Advertisement

LJWorld.com weblogs Town Talk

Menard's project highlights city rule on vacant space; a look at how Lawrence ranks in state retail report

Advertisement

Build it, and it will be empty. That's the motto of Lawrence, at least in one way.

City planners will be reminded of that tonight. The Lawrence-Douglas County Planning Commission will consider a proposal by Menard's, the large home improvement chain, to build a 190,000-square-foot store just east of 31st and Iowa streets. As we previously reported, the city's planning staff is recommending denial of the proposal.

But you may not be aware of one of the reasons the project has received a negative recommendation: When large retail projects are proposed in the city, planners are required to look at a retail market analysis to determine what the city's retail vacancy rate will be after the project is built. The way the rules are written, the vacancy rate is to be calculated by assuming the new project will be 100 percent vacant.

So when city officials do the calculations for this project, they put aside the fact that Menard's has no plans to build a 190,000-square-foot building and then leave it empty. Instead, the city adds the 190,000 square feet of the new store onto the city's estimated amount of vacant square footage, which stood at 643,000 square feet the last time it was calculated, in 2010.

When the city planners add on the 190,000 square feet, that pushes the city's supposed vacancy rate to 8.4 percent from 7 percent — which is just above the 8 percent total that is supposed to be a red flag when it comes to vacancy rates. According to a planning staff report, if you add in the approximately 65,000 square feet of smaller retail space proposed to be built along the outer edges of the Menard's project, the vacancy rate would jump to 9.6 percent.

But the city's planning rules also suggest planners go a step further. The city staff looked at all the retail zoning that currently is in place in the city, but doesn't yet have any buildings on it. That totals about 932,000 additional square feet. The city then makes the assumption that all of that will be built, and then be completely empty. That produces a frightening vacancy rate of 17.8 percent.

Planners, of course, don't think people are going to build large retail buildings without first having a tenant to occupy them. The city's planners understand the city's building market better than most because they are on the front lines of development proposals. But already I have heard people complaining about the city's Planning Department and why it would make this type of assumption. Well, city planners get the thankless job of being a referee in the city's politically charged development arena.

In other words, the job of a planner is to apply the rules to the project — not to rewrite the rules. Rewriting the rules is the job of city commissioners, and the rule that requires the city to assume large new retail buildings are going to be vacant has been on the city's books for at least the past decade.

Its days may be numbered, though. Scott McCullough, the city's planning director, told me the process has begun to change the rule. But it won't reach the City Commission in time to be considered for the Menard's proposal.

The rule change probably will get some opposition as well. There is certainly a group of local citizens that is very convinced the city's retail scene is overbuilt. They argue that even though a new Menard's building won't be empty, the addition of that much retail space in the city will cause an approximate amount of retail square footage elsewhere in the community to go vacant. That theory is how the rule got put in place to begin with.

In other words, the way the city's rules are written right now, retail is assumed to be a zero-sum game. For every one square foot of new retail space that comes into town, you must assume one square foot elsewhere will become vacant. Maybe that is the case in some economic climates. But maybe it isn't the case in other economic conditions.

What's certain is that retail zoning requests are a judgment call. The first round of judging will begin tonight at 6:30 p.m. at City Hall, when the Planning Commission meets. Ultimately, city commissioners will make the final decision on the Menard's request.

• One other piece of information that was included in the city staff's report was a mention of a state report that ranks how Lawrence's retail scene is doing compared to other Kansas cities. It is called a “pull factor” report, and it is basically a look at how Lawrence's per capita sales tax collections compared to the statewide average. It is called a pull factor because it is assumed that cities with averages much higher than the state are “pulling” customers from other communities to shop.

It is a perfect statistic for retail developers because it can be manipulated to fit the situation. When the pull factor is low, it can be argued that more retail development is needed in order to stop the amount of Lawrence residents who go outside of the city to shop. When the number is high, it can be presented as evidence that retail demand is high and the market can support additional retail development.

