Retail report pits shop vs. drop

Question of whether city is overbuilt open to interpretation

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.”