark within the ICSC Marketplaces Industry Report Q1-2023. That’s the highest jump since 2000, when tracking of the data began.

And it’s not a flash in the pan. The first quarter of 2023 represented the sixth consecutive quarter of growth in base rent. On a rolling four-quarter basis ending in the first quarter of 2023, base rents climbed 6.6% over the prior comparable period. Percentage rent also continued to climb, growing 22% during the past four quarters over the previous comparable period.

There’s no shortage of growing tenants seeking quality space. In the first quarter, Marketplaces Industry occupancy rose 1.3 percentage points from a year ago to 91.8% And the gains are not only at open-air, supermarket-anchored centers. Malls experienced a significant improvement in occupancy, ending the quarter at 87.5%, up 3 percentage points from the first quarter of 2022, according to data NCREIF provided to ICSC.

Landlords are investing in their properties to stay competitive in a tight market. Capital expenditures were up by 17.1% on a rolling four-quarter basis, reaching $5.10 per square foot, according to the data.

The growth has helped boost U.S. net operating income by 7% year over year on a rolling four-quarter basis to $19.76 per square foot.