Beyond the Build

Construction Trends

Retail Shape Shifting Again

Residential construction is continuing to morph in ways I never would’ve expected a few years ago, but as I think about things, it makes sense with the present state of existing commercial developments. Where department stores, office buildings and retail sit empty, we are seeing the space converted to multifamily, often adding restaurants, food stores and recreational components.

It requires creativity, but can be vital in maintaining the value of these assets. Coexisting enhances the residential experience and provides a ready-made customer base for the retail. It’s a “density of experiences” that we haven’t seen before, but it’s working. A few thoughts:

Food is king. I was talking with one of our large retail customers this week, and one of their initiatives is finding new ways to make groceries quick, easy and accessible in urban and multifamily communities.

ESG Matters. Environmental, Social, Governance is a growing part of investment criteria, and is being graded similar to ROI. The model heavily weights the impact your investment is making. If you’re not familiar, you should be.

Inflation is a concern. With any adaptive reuse development, it has to pencil out. This generally involves several rounds of repricing and some redesign, especially in the market we are seeing now.

A wise individual who had worked with a life insurance company making loans once told me, “Whenever you wish to test your pro forma, you don’t see reality until you take it to the banker. Keep working if you need to make it happen.”


Merrill Stewart Jr.

Merrill Stewart is Founder and CEO of The Stewart/Perry Company, a commercial building contractor based in Birmingham.