New Building Costs Likely to Remain High: Speaker

The cost of building new retail stores is up and up to stay, an economist told attendees at FMI’s Retail Store Development conference Sunday.

BALTIMORE — The cost of building new retail stores is up and up to stay, an economist told attendees at FMI’s Retail Store Development conference here Sunday. In a keynote speech to kick off the annual conference here, John Strong, a professor of economics at the College of William & Mary, explained how mortgage woes and a weak dollar in the U.S. as well as turmoil in China, have put the world economy under stress. He said costs for items such as building materials, which have skyrocketed since 2003, are unlikely ever to return to those levels and may continue to experience price spikes. He recommended supermarket builders factor inflated material and labor costs into their budgets. Those trends favor a slowdown in new building and a greater emphasis on store remodels. While the slowing economy is likely to slow down merger activity and private equity, retailers with cash on their balance sheets may find “deals” in the real estate market.

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