When Will Retail Construction Spending Grow?

Spending on retail construction should start rebounding in the second half of 2025, and 2026 will be the year of positive year-over-year growth. That’s the word from Ed Sullivan, chief economist at the Portland Cement Association, a trade group for U.S. cement manufacturers. The growth would follow a period when high interest rates and other factors weakened construction spending. When the tally comes in for 2024, Sullivan expects spending on retail construction to have tumbled more than 12% from 2023.

That Dearth of New Construction Motivated This Open-Air Center Purchase

The lack of retail construction of late, however, is one reason commercial real estate asset manager Heitman is bullish on open-air lifestyle centers. Heitman and CenterCal Properties recently bought The Streets of Brentwood, a 358,700-square-foot open-air center in Northern California. The East Bay Times reported a sale price of $75.9 million. In an announcement about the acquisition, Heitman portfolio manager Gordon Black said: “Open-air lifestyle centers have demonstrated strong operating fundamentals [since] the COVID-19 pandemic. These fundamentals are further benefiting from minimal new supply and sustained demand from retailers, a trend we believe will continue.”

Mall Redevelopments Capitalize on Mixed Uses

Mall redevelopments in the U.S. are ushering in a new age of hubs for shopping, dining, working, playing and gathering. JLL’s Future Vision: Prepare Yourself for the Future of Retail report said that going forward, shopping destinations may lean even more toward mixed-use elements. “Retail could become less concentrated in specific zones,” the report predicted, “and instead sprinkled throughout the built environment.”

“ICSC rebranded more than three years ago in recognition that its members are behind not only shopping centers but also the broader marketplaces and spaces where consumers shop, dine, work, play and gather,” said ICSC executive vice president and chief marketing and communications officer Rae Logsdon. “All the uses people have for visiting spaces will continue to meld to create vibrant communities.”

At mall redevelopments, the trend is already well underway. JLL found that almost half, 47.6%, of redeveloped malls in the U.S. include at least three uses and that a little over half, 52.4%, feature multifamily. “And unlike today, where many retail chains stamp out repetitive store prototypes across the landscape,” the report added, “retail spaces could adapt to the needs of each local community, thanks to the power of AI design fed by volumes of customer data.”

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Bed Bath & Beyond’s Brick-and-Mortar Return: 2 Weeks, 2 Big Moves

Home goods retailer Bed Bath & Beyond, which closed all its stores in 2023 after filing for Chapter 11 bankruptcy, is staging a brick-and-mortar comeback. A week after it announced a $40 million investment in The Container Store that will include carved-out store space for co-branded products, Bed Bath & Beyond parent Beyond Inc. has named Kirkland’s the exclusive licensee and operator for new, small-format Bed Bath & Beyond stores.

Each new “neighborhood” store will be as many as 15,000 square feet. That compares with an average of 30,000 square feet for Bed Bath & Beyond’s shuttered locations. Beyond Inc., which still sells Bed Bath & Beyond merchandise online, is investing $25 million in Kirkland’s, a home decor and furnishings chain.

BuyBuy Baby and Denny’s Gear Up for Store Closures

Meanwhile, a former Bed Bath & Beyond subsidiary’s own attempted physical-store comeback has fizzled. BuyBuy Baby closed 115 stores amid the Bed Bath & Beyond bankruptcy, according to USA Today, while Dream on Me, whose products BuyBuyBaby sells, acquired the chain’s intellectual property rights and the leases for 11 of those stores. Dream on Me reopened those 11 stores in November 2023, but the Amherst, New York, store has since closed, and BuyBuy Baby recently announced it will close the other 10 stores by the end of this year and switch to an online-only sales model.

Kmart Closes Its Last Full-Size Store in the Continental U.S.

It’s the end of a retail era: Kmart, once America’s second-largest retailer, shuttered its remaining full-size store in the continental U.S. on Oct. 20. Since opening in 1999, the store had served the town of Bridgehampton on New York’s Long Island. Target — which assumed the Kmart lease several years ago, according to Long Island Business News — is expected to occupy the 89,935-square-foot space in 2026.

Kmart emerged from Chapter 11 bankruptcy in 2003 and merged with Sears, once America’s largest retailer, two years later in a $12.3 billion deal. But neither retailer ever regained their footing in the face of intense competition.