By the BF Staff
From the March/April 2016 Issue
Retailing involves buying large quantities of goods and selling them in smaller quantities to consumers for a profit. Retail accounts for more than $2 trillion in total GDP impact with consumer spending accounting for more than two-thirds of the U.S. economy. The health of this industry is a vital economic indicator since sales tend to be driven by personal income, consumer confidence and interest rates.
The retail sector in the United States includes well over three million retail establishments and according to a report conducted by PricewaterhouseCoopers LLP, it is the largest private-sector employer in the U.S., supporting one out of every four jobs. In addition to directly providing 29 million retail jobs it supports more than four million logistics jobs; four million management and administration jobs; two million healthcare and service jobs; almost two million finance, insurance and real estate jobs; and 800,000 technology jobs.
Retail covers everything from Internet sales and automotive dealers, to convenience stores and food markets, to vending machines and apparel. And while different types of retailers attract different types of consumers there’s no question that everyone is buying something.
The National Retail Federation (NRF)—the nation’s largest retail trade group—recently released its 2016 economic forecast. According to the NRF, retail industry sales (excluding automobiles, gas stations and restaurants) will grow 3.1 percent this year, .4 percent higher than the 10-year average of 2.7 percent. It also expects non-store sales to grow between 6 percent and 9 percent.
“Wage stagnation is easing, jobs are being created and consumer confidence remains steady, so despite the headwinds our economy faces from international developments—particularly in China—we think 2016 will be favorable for growth in the retail industry,” said NRF President and CEO Matthew Shay. “All of the experts agree that the consumer is in the driver’s seat and steering our economic recovery. The best thing the government can do is stay out of the way, stop proposing rules and regulations that create hurdles toward greater capital investment and focus on policies that help retailers provide increased income and job stability for their employees.”
NRF Chief Economist Jack Kleinhenz said that despite 2015’s volatility, “the economy continued to reduce unemployment, raise wages and actually increase real GDP by 2.4 percent. Lower gas prices are creating more discretionary income to save, pay down debt and spend on travel, eating out and personal services. Retailers have benefited as well, and continue to find ways to compete and succeed in a very cost-conscious environment.”
CAPE CORAL: PRIMED FOR RETAILERS
Cape Coral is positioned for strong commercial growth in 2016 and beyond. Cape Coral has 162,000 shoppers—and they’re looking to keep it local.
The largest city in Southwest Florida is prime for retail operations planning to expand into a market that is home to ready buyers and in a subtropical climate with close proximity to major urban cores that draw consumers.
Ranked among the best places to live and do business, and located in tax-friendly Florida, Cape Coral should be retailers’ next location for expansion. Why? The sprawling, 120-mile city—the third largest geographically in the state—is only 42 percent built out. This means that there are wide-open opportunities for finding a prime location in a neighborhood with demographics suiting your goods and services. Smart retailers want to get in on the growing excitement. Cape Coral was built as a bedroom community, but as much as 60 percent of the population commutes out of the city for their jobs, and some retail sectors are experiencing high leakage rates. These commuters want to shop, work, play and stay within their city limits, and new retail opportunities will be filling this void.
An ideal year-round climate, affordable real estate and competitive cost of living have drawn national attention. Forbes magazine reported in 2015 that the Cape Coral metropolitan area is No. 3 nationwide for projected job growth, according to Moody’s Analytics. That’s precisely why—from the desire of its residents—the city’s Economic Development Office (EDO) team is recruiting all types of retail outlets and shopping destinations, from world names to small boutiques, along with other compatible ventures that create a rich businesses environment.
Keys to the Cape’s Forecast
- As the 10th largest city in Florida, Cape Coral is an ideal location for relocating businesses due to its large, talented and available workforce.
- Numerous existing retailers in Cape Coral have experienced tremendous annual sales and, in some instances, are the largest grossing stores within their respective chains. This reflects the retail market’s vast potential. Cape Coral is seeking to take advantage of this potential and to address the leakage rates associated with certain retail sectors.
