Year: 2012

Reality and Economic Development, Part 2

Posted by Rickey Hayes on December 19, 2012 in Blog | No Comments

(required prerequisite: must read Part 1 of this series before reading Part 2)

Written by
Rickey Hayes
Retail Attractions, LLC

Yesterday I had one of those experiences where you really feel good about what you’re doing. It was a short and fleeting moment, but while it lasted I felt like I was truly doing work that mattered. I got an unsolicited call from a real estate broker in a city we work in, and I quote him verbatim, “When we hired your company I was skeptical, but after a year and a half, I think we made a great decision”. He went on to say that although he couldn’t tie every deal in the last year and a half directly to our company, he had realized the new interest started after the community contracted Retail Attractions. I told him Retail Attractions’ specialty was creating interest from private sector investors and pestering retail and restaurant site selectors until they took a good look and a good listen to the strength of a local market. Retail development extends beyond data. Yes, you need a qualified third party to validate your trade area, but more importantly your community needs a spokesperson with relationships in the retail world. Hearing about a community from a respected member of the retail world is far more effective than through the typical city propaganda.

I want to continue the very important consideration of getting city leaders to acknowledge reality in terms of recruiting retail and growing their sales and ad valorem tax base. Nowhere else do the old wife’s tales, urban legends, falsehoods, lies, and innuendos exist more frequently than in government and economic development. Doing things the way things used to be done simply will not be enough in this economy. Before you can start, you have to identify your reality, and the reality is that there is a general lack of understanding prevalent in communities across the country about how economic development happens and what works (and maybe more importantly what doesn’t work). Here are a few of the vital ingredients:

vision for your future
developable and affordable real estate
water, sanitary and storm sewer, electricity, natural gas, intermodal transportation infrastructure to support growth
capital and financing
available incentives
public / private partnerships
interagency and regional partnerships
political support
and most importantly, the competition factor

Oh yes, in this modern economy it is not your city against the small town down the road, it’s your city against the world. And while these ingredients differ when you compare retail centric development to traditional economic development models, retail centric development is as competitive, if not more so, than traditional economic development. While I don’t think it is necessary to deal with each of these factors individually, there are a few that must be addressed, and that is where we will start… next time.

Rickey Hayes is the principal of Retail Attractions, LLC, a firm dedicated to helping cities and developers successfully find retail sites, close deals and improve the quality of life for our client cities.

Reality and Economic Development

Posted by Rickey Hayes on November 14, 2012 in Blog | No Comments

Written by
Rickey Hayes
Retail Attractions, LLC

Reality is defined as “the state of the world as it really is rather than one might want it to be”. The state of the world as it really is… The very thought of that scares a lot of folks. The fact is that most people prefer living in a world that pretty much goes the way they think it ought to, instead of the possibility of dealing in the harsh reality of the way things actually are. The movie response to the demand of all we want is the truth is that most people can’t handle the truth or at least need the truth to be watered down a bit. This question of reality and the way things really are gets clouded and hazy quicker in government than in almost any other place. If media, in all forms, from newspapers, magazines, internet, television, books, etc. could only print what was real and true, the flood of words we see and hear every day would look entirely different in scope and in volume. City governments are governed by elected officials who should have at the very least a good understanding of reality as their foundational qualification. Unfortunately that is not always the case. Be that as it may, the truth is that before real and positive change can occur, somebody has to get a glimpse of reality.

Retail Attractions has had the privilege of working in cities of every size in several states over the last four years. In terms of economic development, reality is always the starting place for real and positive change. It is the elected officials and the city administration that should be in ultimate control of economic development, not the chamber of commerce and not some quasi-governmental group (unless the quasi-governmental group is only a recommender of the direction the local leaders should go). We believe economic development (marketing, data, strategic and development planning, and all the enter-twined relationship building necessary to accomplish the task) can best be done by a professional, independent, third party group with the qualifications, experience, expertise, and relationships to get the job done. This process functions best when these services are performed on contract basis by an outside organizations and city leaders can be brought back to reality on a regular basis. City governments for the most part do not understand the process of economic development (especially retail development)… the amount of time it takes and the complexity of the process. I run into city councilors all the time who are “always certain, and often wrong” about the way economic development should be accomplished.

