Economic Development, Real Estate, and Retail

Despite challenges, retailers like downtown

November 24, 2012
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Editor’s note: This is the first in a series looking at retail potential in downtown Grand Rapids.

(As seen on WZZM TV 13) On an almost unanimous basis, downtown retailers said they were pleased with their locations and would open their stores in the same area, even if they had an alternative. They also said downtown and its surrounding retail areas were in need of more stores and reasons for shoppers to shop with them.

Those comments and a few more were made to Robert Gibbs when he visited with 29 storeowners in the district last summer. Other things Gibbs heard from the retailers were that many customers complained about a lack of convenient parking, which has been a gripe for decades, and that few owners would expand their stores if they had an opportunity to do so.

The owner of Gibbs Planning Group in Birmingham, Mich., was hired by the Grand Rapids Downtown Development Authority to analyze the current retail makeup of the sector and forecast what it could become over the next five years. Gibbs said another 120 to 150 new stores and restaurants could be added to the four sectors he cited as comprising the bulk of downtown’s retailing.

In his meetings with retailers, Gibbs learned many were undercapitalized and lacked the resources for proper fixtures, lighting and finishes for their stores. He said most of the shops had poor signage and “ineffective” window displays.

Perhaps most importantly, Gibbs noted that 70 percent of retail sales occur after 5 p.m. on weekdays and on Sundays, and most downtown businesses have limited daytime hours and can’t maintain evening or weekend hours because owners are already maxed out on their hours and can’t afford additional help.

In his report, Gibbs pointed out that national fashion, home furnishings and lifestyle retailers have leased space in suburban shopping centers here instead of locating downtown.

“This is contrary to recent trends by national retailers to create smaller urban formats for city centers similar to Grand Rapids. The city is among the most attractive and walkable in the Midwest and in itself a unique destination,” he wrote in the report.

“Gibbs Planning Group concludes that the lack of such new retailers in the downtown is for nonmarket reasons such as parking, lack of real estate inventory, ineffective marketing campaigns and a bias by community real estate brokers and policy makers to discourage national chains in the downtown,” he added.

Gibbs said downtown’s current “unique, one-of-a-kind” retailers make the district unsustainable without an anchor store or two, and the business owners he spoke with knew that. He said almost everyone he talked to told him they wanted to see some national retailers move into the district, naming Apple, Ann Taylor, Brooks Brothers, DSW, Lofts, Forever 21, Gap, Target, Trader Joes and Whole Foods as possibilities.

“Gibbs Planning Group found an overwhelming interest from all stakeholders for a new green grocery or supermarket in the Government/Monroe Center area. Business owners, residents, real estate developers, visitors and workers alike suggested that the DDA or city focus on attracting a green grocer,” he said.

As for the business recruitment incentives offered by the city, Gibbs said most focus on the location and are responsible for the “unusually attractive storefronts and public realm.” But he also said seven additional incentives are needed to retain current businesses and draw new ones to the district. One is an incubator program, something the DDA looked into earlier this year but didn’t follow through on. Gibbs suggested the city should offer startups finished commercial space ranging from 50 to 500 square feet.

Gibbs also said the city should employ a business recruitment consultant that would actively represent Grand Rapids at regional and national leasing conferences. He added that the DDA needs to collect and keep a monthly database of 10 key statistics the retail industry follows. These include pedestrian and vehicular traffic at key intersections, shopper satisfaction surveys, parking counts, and hotel, office and retail occupancy rates and rent charges.

Gibbs said a market-based plan for locating various types of businesses needs to be developed, too, and professional assistance to business owners on how to plan a store and create its visual layout also is needed.

According to the Gibbs Planning Group, downtown’s primary trade area has an estimated population of 267,000 that is expected to grow by 1 percent to 270,400 by 2017. The trade area’s population is larger than the city’s because it includes Walker, Kentwood, Rockford and Cascade Township, among a few others, in its boundary.

The average age of those in the primary trade area is 32.7; median household income is $51,770. Seventy-three percent of those in that area are white, while Hispanics and African Americans each have representation of about 14 percent. Twenty-nine percent of those age 25 and older have earned a college degree and 59 percent are classified as white-collar workers.

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