- A new conference center is being built at the Westin Hotel at the waterfront, resort-style Tarpon Point community, which will draw visitors from around the nation.
- Efforts are underway along Cape Coral Parkway to create a pedestrian-friendly town center with plans for a Village Square, a mixed-use project featuring office, retail and residential space.
- The city boasts nearly 400 miles of navigable canals, and is surrounded by the Gulf of Mexico and the Caloosahatchee River, part of the federal Intracoastal Waterway, bringing boaters from around the country. This key amenity also inspires homeowners and business owners. Marine services, recreational outfitters for kayaking, fly fishing and other activities, pool supply stores, tackle shops and boating-supply stores can count on residents’ love of being outdoors and on the water.
- The American Association of Retired Persons estimates that 10,000 baby boomers a day will be turning 65—retirement age—for the next 14 years. Cape Coral ranks No. 8 in the top 10 best places for retirement—the only Florida city to make the list. (Bankrate, 2015)
Investment Zones & Distinct Communities
The Cape Coral Economic Development Office has designed several investment zones to enhance and tailor growth with a visionary outlook. Here are few that are ideal for retail because of their locations and high traffic counts:
Veterans Investment Zone. The 240,000-square-foot Lee County VA Healthcare Center on Diplomat Parkway has exceeded its original projections in terms of patients, visitors and service levels. This facility is drawing thousands from throughout the region; an estimated 260,000 veterans live in Southwest Florida. Nearby is a new 15-acre Cape Coral Army Reserve Center. One component is the 222,000–square-foot Patriot Plaza planned for development on more than 430 acres of undeveloped land within one mile of the regional VA Healthcare Center.
South Cape has enjoyed rapid growth in the past year with the opening of several new, vibrant entertainment venues, restaurants and microbreweries.
Pine Island Road Commercial Corridor was completed last year, ready for innovators who want get in on the ground floor of a major commercial destination.
Shops at Surfside is located amidst the highest income demographics and the highest averaged priced home areas in Cape Coral, featuring 185,000 square feet on 21.75 acres.
Concourse at Cape Coral is a 171-acre parcel attractively located near Cape Coral, Fort Myers and Punta Gorda. Owned by the city, it is seeking public-private partnerships for development, including 55 acres for shopping and 50 acres for entertainment nestled in unspoiled nature with water views.
The Cape Coral Economic Development Office (EDO) is working on several fronts to attract new investors and businesses to the city, facilitating the expansion of existing businesses, creating new and improved employment opportunities and developing and promoting economic incentives. The Cape Coral EDO team tracks emerging industries, demographics, market conditions and workforce data to provide solid resources for startups, relocations and expansions.
QUITE SIMPLY, HESPERIA WORKS FOR BUSINESS
Hesperia is a pro-business community in Southern California eager to welcome prospective developers, industrialists, retailers and new business owners. Hesperia will assign a team of professionals as strategic partners, making your transition here expedient, affordable, productive and profitable. It is no wonder that national brand retailers choose Hesperia as their first location in the High Desert.
Hesperia is located along both the I-15 and SR-395 highways, in the expanding High Desert region of Southern California. With 17 miles of freeway frontage, Hesperia offers easy access to 431,000 High Desert residents and traffic counts on I-15 in excess of 200,000 cars per day. With strong economic indicators in its favor and having developed a diverse toolkit of business friendly programs and strategies, the economic development team for the city of Hesperia is primed for prosperity.
Increasingly, retail businesses and restaurants are staking their claims in the flourishing City of Hesperia, located in the Inland Empire. One of Hesperia’s top priorities is to bring attractive lifestyle options to its ever-growing base of residents with household incomes that average $65,774.
Even during the economic downturn of the recent past, Hesperia has demonstrated strong growth and astute planning, keeping its ribbon-cutting shears sharply honed. One reason is the impressive $1.4 billion retail potential in the I-15 and Main Street trade area of the city encompassing Lewis Retail Center’s High Desert Gateway and the Marketplace on Main.