Reality may not always be pleasant, but no real progress in anything has ever been made, no goals have ever been reached, no problems have really been solved without looking at the situation squarely with reality glasses on. So what does that mean to city governments? If you think you can navigate the very complex, very competitive, very detailed work of retail development in any of its multi-faceted details without outside assistance you are simply not facing reality. Why do banks, which are usually pretty detail oriented places, have regular visits from people called examiners? Because outside, independent, third party eyes can see things from a point of view that help bring reality to the picture. We just came through perhaps the worst banking scandal in our country’s history because loans were made in a cloudy, shady, and very loosely scrutinized way. Reality is a good thing. What makes good lawyers, doctors, mechanics, CPA’s, judges, and politicians? The willingness on their part to deal with the issues at hand in realistic terms. What makes good marriages, good partnerships, and happy endings? Facing reality and making the right course corrections on the journey on from where you are to where you’re going. Reality will never fail you.

Population vs. Retail Base

Posted by Rickey Hayes on October 10, 2012 in Blog | No Comments

Written by
Rickey Hayes
Retail Attractions, LLC

If you look at the 2010 census data for Owasso, Oklahoma you will see that the Census Bureau reports the population of the city at 28,915. If you drive through the city, you might be impressed at how well the city “shows”, that is the overall visual impact at eye level. But what will really boggle your mind is the fact that on nearly every corner in town is a national retailer or restaurant. Just go down the list…Wal-Mart, Target, Hobby Lobby, Belk, JC Penney, Kohl’s, TJ Maxx, Ross, Lane Bryant, Best Buy, Lowes, Home Depot, Pier One, Olive Garden, Cracker Barrel…they are all there. In a few months, another retail center anchored by Sam’s Club will open across the street from Walgreens and CVS Pharmacy. The question is always asked… How does a community with a population fewer than 30,000 residents have this level of retail presence?

So let’s go through some of the reasons why a community this small in population has such a massive and still growing retail base. 1) Growth. Owasso has been one of the fastest growing suburbs in the Tulsa MSA for the last twenty years. 2) Location. Owasso has a US highway infrastructure dissecting the community that three states use to access the urban areas of Tulsa. 3) Incentives. When communities across the nation were competing for retail deals, the city leaders of Owasso set Owasso apart from other growing communities with highway access by aggressively recruiting retailers using public/private partnerships to incentivize the deals. And most importantly… 4) Retail Base. Even if Owasso hadn’t had the exceptional residential growth and location, the city could have made a case to retailers because they city understood the difference between population and retail base. They understood the consumer trade area for Owasso extended far beyond its city limits, and this is true for many other communities.

We have often talked about defining your trade area in this blog, but probably not addressed exactly why this is so important. A city’s trade area is what defines the retail base for the city, and cities must use their trade area to accurately reflect their true retail potential to retailers. If a city has consumers from other communities shopping and dining in their city, their retail trade area is larger than that of their city limits. Other data providers use concentric rings from the city center or drive time models to identify trade areas, and while these methods require less time and effort, they often do not portray a realistic and defendable retail trade area. When Retail Attractions identifies a community’s trade area, we evaluate competing markets, natural barriers, traffic flow, accessibility, and the availability of developable real estate. Once the trade area is established, demographic data and opportunity gaps are identified, and this information profiles the type of consumer shopping in the area and what sectors are not being serviced in the area.

In the example of Owasso, a community with a city limits population of fewer than 30,000 residents has a retail base of nearly 250,000 consumers. At first glance, retailers dismissed Owasso as a viable development opportunity because it was too small, but city representatives recognized the retail potential of Owasso and were persistent. They identified a defendable trade area and went back to the retailers with their retail base demographics rather than their city limits demographics. This process was by no means easy, but persistence paid off for the city as well as the retailers. Owasso has countless top performing stores; stores that beat out stores located in major retail corridors in metro areas. This success is because the retail base for Owasso far exceeds the 28,915 residents retailers saw at first glance.

