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BIG BOX Detroit Regional Chamber (PowerPoint)

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					The Detroit Regional Chamber
•Largest chamber of commerce in the United States,
with over 20,000 members
•Established 1903
•90 staff members

                                The Detroit
                                Region
The Detroit Regional
Economic Partnership
•Economic Development Arm of the Detroit Regional
Chamber
•Represents 10 counties and the City of Detroit
•120 private sector investors
Our Experiences with Big Box Retail
• The Detroit Region spans rural farmlands and the
nation’s 10th largest City
• Home Depot, Lowe’s, Costco, Best Buy, Kohl’s, J.C.
Penney, Target, IKEA and many others are expanding
in our area
• Bankruptcies and store closings: Jacobson’s,
Montgomery Ward and Kmart


   Downtown                Cabela’s Superstore,
 Detroit Borders            Dundee Michigan
  America’s Top Big Box Retailers
  Rank   Name          # Stores   Change         2003 Sales
                                  from 2003      ($000’s)
  1      Wal-Mart      4,906      4.5%           $258,681,000
  2      Home Depot    1,707      11.4           64,816,000
  3      Kroger        3,774      -7.7           53,790,800
  4      Target        1,553      5.3            48,163,000
  5      Costco        420        4.7            42,545,552
  6      Sears         1,970      -14.3          41,124,000
  7      Safeway       1,817      0.3            35,552,700
  8      Albertson’s   2,305      0.8            35,436,000
  9      Lowe’s        952        11.5           30,838,000
  10     Best Buy      767        -59.4          24,547,000



Big Box Trends
• Employment growth vs. rising           • De-Malling
interest rates                           • New urban store designs
• Dollar stores                          • Retail real estate is hot
• Grocery chains: increased              investment
competition from specialty stores
Big Box Basics
• Big Box store footprints = 20,000 to 200,000 square feet
• Parking field typically 4 to 7 times store footprint
• Wal-Mart, Target need 15-16 acres minimum

                                 130,000 (Typical Target,
     20,000 (Staples)            Costco)
           57,564 (Football Field)                  200,000 (Super Wal-Mart,
                                                    Sears Grand)


                                                                     300,000
                                                                     (IKEA)
The Players Driving Development:
         • Retailer’s regional real estate manager
         • Commercial real estate brokers
         • Real estate developer


 • Big box stores typically partner with a local developer
 to find and develop sites in a market

 • Retailers often sign exclusive representation
 agreements with commercial real estate brokers to find
 new sites and negotiate deals


                 Network with the local commercial
                 real estate community. Commercial
                 real estate is a “relationships”
                 business
Development Process Overview
What You Can Do: Prepare Information
Trade Area                   Site Inventory
  • Area from which store       • Catalog of potential
  can draw customers            big box sites
  • Maps / aerials with         • Zoning, price, site
  competitors’ locations        plans, contact
                                information, utilities
Demographics
• Population, households,    Needs Analysis
Income, ethnicity, trends      • Where are we
• Major employers, and         underserved?
important news (e.g., new      • Categories of retail
plant opening)
• Daytime population

          “ We rely on demographics to decide where
          to go…where is business available, and
          where do we need to be ” – John Mullen,
          Home Depot’s Northeastern Region
          Regional Vice President
Example: Diagram of Existing Big Box
Example: Drive Time Map
                                            Ingress &
                                              Egress



                   Parking
                    Field




                                Traffic counts

                                 Frontage


      Pylon Sign         Truck docks
                         & turnaround
                             space
Outlot Bldgs
                  Sewer & Water Mains


                  4-Lane Divided Rd.



                                  High traffic
     Freeway                      count freeway
     Visibility                   interchange




Potential wetland?
Incentives and other tools
• Special Improvement Districts (SIDs), Special Services Areas
(SSAs), Business Improvement Districts (BIDs)
• Brownfield Redevelopment
• Federal or State Economic Development Zones (Empowerment
Zones, Enterprise Zones, etc.)
• Special Taxation Districts
• Community Development Block Grants
• Tax Increment Financing
• Economic Development Administration Grants
• SBA 504 Loans
• Tax Abatements
• Writing down cost of land
• Public-Sector Leases
• State & Local Infrastructure Grants
• Matching Funds
• Revolving Loan Funds
• Bond Issues
• Historic tax credits
• Public loan guarantees
• Nonprofit grants and assistance (see www.lisc.org, the Local
Initiative Support Corporation)
Urban Big Box: Unique Challenges

                        Cost          Perception
                        Gap              Gap




Top Urban Challenges Identified by Retailers
1.    Crime/ Percieved Crime
2.    Insufficient concentration of retailer’s target customer
3.    Lack of consumer purchasing power
4.    Potential shrinkage
5.    Rent
6.    Buildout/Rehabilitation costs
7.    Site identification
8.    Inadequate parking
9.    Higher operating costs
10.   Construction and development costs

Source: Development in Underserved Retail Markets, The
International Council of Shopping Centers
Our Experiences with Big Box Retail
Hidden Demographic Strengths
• Multigenerational Households
• Median household income vs. concentrated buying power
• Detroiters drastically underserved. Half-hour + commutes to
suburban shopping centers common


City of Detroit Taking Proactive Approach
• Mayor Kilpatrick appointed Director of Development, a new
cabinet-level position
• Current administration and last administration sent delegations
to Las Vegas ICSC conference



Remaining Hurdles
• $70 million, 250,000 square foot shopping center currently
planned in Detroit involved acquisition of 81 homes
• City of Detroit owns 38,000 vacant parcels. Work
continues on resolving legal obstacles to redevelopment
Further Resources
The International Council of Shopping Centers (ICSC) is the
nation’s leading shopping center industry association. The ICSC’s
“Alliance Program” helps foster relationships and strategic
alliances between the public and private sectors to help stimulate
growth. www.icsc.org

The Urban Land Institute is the nation’s preeminent
multidisciplinary real estate forum. The ULI publishes in-depth
research reports and maintains a comprehensive library of real
estate industry information www.uli.org

Industry News                    Demographics & Maps
• Shopping Centers Today          • Detroit Regional Chamber
• Crittenton Retail News          Research & Information Center
• Shopping Center Business        313.596.0365
• National Mall Monitor
                                 Lead Generation
                                 • Chain Store Guide
                                 • Retail Tenant Directory

				
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