The High Desert Gateway, a 349,048-square-foot community shopping center anchored by a 180,000-square-foot Super Target, will soon break ground on Phase II. The Marketplace on Main, anchored by a 195,350-square-foot Walmart Supercenter, has space available for a second major retailer to develop 180,000+ square feet. Both of these centers contain some of the top-producing retailers and restaurants in the state.
Hesperia finished 2015 with 93,554 square feet of new, expansion and tenant improvement projects as tracked by the Economic Development Department. Six projects—Petco, Pacific Eye Institute, WaBa Grill, AM/PM, Hesperia Speedwash and another first-in-the- region Habit Burger Grill—contributed $24.6 million in taxable sales to Hesperia’s economy, along with 137 jobs. Also included was a two-unit 9,985-square-foot, multi-tenant office building on Walnut Street at Hesperia Road.
In 2016 development activity in the city began with stellar opening sales for the first-in-the-region Tractor Supply Co. (TSC), located west of Interstate 15 just past the 533,000-square-foot High Desert Gateway on Main Street. With a grand opening in January less than five months after breaking ground, TSC reported initial sales for their 18,800-square-foot retail store exceeded company projections by 300 percent.
Joining Habit Burger Grill in The Marketplace on Main, anchored by the Walmart Supercenter, are Pieology Pizzeria, Yogurtland, Metro PCS, Great Clips and a nail salon in the 14,000-square-foot multi-tenant building along Main Street at Escondido. Pieology opened in early February to rave reviews for their custom pizzas and fresh salads; Yogurtland, another first for the region, celebrated their ribbon cutting in February as well. Look for future Hesperia business development in 2016, including a national grocer, a national automotive repair franchise and manufacturing and logistics companies.
Located in a robust market with highly desirable market characteristics, coupled with vast market intelligence to make their case to retailers, and a crack team to get them to opening, it is clear Hesperia works for business.
“You won’t find any other City that works as closely or as openly with a developer as Hesperia’s Economic Development department. We work very hard to find tenants for our new shopping centers and we actively work on a daily basis with developers. We get more work done quicker because of this relationship; we just go straight to the bottom line,” said Management Analyst Rod Yahnke.
Commercial, industrial and office properties abound throughout Hesperia, and this pro-development, customer service-oriented City is serious about bringing your business to Hesperia. To see how Hesperia can work for you, contact Economic Development Analysts Lisa LaMere and Rod Yahnke by e-mail at [email protected] Appointments are now being scheduled for ICSC’s RECon in Las Vegas, May 22-25. Find them in Booth S494P.
RETAIL SEGMENT LEADS THE COMMERCIAL MARKET IN BRANSON, MISSOURI
While often referred to as the “Entertainment Capital of the World” or the home of world-class family-friendly attractions, amusement and water parks, many residents and visitors to the Branson area describe the breathtaking view of the scenic Ozark Mountains and share stories of outdoor adventures across a variety of hiking, zip-lining experiences or water sports activities on one of Southwest Missouri’s three recreational lakes. The region has become a premier golf destination in the United States as the area is home to the PGA Tour Champion Legends of Golf, and most recently earned two of five top places in Golfweek’s 2016 “America’s Best Courses You Can Play” with Branson Hills (formerly named Payne Steward) ranking #1 in Missouri and Buffalo Ridge Springs ranking #3. It goes without saying that quality of life is second to none, especially considering the quality of the schools, its local healthcare provider—CoxHealth Branson—ranking #1 in patient outcomes, access to seven major universities and colleges within a 45-minute commute, along with a vast number of sports and recreational activities for all ages. But what about the booming retail market that is a major contributor to Branson’s billion-dollar economy?
Branson recorded a 4.4 percent increase in its one percent sales tax collections with a record eleven million dollars in 2015. Much of this can be attributed to the success of the retail shopping market in Branson. Branson is home to not just one, but two open air outlet malls featuring more than 70 name-brand shops with discounts of 30 to 70 percent off retail prices. Tanger Outlets is home to designer shops like Coach, Fossil, Oakley, Eddie Bauer, Anne Taylor, Under Armour, Nike and even the enchanted Disney Store, and is a shopping mecca for local region shoppers and seasonal visitors to the area. The second outlet mall, the Shoppes at Branson Meadows, is another outlet mall where shoppers can find great savings on home décor, kitchenware, cutlery, tools, clothing and more, and catch a movie at the Branson Meadows Cinema before dinner on site.