If you live in a city and think it has retail potential that is not being addressed, let Retail Attractions help you identify your retail base and effectively market your community to national retailers. Contact us today to get started!

Economic Development in the Information Age

Posted by Rickey Hayes on September 12, 2012 in Blog | No Comments

Written by
Rickey Hayes
Retail Attractions, LLC

There has been a lot of attention recently on social media in terms of marketing communities and the effect of the internet on economic development efforts in local settings. Last year in one of our client cities, a national quick service restaurant CEO stated to the press at their grand opening that Facebook messages to the company influenced their decision. What he did not mention are the less glamorous influences: the hundreds of hours of work by our firm, the city and real estate professionals on both sides. The deal would not have happened without the compelling market data and traffic counts or the countless meetings and calls. But social media did play a role.

Cities around the country are using Facebook, Twitter, Google, and other sources to keep their constituents informed of events, weather alerts, traffic detours, etc… Information is good. On the other hand, misinformation can be bad. While accurate information is always helpful, rumors and half-truths sometimes cause major problems for city administrators. We have seen first-hand how uninformed and in-experienced folks can slow down and sometimes even stop economic development in cities. Social media is a collaborative effort of the community, and there is no requirement for qualification to be part of the community. This means anyone can post anything on a social media site, and it is out there for the whole world to see: regardless of whether it is accurate or pure fiction. This can be very dangerous to development.

The bottom line is that social media is what a community makes of it. A properly managed campaign can be very beneficial to a community’s retail recruitment efforts, but a poorly managed campaign can sabotage even the most lucrative deal. Communities have to actively post pertinent information and more importantly respond to misinformation. City leaders have to be very sensitive to what should be public knowledge at what stage of the process, and they have to aggressively dispel rumors and half-truths.

The city should be the best informed party on matters of economic development, and they should be the ones delivering the information directly. Communities should not depend on quasi-governmental groups to be the spokespeople for marketing the community. Retail Attractions has considerable experience with how and when social media should be used to promote retail development. Using Retail Attractions will save a community time, money, sweat, and most importantly tears. Contact us today to streamline your economic development efforts and to get the most out of social media.

Focusing on the Right Things

Posted by Rickey Hayes on April 26, 2012 in Blog | No Comments

Written by
Rickey Hayes
Retail Attractions, LLC

Communities around this country are doing everything they can to position themselves ahead of the pack in their economic development efforts. It is very common for a city to create and share marketing “propaganda” touting the many reasons why their particular community is the best place in the free world for investment. We are not saying this isn’t an important element, but there is a problem with relying on this approach. Our firm has heard from those receiving these materials. In many cases they don’t even take the time to look at them, no matter how glossy, slick, or gaudy they may be. What retailers are looking for in a city is the answer to one simple question: “Will our company make a profit in this market?” If the answer to that question is yes, then the follow-up question is: “How efficiently can we get open and get our goods to market?”

While it is important for you to have accurate, current data on your market for you to execute an educated and informed development effort, you need to know that retailers and restaurants will come armed with their own data. They are experts at researching and analyzing markets, and having demographics that meet their requirements is only the first step. What they are looking for in their next site is a community willing to partner with them and help to ensure a good return on their investment. To show retailers you are ready to form partnerships, a city needs to take action internally as well as externally.

Externally, cities need to hire professionals to recruit new investment. The retail world is a tight knit community, and you need someone who is known and respected within the development arena. We have often been surprised at how quickly news and reputations can pass through the retail community. Having an advocate for your community within this world is a necessity. Internally, communities need to focus on making the development process as seamless and painless as possible by eliminating the obstacles. The regulatory environment in a city can quickly become a quagmire of bureaucratic red tape, delays, fees, and any number of other nightmares for the development community. The most troubling thing to me about this is that most cities don’t have the slightest clue that they have a problem in this area. Streamlining the development process should be at the forefront of concerns for any team of progressive city administrators.

Cities should treat retailers and developers like they were welcomed customers. I’m not talking about loosening development standards and lowering expectations. I’m talking about finding creative ways to partner with the private sector. This partnership will help to improve quality of life for your citizens, create sales tax revenue for your city budgets, and stop retail leakage caused by your citizens leaving town to purchase goods and services that they would love to buy at home.