But the numbers are interesting because they do a good job of showing how Lawrence's per capita spending stacks up against other cities. The most recent report, which is for the state's 2012 fiscal year, shows Lawrence's numbers have rebounded. The city's pull factor was 1.07, which means it is 7 percent higher than the statewide average. As recently as 2000, the city's pull factor was .99. Going back farther, the city hit a high-water mark of 1.13 in 2000. So, we're somewhere in the middle of the range but trending upward.

Here's a look at how other large towns in the state fared. I'll leave the analysis up to you: Lenexa: 1.52 Overland Park: 1.51 Salina: 1.47 Garden City: 1.47 Manhattan: 1.40 Leawood: 1.40 Topeka: 1.37 Hutchinson: 1.27 Liberal: 1.23 Dodge City: 1.22 Olathe: 1.18 Pittsburg: 1.13 Junction City: 1.12 Wichita: 1.11 Fort Scott: 1.09 Coffeyville: 1.08 Emporia: 1.08 Lawrence: 1.07 Parsons: 1.05 Shawnee: .93 Atchison: .89 Kansas City: .86 Newton: .87 Leavenworth; .73 Prairie Village: .64

Comments

Rick Aldrich 1 year, 8 months ago

BLAH! BLAH! BLAH! Build it and They Will Come. the people have spoken.

MarcoPogo 1 year, 8 months ago

You mean like all the empty store fronts in the buildings right in front of Best Buy?

workinghard 1 year, 8 months ago

Those are empty because the city idiotically made an agreement that nothing could go in there that would compete in any way with Best Buy or Home Depot. In other words, not much. The new ATT store in front of Walmart could not go in there because Best Buy sells cell phones. I wonder how many other agreements like this there are around town? This creates empty retail space. So why was a new building allowed to be built for ATT if we have these rules? Hmmm, so if Best Buy or Home Depot closes down, that should open up those buildings to more businesses.

streetman 1 year, 8 months ago

That would require journalism. LJW does not "do" journalism.

MarcoPogo 1 year, 8 months ago

That does sound interesting! Would love to hear more detailed information. I don't care whether Menard's comes or not. I just don't necessarily agree with the idea that tenants will magically appear after everybody involved has all their concessions and money thrown out there.

workinghard 1 year, 8 months ago

I actually read about it on the LJW so it is out there. Might even have been one of Chad's articles. How about it Chad.

Keith 1 year, 8 months ago

Doubtful the city made those arrangements, but I can sure see Best Buy and Home Depot putting such restrictions in their lease.

workinghard 1 year, 8 months ago

Could be, hopefully Chad can check it out for us.

Chad Lawhorn 1 year, 8 months ago

I've mentioned the deed restrictions that run on that property a few times. But my former colleague Mark Fagan did the most detailed piece on it. It is here: http://www2.ljworld.com/news/2008/feb... Bottomline, I think most of the issues have been related to no compete clauses the developers agreed to in order to attract Best Buy to the site. Thanks, Chad.

pizzapete 1 year, 8 months ago

I'm surprised to hear we have "rules" for development in Lawrence. Were these "rules" taken into account for the 9th and New Hampshire project and the proposed retail surrounding the new recreation center?

LogicMan 1 year, 8 months ago

The Menards will enhance Lawrence's pull factor. It's no mistake that they want the southside which is closest to Baldwin and Ottawa, and where the completed SLT will bring in more people from Eudora, Desoto, and even the southwestern suburbs of KC.

Build it, and they will come spend their money here. A win for all except the nattering nabobs of negativity.

jack22 1 year, 8 months ago

Good points LogicMan, I hadn't thought about it that way, but I'd bet you're right that it would be a draw for people in surrounding communities, especially now that they've got a green light on the SLT.

Catalano 1 year, 8 months ago

Chad...what's this about?

Its days may be numbered, though. Scott McCullough, the city's planning director, told me the process has begun to change the rule. But it won't reach the City Commission in time to be considered for the Menard's proposal.

