Retailers Are Buying Grand Rapids

June 21, 2002
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GRAND RAPIDS — Bennigan’s, IHOP, Texas Roadhouse and the Macaroni Grill lead a long list of restaurants that are building here or have opened recently.

Krispy Kreme is also bringing its doughnuts to town.

Dan Hurwitz and his family are putting up a multi-million dollar retail center on East Paris Avenue, and Jeff Hundley and Ed and Mark Finkelstein are hoping to invest up to $100 million in retail on 28th Street SE.

That is a lot of new retail and restaurants for the metro area in a short time, especially when the economy isn’t in the greatest of shapes.

So why is metro Grand Rapids getting so much attention? Because it’s the city’s turn. Many of the national retailers and restaurants have filled their quotas in the Chicagos of the country and are turning their heads to smaller markets.

“We have seen a big influx of people in restaurants and retailers, and we’re kind of a draw right now because we’re a very solid and growing secondary city. If you look at secondary cities, where people are concentrating now to fill in, then we’re one of the best,” said Bill Bussey, a retail specialist with Grubb & Ellis/Paramount Properties.

Another reason they come here is because the metro area looks pretty good to them. The average annual household income was $67,662 last year, while the median home was worth $98,446, according to the Polk Co. That latter figure was up 50 percent from 1990. A third consideration, of course, is whether a location will give enough exposure.

But besides those general considerations, each company has its own motive for setting up shop in a town, and Krispy Kreme wasn’t an exception to that almost rule-like creed.

Bussey said it was a challenge to convince the doughnut people to come here, as the city didn’t have the dense population that the Winston-Salem company usually requires for a franchise. So Bussey asked Krispy Kreme whether its stores were successful in markets where Starbucks served coffee, and they told him where Starbucks goes, they go.

“Then we got some statistics on the few Starbucks that had opened up here, and they had done very well. We told them that if Starbucks was doing well, then you ought to be here,” said Bussey.

“So over a period of time we fed them a lot of information from a cross section of our demographics to show how other people were doing, and they finally said they ought to be here.”

The International House of Pancakes story, however, differs from the Krispy Kreme tale. It’s almost the exact opposite, in fact, as IHOP executives are considered a fairly assertive group when compared to their more reluctant counterparts at Krispy Kreme.

Bussey said it was IHOP who pushed him and his associate, Dave Denton, to find suitable locations for its four restaurants that are planned for GR. Once that order was pretty much filled, the restaurant chain placed another one.

“Now we need to be in these ten cities. Let’s go, boys,” said Bussey of the directive he received from IHOP.

Bussey said competition doesn’t keep the chains from staking a claim in the local retail market, unless that competitive factor is tied to a specific location. A firm, for example, may not want to build on Alpine Avenue because of the restaurants already there, but is willing to construct one in Grandville if the site works.

But not all battles are won. Bussey said that a national retailer recently said no to the area because the MSA demographics weren’t strong enough. Even though the local MSA has a million people, a figure the retailer was looking for, that million is spread out over a wider zone than the retailer wanted. So some skirmishes are lost to a numbers game.

Still, retail numbers remain strong here. The last report from Grubb & Ellis/Paramount showed only a 2.4 percent vacancy rate in the market with another 237,000 square feet under construction. And retail sales across West Michigan topped $12.5 billion last year.

“People spend more money here in stores than they do in Las Vegas,” said Bussey of a market that statistically compares favorably to here. “But the difference is, Las Vegas is all within about five miles, and we go all the way through four counties.”

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