Trends

Owen Buckley asked his colleagues what trends they were seeing in the world of retail development.

Dave Hickman cited the emergence of “pop-up temporary tenants” to fill space during the holiday season and drive traffic to projects. Hickman has also been seeing a re-use of existing boxes like the former Dillon’s building on Metcalf Avenue in Johnson County. That erstwhile store that has been sold to a church.

Dan Lowe was curious as to the evolution of “junior boxes.”

Bob Johnson expressed his belief that the local market was in good shape compared to other Midwest cities like Chicago and Minneapolis. “You look at the six or eight prime power centers in Kansas City in all four corners of the city,” said Johnson, “and there’s not one 20-to-30,000-foot vacancy in any one of those, and there hasn’t been, which is remarkable.”

Johnson argued that the Kansas City market was more stable and that rents never got out of hand here as they did elsewhere. “The combination has really created opportunity to build here,” added Johnson, “if you can get the right rental rate and the right deal.”

On the finance front, Joe Platt pointed to pre-leasing as a requirement for new development. He noted, too, that lenders are looking more at infill, given the understanding that residential growth will be lagging for some time to come. One potentially useful trend is that there is “a whole lot more capital available than there was in 2009.”

On the retail front, Gail Lozoff suggested that the vibrant trade areas are becoming saturated with restaurants. Although she would like to expand, she cannot take the risk of moving into an area unless it has the density, population, and demographics Spin! needs. “We’re seeing a lot more competition in our primary trade areas,” she noted.

Beauty Brands is likewise being more selective on where to develop new stores. “We’re backfilling existing markets, capitalizing on our existing management strength and advertising, and we’re always looking to lower our occupancy costs,” said Mitch Truster. “We have a controlled managed growth, and that will remain the way for us.”

Buckley asked David Block whether there were pockets of the market that could handle new development. On the other hand, ventured Buckley, “Is new development just something that is off the table for the next few years?”

“I think we’re running out of room,” said Block. “Without a lot of new development, it’s going to be more infill, more redevelopment.”

The problem, as he saw it, was finding tenants “that will pay the rent in order to make the deal.”

Public/Private Partnerships

When David Block suggested the need for alternative financing to make new deals possible in infill areas, the attention turned to Mike Downing, deputy director of the Missouri Department of Economic Development, who had driven in from Jefferson City to participate.

“I’ve been in this business for a number of years and seen a lot of ups and downs,” said Downing, “and I think we’re going back up.” He cited an uptick in state revenues in the past few months and a more positive outlook in the business community.

His department has tasked 41 executives from around Missouri to construct a strategic plan for statewide economic development, looking at all sectors of the economy 20 years into the future. “We’re more focused on trying to figure out key redevelopment strategies, incentives for redevelopment that would really have a dramatic impact on a surrounding area.” One local focus is the Bannister Mall area.