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Retail Outlook: Retail professionals optimistic for 2020

BY Sunday, December 22, 2019 12:26pm

As consumers’ shopping habits change and the retail sector reacts to new technology-driven disruptions, retail industry watchers in West Michigan remain optimistic about the year to come. 

Among the industry insiders holding a positive outlook is Cecily McCabe at Woodland Mall in Grand Rapids. 

“I think we’re the best-kept secret in retail right now in that we’ve got a strong buying economy here,” said McCabe, marketing manager for Woodland Mall. “People like to shop. It makes it a lot easier to attract new retailers to Grand Rapids.”

In the last year, Woodland Mall invested $100 million to renovate a former Sears store location as part of a project that redeveloped an entire wing of the shopping center to bring in high-end tenants such as Von Maur, which operates from a 90,000-square-foot space. Nineteen new retailers have come to the mall since crews began the demolition of Sears in 2017. 

In 2020, four new stores are slated to open in Woodland Mall, and Pennsylvania Real Estate Investment Trust Inc. hopes to redevelop another wing of the sprawling complex in the coming years, McCabe said.

This growth trajectory and projections from other local retail experts contrast with the national narrative of a brick and mortar retail crisis that’s worsening because of consumers’ increasingly online shopping habits. Retail industry professionals in West Michigan are optimistic 2020 will be another strong year for retailers who are able to adapt to changes in the market.

“We know there’s a strong desire by the community to shop brick and mortar,” McCabe said.

That sentiment was echoed by David Denton, vice president of real estate brokerage at Grand Rapids-based DAR Development Inc. Denton called 2019 a “record year” from a production standpoint, and he expects consistency for the next few years based on the pipeline going into 2020.

Denton is a 20-year industry veteran who specializes in retail and restaurant projects in Michigan, northern Indiana and Ohio. He has some national clients, like Starbucks and Tropical Smoothie, that are generating a lot of activity. In particular, national retailers remain interested in Grand Rapids’ traditional retail corridors, Denton said.

“People still like brick and mortar; they still like experiences,” he said. “They like convenience, but they don’t do 100 percent of their shopping online.”

According to data from Colliers International, the vacancy rate for West Michigan retail overall stands at 3.17 percent. Colliers notes 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.

“The most active retailers we find today want the brand-new center, and they’re willing to pay $30 to $40 a square foot — which seems crazy — to be on the right corner or to be next to the right center on 28th Street or Alpine, or in Grandville,” Denton said.

The healthy retail outlook locally comes as the Grand Rapids Downtown Development Authority and Grand Rapids Area Chamber of Commerce next year will continue a one-year retail retention and attraction initiative. The project involves studying current and future trends in retail, as well as hiring a retail specialist who will develop and implement an action plan. 

The partners aim to present the recommended strategies outlined in an 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. The study will focus on retail across the city, including downtown and in neighborhood business corridors.

For its part, the DDA awarded innovation grants to a handful of retailers who plan to open in downtown Grand Rapids.

This month, three more retailers received funding from the DDA to help start their small businesses in downtown Grand Rapids. The DDA has approved seven grants since the program began in 2018, and has granted $250,000 in total.

The DDA most recently approved grants for GR Noir Wine & Jazz at 35 S. Division Ave., part of a $4 million development by Rockford Construction Co. Inc. that activated a long-vacant corner of Division and Weston. Art Caribbean Fusion Cuisine also received a grant for its location at 57 Monroe Center Ave., and Oh, Hello Co., an online stationery and organization accessories company, received a grant for its first brick-and-mortar location at 40 Monroe Center Ave.

The grant program was created because the DDA saw a “considerable amount” of demand for business services downtown that are not frequently available, Kyama Kitavi, economic development manager for Downtown Grand Rapids Inc., said during the December DDA meeting.

Retailers are taking note that they need to have a strong online presence in addition to their brick-and-mortar location, Woodland Mall’s McCabe told MiBiz.

“We’ve learned that there’s a strong synergy between brick and mortar and online retail,” she said. “The retailers that have a strong presence in both areas are the ones that are the most successful in our mall. We’re also starting to attract online retailers that would also like to have brick-and-mortar presence.”

In other trends, DAR Development’s Denton expects to see more focus on the health and wellness part of the market, with fitness centers, physical therapy and chiropractic offices, as well as CBD and marijuana-related businesses. The region also has proven attractive to experience-related retailers, such as trampoline parks or movie theaters.

“You’re going to see more and more of that, which is positive, because it pulls people out to the retail areas for reasons other than food, and then opens them up to the opportunity to shop as well,” Denton said.

McCabe said as long as retailers reinvest and react proactively to changes, the outlook for retail in West Michigan is “very positive.” 

“As long as we continue to do that, we see a healthy outlook for the future, definitely,” she said.

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