Call us. We can help.

What’s in Store for 2012? (Part 3 of 3)

Posted by Rickey Hayes on March 26, 2012 in Blog | No Comments

“NEW DEVELOPMENT PARADIGMS AND TRENDS”

Written by
Rickey Hayes
Retail Attractions, LLC

In our last two blog posts we discussed how local politics play a big part in retail and economic development for cities, especially when communities have to compete for every advantage in these days of growing expenses and declining revenues. As we mentioned before, the model for retail development in cities has changed radically. Much stricter guidelines and more scrutiny at each level of the process is resulting in far less growth and causing cities that need and desire to grow their retail base to think in new ways.

Gambling on the future is always a risky thing, but it has always been a part of the risk of development. Betting on the cycle is fun and profitable if you get it right, and a killer if you get it wrong. The good news is that there are some encouraging signs in the retail arena. Bookstores, and electronics retailers are suffering, but retailers like T.J. Maxx, Marshalls, Petco, and almost all the “dollar” stores are seeing strong growth. In some parts of the country, retailers are still struggling and the evidence indicates that consumers are still sensitive to pricing and that people for the most part are shopping for bargains and the greatest value for their money.

We are seeing some grocery growth across the region, and, because of the economy’s effect on the housing industry, many grocery chains are still very cautious and are taking advantage, as are lots of other retailers and restaurants, looking at 2nd generation space, infill, and redevelopment opportunities. In some markets, not in all, department store closings have created caverns in malls and in power and strip centers that have led to redevelopment challenges for owners. In certain areas, de-malling will benefit both owners and consumers as new retail growth creates new challenges to find exciting and more efficient shopping experiences for communities and consumers.

Across the board, there are many challenges to retail growth. Without healthy and sustained job growth, retail may survive but certainly new growth will be needed to cause it to thrive. Retail Attractions has always preached that new retail growth in cities gives them a boost in recruiting new job opportunities. Retailers are all concerned about internet sales opportunities, both in relation to their own increased sales, and negatively as to how those online sales pinch their traditional real estate models. New efforts to make the collection of sales taxes for city governments easier on internet sales may be good for cities, but they are increasingly becoming more tangled in the political winds at the federal level.

Last but not least, cities should not be shocked when retailers in many genres begin to downsize their boxes to become as efficient as possible. This is already happening in many of our client cities. Cities should assist retailers with all available means to help them improve their efficiency and over-all sales per square foot. Justice (a clothing outlet targeting girls aged 7-14), for example, plans to open 55 stores in the US, but also plans to remodel over 40 locations. Old Navy has already remodeled numerous stores to downsize and re-fit into smaller spaces.

Retail Attractions has relationships with retail and restaurant tenants and would love to help your community market itself to retail growth. Cities need to learn the valuable lesson of doing what they do best, which hopefully is building new infrastructure for growth, providing government services to their citizens, and creating proactive policies for growth and sustainability. Let a professional do the work of marketing your community to the national retailers. It’s more efficient, and more productive.

What’s in Store for 2012? (Part 2 of 3)

Posted by Rickey Hayes on March 19, 2012 in Blog | No Comments

“COMPETITION-IT AIN’T AS EASY AS IT LOOKS”

Written by
Rickey Hayes
Retail Attractions, LLC

As we said in the last blog post, local politics play a big part in retail and economic development for cities. Over the past several years federal politics, crazy as they are, have spawned a trickle-down effect that has flowed from the federal politics into state, regional, and local governments. Communities that were able to govern in relative unity a few years back are now experiencing bitter partisanship and radical thinking. When cities are competing to attract sales tax producing retail development to their city limits, they cannot afford to have dissension in their local politics. It’s hard enough to foster growth when everyone is working in a unified and efficient manner. With competition more fierce than ever, retailers and restaurants that are looking for new sites are definitely looking for the “low-hanging” fruit. They want markets that are the easiest, simplest, and produce the biggest bang for their investment dollars.

