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Observations and Conversations about Commercial Construction, Development and Management

Commercial General Construction 2014 Highs and Lows

As we close out another year, we wanted to take a look back at the commercial construction trends that defined 2014 and highlight some of the highs and lows. Overall, this was a great year for the commercial construction industry as commercial construction activity and revenue were up considerably.

According to a recent article from Crain’s Chicago Business, signed contracts for construction projects in the Chicago area were at $4.3 billion during the first six months of the year, up 16 percent from deals during the same period a year ago.

Stratford Square Mall - Commercial COnstruction

Englewood recently began work on the Stratford Square Mall in Bloomingdale, Ill.
Mall renovation work was a highlight of 2014.

High – Ground-Up Construction Makes a Comeback
Nothing gets a national commercial contractor more excited than moving dirt. The past few years have been dominated by commercial construction renovation work, but this year saw a strong return of ground-up construction. Led by the restaurant sector, new projects broke ground across the country as restaurateurs felt the gains of the improving economy.

One byproduct of this commercial construction trend is it has allowed Englewood to be more selective in our projects. In 2010, commercial construction firms were in survival mode and had to bid on anything available. Now, we can avoid bidding on projects that already have too many bidders, or, are too small for Englewood to be competitive. This has allowed us to concentrate on national corporate programs with firms like Darden and profitable new construction projects with restaurants such as Cooper’s Hawk Winery and the award-winning Harry Caray’s 7th Inning Stretch and Chicago Sports Museum.

Low – Retail takes a step back
While it has been a robust year and revenue is up, the majority of our commercial activity has been in new restaurant construction. Retail construction has taken a step back and worthwhile projects are becoming few and far between. Many national retailers are still expanding, but it is with smaller square-footage concepts, making margins much tighter and bidding much more competitive. National retailers still haven’t fully recovered from the downturn, with expansion velocity at a sluggish pace.

That’s not to say there are no opportunities in new retail construction. Englewood continues to be very active with many national retailers such as American Girl and Destination Maternity brands, but work in the retail construction sector is definitely down for everyone.

High – Shopping Mall Renovation
Yes, you read that correctly—one portion of the retail construction market that is experiencing robust activity is the mall reconstruction sector. While new retailers may not be expanding at a rapid clip, shopping mall owners are taking the opportunity to renovate and reposition traditional malls to entice shoppers back to brick and mortar locations. Englewood has been busy at the Lake Brazos Mall in Jackson, Texas and Stratford Square Mall in Bloomingdale, Ill. We expect this work to continue well into 2015.

Low – Labor Shortage
An unfortunate byproduct of the recent economic downturn and now quick construction rebound is that the industry is facing a major commercial construction labor shortage. Many skilled laborers were forced to leave the industry to find new work, while others left the country entirely to find work in growing overseas markets. Commercial contractors are very concerned about the lack of skilled labor available for new projects. As the commercial construction industry continues to heat up, this should be a commercial construction trend to watch closely as it may put a damper on the amount of new commercial construction the market can handle.

On behalf of everyone at Englewood, I would like to wish all of our readers happy holidays and a safe and healthy New Year. With the way the commercial construction industry is going, we feel 2015 will be a prosperous year indeed.

Check back in with us in January as Englewood CEO Bill Di Santo will take a look back at 2014.

Chuck Taylor
Director of Operations
Tel: 847-233-9200 x712

Questions? Comments?
You can reach me at chuck.taylor@englewoodconstruction.com
www.EnglewoodConstruction.com

2015 Commercial Construction Industry Trends and Predictions

It has been another whirlwind year at Englewood Construction and we are happy to report that our predicted 2014 commercial construction trends came true, which has meant a lot of new projects on our end.

The increased commercial construction activity paved the way for some large new retail construction projects and restaurant construction, as national retailers and restaurant owners became more confident in the improving economy. This year, we expect this activity to carry-over in a big way as national retailers, mall owners and restaurateurs position themselves for continued growth.

Now to get to it—our predictions for 2015 commercial construction trends:

1) Shopping center owners reshape the mall

Shopping center owners are embracing commercial construction projects to revive and revitalize the mall concept. Many national retailers are moving away from tucked-away corners in shopping malls, where they may have enjoyed lower rents, to premium areas with more foot traffic.

Coopers Hawk - Restaurant Construction

Ground up construction project are on the rise. Englewood Construction recently broke ground on an 11,265-square-foot, ground-up Cooper’s Hawk Winery and Restaurant in Oaklawn, Ill.

However, to help offset the cost of a more expensive center-court location, national retailers are opting to take smaller floor plates rather than replicate the same size corner location store. For shopping mall owners, this has meant finding ways to reconfigure areas with mall renovation projects to support more retailers with smaller footprints.

A strategy used by shopping mall owners to make this work is to improve sight lines for shoppers. When more retailers are packed together, some can get lost in the shuffle. Using a retail construction contractor to make both signage and showroom space visible to shoppers is imperative. Englewood recently did this with Harry Caray’s 7th Inning Stretch and Chicago Sports Museum in Chicago’s Water Tower Place. While signage was visible to shoppers, the restaurant space could not be seen from the escalators. So we pushed out the restaurant space to make it more visible and inviting. Based on the success of pushing out Harry Caray’s to make it more visible, we expect to see a retail construction trend with more retailers calling attention to their store locations through creative commercial construction problem solving.

