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HomeMy WebLinkAbout02232010 PRESENTATIONRetail Center Revitalization Strategic Plan Harnessing Retail Potential Today for a Better Community Tomorrow Council Member Glenn Davis and Council Member Rosemary Wilson Initiative Team Members: Warren D. Harris, Economic Development Andrew Friedman, Housing and Neighborhood Preservation Deputy Chief James Cervera, Police Michael Clark, Norfolk Redevelopment and Housing Authority John Westbrook, Lynnhaven Mall Ron Ripley, Ripley Heatwole Tasos Galiotos, Wilcox Savage Karen Lasley, Planning Bill Dore, Housing and Neighborhood Preservation Cynthia Whitbred-Spanoulis, Economic Development Jerrod Fishback, Economic Development Susan Milhoan, Retail Alliance Debbie Puckett, Retail Alliance Carlene Bowers, Retail Alliance Janet Balestino, Retail Alliance Background • Council Initiative in response to changing retail dynamics • 17 Member Committee met for 6 months • Reviewed entire city's retail inventory • Reviewed crime data for retail centers • Reviewed code violation data for retail centers • Reviewed local, regional, and national trends • Developed recommendations for City Council consideration Definitions • Power Center- Example: Landstown Commons Category-dominant anchors,lncluding discount department stores, off-price stores, wholesale clubs, with only a few small tenants (250,000-600,000 GLA) • Lifestyle Center- Example: Lynnhaven Mall AMC area Upscale national-chain specialtystores with dining and entertainment in an outdoor setting (150,000-500,000 GLA) • Community Center -Example: Princess Anne Marketplace General merchandise or convenience oriented offerings. Wider range of apparel and other soft goods offerings than neighborhood centers. The center is usually configured in a straight line as a strip, or may be laid out in an L or U shape, depending on the site and design. (100,000-350,OOOGLA) • Neighborhood Center- Example: Indian Lakes Convenience oriented -normally grocery store anchored. (30,000-150,000 GLA) • Strip Center- Example: Holland West Attached row of stores or service outlets managed as a coherent retail entity, with on-site parking usually located in front of the stores. Open canopies may connect the store fronts, but a strip center does not have enclosed walkways linking the stores. A strip center may be configured in a straight line, or have an "L" or "U" shape. A convenience center is among the smallest of the centers, whose tenants provide a narrow mix of goods and personal services to a very limited trade area. Mixed Use Development-Example: Town Center A mixed-use developmentis a real estate project with planned integration of some combination of retail, office, residential, hotel, recreation or otherfunctions. It is pedestrian-oriented and containselementsof alive-work-playenvironment. It maximizesspace usage, has amenities and architectural expression and tends to mitigate traffic and sprawl. National Trends in Retail Industry I. Chan~in~ Net Absorption • Costar and Property and Portfolio Research Inc. forecasts "negative economic absorption to continue for two to three more quarters, followed by fairly robust positive absorption into 2011 and beyond" -Jay Spivey, Costar Group's Senior Director of Research & Ana lytics • Power centers (+3.OM SF) • Lifestyle centers (+1.1M SF) • Outlet centers and super regional malls has been flat • Regional malls (-800,000 SF) • Community centers (-1.1M SF) • Strip centers (-1.4M SF) • Neighborhood centers (-2.3M SF) National Trends in Retail Industry II Chan~in~ Vacancy Rate • Costar and Property and Portfolio Research Inc. forecasts that the national average retail vacancy rate will rise to higher than 8% in the first quarter of 2010 and following that, is expected to eventually return to pre-recession levels in early 2012. • Vacancy by shopping center type generally increases as centers get smaller. Strip (11.8%) Neighborhood (10.4%) Community (10.3%) Lifestyle centers (8.4%) Power centers (8%) Regional malls (7.9%) Outlet centers (5.7%) Super regional malls (3.8%) National Trends in Retail Industry III. Economic Realities and Forecast • Changing Demographics- - Boomer Effect - Generation X and Generation Y • Shifting Trends in Retail Center Format • The U.S. retail industry is currently experiencing a "100- Million-Square-Foot Hangover" - PricewaterhouseCoopers Korpacz Real Estate Investor S u rvey fi rst quarter 2009 report. (Supply outpacing Demand) National Trends in Retail Industry So, how are malls and other retail centers adapting? • Malls built over the last few decades are being refurbished into so-called lifestyle centers -Emphasize convenience, upscale shopping, and entertainment. • Programming-festivals, farmers markets, concerts, etc.. • Creating a greater sense of place. • Green Initiatives • Rebranding properties and going upscale percent. • Older malls being torn down and redeveloped into more mixed-use, higher density properties By 2011, the number of lifestyle centers in the United States is expected to increase by 53 Survey of Virginia Beach Retail Centers •Reviewed all Virginia Beach Retail Center Assessments, Code Violations, and Crime data •Explored "Root Causes" of failing centers with stakeholders •Discussed Potential solutions Survey of Virginia Beach Retail Centers Virginia Beach Retail Centers By Type Strip Center Neighborhood Center 67% of the retail centers located in Virginia Seach are Strip Centers. Gross Leasable Area 32% of GLA is found in Community Shopping Centers. 