Thanks.

HutchSaltHawk 1 year, 8 months ago

I question the accuracy of the numbers. Hutchinson is reported as having a pull of 1.27. Really? Shopping there is minimal as the mall is all but defunct. Seems most folks in Hutchinson go to Wichita or KC for shopping (or to go to the movies).

Steve Jacob 1 year, 8 months ago

Just seems odd to penalize Menard's because of other peoples mistakes.

Matthew Herbert 1 year, 8 months ago

Why does that seem odd to you? From tax code to auto bailouts to gun control, to me that actually sounds like a metaphor for how much of this country is structured. Other people make dumb decisions, the rest that make good decisions pay the price.

optimist 1 year, 8 months ago

While it seems logical that adding retail space may result in creating vacancy elsewhere there are way too many factors to consider: 1. How many dollars spent on home improvement are being spent by Lawrence residents in neighboring communities? If it's significant enough as Menard's seems to think and can sustain Menard's existence in Lawrence then there is little reason to believe any space will become vacant because of Menard's. 2. Is there an excess of this type of retail establishment in Lawrence? If there were already a second home improvement retailer here in Lawrence then it would make sense to assume a significant amount of retail space would become vacant with Menard's entry. Absent that then adding a competition to Home Depot would only benefit the local tax payer as a whole. This is a strong example of why it is difficult for Government to be efficient or effective. These types of rigid policies intended to be "fair" to all are rarely fair or reasonble to any.

David Klamet 1 year, 8 months ago

Am I the only one that having these clusters of home improvement stores is inconvenient for everyone but the company?

That is what Topeka has. if you don't live on the west side of Topeka, you won't have one nearby.

31st and Iowa will be a congested, ugly mess...wait, it is already.

How much is another improvement store going to help anyone? From my experience with the Menard's in Topeka, competition doesn't seem to affect prices. I can get grass seed for less at Westlake, and 30% less at W-mart. I don't see a reason to by at Menard's over W-mart.

Put it out close to me (west side of town), or somebody else (North or east) and it will have some benefit. As it is, any argument for its benefit is pretty lame.

David Klamet 1 year, 8 months ago

You are, I assume, speaking of the free enterprise that caused the financial crash of 2008-2009? The same one that gives us the most expensive and inefficient health care system in the world? Actually maybe I'm exaggerating and it is only one of the most expensive and inefficient. I can show you a $14K hospital bill for a one day stay and LMH last year.

Then there is the aspect of free enterprise where some companies pay more to lobbyists than they do in taxes.

By all means, lets have some more of that.

Any good idea can go bad, explain how this one hasn't.

Let's look at it from the perspective of one of the wealth: http://www.youtube.com/watch?v=bBx2Y5...

Although you will noticed that this is a TED talk, for some reason, the video never made it to the website. Hmmm.

streetman 1 year, 8 months ago

Apparently, you think you're smarter than the people who build and run these companies. They aren't going to spend millions of dollars to build in a poor location. And business clusters are bad? Seems to work just fine the car dealers. And restaurants.

irvan moore 1 year, 8 months ago

I wonder why they don't look at apartments the same way when someone wants to build them

Alex Keiffer 1 year, 8 months ago

Come on, Lawrence planning commission. Just let Menards build its store in town, and thus give Home Depot the competition it desperately needs. If you really want to improve the shopping experience in town, you should do a better job of showing it as well; a pull factor of 1.07 isn't bad, but it could certainly be better.

It is very disappointing how little concern you've shown in terms of businesses closures and retail development in Lawrence proper over the past few years. When Old Navy left you didn't seem to care less; when Lowe's showed interest in building a store on West 6th you gave in to residents who didn't want it out there; when Olive Garden became interested in placing a restaurant at 27th and Iowa you fought tooth and nail to keep that from happening; and now with Half Price Books in the gradual process of leaving town, there has been no effort from you in terms of attracting another quality bookseller (such as Barnes & Noble) to the Lawrence market, even with Lawrence being a college town with a highly-educated population. Something is obviously very wrong with this picture.

