More bad economic news for Emerald City. Boss Godfrey's much ballyhooed downtown Wal-Mart Super Center project has hit a snag. According to this morning's Standard-Examiner story, groundbreaking has been delayed for at least a year. We incorporate the lead paragraphs from this morning's Ace Reporter Schwebke's story:
OGDEN — The construction of a downtown Wal-Mart Supercenter will be delayed a year because soil at the site will have to undergo environmental cleanup, a city official said Tuesday.Although Emerald City and Wal-Mart spokemen attribute the delay to an unspecified "soils problem," we wonder whether more fundamental market forces may be at work. On March 5, the Wall Street Journal reported on a slump in commercial real estate development, specifically noting that Wal-Mart, among other US retailers, have "pared expansion plans" -- and worse. From the WSJ article:
Greg Montgomery, the city’s planning manager, said he was told by a Wal-Mart engineer the cleanup will be necessary, but he hasn’t seen a report detailing what was found in the soil.
Work on the Wal-Mart at the northwest corner of 20th Street and Wall Avenue was initially slated to begin later this summer and be completed in late 2009 or early 2010.
However, the start of construction has been pushed back to October 2009 to accommodate the soil cleanup, Montgomery said.
Retail is one of the more vulnerable sectors of commercial real estate, tied to the housing market and consumer spending. As the economy lists toward recession, retail property stands to suffer higher vacancy rates, constrained rent growth and declining values. Results for publicly traded retail landlords look healthy. After several years of rapid expansion by retail tenants and strong spending by shoppers, real-estate investment trusts that own and develop retail properties boast occupancy rates in the low- to mid-90% range. Many claim little trouble so far in replacing bankrupt or otherwise failing retailers that have vacated their stores.It's been a couple of months of bad economic news in Emerald City, with recent disappointments such as Adam Aircraft, Midtown Village at the Junction and now Wal-Mart.
The outlook is souring. Retailers have reported a slowdown in sales. Wal-Mart Stores Inc. and J.C. Penney Co., among others, have pared expansion plans. Electronics seller Best Buy Co. has reined in its quarterly earnings forecast. Talbots Inc., Movie Gallery Inc.'s Hollywood Video and numerous home-furnishings retailers have announced store closings. Others, including Bombay Co., have liquidated under bankruptcy protection.
We swear it's got to be driving our can-do Mayor nuts.
And what say our gentle readers? Will it actually take a full year for Wal-Mart's contractor to haul off and replace 16 acres of contaminated dirt? Or are Wal-Mart officials playing it cagey, drawing in their horns and preparing to ride out the percipient world recession?
