The Price Is High for Shopping Centers : Construction: A 22% increase in cost is attributed to better-quality projects being built in exclusive areas.

The pace of shopping center construction in Orange County remained stable during 1989, but the average construction value of new centers increased 22%, according to a report by a national shopping center trade group.

Twenty-one shopping centers were started in Orange County in 1989 with a construction value of $54.2 million, compared to 20 centers started at a value of $44.3 million a year earlier, according to a report by the International Council of Shopping Centers in New York.

The new construction will add 1.18 million square feet of space to Orange County’s base of shopping centers, compared to an addition of 1.13 million square feet of space during 1988, the ICSC reported.

The increase in the average cost of new shopping centers does not necessarily reflect increased construction costs, said John Baker, vice president at MCG Architects in Irvine. Rather, Baker said the higher cost per center is due to better-quality projects being built in exclusive, high-growth parts of the county, such as South County.

Wayne Wedin, a La Habra retail consultant, said the higher costs of new centers could also be due to the increased expense of meeting local government mandates, such as requirements for more parking spaces.

Statewide retail sales increased to $81.6 billion for 1989, up 12.5% compared to $72.5 billion a year earlier.

At the end of 1989, California had 4,246 shopping centers with 484 million square feet of space, compared to 3,856 centers with 449 million square feet a year earlier. The centers employed 1 million Californians, or 9% of the state’s work force.

Nationally, retail sales were $676.2 billion in 1989, up 7.8% from $627.1 billion in 1988.

At the end of 1989, the nation had 34,683 shopping centers with 4.2 billion square feet of space, compared to 32,563 shopping centers with 3.9 billion square feet of space a year earlier. Shopping centers employed 9.9 million people, or 9% of the nation’s work force.

Comparable figures for Orange County during the same period were not available, but Isaac Lagnado, a researcher with the ICSC, said county retail sales in the first quarter ended March 31 were up 6% compared to a year earlier. That compared to first-quarter sales growth of 5.5% in the United States and 5% in Los Angeles County.

“We are seeing a significant drop of new center starts nationwide in the first quarter that cannot be explained by the level of retail sales,” Lagnado said. “Orange County retail has been relatively healthy, but it seems to have a shortage of construction credit”.

CONSTRUCTION STARTS

1986: 25

1987: 11

1988: 20

1989: 21

NEW LEASEABLE AREA (In thousands of square feet)

1986: 1,608

1987: 785

1988: 1,131

1989: 1,182

CONSTRUCTION VALUE

1986: $77.6

1987: $42.9

1988: $44.3

1989: $54.2