Urban renewal isn’t easy: The challenge of filling vacant shops

Column by Bill Christopher
Posted 2/14/18

At long last, the mystery has been solved. There has been so much speculation and constant social media chatter about what anchor store is going into the redevelopment project at the Huron Center in …

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Urban renewal isn’t easy: The challenge of filling vacant shops

Posted

At long last, the mystery has been solved. There has been so much speculation and constant social media chatter about what anchor store is going into the redevelopment project at the Huron Center in Northglenn.

Recently, the City of Northglenn announced that Save-a-Lot has leased over 21,000 square feet in the center being revitalized at 104th Avenue and Huron Street.

Save-a-Lot, which is a grocery store chain with over 1,300 stores nationwide, will join Auto Zone and Arby’s at the site according to the developer. Approximately 30 to 50 jobs will be created by the new Save-a-Lot store.

A mixed review

Social media has had a steady thread of chatter both pro and con about what retail chain might be locating in the center. Clearly, Save-a-Lot is not the top of the wish list among grocery chains for many residents.

Some neighbors expressed a desire for Whole Foods (which Amazon recently acquired) or Trader Joe’s while others said something like a Save-a-Lot was acceptable. The point was made numerous times that having the building occupied was better than an empty center. Once it was announced that Save-a-Lot was the anchor, there was some sentiment among social media readers that they would not shop there.

This came from a mixture of Northglenn, Federal Heights and Westminster residents who weighed in.

Challenge of redevelopment versus new development

I have three reasons for citing the Huron Center redevelopment that apply to existing older retail centers overall. This is to say that this experience is not unique to Northglenn. It is a national dilemma.

First, redevelopment of older, “tired” retail centers is a very difficult task to achieve. Building new retail on virgin sites on undeveloped, emerging locations is far easier to attract tenants than to go back in older neighborhoods and attempt a “Phoenix event” where some group of exciting new retailers emerge. It just isn’t likely to happen.

Plus, making the numbers work is a challenge from the start. Sure, a developer can attract the class C retailers and service providers like a second-hand store or tattoo parlor or a laundromat or the like - but who wants them?

Besides, grocery chains are hard to come by as an anchor.

The many facets of making it happen

The second reason is that the public doesn’t know or understand all the aspects which are involved in making a redevelopment project happen. The Huron Center redeveloper, Evergreen Development, did disclose that $10 million was being invested in the center. While details of how the money will be spent were not disclosed, overall it has to include acquisition of the property, new facade, internal construction, site improvements and enticements to the retailers lease space at the center.

Perhaps there are requirements of the city which have to be resolved as well such as storm drainage, new utilities, undergrounding utility lines, etc.

Then there is the role which the city and/or urban renewal organization plays in either waiving fees and/or sharing revenues generated from the revitalized set of tenants.

What is puzzling in the Huron Center case is that the City of Northglenn does not impose sales tax on grocery sales. So, Save-a-Lot will not be generating sales tax revenues to the city. On the other hand, this retailer or the developer will pay property taxes and Save-a-Lot will create 30-50 new jobs.

Furthermore, this grocery store will generate “foot traffic” to the center which benefits the whole center to varying degrees.

Residents’ perception versus the current market place

Another aspect of residents’ expectations is their own perception of what the retail center close to their homes should attract. Often times, the residents have higher expectations like a Trader Joe’s versus a Save-a-Lot than what the developer is able to attract.

Residents tend to see their homes and the current demographics worthy of a cut above class of tenants contrasted by the real market. We need to remember the old cliché of “location, location, location” when it comes to retail/service providers deciding new locations.

Fast changing trend on how people shop

Every community has redevelopment challenges as mentioned above.

As big box anchored centers and neighbor retail centers age, they usually will lose their anchor(s) along the way. In turn, this usually has a negative impact on the retailers/service providers left behind.

Anchors like Best Buy, Office Depot, Michael’s, Ross - to name a few - like to move when their leases allow relocating. Grocery chains regularly monitor the “performance” of each store location and will close locations which are in decline.

Remember Albertson’s huge pull-back several years ago in the Denver metro area? Westminster was impacted at three separate locations with store closures and it took years to finally bring those centers back to full strength. Albertson’s was one of the two key tenants at the Huron Center that left, causing the long-term vacant space there.

Finally, we need to pay heed to the fast evolving change in how retail functions. With Internet sales soaring each year, investing in more brick and mortar stores is much more challenging for corporate America to spend their money on “Main Street U.S.A.”

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