When it comes to the metro Detroit area, perception may not equal reality. The once-and-future motor city is meeting the challenges of a downsizing auto industry and a national economic slow down head on. The changing dynamics have altered the names of expanding retailers, but this shift has managed to present an opportunity to many local entrepreneurs and market savvy retailers.
Similar to the rest of the country, the metro Detroit retail sector has been impacted by consumer pull back, national big box closures and the reduction in new store openings. Store closures from Mervyns, Circuit City, Cost Plus, Linens N Things, La-Z-Boy and Office Depot have increased the overall vacancy rate to 9.9 percent, and left landlord’s seeking replacement retailers and/or new uses for empty space. Increasing vacancy is pressuring the market, slowing demand for new development in greenfield growth markets and creating better opportunities for new locations in dense, established markets.
Aside from Taubman Center’s Mall at Partridge Creek, metro Detroit did not get caught up in the over development of lifestyle centers in recent years. Instead, Michigan developers focused on smaller, traditional grocery centers or Walmart, Meijer or Target-anchored endeavors.
A number of these projects have recently come online or commenced construction. Lormax Stern Development Corporation is currently working on three Walmart developments in Hartland, Rochester Hills and Livonia, Michigan. Also, Schostak Brothers and Company recently completed a redevelopment of Wonderland Mall in Livonia. The 650,000-square-foot Wonderland Village power center is home to a new Target, Walmart Supercenter and LA Fitness, as well as a strong collection of small shop retailers. Wonderland’s new retailers have opened above projections and are an example of success being achieved by re-engaging existing core communities instead of chasing rooftops into greener markets.
Other new developments include the 175,000-square-foot Village Lakes Shopping Center in White Lake, which is anchored by JC Penney, Marshall’s and Famous Footwear; the 300,000-square-foot Crossroads Village in Canton, anchored by Target, Kohls, Old Navy and PetSmart; and a 103,000-square-foot redevelopment by Ramco Gershenson Properties Trust of Old Orchard Shopping Center in West Bloomfield, Michigan, which is anchored by a new Plumb Market.
Many retailers remain active in the metro Detroit market. Walmart and Meijer are seeking new locations and capitalizing on the national consumer shift to discount and affordable goods. With new locations in Hartland, Livonia, Rochester Hills, and Clinton Township, both operators continue to gain market share across Michigan. Kroger is keeping pace by reinvesting across the state. Currently, the grocery retailer is expanding many of the stores acquired in 2007 from Farmer Jack/A&P. These stores are located in Detroit-area markets such as Brownstown Township, Schwartz Creek, Westland, Taylor, St. Clair Shores and a new opening in Macomb Township.
Other national retailers taking advantage of market opportunities and seeking/opening locations include Marshall’s, TJ Maxx, Golfsmith, Aldi, LA Fitness, Hobby Lobby, Buy Buy Baby, The Christmas Tree Shop, Plumb Market, CVS/pharmacy, Walgreen’s, Chase Bank, Citi Trends, Pei Wei, Cato, Famous Footwear, O’Reilly’s Automotive, Advanced Auto, Belle Tire, Dollar Tree, Dollar General, Tim Horton’s, Sonic, Jimmy Johns, and Five Guys Burgers & Fries.
Metro Detroit is also seeing local entrepreneurs step up to fill the void left by retreating national retailers. Local companies such as ABC Warehouse and Dunham’s Sports have taken advantage of the market conditions and increased revenues with a number of relocations by back-filling vacated mid-box storefronts. Local franchisees including Five Guys, Jimmy Johns and Noodles & Company, as well as an assortment of family restaurants, are taking advantage of reduced national competition for prime locations and are filling area vacancies. A new apparel concept, Wear District, is picking up where Steve and Barry’s left off. The retailer requires 25,000 square feet and is a great example of local entrepreneurs seeing a retail void, gathering tremendous executive talent and opening in proven retail locations.
Southeast Michigan remains one of the largest metro areas in the country, home to renowned research institutions and a talented work force. While the region rides out the immediate ups and downs of the economy, the area continues to diversify and opportunistic retailers and entrepreneurs are rising to the challenge to meet the community’s needs.
— Anthony Schmitt is vice president of Southfield, Michigan-based LaKritz-Weber & Company.