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Archive for Monday, October 15, 2007

Retail report pits shop vs. drop

Question of whether city is overbuilt open to interpretation

October 15, 2007

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New retail report leaves City Commissioners divided

City Commissioners continue to shop for an answer to the question of whether Lawrence is adding new retail space too quickly or too slowly. Enlarge video

Related document

Retail Market Report - 2006 ( .PDF )

Vacancy rates

Here are the commercial vacancy rates of several major shopping areas in the city. All the rates are based on data gathered in February. The overall citywide average was 6.7 percent.

Downtown: 8.6 percent

Sixth and Wakarusa: 14.2 percent

South Iowa: 4.9 percent

East 23rd Street: 9.4 percent

West 23rd Street: 4 percent

North Lawrence: 13.7 percent

Ninth and Iowa: 3.9 percent

15th and Kasold: 17.3 percent

19th and Haskell: 10 percent

15th and Wakarusa: 8 percent

Clinton Parkway and Kasold: 2.4 percent

Source: Lawrence-Douglas County Planning Department

City commissioners are still shopping for an answer to the question of whether Lawrence is adding retail space too quickly or too slowly.

A report by the Lawrence-Douglas County Planning Department certainly hasn't decided the simmering issue for commissioners.

To City Commissioner Boog Highberger, the report contains clear signals that the city might be building more retail space than its population can afford.

"The report is pretty clear that we have a very high amount of retail space per capita, and it is growing at a much faster rate than our population," Highberger said.

But to City Commissioner Rob Chestnut, the very same report says something much different. He said the report shows Lawrence does not fare well compared to Overland Park, Topeka and other communities when it comes to attracting visiting shoppers and keeping local shoppers in Lawrence.

"What it shows us is that we're seriously behind in comparison to a lot of other communities," Chestnut said. "I think there always has been a sense of that out in the community, but this is a good way to put some data behind it."

One point commissioners do agree upon is that it is important for the city to keep an eye on the retail market and not let it become overdeveloped. If that happens, the city could pay a heavy price.

"Businesses go out of business, stores become vacant, and vacancy causes blight," Highberger said of the possible consequences. "Blight is the concern. So many cities have really damaged their core areas by allowing unrestricted growth."

The data

The report - which is based on data gathered in February - estimates that 6.7 percent of all commercial space in Lawrence is vacant. Supporters of the notion that Lawrence can afford to add more retail space point to that number.

The 6.7 percent vacancy rate is considered to be below the latest national averages of 7.5 to 8 percent. It also is below the 8 percent level that Horizon 2020, the city's comprehensive plan - uses as a benchmark for a healthy market.

But the report also has disturbing numbers about how much new income city residents have to spend on retail purchases. The report found that the average annual income for Lawrence residents - after being adjusted for inflation - grew by only 1 percent per year during the time period of 2000 to 2006. That is the smallest growth rate since at least 1990. For comparison, income grew at an annual rate of 3.5 percent from 1995 to 2000, and at 1.5 percent per year for the period of 1990 to 1995.

The report also found that sales tax collections are growing at their slowest rate since at least 1990. From 2000 to 2006, collections grew by 0.6 percent per year. That's down from 1.7 percent per year from 1995 to 2000, and 3.8 percent from 1990 to 1995.

Community voices

The income growth and sales tax growth numbers are the most important to consider, said Kirk McClure, a Kansas University associate professor of urban planning who has hammered on the City Commission to restrict new retail growth.

He said both the numbers - along with slowing population growth - suggest that city commissioners need to be cautious about approving additional retail development.

"I think we're building more space than we can possibly support," McClure said. "In the process, we're hurting the one thing that is truly unique, and that is our downtown. That is really the one chance we have to boost our retail sales."

Supporters of adding retail space in the community concede the income numbers are not good. But they said that is an economic development issue related to the community's ability to attract high-paying jobs. But the slowdown in sales tax growth is related to Lawrence becoming a less attractive shopping destination.

In short, they say, Lawrence is losing business to other cities that offer the stores that shoppers want.

"None of this to me says that we're overbuilt," said Doug Brown, a commercial real estate agent with Coldwell Banker McGrew Commercial Real Estate. "What it says is that we certainly could stand to grasp more of the retail market."

