Retail Construction Hits Record Lows, But One Developer Sees Opportunity

Going Against the Grain

At a time when high costs and economic uncertainty have sidelined most retail developers, Joshua Simon is moving forward with confidence. His Scottsdale-based firm, SimonCRE, has committed over $1B in retail projects and expects to invest another $500M by 2026, according to the WSJ.

While most peers cite high construction costs, permitting hurdles, and shifting consumer habits as reasons to sit tight, Simon sees opportunity — especially in Sun Belt markets like Arizona, Indiana, and Tennessee, where retail demand remains solid and municipalities are eager to spur development.

The Strategy: Incentives + Market Timing

Simon’s model hinges on working with cities that actively support retail development. In Mesa, AZ, for instance, local officials approved a $100M retail center and offered to reimburse Simon for infrastructure costs if specific retail tenants are delivered.

Cities with lower property taxes often rely more heavily on sales-tax revenue, making them willing partners in retail projects. That public buy-in is a crucial part of Simon’s strategy.

What Makes It Work

Simon focuses on:

• Affordable land in growing communities
• Local and regional lenders willing to underwrite retail
• Pre-leased tenants like Sprouts, HomeGoods, and Ross
• Selling completed properties quickly to lock in returns

His high-profile success, Village at Prasada, became the largest shopping center built in the western U.S. in the past seven years. Despite pandemic-era cost overruns, the first phase is fully leased, and construction has begun on phase two, bringing the project to 1.3M SF.

Why Others Are Hesitant

Nationwide, retail development has fallen sharply since the 2008 financial crisis. Construction costs, further strained by tariffs on materials like steel and aluminum, remain a top concern. Even with strong tenant demand, rent growth often can’t cover the cost of new construction.

In contrast to Simon’s approach, firms like Marx Realty say new ground-up retail simply doesn’t pencil out in markets like New York due to high land costs and zoning hurdles.

A First-Mover Advantage

SimonCRE’s ability to push ahead while others pause gives it a strategic edge. As retailers expand into secondary markets, demand for new store space is rising — and there are few new projects to meet that need.

“The few that survived, they’ve got a huge leg up,” said Bronson Naab, SVP at National Bank of Arizona, which has lent over $200M to Simon’s firm.

What’s Next

With momentum from his existing pipeline and more cities warming to retail partnerships, Simon believes there’s more room to grow — even if the rest of the industry stays on the sidelines a bit longer.

He admits it’s a tough business. But for now, he’s among the few developers proving there’s still a case — and a market — for building new retail.