2) Ground up is on the up and up

We have seen a refreshing amount of ground-up commercial construction projects recently. While there still is ample space for retrofits, many retailers and restaurateurs have decided to build ground-up in order to meet brand standards. This has been great news for general commercial construction contractors. Just last month, we broke ground on a three new projects: Cooper’s Hawk Winery and Restaurant in the Chicago area, a Season’s 52 from Darden in New Jersey and a 55,000-square-foot Hobby Lobby at Seabrook Crossings in Seabrook, N.H. And earlier this year, we completed a ground-up retail construction project Goodwill in the Chicago area. It’s always good to see this much dirt moving in the commercial construction industry and this activity should gain velocity in 2015.

3) New restaurant construction is back on the menu

Restaurant construction has been hot the past few years, but the majority of it was confined to upscale activity. That has changed in recent months, so when it comes to 2015 restaurant construction trends all signs point to a very robust pipeline across all product types. As consumers look to pay for experiences that can’t be replicated at home, or, on-line, restaurant construction for fine dining, fast casual, and fast food concepts should all see a steady uptick. For example, Englewood recently began an expansion at white tablecloth restaurant The Purple Pig in Chicago, as well as the renovation of a Yard House in Kansas City’s Power and Light District. Simultaneously, we’re working with Red Robin and Buffalo Wild Wings in the fast casual arena to roll out several new restaurants in 2015.

While national commercial contractors like Englewood have a lot to look forward to in 2015, we’re not done with 2014 yet. Don’t miss our next blog post where we will cover the highs and lows of commercial construction this year.

Shopping Center Development Strategies: How to Win Against Online Retail

Stratford Square Commercial Construction

Stratford Square in Bloomingdale, Ill. is undergoing a redevelopment that will include a Round1 bowling concept.

While the shopping center experience is far from over, it’s safe to say that shopping center developers and owners are working harder than ever to compete for foot traffic. The rise of on-line shopping has been a boon to retailers, but if we are honest, it has been detrimental to commercial general construction, with the closing of many brick and mortar retail stores.

That’s why savvy shopping center developers are developing new strategies to compete and win against online retail. This strategy to create an experience, rather than just a shopping mall development with a lot of big name retailers is a step in the right direction. By creating an entertaining environment, shopping center developers are betting that it will bring foot traffic back to the mall. This crowd may not be there for a shopping experience first and foremost, but the longer they stay the better chance they have of becoming a traditional shopper.

By partnering with experienced commercial general construction firms, shopping center owners are redeveloping or adding on entertainment options at shopping mall developments that may not have been the norm 10-15 years ago. These new options create the desired experience that shopping mall owners are trying to achieve.

Some of these new shopping center development options include:

  • Fine dining. While retail items can be purchased on-line from the comfort of your couch, the fine dining experience cannot be replicated at home. People who want a break from cooking and to be served in a pleasant atmosphere still have to go to restaurants. Shopping mall owners are discovering that upgrading their developments with high-end restaurant construction can be a key in driving traffic to the mall.
  • Entertainment options. Recently, trends such as adding entertainment options like bowling alleys and video arcades have become popular. While not typical retail construction options for shopping malls, owners know they do drive foot traffic to their shopping centers.

For example, at Woodfield Mall, one of the Chicago area’s most popular malls, the owners have decided to add Level 257, a video-game themed restaurant. Another Chicago area mall, Stratford Square, has announced the addition of Round1, a new bowling concept. These retail construction projects will help bring a new set of visitors to the malls that otherwise may never have ventured to the shopping center developments.

  • Movie theater enhancement. Sometimes, it’s not enough to just offer a movie theater anymore. Shopping mall owners are trying to lure movie theater operators that have developed a new experience, thus, hopefully driving new traffic. Block 37 on Chicago’s State Street just announced a new AMC dine-in movie concept. Several other movie theaters are providing options such as reserved seating or valet parking to differentiate themselves and create a new experience.
  • Create a town center feel. Sometimes, it’s not enough to add new retail concepts. Creating an environment that can lead to several different experiences can be a game changer. Next to the Fashion Outlets of Chicago in Rosemont, Ill., the municipality has created an entire town center that offers several dining and entertainment options. Live music can be heard almost any night of the week at several venues and family entertainment is often staged in the new town square. It even has an indoor skydiving center. This retail construction project has been a boon to the city, as it is packed on weekend nights with everyone from families to couples and teens seeking entertainment and dining experiences. The Fashion Outlets benefit from this overflow traffic as well. Shopping center developers that cater to family entertainment have an excellent chance of wooing multiple generations of shoppers.

It’s clear there is no single answer to enhance a shopping center development and make it relevant, but with retail construction projects that approach the traditional shopping mall in an innovative way, shopping center owners may create an experience that keeps them competitive in the new age of on-line retail.

Chuck Taylor
Director of Operations
Tel: 847-233-9200 x712

Questions? Comments?
You can reach me at chuck.taylor@englewoodconstruction.com
www.EnglewoodConstruction.com