BACKGROUND MATERIAL • • • • • • • • • • • • GENERAL CONDITIONS BUSINESS DISTRICTS DOWNTOWN COMMERCIAL DISTRICT PHYSICAL/DESIGN ELEMENTS OF DOWNTOWN COMPARATIVE ANALYSIS SIZE AND SHAPE OF TRADE AREA NORTH BEND TRADE AREA CONDITIONS: DEMOGRAPHIC, ECONOMIC & LIFESTYLE CHARACTERISTICS CONSUMER / BUSINESS / VISITOR ATTITUDES ANALYSIS OF RETAIL OPPORTUNITIES ANALYSIS OF RESTAURANT OPPORTUNITIES OPPORTUNITY GAPS OTHER CONSIDERATIONS: Lodging: Brownsfields • NEXT STEPS FOR IMPLEMENTING THE MARKET ANALYSIS
Page 1…General Conditions: Trade Area, Demographics, Attitudes, Opportunities Feb 26, 2006, City of North Bend, EDC Market Analysis Report
GENERAL CONDITIONS The City of North Bend is located near the Cascade Mountains in the most eastern portion of King County, the largest and one of the fastest growing counties in Washington according to State population estimates. North Bend grew by 84% between 1990 and 2000 but since that time population has had a slow reduction. King County is expected to grow by 311,000 people by 2022. North Bend and its trade area will be part of that growth. With large empty buildings in the downtown core and “missed economic development” because of the lack of water rights, the intent of the Market Analysis was to develop a plan to identify market opportunities for existing business owners and prospective business. The downtown commercial district, which is a mixture of services, residences, and retail businesses needed some attention to prepare the City for exiting the development moratorium. The focus of the analysis would be to provide answers to questions about community needs. The demographic information would show what opportunities the community could realistically expect for the downtown area. Identifying the City’s market area was a primary goal, as was determining what markets were underserved, the significance of the City’s location next to Interstate 90, connecting the business near the freeway with the downtown district, and the considerable recreational setting. BUSINESS DISTRICTS There are several commercial districts, which include the Interstate 90 business district, the downtown commercial area, and the Ace Hardware commercial area. The Downtown Commercial district is mostly the North Bend Way area from the Les Schwab area to the western entrance at the South Fork of the Snoqualmie River. It includes the Historic Commercial District, car dealership, and QFC grocery. The Interstate 90 district includes the Factory Stores and Mountain Valley areas which have numerous outlet stores, Safeway grocery store, and convenience services for the I90 traveler. The Ace Hardware district has shared on-site parking, several restaurants, services and small businesses, and large hardware store. DOWNTOWN COMMERCIAL DISTRICT Despite the several negative indicators that affect the downtown, there are several businesses which continue to attract people to the downtown. Examples include the grocery store, post office, city hall, financial facilities, two theaters, train, several restaurants, and the auto sales. These attractions should be looked at as assets.
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An inventory of downtown businesses located along North Bend Way from the South Fork of the Snoqualmie River western entrance to the rental store on the east part of downtown follows:
Inventory of North Bend Way Downtown - West entrance to rental store on east 1 MFG (retail 2 Bar (w.o. restaurant) 1 Café type 1 Automobile sales 2 offices (2nd floor) plus offices not completed 2 lodging 2 Entertainment (live theater and movie theatre) 3 Vacant lots 3 Vacant bldgs 2 Real Estate offices (HCD) 4 MF-apartments 7 Retail 9 Restaurants (4 w/bar area) 14 services: gas, rental, auto, & personal svcs such as hair, laundry, nail 53 Businesses along North Bend Way
1.9% 3.8% 1.9% 1.9% 3.8% 3.8% 3.8% 5.7% 5.7% 3.8% 7.5% 13.2% 17.0% 26.4% 100%
This business mix identifies 30% service providers of all storefront businesses. The vacancy rate of both lots and buildings recognizes the availability of space for expansion or new businesses in the downtown. The size of the vacant buildings, which are all located in the Historic Commercial District (HCD), totals approximately 19,000 square feet or 23% vacancy rate within the 1 ½ block area of the District. The surrounding business mix studied (shown above) and outside the HCD identified 1 vacant lot without structures. In addition, the downtown zoning allows for up to 35’ high buildings, which supports additional and new space availability. The City’s downtown has gone through many changes with the present location of Interstate 90 moved from downtown in the 1970s; the revitalization effort with the Alpine façade theme in the late 1970s, and the landmark Historic Commercial District façade incentive program initiated in the late 1990s and continues today. A recent review of the downtown’s gross sales indicates good, steady growth for all of the buildings that have undergone new facades or in some cases, new owners.
