In Vegas, Baltimore courts retailers to open new stores
By By Natalie Sherman and The Baltimore Sun
May 24, 2014 | 10:17 AM
City officials went shopping for deals at a Las Vegas retail real estate conference this past week, looking for big-name stores to locate here, even as one developer stopped work on plans for a Wal-Mart in Remington.
The 10-member city delegation was focused on bringing supermarkets to Baltimore and marketing the Old Town Mall, a 16-acre group of properties in East Baltimore that the city has been trying to redevelop for years.
"It's been nonstop meetings for two days," said Mayor Stephanie Rawlings-Blake this week, adding that grocers had expressed interest in the city. "A lot of people were eager to walk away with the food desert map and dig deeper into the potential locations."
About 33,500 people attended the three-day annual convention hosted by the International Council of Shopping Centers, including nearly 700 from Maryland, according to organizers. A list of attendees noted 59 public officials from the state. (Missouri and Tennessee, which have similarly sized populations, sent 31 and 50 public officials, respectively. New York sent 14.)
A "Maryland party" on Monday night represented the apogee of schmoozing, with cups of crab meat and Berger cookies shipped across the country. The party was financed by $14,000 in state funds, as well as private sponsors.
State transportation and economic development officials were trying to pitch mixed-use developments built around public transit, said Jerry Sanford, director of business recruitment and location services for the state Department of Business and Economic Development. The projects are typically more expensive, but Sanford said the idea was met with "keen interest."
"From a developer's point of view and a retailer's point of view, the density that comes with transit-oriented development really helps to make a project work," he said.
The city, which has sent representatives to the convention for more than 10 years, spent more than $12,000 on staff trips this year. (Tickets to the conference range from $50 for students to $1,525.) District 12 City Councilman Carl Stokes said the expense is worth it to try to raise Baltimore's profile in the shopping world.
Baltimore City had a 6.5 percent vacancy rate in its nearly 15 million square feet of retail space during the first three months of 2014, several percentage points higher than most of the surrounding areas, according to a research report by MacKenzie Commercial Real Estate Services. The report measures space in traditional shopping centers and does not count smaller storefront properties.
The big-name stores help anchor new projects and are a safer bet for landlords, industry members said.
Bigger retailers have traditionally avoided cities, which tend to have fewer large lots, less parking and more complicated approval processes. But with cities growing in population again and chains exhausting suburban opportunities, the stores have started to refocus on urban centers as the new growth frontier.
"You have a limited variety of shopping options, and so Baltimoreans … have to find a car and drive out to other places to do their shopping," said Stokes, adding that he thinks national stores have become more interested.
"It would be crazy for them not to be," he said. "There's quite a bit of spending power in Baltimore City."
Wal-Mart, for example, said it remains interested in opening a store at the stalled 25th Street Station development in Remington, despite objections that have delayed the project for years. Last week, developer WV Urban Developments said it left the project.
Seawall Development Corp., which has completed a number of projects in Remington, will take over the site, said Donald Manekin, a Seawall partner who declined to provide specifics and referred questions — such as whether the company will move forward with Wal-Mart — to others in the company, who did not respond to calls for comment. The landowner, Bruce Mortimer, president of Anderson Automotive Group, also did not return phone calls.
City Council members said Wal-Mart is also scouting other locations in the city. The retailer issued a statement saying only, "While we don't currently have plans for an additional store at this time, we are always looking for opportunities to provide Baltimore residents with convenient and affordable shopping options."
The 25th Street Station delays did not appear to deter other retailers or developers, said Colin Tarbert, deputy mayor for economic and neighborhood development.
"The development interest that we saw over the last couple days was really strong," he said. "There's a lot of interest in Baltimore City."
While the ICSC convention caters to bigger companies, Tarbert said efforts to lure those firms complement city programs for smaller businesses, such as the city's Main Streets program.
"I think it works well," he said. "We have a lot of neighborhood-focused programs to support the local businesses and the local environment, but also provide the retail that residents want."
Conference-goers said interest in the region generally was more robust than in recent years, with businesses such as Chipotle, Planet Fitness, the Krispy Kreme doughnut chain, and Wagamama noodle shop eyeing expansion in the area. (Those companies did not respond to requests for comment or declined to offer details about their plans, though a Jones Lang LaSalle broker confirmed last week that his firm was scouting Baltimore-area locations for Krispy Kreme.)
Convention attendance rose by about 1,000 people compared to last year — a sign, perhaps, of renewed economic confidence — and the talks were more specific, attendees said.
"A lot of the meetings were not only meet-and-greet and ways to network, but there were specific deals that were already in place, and tenants and landlords had a chance to negotiate terms," said John Schultz, a senior vice president and principal at MacKenzie Retail in Lutherville.
Restaurants and fitness centers were particularly popular tenant prospects this year as shopping center owners try to figure out ways to make the complexes home to an "experience" that will encourage customers to linger and return, industry members said.
"Retailers and malls like food. People have to eat, and food brings them in," said Mark Millman, founder and CEO of Millman Search Group, a consulting and recruitment firm.
Surveys have shown foot traffic declining at malls and big-box stores as shoppers do more shopping and research online.
"It's no longer enough from a shopping center angle to be one of the distribution channels for goods," said Jesse Tron, spokesman for the conference organizers. "You have to be more than that. You have to create an experience for the consumer."
Developer Mark Sapperstein, who is starting on a 10-acre second phase of his Canton Crossing shopping center, said he went to the conference hoping to interest apparel, sporting goods and outdoor furnishings stores in the project.
Based on conversations at the conference, he said, he believes he can fill 80,000 to 90,000 square feet of space "in a heartbeat." (He then clarified that the timeline would be closer to three to six months.)
"They see growth in the city, so the response is positive," he said. "I was very encouraged."
Baltimore Sun reporter Luke Broadwater contributed to this article.