Recruiting retailers poses challenges
Efforts at Corridor Plaza explained
Editors note: Business leaders and local officials involved in the redevelopment of Crossroads Mall into Corridor Plaza present the latest information on the project in a series of occasional stories that will appear in The Messenger. In the following story, Mike Cunningham of Buyers Realty gives insight into the process of recruiting retailers to Fort Dodge as part of the Corridor Plaza project. Buyers Realty owns and manages nearly 2 million square feet of retail shopping centers and commercial property.
What does it take to bring national retailers to a market like Fort Dodge? And what types of retailers are being recruited? Bringing big name stores to town may not be as easy as you think.
“We’re looking at restaurants, soft goods, sporting goods, and services among others,” said Mike Cunningham of Buyers Realty, a commercial real estate brokerage firm brought in to specialize in retail leasing on the Corridor Plaza project.
Fort Dodge is competing with cities across the United States for the attention of retailers looking to expand and lease retail space.
Fort Dodge has both challenges and advantages in this highly competitive market.
One of the challenges is the geographic and population size of Fort Dodge.
“Some retailers may want a population of 100,000 or more in the statistical area,” said Cunningham. “Restaurants have a lot of requirements. It is our job to justify that we can draw the numbers.”
An advantage is already having stores like Hobby Lobby, Target, Kohl’s, and Marshalls.
“Having those stores encourages other national retailers to take a look at Fort Dodge,” he said.
Those who shop locally are helping this process.
“Retailers like to see that the other stores in town are successful,” said Cunningham. “If they are doing better than average. If the local population is supporting the existing retail, it makes it easier to recruit new. The more synergy the better.”
This applies especially to junior box retailers, though every retailer is different. Often, they want to cluster together, three to four of them at a time.
“Retailers are cautious and very site selective,” Cunnigham said. ”They do a lot of research deciding what kind of market they want to open in. They are looking at the whole country – competing with cities all over the United States. Some of them have huge growth.”
The process takes quite a while and varies year to year. Only so many new stores or restaurants are opened each year, and they can be filled up to a year in advance.
Cunningham said, “Ulta, for example, may plan to open 50 stores next year, but may already have them all spoken for.”
Store counts also vary widely depending on how the economy is doing.
“COVID slowed things down, but we’ve seen a decent amount of activity from people that are wanting to grow,” he said.
There are plenty of additional economic considerations that play a part in a retailer’s decision to expand, including rising construction costs and labor supply. However, according to Colliers report ”Clarity and New Reality: Commercial Real Estate Outlook for 2022” published this month, the vacancy rate nationwide dropped below 5 percent and is expected to continue to fall into 2022 as retail openings exceed closings.
Retailers may also continue a trend of smaller-footprint stores. Colliers’ report noted some Target stores opening Ulta “mini-shops” and small Sephora stores being added inside select Kohl’s.
The project team shared they are in discussion with four to six junior box retailers currently. The junior box retailers typically occupy 10,000 to 30,000 square feet each.
“We’re talking to some new to market retailers that haven’t been in Fort Dodge,” said Cunningham. “We’ve had pretty good activity and hopefully in the next couple months we can make some good progress on the junior box portion of the center. It would probably be four to six retailers. That’s most likely how many the project would support based on the size of it.”
Based on research conducted to support the proposal to the Iowa Economic Development Authority for the Iowa Reinvestment District funding, the land uses proposed for the redevelopment of the Crossroads Mall site are reasonable and market supportable.
Research supporting the application notes, within a 30-mile radius of the project site, the resident population is estimated to be 79,233 people, increasing to 225,270 people within a 45-mile radius and to 427,551 people within a 60-mile radius. Extending beyond 30-miles, Fort Dodge could find competition from other regional hubs such as Mason City and Ames.
Vacancy rates are also noted as the lowest in the Fort Dodge retail submarket since 2016, dropping to 5 percent in 2021.
“I think retailers are just cautious and they don’t want to make a mistake. We’re competing,” said Cunningham.
Statistics on Fort Dodge market provided in this article and found in the Iowa Reinvestment District proposal are sourced from CoStar, LoopNet, and Johnson Consulting.