NORTH BAY - Retail real estate is working through a combination of large retailers' interest in expanding their presence in the region along with pressure on stores affected by lower consumer spending on homes and other big-ticket items.

About 1 million square feet of retail space in four planned shopping centers remain on hold until at least April for the Petaluma City Council to adopt a delayed update to its central land-use planning document. Meanwhile, major retailers are eyeing additional locations including San Rafael, Novato, Napa, Vallejo and Santa Rosa. Even more opportunities could emerge with a resolution to Santa Rosa's sweeping yet legally embroiled Gateways redevelopment project.

At the same time, vacancy rates of less than 5 percent and high construction costs have pushed rents in some of the newest retail space as high as $5 a square foot per month, and a number of retailers are feeling the pinch of a slowdown in consumer spending.

"It will be an interesting year," predicted Mark Koenig, NAI BT Commercial partner in the Terranomics retail division. "It will bring adjustment in pricing for sale and lease and what sellers can expect to get for their properties."

Retailers are pushing back against rents, according to Lois Codding, vice president of Codding Enterprises. The Rohnert Park company owns retail and office space in Rohnert Park, a regional mall in Merced and a half-stake with shopping center giant Simon Property Group in the Coddingtown regional mall in Santa Rosa.

"Many retailers that were expanding now aren't and are in a wait-and-see mode before they do any more," Ms. Codding said.

This is mainly an issue for higher-end apparel retailers, so Ms. Codding has been marketing to fast-food and lower-end food chains.

"It's definitely an issue for moms and pops with mortgages, and most of them rely on loans to expand their businesses," she said.

She noted that it's less of an issue for a regional shopping center such as Coddingtown, where renovations toward converting the mall back to what is now known as a lifestyle center are set to begin with a new Whole Foods Market store this spring.

David Simon, CEO of the Indianapolis-based retail real estate investment trust, told analysts during an earnings conference call Feb. 1 that occupancy at regional malls, lifestyle centers and premium outlets, such as its Petaluma and Napa centers, increased 30 to 90 basis points last year and average rent per square foot increased about 5 percent in 2007.

"Most of the retailers we talk to are well-capitalized and pretty bullish and recognize that we're going through a cycle and have not changed what they do with store openings in 2009 and 2010," he said.

Lowe's Home Improvement is looking to open one of its big-box stores as an anchor for a 36-acre center proposed on McDowell Boulevard in Petaluma, where projects have been delayed as the city revised its General Plan update to address water and greenhouse gases. Meanwhile, environmental studies have begun on a Lowe's freestanding site where a Home Depot originally was planned on Santa Rosa Avenue in south Santa Rosa.

And the Home Depot continues to be interested in a second Marin County store, located in Novato, following a fallout with the developer of a property there called Hanna Ranch.

Retail construction in Novato has been brisk with Grosvenor's Hamilton Gateway, a Safeway-anchored neighborhood center on the east side of Highway 101 and a Whole Foods Market-anchored project with residential condominiums above on the west side.

Environmental review also is under way for a Target store in San Rafael.

Whole Foods recently opened stores in Napa and Sonoma and is looking to open one in Mill Valley.

New retail in Napa includes ground-floor space at The Wiseman Company's Main Street West, Channel Properties' The Riverfront, CDI Development's Napa Square as well as 15,000 square feet at the Inn at Town Center and 40,000 square feet rapidly filling at Oxbow Public Market.

Tesco's U.S. subsidiary, Fresh & Easy Neighborhood Market, announced 2009 openings in Napa, Vallejo, Fairfield and 15 other sites in the Bay Area and continues to look for sites in Sonoma and Marin counties.

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