The existing business mix of this approximate 5-block area outlined above shows only 13.2% retail and upon closer review, the existing retail is what one consumer surveyed called “functional-type” businesses are located in the downtown, versus more “impulsive” type retail stores. It is a common theme across the United States that there
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is less and less retail in downtown cores, however there has been a recent “boom town” effort that is bringing revitalization success to many small towns. The existing retail stores do offer a variety of items including antiques, guitars, health items, bikes and winter sport equipment. This mix is positive but there is a need for increasing the number of retail stores by matching what local residents would purchase and then maximize the attention of local consumers who value local ownership and quality of service provided by downtown stores. The consumer survey1 indicated the high value placed on locally-owned stores and restaurants. According to City of North Bend’s average daily traffic counts2, there are 12,000 trips in the Central Business District (CBD) and 14,000 trips along the Bendigo/Factory Outlet Mall area. It was found in the 2005 surveys3 that consumers want convenient shopping which is not necessarily in an area outside of North Bend if there were more convenient shopping hours. Retailers may need to work together to have consistent convenient hours for customers such as extended hours into the evening and opening late in the morning. And they must be patient and must advertise what they have for sale and open hours, etc. Consumers need convenience with consistent hours open for shopping. Physical/Design Elements of Downtown “Empty store fronts in the Downtown area, what a waste! There are many run down/ vacant buildings and houses that could be developed for residential and commercial uses.” –from 2005 North Bend Consumer Survey When asked about what weaknesses of the City, the highest percentage of survey respondents included words such as chaotic, lack of cohesion, hodgepodge, ugly and dumpy in describing the downtown. There are several examples of attractive building facades, most of them received the City’s design incentives: • The McGrath Building: Robertiello’s • Masonic Lodge Building: Bike Shop & Unity Theater • Twede’s Café • North Bend Theatre Unfortunately, the majority of buildings along the northern side of North Bend Way, detract from the visual appeal of downtown. These buildings have been mostly empty and not well-maintained. There may be a need to develop a strategy for unkempt buildings such as meeting with each business owners with vacant buildings or property in the downtown core to develop a plan for change including enforcement action. There are several incentives available to assist building owners.
1North Bend Visitor, Consumer, Business Survey, 2005 22005 & 2003 North Bend Average Daily Traffic Counts 3North Bend Visitor, Consumer, Business Survey, 2005
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COMPARATIVE ANALYSIS:
The Cities of Duvall, Enumclaw, and Maple Valley were used as comparison cities to North Bend. Each of the comparative communities has similarities to North Bend, but remain unique in its own way. Similarities of all four small towns include its population size; the traditional family households’ composition; the access to nature and considerable recreation options; a timber resource industry base change to a more retail, manufacturing, service and commuter employment base; and each town has a downtown center. Duvall, Washington: Duvall is a small town of close to 6,000 people; is rich in history and tradition, offering Northwest beauty with the Snoqualmie River and nearby mountains for visual and recreational enjoyment. The Duvall downtown offers a unique cluster of shops, restaurants, and restored train depot. Local employment leads with educational, health and social services; manufacturing; professional services, and the retail trade. Maple Valley, Washington: Maple Valley is a new small city incorporated in 1997, which has experienced healthy residential and commercial growth. The City encircles Lake Wilderness and has two other lakes, which attracts people for recreational activities. The local employment base leads with manufacturing, educational, health and social services and the retail trade. Enumclaw, Washington: Enumclaw is a growing small town with a population of 11,000 and is located in the foothills of Mount Rainier, approximately 45 miles southeast of Seattle. Enumclaw has an active downtown revitalization program and an employment base of educational and social services, manufacturing, retail trade and construction.
SIZE AND SHAPE OF TRADE AREA Upon analysis of the City’s geographic area, the population drive-time to/from North Bend, the access to a heavily traveled interstate, and to the nearby regional business areas, the trade area selected encompassed the 5-mile radius of North Bend. The primary trade area was determined to be within a one-mile radius of downtown North Bend and secondary trade areas of 3 and 5-mile range. This trade area was used throughout the study and includes the communities of North Bend, unincorporated surrounding area, and Snoqualmie.
NORTH BEND TRADE AREA CONDITIONS
DEMOGRAPHIC, ECONOMIC & LIFESTYLE CHARACTERISTICS Household composition is important in identifying different retail opportunities. For example: households with children will spend more money on children’s clothes and food while married households without children have more disposable income and will spend more on appliances, cars, and home furnishings. North Bend’s household composition has a large percentage of traditional, married family households. While the number of households in North Bend is projected to decrease by –2.9% over the next 5 years, the trade area for North Bend is projected to increase by 14 to 17.1% during that same time period.