24% is found in Neighborhood Shopping Centers. 17% is found in Strip Centers 11 % is found in Power Centers . Community Center Power Center x Theme/Festival Center . Super Regional Mall Regional Mall Lifestyle Center Gross Leasable Area in Virginia Beach by Retail Type Strip Center Neighborhood Center Community Center Power Center =x Theme/Festival Center 'Super Regional Mall Regional Mall Lifestyle Center Survey of Virginia Beach Retail Centers Assessed Value of Retail Centers in Virginia Beach Value per SgFt 10 61 112 163 214 265 Survey of Virginia Beach Retail Centers Assessed Values of the Three Largest Groups of Retail Centers As you can see, the assessed values curve for each property type is very similar. In fact, the average assessment for each group is within $5 of one another. Assessed Value of Shopping Center By Type Strip Center -Community Center Neighborhood Center 5 59 113 167 221 275 Assessed Value Per SgFt Survey of Virginia Beach Retail Centers Remember: International Council of Shopping Centers found that the life of most shopping centers is between twenty-two and twenty-nine years with an average life of twenty-seven years. Age of Retail Centers in Virginia Beach 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 Age (years) 0 12 24 36 48 60 Survey of Virginia Beach Retail Centers Value of Virginia Beach Retail Centers in Top Quintile 300.00 250.00 200.00 150.00 100.00 50.00 0.00 K~ Value/SgFt w~~ p cn ~ w~ ~~ C7 cn J w cn U~ J S Q w a J cn w C7 +~ U Z w cn H w Q cn cn w cn ~ W a a~ ~ o~ a a W > W > W z W~ °a o W o c ac ~ a a° a o a~~~ o a c o W a a o ~ o a z J W m = W = d Z > > ~ ~ Y Z S ~ J G O d ~ J ~ = d U ~ _ (n d G U d d = _ ~' ~ ~' ~ C7 2~ C7 w a p p ~ w cn ~ O z Z C7 = cn w ~ O~ c Z ~ m m 0 O ~ cn > U ~ S U (n O U O Z ~' W W ~ ~ W U W Z Z (n /S~ ~ ~ a U Y •c~ ~ d W G Q W m d ~' = U Q (n (n ~ O ~ U Y J ~ J Q U W J O U L~L Z ~ W ~ Z LJ ~' Z W ~' c Z ~' O J Z J ~ ~ Q }~ ~ m m X m O Z '-'-' S Q J J w z~ a a~> S Q=~ a Z W Q m 'a Q Q J Q~~ ~~~~ O Y~~ J m z = O Y- a a U Q z= Q ~' a~~ a ~ J x cn ~ cn ~ O W~~~~ a a a a = a ~ a Y z z} z z z~ o a~ w g a a~ a w~ U O O Z W~~ Q Q Y Q J} J} J}~ ~ z o~ W~ J J r U U W Z O C:) S J J ~ Q ~' ~ C:) ~ ~ w ~ Z N cn z O d - d W d 0 ~ z O J ~ ~ _ = d d ~ U Summary •Approx 219 retail centers surveyed with the average age Of 26 years-mote--estimated lifespan is 27 years) •Strategy for Revitalization may mean a complete redevelopment of the center and a possible change of use. •Surrounding Neighborhoods play a key role in the viability of a reta i l center. •National Retailers are becoming increasingly selective in locations •Landlords are facing increasing financial challenges and infilling non-traditional tenants Strategy Recommendation Establish Retail Improvement Program as part of a Design Center component--(Strategic Growth Area Office) • Suggested Budget Request - $150,000 (Retail Improvement Program Fund) PROGRAM OBJECTIVES •To improve the viability of existing businesses in the City of Virginia Beach. •To provide financial assistance for facade improvements to owners of properties. •To eliminate blight and non-conforming design standards by encouraging program participation. •To improve the visual presentation of individual properties by upgrading facades, signage, and other exterior features. •To bring structures up to existing building and safety code standards. •To determine long-term viability and suggest potential alternative options PROJECT FINANCING •For every private dollar invested in the program, the city would consider a grant in the amount of 2: 1, dependent upon the availability of budgeted funds through the Department of Housing and Neighborhood Preservation. Strategy Recommendation POTENTIAL ELIGIBLE IMPROVEMENTS An effective program must outline and provide tools to property owners to encourage the repositioning and rebranding of their center. The list below represents some examples of eligible improvements: •Painting/stucco or other exterior enhancement •Awnings, windows/doors replacement •Murals, marquees, parapet walls, arcade/canopy facade •Removal of old signage and new conforming facade and/or monument signs •Tile/pavement between entry and public sidewalk •Exterior and/or display lighting •Accessibility improvements for the disabled •Architectural and design costs are program eligible costs •Landscaping improvements •Other improvements subject to City approval Funds Administered through Housing and Neighborhood Preservation program-currently established for residential properties. Include a commercial element in the Neighborhood Preservation Plan. Next Steps • Budget Process • Design Center as part of the SGA office • Develop Specific Implementation Program - Develop Application Forms - Eligible Criteria Refined - Marketing and Education of the Program • Share program with City Staff • Target specific properties • Host Open House for Business Owners at Design Center Questions?