Retail developers thrive on housing growth.
They build shopping centers to meet the demand for stores, restaurants and services as homeowners move into new neighborhoods.
But when the housing market slumps, retailers typically slow expansion, and developers put projects on hold.
That's happening today throughout the Charlotte region, but retail growth is still occurring in certain pockets under the right circumstances.
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A recent example is Crescent Retail's 425,000-square-foot Mill Creek Commons under way on 75 acres off Lake Wylie at S.C. 557 and S.C. 274 in York County, S.C.
The first anchor tenant – a 117,000-square-foot Lowe's home improvement store with a garden center – opened last week and will have a grand opening event Thursday.
For nearby residents like retiree Jack Haher, who has lived in River Hills about a mile north of the center since 1983, this is a potential Next Big Thing that has been a long time coming.
He recalls River Hills residents driving to Clover, S.C., to buy groceries in the early years. And many of his neighbors still drive across the Buster Boyd Bridge to shop in Mecklenburg County.
Haher, who was at the Lowe's earlier this week, expects to take advantage of a Walgreens under construction and due to open in April and a Super Wal-Mart targeted for late 2009.
That's why retail follows housing.
“It's easy for people to say, ‘I'm saving money on gas by going to a shopping center within a mile of my house' – it's convenience and proximity,” said real estate analyst Andrew Jenkins of Karnes Research Co.
Crescent Retail's David Niekamp, director of retail development, said the Crescent Resources LLC entity was attracted by the Lake Wylie area's residential growth and household income levels.
The population within a five-mile radius of the center increased about 32 percent to 21,781 from 2000 to 2007 and is expected to grow to 26,610 by 2012, Niekamp said.
The average 2007 household income was $78,467 within a five-mile radius and $95,911 within a one-mile radius.
The statistics got the attention of major retailers, too. “Lowe's and Wal-Mart saw it as an under-served area they could go into,” Niekamp said.
That was a major factor in Crescent Retail's efforts to proceed with the estimated $65 million to $75 million center at a time when many others are scaling down.
Also a plus: This project and five others under Niekamp's wing were in the development “pipeline” before the Carolinas felt the full brunt of the housing slump.
“The new projects – that is where the real difficulty is now,” he said.
Lenders consider retail developments that might have been a sure thing just a year ago as too risky to finance in an uncertain economic climate.
In the Charlotte area, retail projects totaling 10.5 million square feet are proposed, and 3 million square feet of retail space is under construction, according to Karnes Research.
Jenkins said it's unlikely developers will follow through on all of the proposed projects, which will require not only financing but substantial preleasing.
Junior anchors (usually under 30,000 square feet) such as electronics chains, pet super-stores, apparel retailers, office suppliers and bookstores are reluctant to expand until the economy improves.
They and smaller, locally owned and franchised stores and restaurants are hard-pressed to afford the expense of opening another location and assuming more risk, Jenkins said.
Crescent Retail is pushing to sign junior anchors at Mill Creek Commons now that Lowe's is open. Niekamp thinks they will want to take advantage of Lowe's and Super Wal-Mart's drawing power.
Owners of small shops also are expressing interest, Crescent Retail officials said, but they need the junior anchors to generate traffic for them.
The developers hope to have junior anchors open by 2010. Walgreens, Provident Community Bank and McDonald's plan to occupy three of the center's 10 road-frontage parcels.
In clearing the acreage, Crescent Retail left an undisturbed buffer ranging from 50 to 350 feet along Lake Wylie.
About 25 percent of the 75-acre site is deed restricted and will remain open space, officials said.