Month: September 2015
How To Retail Small Markets
Posted by Rickey Hayes on September 24, 2015 in Blog | No Comments
How To Retail Small Markets
Written by Rickey Hayes, Retail Attractions, LLC
Our company has had the opportunity and good fortune to have been able to work in over 330 cities in 35 states since we started in 2007. We have worked in large, urban markets from New York City to Los Angeles as well as medium markets from Mandan, North Dakota to the lovely City of McAllen, Texas on the Rio Grand River. While a lot of this work has been in the role of a consultant directly contracted to a local municipality, much of it has also been work for a developer, a franchise owner, or a retailer or restaurant asking us to do a specific scope of work in a local market. While working in large and medium size markets, there is an expectation of actually being able to see new private sector investment materializing and actual brick and mortar coming out of the ground. Consumer groups are readily identifiable, disposable income is easy to see, and retail tenants are aggressive to find a home. It’s fun work. The much harder job is to recruit retail interest and private sector investment in smaller markets. And the facts are that there are a bunch more smaller communities that are under-retailed, and that getting that job done takes a lot more work and patience. It can still be done, but it takes longer, and requires certain crucial steps be accomplished through the process. I want to address the issues that small market cities face, and how to overcome some of those obstacles.
Before we start, let me say a couple of things. No matter what size market you find yourself in, having at least a basic understanding of how retail growth works, and the common ingredients in any retail deal is crucial. Secondly, the smaller the market, the more creative the community needs to become. Both of these foundational truths will be covered in more detail as we proceed.
Common Considerations For Retail Growth in Any Market:
· Market Data: Having correct and up to date information on your city: your trade area, your people (including those who live in your community, and those that come to buy goods and services), your real estate, and information on your regulatory climate and your willingness to partner with the private sector is essential. [* know that data is just numbers unless you have a story, and it (the data) may be harmful, especially if your market is small.]
· Population Growth in the Market: There is no surer way to attract private sector investment in your community than new residential growth, or the evidence that your city needs and can accommodate new residential development.
· Other pertinent info to share, like disposable income and traffic counts, and destination points where large volumes of potential consumers come into the market are all critical for small markets to broadcast.
In order to bring new retail and restaurant development and for that matter any new private sector investment into a small (or smaller) market, the key thing to understand is that from the perspective of the retail or restaurant tenant, whether they are corporate or franchise driven, they probably will have multiple other opportunities in stronger markets than yours. That is the reason that smaller markets, and those administrative and elected officials that want to increase their revenues have to be willing to do something different, to consider some other angle, offer some other reason to get the folks who make the retail decisions to pay attention to your specific situation.
I have had the pleasure of seeing some success stories in smaller markets and that is probably the most fulfilling part of our work. Many times the smaller the market the greater the impact from the development of new retail. In small markets, the more innovative the city is the better. At a minimum, I would suggest that if your city is a small market, city leaders should at the very least look at some way to identify, option, and control the real estate dynamic, especially sites that could, in any way, be considered commercial. Whoever controls the real estate controls the future development of your community. Two other things will help as well, first get professional marketing pieces done on all the commercial sites, and then, if possible, city administration should develop a “one stop shop” mentality in terms of entitlements, annexation, platting, site plan review, etc. to save developers as much time as possible.
I have experienced retail development in many different settings. It’s really fun when a city has all the right stuff going for it. This happened in Owasso, Ok shortly after 2002, and we experienced a tsunami of retail. It came in huge waves. But it still took more than a decade to get it all done. And I mean everything was right in Owasso: residential growth was off the charts, retailers were wildly aggressive, banks would loan money for a retail deal at the drop of a hat, and the city had big household incomes and stellar demographics. Still took ten years to get the market retailed. So small market communities should definitely be extremely patient, and let a qualified company like Retail Attractions market them to the private sector. It will save you time and a lot of money and effort. But know going in that it will take a long time. One of the most frustrating parts of my work is the job of educating city councilors about how long it takes. When you see a new retail deal under construction somewhere, you can know without a doubt that, even with an accelerated effort and timeline, some poor soul has been working hard to make that deal a reality for at least a couple of years in most cases.
It is also worth mentioning that the smaller the market the more hesitant the retailers and developers are in meeting with you. This is not really about anything other than the fact that most of the retail and restaurant tenants that are growing have already identified “growth markets” and they have to be educated to all the extenuating circumstances, and the “rest of the story” that makes your small market viable. This is what the real basis of Retail Attractions scope of work entails. Bringing the real story of your market to the retail world is what we do every day. We are known and respected by those who develop and the tenants they build for. And the good news is our relationships have grown every month we’ve been in business.
