Indiana's retail developers.

• Author: Miller, Chuck
• Position: Shopping center developers - Industry Overview

"Awakening from the hangover of the 1980s"

"The shopping-center business is awakening from the hangover of the 1980s."

Tim Mehall sees light at the end of the tunnel. As vice president of retail leasing for Cressy & Everett in Mishawaka, he has witnessed the near stoppage of new construction of shopping centers and malls the past three years.

How dark has the tunnel been? In 1992, the number of new shopping centers increased nationally only 1.6 percent, compared with growth rates above 7 percent in the mid-'80s. Leasable space increased 1.7 percent last year, down from a peak of 6.8 percent in 1989, the last of the boom years.

"Due to the national economic downturn, the savings-and-loan fallout a few years ago, along with new federal regulations on real-estate loans, new development in the commercial real-estate industry has slowed considerably," notes Bill Schrage of The Skinner & Broadbent Co. of Indianapolis.

Certainly, Indiana developers haven't had to stop all their activities for lack of money. Development companies around the state have gotten some projects done over the last couple of years, despite tight money.

In perhaps the most dramatic example, Melvin Simon & Associates of Indianapolis last summer opened Mall of America, the largest mall in the country, just outside of Minneapolis. With 2.6 million square feet of leasable retail space and 4.2 million square feet of total space, it's nearly four times the size of Indiana's largest malls. Also, concrete is being poured at the site of Simon's Circle Centre Mall in downtown Indianapolis, following years of delays.

"One survey reported that more than 200 retailers will open or expand more than 32,000 new stores over the next four years," notes James Lohman, vice president of Murphy & Associates of Fort Wayne.

"There is every indication that retail space is again in demand," agrees Phil Knapke of Goldstine Knapke Corp. in Fort Wayne. "And there has been a strong, renewed interest in existing retail space, especially in established shopping centers."

A healthier retail environment is one reason lenders are again looking at shopping-center developments. The 1992 holiday shopping season tells the story--sales were up 8 percent over the 1991 holiday season, which pushed full-year 1992 sales above previous-year numbers by 4.6 percent.

Melvin Simon & Associates, owned by brothers Mel and Herb Simon, was incorporated in 1960 as a developer of strip shopping centers. Its first project was...