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Age is an important demographic factor to consider as consumer expenditures change with age. Examples: Drug stores and assisted care services flourish in areas with an older population. Toy stores, day care centers, etc. are often successful in areas with many children and infants. Clothing stores & fast food establishments thrive in retail areas that contain a large concentration of adolescents. Furthermore specialized entertainment and recreation options can target certain age segments. North Bend’s age distribution is expected to stay fairly flat at around 37 for median age; also, the age distribution is about the same for its trade area. This age segment may provide a niche market consideration for specific goods and services in North Bend. Gender is a key factor as most household purchasing decisions are generally made by the female. The male and female distribution of the population is about equal in North Bend. Population in North Bend increased by 84.1% between 1990 and 2000 and has had a continual but slight decline since then. North Bend’s population is expected to decline by -1.8% over the next 5 years while its broader trade area will grow by 14 to 16%. Both the North Bend and its trade area population provide a source of future demand. Household income is an indicator for the spending power of residents. Household income positively correlates with retail expenditures in many product categories. Retailers may consider the median or average household income in a trade area or seek a minimum number of households within a certain income range. Another common practice is to analyze the distribution of household incomes (ex. discount stores avoid extreme high or low-income areas). North Bend’s household income is expected to increase 14% over the next five years, (from $77,000 to $88,000) while its expanded trade area is slightly higher ($92,000 to $96,000) with income growth to be at a similar rate to North Bends over the next 5 years. Educational attainment is another way to determine the socio-economic status of an area. Because income increases with advancing educational attainment, many retailers focus on income level rather than education. One exception is bookstores, which are often sited based on the number of college-educated individuals in the trade area. Similarly, computer and software stores are often sited in areas with high levels of education. Approximately 26% of the population in North Bend’s trade area has a college degree. Commuting time refers to the total number of minutes that it took on average for a person to travel from their home to work in one direction, which in North Bend is on average 33.91 minutes. In-commuters are those workers who travel to North Bend to work. These incommuters generally offer another outlet for generating sales and services to local businesses.
CONSUMER / BUSINESS / VISITOR ATTITUDES The North Bend Economic Development Commission followed the design of a mail survey prepared by the University of Wisconsin for use by rural communities. Findings include: • Current consumers are primarily doing their non-grocery shopping outside North Bend and secondarily at the Factory Outlet/Safeway areas near the freeway or the greater North Bend area. • The primary non-grocery shopping area reported was Issaquah.
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• • • • •
• • • •
The topmost businesses that the residents (total of 1, 985 suggestions) said they would most likely patronize if that business opened in North Bend include bookstore, drug store, variety store and sporting goods. The topmost businesses that the visitors said they would most likely patronize were restaurants and entertainment, such as recreational activities. Local residents made 928 suggestions for places to eat and the types of food. There is significant interest in family, fine dining, healthy/organic, and Thai, steak and seafood cusine. Other frequently mentioned desired establishments include coffee shops, delis, and specialty foods. Specific leisure interests of consumers include attending music type events and shows as well as participating in more active pursuits including many, many outdoor options such as skiing, canoeing, as well as acting and drama activities. There is strong support for encouraging additional events and festivals in the community as well as incorporating the natural setting into these types of events. Consumers shared that North Bend’s greatest strengths are its small town feel and natural beauty. Consumers stated they would like to have small, unique …in the downtown…and to clean up downtown The topmost businesses that the business community said would most likely help with their own business were computer software, furniture, book and hardware stores. Businesses were fairly neutral about the importance of their storefront appearance; they were satisfied with city services especially fire and police services and somewhat agreed that downtown is safe. However, when asked about improvement areas the following areas were suggested: traffic, police, signage, and parking.
ANALYSIS OF RETAIL OPPORTUNITIES The trade area map illustrates the location of North Bend relative to the concentrations of residential retail demand within the 5-mile radius. The location of North Bend is within 15 minutes (Issaquah and beyond) of a much larger supply of retail businesses, which North Bend competes. The following includes some of the retail opportunities examined as part of this study. Please refer to the extensive comments and information in the report that substantiates these conclusions. Book Store: Based on demand, supply, and local consumer considerations, there appears to be some market support for the expansion or recruitment of a new business in this retail category. It might be possible to recruit a smaller bookstore or encourage a store in another category to sell books. There might also be market support for a bookstore specializing in a focused niche. Such a bookstore would need to serve a market larger than the trade area and might require a significant web-presence to be profitable.
