Home Body
Oct 1, 2008 12:00 PM, By Mike Janssen
Milks of Grubb & Ellis in Kalamazoo says the growing trend of drivers' reluctance to travel long distances or make frequent trips to the mall is reinforcing retailers' inclinations to rein in or jettison prior expansion plans. Rather than open a new store a few miles away from a current site, retailers and franchises such as sandwich and coffee shops will try to draw more traffic to existing stores.
However, those pressures have yet to show a negative impact on the overall health of retail in Kalamazoo, says Milks. The city is home to fewer vacant retail locations in comparison to other cities around the country, which has helped to keep rents stable.
One tactic that some malls have started to employ is to use gas card promotions as a way of providing incentives to shoppers.
Barrington, Ill.-based GK Development, for example, held gas card promotions at two Iowa malls — College Square Mall in Cedar Falls and North Grand Mall in Ames. The promotion coincided with Iowa's annual sales tax holiday in early August. In both cases, customers received gas cards with purchases of goods at the shopping centers.
Old or new?
Given gas prices are pushing consumers to develop new habits anyway, Sorenson Park Plaza, a Woltemath-Otis Development Inc. property that opened in Omaha a few years ago, may also be poised to capitalize on the emerging trend.
“When you build a new shopping center, you're always asking people to break old habits,” says Jim Otis, vice president of Woltemath-Otis.
The 600,000-square-foot lifestyle center is an in-fill redevelopment on the northern edge of Omaha's central area, near older houses and a rash of new construction.
Before the development of Sorenson Park Plaza, nearby residents routinely drove more than 10 miles to shop at a center of its caliber, Otis says.
Older centers may lose traffic to the newer centers serving residents closer to their neighborhoods. The Grubb & Ellis report cites that competition among Omaha centers will continue to intensify. Retail space in Omaha has increased at a yearly rate of 6 percent since 2001.
Otis and other developers emphasize that their impressions of the influence of gas prices on shopping habits stem from anecdotal evidence, at least for now. Numerous factors influence shopping habits, especially in difficult economic times, and untangling them is not easy. Otis says Woltemath-Otis Development plans to track the gas-price trend when its sales figures come out in the first half of 2009.
“It'll be interesting to see if that did have an effect,” he says.
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