It's understandable how you in Lawrence would like to keep as many locally-owned businesses in town as possible; I've especially noticed that mentality myself whenever I come to your city. But if you think about it, the more chain business there are in town, the more shoppers (especially from elsewhere) you will attract. This would surely mean more locally-owned businesses opening in Lawrence proper, and overall more sales tax revenue plus a greater "pull factor". This is why I believe that with Menards in town, you will not only be providing another home-improvement retail option, but fewer Lawrence shoppers will leave for Topeka or the Kansas City area if they wish to shop at any home-improvement retailer besides Home Depot (thus resulting in some lost sales tax revenue).

So please, planning commission, how about bringing Menards to the Lawrence market and quit fighting it, hmm? Granted, you don't want to oversaturate the market, but this is just one store coming to town.

bearded_gnome 1 year, 8 months ago

The rule change probably will get some opposition as well. There is certainly a group of local citizens that is very convinced the city's retail scene is overbuilt.

---and not one has posted, hmmm.

They argue [falsely] that even though a new Menard's building won't be empty, the addition of that much retail space in the city will cause an approximate amount of retail square footage elsewhere in the community to go vacant. That theory is how the rule got put in place to begin with. ---it is entirely false to assume that our retail is overbuilt and that it functions as a zero sum gain proposition.

In other words, the way the city's rules are written right now, retail is assumed to be a zero-sum game. For every one square foot of new retail space that comes into town, you must assume one square foot elsewhere will become vacant. Maybe that is the case in some economic climates. But maybe it isn't the case in other economic conditions.

---the "pull" factor indicates that obviously Lawrence isn't overbuilt for retail, despite the multitudinous claims to the contrary by the "political" group who apparently are really opposed to growth as such.

cut-and-paste anyone?

LogicMan 1 year, 8 months ago

"and maybe a Popeyes Chicken"

Buy the franchise license for Lawrence and open a few here.

streetman 1 year, 8 months ago

Nasty little secret: stuck between the KC metro area and Topeka, Lawrence is not a "draw" for anything except the occasional KU game. What is there to draw Douglas Co residents from running to Olathe or Topeka? The mall we don't have?

We better be careful about reflexively saying "no" when a business wants to make an investment here -- especially a retail business that, not only giving a service/choice to Lawrence residents, will help draw from the surrounding area (small towns and rural folks). And we'll reap some jobs and tax money in the process.

(I'm relatively new to the community, but I suspect that the reasons officially given for killing these proposals are a bogus cover-up for unstated (elitist/ vociferous minority) reasons).

princessblea 1 year, 8 months ago

Agreed! I work in Lawrence but shop outside...Love Whole Foods, Olive garden, and variety of choices for retail. A mall would be so nice. Cannot do the congested Mass street ..park 2 hours....return quickly to meter feed...run quickly to finish ... Ugh. Nice place...just not fun shopping. Thank goodness for online stores :)

Tammy Copp-Barta 1 year, 8 months ago

Then WHY did they allow the building to go up at the corner of the Walmart parking lot when the building in the Best Buy parking lot has NEVER had a tenant in it?!?!? They could have put that business in there!

LogicMan 1 year, 8 months ago

Because there's apparently a restriction in place that doesn't allow anyone who'd compete with Home Depot and Best Buy. Considering all the lines they sell, combined, not many qualify as noncompetitors. A small Red Lobster might do well there though.

Tammy Copp-Barta 1 year, 8 months ago

Isn't that called a monopoly and it's against the law???

workinghard 1 year, 8 months ago

Maybe the city needs to challenge that restriction and see if it holds up in court. They challenge everything else so why haven't they done so in this case? What is the name of the developer?

Liberty275 1 year, 8 months ago

If the rule is already in the process of change, and the commission isn't bound by the rule anyway, then they need to ignore the rule and approve the project.

Commenting has been disabled for this item.