Copyright 
Lebhar-Friedman, Inc. Apr 2000| [Headnote] |
| Underserved markets are ripe far new development |
| [Photograph] |
| The Lakes Mall in Muskegon, Mich., slated to open in August 2001, has already attracted Sears, J. C. Penney and Younkers as anchors. |
With all the talk about the overdeveloped U.S. retail landscape, it's hard to believe there remains a number of underserved metropolitan markets. However, a diminishing demand for in-fill locations in tier-one cities coupled with the potential that exists in middle markets is prompting national retailers to explore previously unrecognized frontiers.
Unlike a secondary or tertiary market in which new development may have been considered and ruled out or postponed, new opportunities continue to be identified in unexpected "sleeper" communities.
"Finding underserved markets is a big part of our business," affirms Michael Lebovitz, senior VP mall projects of CBL & Associates Properties Inc., Chattanooga, Tenn. "We often work with national retailers to develop new centers in areas they have identiPied as being underserved. Muskegon, Mich., is part of the Grand Rapids MSA [metropolitan statistical area] and one of those few underserved markets in the country."
CBL is developing The Lakes Mall, scheduled to open in August 2001; an a 100-acre site in Muskegon. The family-oriented market encompasses a trade area of 240,000 people with average annual household incomes of $55,000. "The area is currently served by an older mall in downtown Muskegon and a power center that is about five years old," continues Lebovitz.
Sears plans to relocate from the downtown mall to The Lakes Mall, and J.C. Penney is moving from its freestanding location into the new development. Marking its entrance into Muskegon, Younkers is the third anchor slated for the first phase and provisions exist to add a fourth anchor as well as a cinema. A 25,000-sq.-ft. big box is also included in Phase 1 along with 15 acres of out-parcel sites.
Another bedroom community that is a retail development sleeper sits within 30 minutes of both downtown Atlanta and Hartsfield International Airport.
Henry County, Ga., has been ranked the fourth-fastest-growing county in the United States by the U.S. Census Bureau. Its population more than doubled from 1990 to 1999, topping 110,000 people, and it is expected to increase another 25% to more than 137,000 by 2004. In 1999, the average household income was more than $54,000 and is forecast to be $62,740 by 2004.
Once rural farmland, Henry County is home to Eagle's Landing, a large golf and country-club community, and is the designated site for two mixeduse developments that will construct hundreds of homes, creating additional demand for neighborhood shopping centers.
Similar pockets of opportunity exist around the country, from Wood Village, Ore., where Koll Development Co. of Newport Beach, Calif., is developing the 470,000-sq.-ft. Wood Village Town Center, to Pearl, Miss., part of the Jackson metropolitan area.
Riverwind Properties of Pearl, Miss., is developing a 200-acre retail center, The Crossings at Riverwind, which will feature 750,000 sa. ft. of open-air market space plus two power centers. Strategically located at the intersections of Interstate Highway 20, I-55, U.S. 49, U.S. 80 and Highway 468, the development expects to become the state's mecca for retail. The developer estimates a population of 450,000 people lives within a 20-minute drive of the shopping center site, and the Rankin County Chamber of Commerce confirms that the county has an average household income of $59,396.
"The total project is a comprehensive mixeduse development that dedicates 35 acres to office space and 100 acres to a residential component that will have more than 300 single-family homes," says Judy B. Hall, CEO of Riverwind Properties. "Another 25 acres will be developed with a grocery-anchored community center, and the first power center is scheduled to open the fall of 2001. Several businesses are already open,including Planet Rock, an indoor-entertainment facility for children; restaurants; hotels and Tinsel Town, the largest theater in the state with stadium seating."
Both a haven of history and a center of burgeoning economic development, Richmond, Va., is one of the country's most dynamic emerging markets.
"1999 marked a watershed change in Richmond's corporate profile," says John Woodward, marketing manager for the City of Richmond, Department of Economic Development. "Traditionally, the city has been known for its manufacturing companies such as DuPont, AlliedSignal and Reynolds. Last year, Phillip Morris was displaced from the position of being the largest private employer in Richmond by Capital One, the credit-card company that has been a pioneer in data mining. The manufacturing-intensive base is evolving into companies that are predominantly high-tech. More companies, such as White Oak Semiconductor, a joint venture between Motorola and Siemens, are making Richmond their home."
The professional demographics are enhanced by a core employment structure that includes government workers-Richmond is the state's capitol; medical professionals-MCV (Medical College of Virginia) operates one of the largest teaching hospitals in the region in Richmond; and attorneys-- two of the South's largest law firms practice from Richmond.
The city also serves the academic populations of local colleges and universities including the University of Richmond, Randolph Macon College, Virginia Commonwealth University and Virginia Union University. The total labor force in the metropolitan area exceeds half a million: Roughly 52% are male and 48% are female, and the median age is 35.6 years.
Woodward describes a renaissance in the downtown area where "huge tobacco warehouses are being converted into high-end residential apartments, which are attracting single professionals in their 20s and 30s who generally have above-average discretionary income. This new demographic has become a catalyst for retail and entertainment development in the central business district."
According to Woodward, the first commercial canal system in the United States ran through Richmond and has been restored recently, adding an attractive ambience and historic element to the downtown streetscape. La Difference, an upscale home furnishings store, converted a 45,000-sq.-ft. warehouse alongside the canal into a three-level retail destination in the revitalized "Shockoe" district-Richmond's new area for daytime offices and 24/7 entertainment and retailing.
"We're getting a critical mass of downtown residents who don't want to turn off the lights and roll up the sidewalks at five o'clock," he continues. "Ironically, just like families with children will choose to commute from suburbs into downtown offices, we're seeing a trend of reverse commuting where young professionals who work in high-tech office parks outside the city are choosing to live in Richmond's vibrant urban center."
In terms of investment, the biggest single project in Richmond is the $163 million expansion of the convention center. Intentions are to position the city in the same league with other mid-size cities such as Denver or Nashville, Tenn., which have become prime locations for large trade shows and conventions. The first phase of the expansion should be completed in 2001 and will encompass 610,000 sq. ft., including 180,000 sq. ft. of column-free exhibition space.
"National retailers like Banana Republic, Gap and 3.Crew will probably gravitate more to the historic Shockoe Slip area with its cobblestone streets, but the convention area is going to need an influx of hotel, retail and entertainment components," predicts Woodward.
| [Photograph] |
| The restored canal in Richmond, Va.'s revitalized Shockoe District is an ideal backdrop for lifestyle and niche retailers. |
National developers are quickly discovering the potential Richmond offers to retailers; Woodward alludes to a large project under consideration by Forest City Enterprises of Cleveland. While a spokesperson at Forest City confirmed the interest in Richmond, the plans were not mature enough to share details.
CBL & Associates Properties is developing a 450,000-sq.-ft. power center in Richmond that will serve the growing suburban neighborhoods. "We initially entered the Richmond market on behalf of Hannaford supermarkets because they saw opportunity in the area when they were expanding into Virginia and North Carolina," states Mark Mancuso, VP of CBL & Associates Properties. Two community centers were developed by CBL & Associates Properties to provide locations for the expanding grocer, both of which opened in 1997.
Chesterfield Crossing, the power center currently under development in Richmond; was also a direct result of retailer interest: "Home Depot contacted us," says Mancuso. In addition to the home Depot anchor, which opened Feb. 24, 2000, Chesterfield Crossing will include a WalMart Superstore, PETsMART, Fashion Bug and Friedman's Jewelers.
"We are continuing to look at other opportunities in the Richmond market," concludes Mancuso. "There is growth in virtually every section of the city."
My Research
