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By Lou Hirsh CoStar News October 2, 2022 | 7:45 P.M.
Supply Chain Snags Delay Retail Projects
Retail developments and the repurposing of older centers are proceeding amid supply chain hiccups more than two years into the pandemic.
Some developers at the International Council of Shopping Centers’ Western regional conference, held Sept. 28-30 in San Diego, said it’s not unusual for tenant improvements that once took about six months to now span a year or more. Landlords and their tenants, especially restaurant operators, are taking steps to counter lingering delays for delivery of rooftop ventilation systems and walk-in coolers.
“We have a secondary supplier for almost everything we need,” Aaron Harris, vice president of real estate and construction for Dutch Bros. Coffee, said during a panel discussion. “We pay ahead of time and we lock up inventory with suppliers, so I can tell you where my roofing materials are coming from, where my floor tile is coming from.
“That’s the reality that we’re facing,” said Harris, whose Grants Pass, Oregon-based company is standing by plans to add 150 new stores annually over the next several years. “If I had the ability to buy 150 rooftop units tomorrow, I would do it.”
Another problem dating back to the earliest days of the pandemic: Staffing shortages in city departments charged with approving development permits. Carmen Decker, western regional president of retail center developer Kimco, said the Jericho, New York-based company has responded by establishing a tenant buildout coordination department that works with cities, some of which designate their own staff liaisons to help see large projects through entitlement processes. Facebook Parent Freezes HiringFacebook parent Meta has reportedly joined a growing list of major technology firms laying off workers or temporarily halting new hiring in the face of economic uncertainty, a trend with implications for real estate demand well beyond Silicon Valley.
Meta CEO Mark Zuckerberg told workers Sept. 29 that the Menlo Park, California-based company would freeze hiring and “further restructure” in the face of slowing sales and lower stock prices across the tech industry, Bloomberg News reported earlier. Layoffs are possible and budgets will be reduced across most departments, after Meta this year announced cutbacks in hiring plans.
“I had hoped the economy would have more clearly stabilized by now, but from what we’re seeing it doesn’t yet seem like it has, so we want to plan somewhat conservatively,” Zuckerberg told employees during a weekly Q&A session, according to Bloomberg.
The Facebook parent would join several big tech companies that have frozen hiring or announced layoffs in recent weeks, including Docusign, Lyft, Uber, Robinhood, Twilio and Google. Shifts to flexible work-from-home arrangements at those and other tech firms have already had the effect of reducing office demand, with companies such as Airbnb putting big swaths of space up for subleasing.
A Meta spokesman declined to comment but referred CoStar News to Zuckerberg’s remarks during a July earnings call, in which the CEO said the company plans to “steadily reduce headcount growth” over the next year. Consumer Spending Rises
Personal income rose 0.3%,or $71.6 billion, in August from the prior month — but that was outpaced by a 0.4%, or $67.5 billion, increase in spending, the Commerce Department reported Friday. Personal savings held steady from the previous month at 3.5% of disposable income.
Wages, proprietors’ income and government social benefits were the primary drivers of added income. Spending increases were led by housing and utilities, up 29.6% for the month, along with transportation and health care services.
Despite income gains and a historically strong job market, results of a closely watched survey by the University of Michigan showed consumer confidence for September remaining essentially on par with August levels. September’s 58.6 index rose 0.4 points from the prior month, but was down more than 19 points from September 2021. Numbers above 50 generally indicating positive sentiment about current and future economic conditions.
Inflation remains a key concern, with consumers worried about rising energy costs and other effects from the war in Ukraine and climate-related disasters such as droughts and hurricanes. “Consumers welcomed the slowdown in inflation last month, but they show signs of uncertainty over the trajectory of the economy,” University of Michigan economist and survey director Joanne Hsu said in a statement Friday. “Developments overseas generate downside risks.”
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