Call us. We can help. Office (918) 376-6707 or cell (918) 629-6066
Rickey Hayes is the principal of Retail Attractions, LLC, a firm dedicated to helping cities and developers successfully find and develop retail sites, close deals, transform communities, and improve the quality of life for our client cities.
Sometimes Communities (and Consultants) Do Really Dumb Things
Posted by Rickey Hayes on September 3, 2015 in Blog | No Comments
By Rickey Hayes, Retail Attractions, LLC
Recently a client city that our company had worked in for two years decided to not renew our contract and go with another “competitor”. Now I know what you are thinking. I bet you are thinking something along the lines of well competition is good and maybe the other firm can do something for the community that your firm wasn’t able to do. And you might be right. But before you really start celebrating your “rightness” you probably need to know the rest of the story.
I use this blog as a platform to educate cities, elected officials, and other folks and organizations on economic development, retail development, quality of life issues, and other subjects that they may need “educating” on. The reader may ask “What qualifies you to educate others?” All educators need two things: training and experience. And if I had to choose as to what makes an educator most effective, I would say experience trumps training every time. I have had years of training, and having worked directly or indirectly in over 300 cities in 35 states, and having been part of, at some level, the facilitation and completion of, millions of square feet of retail, residential (both single and multi-family), medical, office, and other mixed uses of commercial real estate, I have some “experience”.
So back to my story. I am guilty of doing some dumb things myself, so don’t think I am really bashing the group of city officials that I am telling you about. I am not. And I will leave the city anonymous:.to protect the guilty. When I began working for this city, I did so as a favor to the city manager, who was new to the job in that community. This city manager had just left another city, where because of a poorly done retail project, multiple lawsuits, possible criminal acts, and lots of public money was spent helping to clean up a really big mess. I might say that we were not working in the city when this terrible series of events went down. I watched it from the sidelines, and was really interested because the city manager, who is my friend, warned the elected officials time after time that the retail deal was not being executed in a lawful and intelligent manner. The result, instead of working to fix what was out of order and instead of correcting what was wrong, the elected officials fired the city manager. So out of a job, the city manager (who, by the way, has considerable training and experience) was quickly hired by another city. As soon as the manager got his feet on the ground, he reached out to me to see if our company could help his new community. He advised me that this new city had never worked with a company like ours, had no budget for contracted consulting services, but he felt like he could muster both a little money and some support to hire us. We agreed to try and help, and because I had lots of respect for the city manager, I agreed to a much lower fee than I would normally apply to a consulting contract. (that was dumb on my part J). I worked hard for the community, made considerable trips to the community for multiple meetings with staff, elected officials, and developers and real estate professionals, and marketed the city to national retailers, restaurants, and developers. Without going into a lot of details, we received positive feedback on the market from multiple retailers and restaurants, but because the market was “green”, and local land owners were not really interested in selling, private sector investment was slow.
Several predictable things occurred during the process. Most of these things were addressed in face to face meetings with city staff and elected officials, but unfortunately some people do not want to be confused with facts, they are motivated by their “aggressiveness” and impatience. Small markets should be extraordinarily patient, because retail development, even in markets where tenants are climbing over one another to get sites, the development process is s-l-o-w. This particular city made the mistake of believing their market was “special”. Unfortunately, their market was just like every other small market, one in tens of thousands or small markets that are competing for these retail deals. They also made the mistake of believing that creating tax increment financing districts, and being vocal about willing to incentivize retail deals, made them stick out among the tens of thousands of other markets in the race, many of whom had better “data” than they had. Fact is that cities all over the country are beginning to offer incentives and create enticing development opportunities to lure retail and restaurant deals.
What I am saying is that elected officials, city administrators, and people who care about growth in cities, especially small ones, need to realize they have to be on the edge of reason and willing to do things that have never been done before, to set their communities apart. We represent dozens of small markets, the ones who have new retail on the ground and the ones who have retail or restaurant deals working are the ones who have stayed the course for the long haul, the ones who have been patient, and the ones who have gotten serious about getting in to the real estate business. Retail 101:whoever controls the real estate controls the future! Believe that. If your community is small, you need a professional and qualified firm to help you. And let me close this session of venting, by saying, if you are a small community you need more than data, because in most small markets, your data may not be helping, it may be harming your efforts. So by all means don’t be seduced by one of my slick talking “competitors” into paying big bucks for data. Bringing retail to small markets may be the toughest job on the planet, but it can be done. It requires proving your market has potential, defining the target retailers and restaurants that best fill your community’s need, and then doing what it takes to get the deal done. That’s what we do.
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.