Trends for 2013: Retail, hospitality construction rebound

The hot sectors for North Bay construction in the coming year will continue to be education, affordable-housing and health care, but retail and hospitality work is making a comeback.

Petaluma-based commercial general contractor Midstate Construction has crews working weekends and evenings to stay on top of about 15 projects going right now, and more large projects are available closer to home. The company has six contracts totaling $30 million on the Target store-anchored East Washington Place regional mall under construction in Petaluma.

"The coming two to three years are going to be the years of renovations," Mr. Nelson said. "New stuff is more expensive, so it pays to renovate."

In the next few years, fewer new buildings are expected to be built, particularly speculative office and industrial projects, he said. Vacancy rates for such space in the North Bay's Highway 101 corridor are above 15 percent.

Owners of retail and hospitality properties are in the business of attracting visitors, so they tend to spruce up and remake their properties periodically, he said. Before the financial slowdown in 2008, there was ongoing investment in renovations and new buildings, but that shifted to upkeep for the past four years.

For example, Midstate earlier this year finished a $40 million major addition to The Meritage Resort & Spa in south Napa and is about to start a renovation of the lobby, 97 of the 228 rooms, restaurant and grounds of Sonoma Mission Inn & Spa, which Fairmont Hotels fully acquired in March.

Chicago-based Simon Property Group is renovating the Coddingtown mall, in which it shares ownership with Codding Enterprises of Rohnert Park, and is in the midst of a refresh of Santa Rosa Plaza. Beside Target, there are now eight new tenants lined up for 20,000 square feet in Coddingtown, including Subway and Coddingtown Grill, a new venture by the owners of Chicago Chop House, according to Brad Baker, Codding president and chief executive officer.

[caption id="attachment_43386" align="alignright" width="176"] Brad Baker[/caption]

"Things are improving and looking better," he said about the prospects for tenants.

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