But the report shows that Lawrence is attracting more shoppers than it is losing. It estimates Lawrence has about a 12 percent "pull factor," meaning that our retail sales are about 12 percent higher than what spending averages suggest they should be based on the city's population. That pull factor has been growing; it is up from 6 percent in 2003.

But Chestnut, Brown and others said it still pales in comparison to the pull factors of other communities. According to data complied by the Kansas Department of Revenue, Lawrence's pull factor ranks 16th out of the top 25 largest cities in the state. Lawrence's 12 percent pull factor is far below Overland Park's 65 percent. It also is below Lenexa's 60 percent, Topeka's 49, Salina's 47, Manhattan's 43, Hutchinson's 36, and Olathe's 33.

Highberger concedes that Lawrence's numbers probably could be better, but he said that doesn't mean the city should start approving large amounts of new retail. Instead it should be looking for unique retail projects.

"I think the only way to really bump that percentage up significantly is to provide new kinds of retail opportunities that we don't have now," Highberger said. "Just more of the same isn't going to change that number."

Comments

cowboy 7 years, 2 months ago

Come on LJW , who is the author of the report ? Good lord hire some journalists.

Richard Heckler 7 years, 2 months ago

Boog is on target. I speculate so many shop Topeka and the KC metro due to selection and pricing. The big name stores in Lawrence are downsized for a reason....the retail business is not here. WHY would consumers drive to Lawrence to shop downsized big box stores? Why would big name stores build larger stores in an extremely limited retail dollar market?

Once again there are only so many retail dollars available in small town Lawrence and building more retail outlets does not increase the local retail dollar availability. It creates economic displacement NOT economic growth thus more empty buildings thus higher tax bills for residents.

12,000-15,000 commuters likely spend retail dollars in Topeka and KCMO metro.

The money is in a new booming industry called " Green Collar" which is said to produce excellent paying employment that cannot be outsourced. These new industries may be developed around a "small business" venue that might not demand tax abatements. Small business keeps local dollars in the community. Lawrence has plenty of vacant space aka idle. No need to create more vacant space.

20 years ago when moving to Lawrence it was discovered there was something quite unique about this town. Not a Big Box shopping center in sight much less one at every intersection. It was decided that would be plenty easy to live with considering the proximity to KCMO metro and Topeka. Shopping locally is still the first order of business and if it cannot be found downtown so what. Either we do without,make a trip to KCMO metro at some point in time or shop online( a secret sales tax source that's gone untapped). KCMO metro is preferable to online.

Lawrence has a beautiful active downtown that some areas would die for. Larger metro cities are doing everything possible to restore vitality to their downtowns so why the continued effort to destroy downtown Lawrence by the leadership within the local real estate/development community ???

Lawrence leadership should begin to understand the value in taking care of existing resources such as downtown,older neighborhoods(send slumlords to the east coast ghettos to live),public school buildings,streets and sidewalks etc etc.

Richard Heckler 7 years, 2 months ago

Just because real estate speculators purchase property does not guarantee development will be allowed for it is NOT the duty of the taxpayer or local government to maximize profits for speculators.Speculating=gambling. Land speculators know these things. Actually this applies to all land owners.

New retail is to create NEW ADDITIONAL revenue and NEW ADDITIONAL employment for a community NOT merely spread current retail dollars to the point where nothing NEW or ADDITIONAL is realized. Certainly it is not to replace existing retail for nothing is gained. Otherwise taxpayers realize TAX INCREASES to cover the cost of additional demand on community services.

Specific projects should be accompanied with independent Retail Impact Studies,Economic Impact studies,Traffic Impact Studies etc etc. for very substantial reasons.

Godot 7 years, 2 months ago

Quoting the Sept 14 chat in the JW with the new director of Downtown Lawrence, Inc.:

"Jane Pennington: With the exception of one or two buildings, Mass Street stores do not stay empty long. There are new shops opening all the time."

I realize she thought she was highlighting a positive about downtown, but, actually, the desired scenario would be: there are very few vacancies because the businesses downtown are successful, and stable.