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Drug Store / Variety Store: The large number of consumers responding to this category in the survey indicated their desire for a store with more variety of accessory type items as well as better pricing. The lack of a drug/variety store in the target area has resulted to sales leakage to other communities in the region. Sporting Goods Store: There may be market support for the recruitment of a new business in this retail category. A successful store would need to focus on the specific recreational opportunities offered in the area (kayaking, skiing, fishing, hiking, biking, etc.) Currently, sporting good needs are likely being met by larger regional shopping areas. A new store that offers recreational products targeted to visitors could become a destination business for North Bend. (residential target – active outdoor recreation was listed as …42% of leisure activities in 2005 North Bend survey) Gift-specialty Store: Based on demand, supply and other considerations, there appears to be market support for the recruitment of new businesses in this retail category. Given the prevalence of tourism in the local community and King County, this category provides potential. Further, a cluster of gift stores developed in conjunction with a few restaurants would give North Bend a critical mass of business activity that could appeal to both the resident and visitor. Sewing/Needlework: There appears to be limited to some support for recruitment of a new business in this retail category. Opportunities exist that can potentially fit into a crafts/arts/sewing/etc /gifts niche
ANALYSIS OF RESTAURANT OPPORTUNITIES: Based on survey data collected in this section, the following summarizes potential concepts that could effectively serve market demand in North Bend. Ethnic: The local consumer survey that was conducted reported a significant interest in more ethnic type cuisine. Asian and Mexican were mentioned frequently with Thai listed as the top choice. Steak / Seafood: Steak and seafood cuisine were listed as the next most stated favored food type by local consumers. Family Dining, Fine Dining as well as delis, café type restaurants specializing in coffee, bagel cafes were mentioned frequently in the surveys.
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OPPORTUNITY GAPS Once the local survey data from residents, visitors and business was compiled, these expectations had to be reviewed with more depth. Would the demographics of the target area support the desires and interests of the residents, visitors, and business community who responded to the 2005 surveys? Opportunity Gaps in Retail Stores (Claritas Inc. 2005 demand/supply research) was analyzed in the one, two, and three-mile zones within the North Bend trade area. (Refer to the demographics study report for more detailed information.) The one-mile range showed the least opportunities however when the two and three mile ranges were reviewed, there were enormous opportunities in nearly every category, with the exception of gasoline stations/stores. These categories included the following sectors: • Building material. Lawn, garden equipment and supplies stores • Clothing and Clothing Accessories stores • Electronics and Appliance stores (small to large-size) • Florists, office supplies and stationery stores • Food and Beverage Stores including specialty food stores • Furniture and home furnishings Stores • General Merchandise Stores • Health and Personal Care stores • Special eating and drinking places • Sporting Goods, Book and Music Stores and Sew/Needlework/Piece Goods Stores Obviously, the above categories include businesses that already exist in North Bend. Top categories mentioned in the local surveys were bookstore, drug store, variety store, sporting goods-type store, as well as computer software, furniture, book and hardware stores. Also, restaurant interest included family dining, fine dining, healthy/organic, and Thai, steak and seafood cuisine, coffee shops, delis and specialty foods. (Please refer to the survey findings for additional detail.) When reviewing the future population demographics of the entire trade area, there is great potential to expand marketing of the existing businesses as well as expand within those business types. The opportunity available for retail in the target area could generate an additional $67 million in sales which would mean approximately $500,000 in tax resources for the City of North Bend. (source: Retail Opportunity Gap report-Demographics Appendix) The Market Survey Analysis and Report needs to be reviewed by the local business community and a strategy developed for extensive organization of the North Bend business community to consider potential growth areas.
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OTHER CONSIDERATIONS WITHIN THE DOWNTOWN: Lodging: There needs to be an analysis of this business category as there exists interest for additional lodging from the Visitor, Consumer, and Business Surveys. Existing rooms available in the North Bend area totals approximately 60. Public and private interests alike could help by being proactive to improve lodging space which could also provide multiple uses such as meeting and conference space. North Bend is in a good, central location for meetings of those coming from east of Snoqualmie Pass and western locations. Brownsfields The City of North Bend take the lead agency role in the assessment of potential in order to identify and reduce threats to the health and welfare of the community. Cleanup and redevelopment will help prevent future brownsfields and promote economic benefits for the City of North Bend residents. (see King County, Washington, 2005 Grant Sheet on Brownsfields for additional information.)
NEXT STEPS FOR IMPLEMENTING THE MARKET PROJECT: 1) Establish a Retention/Expansion Team 2) Share the Market Analysis report with the existing business community 3) Create a clear Market Position Statement and Market-driven strategies for the City of North Bend 4) Identify key businesses which would benefit from business retention services 5) Offer needed business assistance 6) Identify who does the recruitment and retention 7) Promote downtown businesses to targeted markets 8) Help existing businesses identify and develop opportunities for growth/expansion (create a wish list) 9) Recognize early warning signs of business failure 10) Plan for business transition 11) Support our city personally
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