Grand Rapids groups partner on retail pilot program

BY Sunday, October 27, 2019 06:30pm

GRAND RAPIDS — Multiple organizations have partnered to assess how Grand Rapids can attract and retain retail across all parts of the city.

The city of Grand Rapids, the Downtown Development Authority and the Grand Rapids Area Chamber of Commerce will begin the Retail Retention and Attraction Initiative on Nov. 1. The initiative is a one-year pilot program that will involve studying current and future trends in retail and hiring a retail specialist who will develop and implement an action plan.

“We recognize that there can be unique challenges to retailers in Grand Rapids, so we want to make sure we are providing support for those existing businesses, and providing retention services to them across the various resources available in the community,” said Jono Klooster, the city’s acting economic development director.

The total cost estimated for the initiative is $174,616, which includes a retail market study and action plan, the hiring of a retail recruitment and retention specialist, marketing and other needs. The Grand Rapids City Commission voted this month to contribute $100,000 for the initiative, while the DDA in November will consider a $60,000 contribution. The Chamber will make an in-kind contribution of workspace, technology and other resources.

The partners aim to present the recommended strategies outlined in the action plan to the Grand Rapids City Commission in the first half of 2020 and report on the outcomes of the strategies in early 2021.

According to Klooster, a market analysis on the entire Grand Rapids retail environment has never been completed. A study covering some areas of the market was completed about 10 years ago, so it needs to be updated, he said. The new study will focus purely on the retail market, including the downtown and neighborhood business corridors.

“The retail market is changing significantly, and we know that one size doesn’t fit all, and that vibrant business districts, which come in many different forms, help to create a sense of place that contributes to the quality of life for residents. It’s a really broad-based initiative,” Klooster said.

The three partners came together on the initiative because of an alignment of priorities in their missions, said Tim Kelly, president and CEO of Downtown Grand Rapids Inc., which administers the DDA. The initiative also fits within the city’s strategic plan objectives.

“(Being supportive of the retail environment) has been a priority for us for a number of years, and something we are going to continue to do,” Kelly said. “We all identified it as an opportunity.”

Despite a range of threats and challenges, including limited available space because of the low vacancy rates across the market, research has shown West Michigan’s traditional shopping corridors continue to thrive. Retailers and researchers previously told MiBiz that while the retail industry is reacting to technology-driven changes such as the convenience of e-commerce, brick-and-mortar stores remain viable in cases where retailers deploy new online strategies in addition to their physical locations.

This is the case for Woodland Mall and its recently opened 90,000-square-foot Von Maur anchor store. A spokesperson for Woodland owner Pennsylvania Real Estate Investment Trust Inc. told MiBiz the mall has stayed viable because of retailers’ continued reinvestment in their stores.

According to a third quarter report by the West Michigan office of Colliers International, a number of stores including GNC and Kmart announced large-scale closures, while many new retailers and restaurants have come online in Grand Rapids. 

Along with Von Maur, Urban Outfitters opened a new store at Woodland Mall. Several new restaurants have also announced openings, including North Carolina-based Tupelo Honey Southern Kitchen & Bar, which signed a 10-year lease to occupy the first floor of the Hyatt Place Grand Rapids/Downtown at 140 Ottawa Ave. NW.

Other recent openings include Studio Park in downtown Grand Rapids, a 62,500-square-foot mixed-use development that includes a movie theater, restaurants and retail space, among other uses.

The vacancy rate for West Michigan retail overall stands at 3.17 percent. Colliers noted that space continues to fill up quickly, especially second-generation restaurant space, end caps, mid-box space and newer multi-tenant spaces in major retail corridors like 28th Street and Alpine Avenue.

Looking forward, Colliers expects retailers to continue to face high construction costs, which it defines as a major factor in the lack of new or speculative retail space coming online. Vacancy rates will decrease as space fills, while absorption and lease rates will increase because demand outweighs supply in the local market.

City leaders have made it a priority to continue developing a vibrant retail environment, which they see as a critical component of downtown and neighborhood business districts. The economic development department has started conversations with the six corridor improvement authorities throughout the city to engage them in the development of the action plan. 

Overall, the new initiative is intended to support current retail businesses and increase the number of new businesses resulting in fewer first-floor vacancy rates. The retail specialist hired as part of the project will focus on these goals.

“The goal is to really understand the current market, getting into market analysis and data gathering so we can understand the growth potential,” DGRI’s Kelly said. “Really, it’s about how we attract and maintain what we currently have, making sure there is a point person that is charged with doing that, both in downtown and throughout the city.”

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