High turnover downtown means most of the new businesses are failing. That is not good for the individuals, the landlords, the city or the taxpaers. It indicates that the city should not be targeting resources toward maintaining this bad situation. It also indicates that the "unique" stores that Boog and McClure value so highly are the ones that are failing.

Godot 7 years, 2 months ago

BTW, whatever became of the new grocery store in the Casbah space? Has it opened?

Godot 7 years, 2 months ago

With a pull factor of only 12%, and a population under 100,000, it is no wonder Lawrence cannot attract national retailers. Why would they waste their time and resources here?

justthefacts 7 years, 2 months ago

Here's a novel idea - how about we tell the government to stop trying to micro-manage private lives and businesses, and let business owners (or prospective new business owners) decide where and if to open a new enterprise? If they fail, they'll know the city inhabitants can't or won't support them (for whatever reason). IF they succeed, they will know enough of the the city inhabitants approved. Since we all love zoning laws so much (when they apply to other people) we can set up retail zones where such businesses are allowed and are not allowed to exist. But beyond that, isn't it really something government doesn't need to control. Isn't determining what businesses succeed an area where the market forces will best decide what works and what doesn't (and where)? If we DO have vacant spaces popping up all over, then the people who own those properties gambled (and lost) - and can sell the space to someone else who has more savy (maybe they'll be local folks who will open another candle store)?

Richard Heckler 7 years, 2 months ago

Business should not expect tax abatements from taxpayers.

The community cannot fund its' expenditures by property tax alone and no community can tolerate economic displacement. Infrastructure is on the backs of the taxpayer soooo tax dollars are also at risk and without tax dollars no development can be successful.

Thus far 25 years of expanding the tax base has consistently brought personal property tax increases of more than 4%..... a sign that some development is not paying back.

The Casbah Market is still on track with extraordinary woodwork taking place. New equipment is on order as well as some donations from The Merc.

High turnover indicates a business is not doing well thus not generating a level of tax revenue to sustain city expenditures. Retail and residential vacancies are hard on local wallets. Too much retail spreads retail dollars toooo thin.

gccs14r 7 years, 2 months ago

Having a very high sales tax rate doesn't help, either. Why buy anything in KS when the Internet is a few keystrokes away?

Lindsey Buscher 7 years, 2 months ago

The City Commission's reasoning seems a bit fishy to me. They claim that they are concerned with "pull-factor" and so they need more retail space to bring in more dollars. If that is really the concern, then HOW IS Wal-Mart SUPPOSED TO ATTRACT PEOPLE TO SHOP IN LAWRENCE? Of course Doug Brown, a commercial real estate agent, is going to say that we aren't overbuilt and that Lawrence "could stand to grasp more of the retail market." Doug Brown doesn't care about Census numbers showing Lawrence's slowing population growth. Doug Brown doesn't care about what happens to existing retail space. Doug Brown is concerned with "grasping" more profits for himself.

Bud Stagg 7 years, 2 months ago

It's not good retail space if businesses don't make it in that location. Downtown sucks except for resturants and bars, then it's unique. 100 year old buildings with bad parking do not attract customers. Tanger and the riverfront malls didn't make it because of Location, location, location. You have to build things close by where the people live, you have to make it easy to get in and out and you have to have bright, well lit, easy to find products. Why are our city leaders trying to tell retail people how to do their jobs? This is why no company wants to locate in Lawrence, we tell them where they can build instead of letting the customer (the incoming business) tell us what they want.

This town is too stuck on itself. It's regressing and most of you can't even see it. We need outside developement or else we will become inbred. It may be too late.

Lindsey Buscher 7 years, 2 months ago

Yeah! Those damn "no-growthers" at the U.S. Census Bureau!

lunacydetector 7 years, 2 months ago

exactly where is all this retail space that has been built in the past 6 years anyway?

Lindsey Buscher 7 years, 2 months ago

Am I taking your meaning wrong, who are your "no-growthers"?

Lifelong_Lawrencian 7 years, 2 months ago

Merrill says: "Thus far 25 years of expanding the tax base has consistently brought personal property tax increases of more than 4%:.. a sign that some development is not paying back."

Lawrence still has one of the lowest mill levies in the state. Property taxes increase because valuations increase, not rates. This means exactley the opposite. If you purchased real property in Lawrence 25 years ago, your investment has almost certainly paid off very well, all the while you have paid for the right to live in a great community.

