The latest efforts to build a new home improvement store in Lawrence already are on shaky ground.

The city’s Planning Department is now recommending city leaders reject a proposal by Menard’s to build an approximately 190,000-square-foot home improvement center on a vacant site just east of Home Depot at 31st and Iowa streets.

“We’re basically dealing with a policy issue of whether we want to continue to focus our retail development along the Iowa Street corridor, or whether we think now is the time to branch out along another arterial road, like 31st Street,” said Planning Director Scott McCullough.

The recommendation for denial goes to the Lawrence-Douglas County Planning Commission at its meeting at 6:30 p.m. Monday at City Hall. Ultimately, it will be up to the Lawrence City Commission to make a final ruling on the proposal.

Recommendations from the city’s professional planning staff, though, usually carry some weight with commissioners. McCullough said his department is concerned about the proposal on two fronts:

• If retail development is allowed on the proposed site — which is where the Gaslight Mobile Home Village was located — it could set a precedent for more retail development eastward along 31st Street. The city’s comprehensive plan calls for that area to be residential in nature.

• Data is beginning to show, McCullough said, that the supply of retail space in Lawrence is starting to outpace the demand for retail spending in the city.

That portion of the city’s analysis may spur debate. McCullough conceded the city’s retail market analysis for the project is using vacancy rate data and spending data from 2010, when the economy was mired in a deep downturn.

Since 2010, numbers have indicated robust activity in the city’s retail market. The city’s sales tax collections in 2012 grew by more than 5 percent, the highest annual increase since the late 1990s. A key retail statistic kept by the state — the city’s retail pull factor — increased by about 7 percent during the time period.

“There are some mixed issues we need to work through here,” McCullough said.

The difference in data could be significant. The city-produced retail vacancy rate study estimated the retail vacancy rate in 2010 was 7 percent. But a privately produced study by the commercial real estate firm Colliers International estimated the retail vacancy rate in 2012 at 5.4 percent. Due to funding and staffing issues, the city hasn’t produced a retail vacancy study since 2010, but McCullough said his office is scheduled to publish one next month.

A Menard’s spokesman on Friday didn’t have any immediate reaction to the recommendation for denial.

The store is expected to employ about 250 people. The project also proposes a future phase that would accommodate up to six smaller stores or restaurants on the outer edge of the site.

If city officials reject the Menard’s plan, it will be the second time in the last couple of years the city has rejected a proposal to build a major home improvement center. In late 2010, the city rejected a plan for Lowe’s to build a store near Sixth Street and Folks Road.

That project drew stiff opposition from neighbors and from people concerned about traffic in the area. Thus far, that hasn’t been the case with the Menard’s project. McCullough said a neighborhood association hasn’t filed objections about the plan. The 42-acre site — which currently is zoned for dense, multi-family apartment development — is adjacent to one single-family house on the east and three single-family homes on the north. Most of the site abuts Ousdahl Road, which will separate Menard’s and the existing Home Depot store.

McCullough said the idea of having two home improvement stores right next to each other did not factor into the recommendation for denial.

Currently, there is only one vacant site in the city that is zoned to accommodate a store as large as the one proposed by Menard’s: the Mercato development at the northeast corner of Sixth Street and the South Lawrence Trafficway.

But Menard’s officials previously sent a letter to city officials saying they had no interest in that site because of a lack of housing near the location. The site is just south of where the city plans to build its $25 million recreation center, which it hopes will spur development in the area.