The Branson Landing is another flourishing shopping district, and is one of Branson’s most-visited destinations located between historic downtown Branson and Lake Taneycomo. The Branson Landing offers more than 100 storefronts for dining and shopping along an open-air promenade and lakeside boardwalk. The shopping center is capped on the north end by the Belk department store and by a landmark Bass Pro Shops store on the south end. The crown jewel of Branson Landing is its town square—an open plaza at the center of the mall, featuring a $7.5 million fountain show with lights, fire, water and music where spectators are awed by the choreographed display of 120-foot fountain geysers and fire columns that interplay with lights and favorite musical hits. Shoppers find everything from jewelry, gifts and apparel, to housewares, sports-fan favorites and bass boats. Favorite retail chains like Belk, Bass Pro Shops, White House Black Market, Chico’s, Christopher & Banks and Famous Footwear are complimented by the availability of unique boutiques and specialty shops, among locally owned favorites like Branson Quilts, Dove Olive Oil and Gifts of Distinction.
Branson’s retail market continues its upward trend. “Recent year end reports show that Branson’s retail segment is outperforming all major commercial segments,” says Steve Critchfield, CCIM, broker and partner of Commercial 1 Brokers in Branson, Missouri. “The new Lakeside Shops retail center at the Landing was added to the inventory in the fourth quarter of 2015, and the tornado-damaged Branson Mall also has been put back on the market. The commercial portion of the new Ballparks of America complex totals approximately 150,000 square feet and is expected to be added to 2016’s retail inventory.”
Branson began to see signs of expansion in the retail segment in the fourth quarter of 2015 when the market added 116,752 square feet in the year with a total of 55,115 square feet of positive absorption for the year. Vacancy rates bumped up slightly in the year from 12.66 percent to 13.06 percent accounting for the added inventory. Market wide vacancy rates have remained fairly level at approximately 12 percent for the last five years. The vacancy rate only began to tick up in 2015 as new inventory was added to the market.
“At the beginning of 2016, there is at least 1,903,654 square feet of retail inventory inside the city limits of Branson,” Critchfield continues. “Over the next two years, we will see a large number of high profile lease renewals as many national tenants reach the end of their 10 year leases that were established during Branson’s last major expansion in 2006 and 2007.”
Overall, market rents remained flat with Class “A” properties rates of $25 to $40 per-square-foot NNN. Class “B” properties located on the strip reported rates of $17 to $21 per-square-foot NNN and properties off the strip report $8 to $10 per-square-foot NNN. Class “C” properties are available from $6 to $7 per-square-foot NNN citywide.
Over the last two years, the region has begun adding Hollister properties to the available sites database. Significant growth is occurring at Hollister’s Highway 65 interchange with the addition of newer retail and lodging properties being established. Six properties are available in this area for a total of 137,324 square feet with a 39.73 percent vacancy rate. The greatest majority of vacancies are found in Hollister’s Southtowne Center, and Hollister’s leasing rates tend to equate to those located “off the strip” in Branson, ranging from $8-$10 per-square-foot NNN. The opening of the new 245,000-square-foot Menards will certainly generate additional commercial development in the area, and pad sites in front of the new retail center are being offered at $10 per-square-foot. A new 94-room LaQuinta Inn & Suites hotel property expects to attract investment interests for new fast food and dining establishments along with expanded retail developments in near future.
For further information about the retail market opportunities in Branson, Missouri, contact economic development agency Taney County Partnership, Jonas Arjes, Executive Director at [email protected] countypartnership.com or Steve Critchfield, CCIM, Partner—Commercial One Brokers at [email protected] Or visit www.taneycounty partnership.com and www.commercial onebrokers.com for specific demographic profiles and site related data.