Commercial Construction Keeps Pace

SPRING HILL - The rising number of foreclosures says one thing.

Retail industry forecasts say something else.

In some respects, it seems Hernando County's commercial sector has ignored all of those gloomy signals coming from the housing market.

While expectations are not sky high, no one is bracing for disaster. Then again, predicting trends in the retail or grocery market can be tricky. Corporations are cautious about it.

"We're going into 2008 conservatively," admitted Lena Michaud, a Target spokeswoman. "We're conserving inventories and making plans that are consistent with that outlook."

Those retailers that sell durable items, particularly those related to home furnishings, are the ones being affected the most. It is tough times for all furniture and home appliance stores, for instance.

Nondurable items such as clothing, sporting gear and other department store inventories are another matter, said Dr. Michael Loewy, an economics professor at the University of South Florida.

"The purchases of nondurable products don't change a lot," he said. "They are less affected by general economic fluctuations."

The current trends in the local retail market prove his point. Kohl's, Target and Books-A-Million are expected to move to Spring Hill. A JCPenney store has been built along U.S. 19 and there is speculation a Sports Authority may move next door. Perhaps another bookstore chain will pop up along Spring Hill Drive off the Suncoast Parkway.

As of December 2007, the unemployment rate in Hernando County was second worst in the state at 6.6 percent. There were nearly 2,000 foreclosures in the county alone in 2007. This year may be worse. Last month, there were 256 foreclosures.

Even still, there are four locations throughout West Hernando that are expected to become major retail centers during the next 18 months - U.S. 19 and Spring Hill Drive, Spring Hill Drive near the Suncoast Parkway, State Road 50 west of Mariner Boulevard and County Line Road near Anderson Snow Road.

Developers are building about 1.5 million square feet of new commercial property throughout Hernando County.

In 2006, the county development department handed out 103 permits for new commercial construction. Last year, that dropped only slightly, to 102.

"You're still going to see considerable development and planning," said Office of Business Development Director Mike McHugh.

He thinks the slumping housing market and the retail industry are "not directly conjoined." If there is any connection, the current commercial trends are still reflective of the housing boom from two years ago.

"This is more of a reaction to the growth we've already experienced," McHugh said. "There has been a lag there. I think that's what we're experiencing ... It really hasn't been that long since we had very robust growth numbers."

Furthermore, the occupancy rate for shopping centers in Hernando County was at 93.3 percent in 2007, the highest it had been so far this decade, according to the property appraiser's office.

Other statistics suggest a slowing economy, but nothing too alarming. Local trade organizations have not suffered much. Strangely, the Hernando Builders Association has seen some growth in the past year.

Membership with the Greater Hernando County Chamber of Commerce has taken a dip, but nothing significant. Only 26 members decided not to renew last year, said Chamber President Patricia Crowley.

About 10 percent of those who did not renew were in the real estate business.

Sales tax revenue for Hernando County steadily increased from the 2003 fiscal year. The only time it dropped was from 2006 to 2007, when it went down from nearly $8.6 million to $8.2 million.

Budget Director George Zoettlein said $8.4 million has been budgeted for the 2008 fiscal year. McHugh knows the construction of new commercial developments is desperately needed for an area hit hard by the sagging housing market. It may not be enough, but the upcoming retail locations will at least keep some builders active.

"It really should keep those in the construction trade busy," he said. "That'll be a good thing."