Jared’s 2023 Projection
A lot of people are going to be in a holding pattern. As far as build-it-and-they-will-come projects, those are going to be few and far between. It’s not going to be like 2008-09 all over again; I would say things are going to get a little stagnant, but I don’t see a bloodbath.
The development story of 2022 was largely one of conflict between developers and neighborhood residents. What’s the root of that tension?
I think a lot of people misunderstand what developers are trying to do. In a strong, healthy community, you’ve got to have good-quality development. Developers are risking their own money; they wouldn’t do that if they didn’t want a good project, and when the public sees the end product, they’re usually very accommodating to it. People talk about quality of life, being able to walk and bike, but when you try to incorporate anything like that into a neighborhood, they fight back. If they would look at everything, they would realize everyone is there to work with them.
It sounds frustrating.
Development is not for the faint of heart. You put together a budget, put together cost overruns, but then you run into a sinkhole; you hit rock; you run into other environmental issues or a higher interest rate. It’s never-ending. You’re not going to hit a home run every single time. It’s trying to make sure you average it out over time. There’s definitely a balance.
What advice do you have for new developers?
Look, I’m not going to get into saying this developer should have done that, this developer should have done this, made it conform a little better. If everyone’s at the table, and you say here’s the deal, I want to develop something here, and the only response you get back is no, no, no, it’s frustrating. As developers, we live in this community, too. We’re not doing things to be a detriment to the community; we’re trying to help grow our community the right way. Everybody’s going to have a different opinion. It’s like politics – everyone wants to sit there and start shouting each other down. It doesn’t help when you’ve said, “I don’t care what you say; I’m never going to agree with you.” That’s not good for anybody.
What do you see happening with occupancy rates locally as we are either in a recession or teetering on the edge of one?
We’re in a very unusual time. Things still seem to be relatively healthy, at least for the moment, but we’re starting to see signs. People are going to want to be in your stronger retail corridors and the areas where you’ve got better co-tenancy and a lot of businesses there. There will be some vacancies. There’s going to be some pain, but how bad it’s going to be is predicated on how well you prepared for it. Have you been paying down debt, putting away reserves, watching inventory controls? There’s only so much you can do, and a lot of it is how well you run your business. We’re starting to see with other developers, they’re finishing up what’s already under construction and then sitting back. We’re fighting the interest rate environment; we’re still fighting supply chain issues and inflationary construction costs. For the ones that are ill prepared, there’s going to be some pain.
Is it a survival-of-the-fittest situation?
The reality is you’re going to have attrition just by natural progression over time. There’s businesses or concepts that may have run their course. The reality is, there’s always a lot of other retailers, other concepts, and we’re still staying relatively busy in leasing activity. Even if we are going into recession, we’re not going to be in recession forever. The ones that remain will be well positioned for growth and getting that customer base.
Steve Childers to lead city’s key growth initiatives, including Forward SGF.