Would you rather have a situation where you buy property and the value decreases, which causes the community to reduce services or increase tax rates? Look around the rest of Kansas and be happy with the way things are in Lawrence.

average 7 years, 2 months ago

There are good reasons the community has to consider retail. First, to continue to build infrastructure further out and further out costs a lot of money. This is not only the direct cost of building a road or a water line, but also improving existing streets to get traffic to new edge-of-city shopping, building new water plants, new firehouses, more cops, more snowplows (or decreased service), etc. Second, empty storefronts become an eyesore, attract crime, and depress retail viability for neighboring properties.

It would be some interesting investigative journalism to figure out why some places stay empty for years (old Wild Oats, Reuter Organ, Brown Bear Brewery, several places in North Lawrence, two corners of 9th and Iowa, Food-4-Less). One would think that some rent would be better than year-after-year of no rent at all.

Lifelong_Lawrencian 7 years, 2 months ago

I guarantee you Doug Brown knows exactley how much retail space there is available.

I don't think it is any secret that there is lots of empty office space in town and that most restaurants and bars are really hurting. The economy in town and nationwide is not doing well and this is where folks trim their budgets first.

OTTR, an article like that would be interesting if they also compared the vacancy rate with past years and other communities nearby, like Overland Park or Topeka.

But the likely answer would be that we are not doing so well even compared to these based on the latest census data. The question is why? Is it because our land is over priced, or gas prices are too high to justify the commute, or that our city just is not friendly to developement? I suggest it is all of the above. I don't think that people have generally decided that they no longer like our city. Lawrence is still a great community--an oasis in a vast cultural desert. But perhaps people can no longer afford such an intangible luxory.

TriSigmaKS 7 years, 2 months ago

As someone who just moved to Lawrence a few months ago from out of state, I have a few comments. I did however grow up near the area and went to grad school at KU. The reason I do not spend the majority of my income in Lawrence? The shops that I prefer to spend money at are not here in Lawrence, but are in Olathe and Overland Park. I know I am not in the full majority, but if you ask some college students too they may agree.

I don't really shop downtown, except for a few stores, but mostly go there for the restaurants, I think even more restaurants, local or regional (meaning not big chains), would be amazing. What types of shops in Lawrence do I want? Ann Taylor Loft, Nine West Shoes, Banana Republic, Dillards or Macy's, Williams Sonoma, White House Black Market, J Crew, ULTA and probably a few others. A mall might be nice to keep all of these places in one central location. Restaurant wise a few more national chains outside of downtown would be nice. PF Changs or Pei Wei, Outback Steakhouse, 2 Guys Grille (it's a local/regional joint in NC), Atlanta Bread Company, Carraba's, Macaroni Grill, Cheesecake Factory, and maybe a few others. I'm truly for a good balance of local places and chains. I would prefer not to have to drive to Johnson County for these places. Maybe the national places I have listed could develop more out at Iowa and 33rd area and we could encourage more local places downtown and around town.

I am not a city planner, not an expert in this field, but I truly think we could develop and please all in one way or another. I believe in the local business and support them often, but when it comes to certain goods or restaurants, I prefer national chains too.

gccs14r 7 years, 2 months ago

Why try to replicate the soulless JoCo retail scene here? Anyone who wants that life is welcome to move a half-hour down the road.

Lifelong_Lawrencian 7 years, 2 months ago

TriSimga-

Many of the stores you refer to demand a certain demographic that a town under 100,000 simply cannot support. City planners have little to do with attracting these businesses, developers and commercial realtors do. They typically do the demographic studies and find/create the sites for the location of these retailers.

Your comments touch upon another problem our city is facing. A town the size of Lawrence is stuck between a rock and a hard place. It is large enough that it needs to attract these main stream retailers for the tax dollars they bring and to compete with surrounding communities, but we are not yet big enough that they will locate here.

Godot 7 years, 2 months ago

Lifelong is right; the major chain stores want to see a population of at least 100,000, with some decent "pull" from other cities. Lawrence just doesn't cut it.

gccs14r 7 years, 2 months ago

The runaway retail out West and South should have never been approved. We don't need to make a bad situation worse.

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