Between 2003 and 2006, big box retail stores were doing 100-200 new deals a year, and the junior anchors were equally as aggressive. Big box anchored power centers and retail developments were being built all over the place. Financing was simple, banks were cooperative and throwing money at retail deals. Brokers were making tons of money. Times were great. Not today. In these tough, lean economic times, many of the big boxes are not even considering new sites, and the ones that are will just do one or two a year. In the past, all it took for a communities to have an excellent chance for new retail deals was showing residential growth in their markets. Today it takes a special circumstance to get the attention of the retail and restaurant site selectors. In this highly competitive market, cities are competing for their very existence, and suburban communities circling a core urban area are competing amongst themselves for retail goods and services for their growing residential areas.

Where a retailer might have been willing to work with difficult local politics in the past, in this market unstable or volatile local politics can have a negative effect on retail deals and slow or even stop development. Cities need to consider the impact of their reputation on the watching world. Folks in the retail business talk to each other. Developers discuss markets over coffee. Retailers discuss how a smoothly a deal went over lunch. It is imperative for cities need to get their ducks in a row and share their retail potential with the development world. They need to be vocal about partnering with the private sector with incentives, development agreements and partnerships. They need to streamline the regulatory environment and perhaps even get into the real estate business to control the use of prime development areas. In addition, local bodies need ensure their community has a reputation for being politically unified with pro-business attitude. A reputation like that will go a long way in these competitive times.

It goes without saying, but I’m going to say it anyway… Communities need to hire an independent, experienced, well-respected third party consulting firm to market them to the retail world. Hiring a consultant shows the development world your community is serious about growth and is taking the first steps to making it happen. Retail Attractions is proud to represent communities across the county in their development efforts. When your community is ready to take the next step give us a call at 918-376-6707. We are ready when you are.

What’s in Store for 2012? (Part 1 of 3)

Posted by Rickey Hayes on March 12, 2012 in Blog | No Comments

“LOCAL POLITICS”

Written by
Rickey Hayes
Retail Attractions, LLC

This year has been an amazing year for Retail Attractions. We have seen positive impact in all of our client cities. As 2011 comes to a close and I reminisce over the last year’s scope of work, I am both excited and concerned about what is ahead for communities, large and small, across the country. On one hand, I am excited about the potential that is waiting for communities that really have a grasp on what it takes to market themselves and get noticed by investors while 43,000 other cities across the country are trying to capture the same attention. Good times are in store for many cities in 2012. Increased revenues through sales tax, new residential and retail development, and improved quality of life are all possible. City governments must be willing to take a look at reality and see what is missing, or see what is actually taking place, and be prepared to take an honest and realistic look at what is going to have to happen to change their current circumstances. If a city is willing to do that, they are going to be pleasantly surprised when they see that change is possible. One thing is for sure, if you keep doing what you’ve always done, you’re going to keep getting what you always got.

On the other hand, I see some really tough times coming for lots of communities as well. In recent months, many communities across the country have fallen victim to ultra conservative ideology that has trickled down to the local administrations because of political activism spawned at higher levels of government. In any political realm, it is inevitable that differences of opinion are going to rise. That is the beautiful thing about democracy. It works well when the diversity in local political ideologies have at the core of their belief systems the overall good of the community. If the goal is to improve the overall quality of life in a local setting, and everybody is working together for the common good, then differing opinions on how to reach the goals make life fun and exciting. However, if the goal is not to fix what is wrong and build consensus but to stir up more unrest, more dissension, then this ideology can get in the way of progress and may cause communities to turn away from opportunities that they might not get again. Our total scope of work in our client cities is improving the quality of life, improving revenues, and improving the way cities do business in terms of retail development. Every community has a story to tell. It only takes three things to improve the quality of life in any city: VISION, UNIFIED EFFORT, and FUNDING. In most cases, funding change is relatively easy. But creating vision is tougher. And getting people to gather around a dream or a vision and work hard to get it done is tougher still. But it can and should be done.

As overwhelming as this list seems, it is all necessary to make your community the most attractive destination possible to retailers looking to expand. Competition is fierce. If you don’t want to be left out, you need to do the same. Retail Attractions can help you put your best foot forward. We provide a wide range of services to help you turn your vision into your reality.