Commercial brokers report interest from national chains as MSA approaches 500K

Commercial property brokers say Springfield is coming of age and turning heads of national retailers exploring new markets.

A reason: The population is approaching 500,000 in the metropolitan statistical area.

“Half of a million – it’s a threshold,” said commercial property broker Brad Thessing, who is co-developing the $10 million Glenstone Marketplace and recently secured Greensboro, N.C.-based high-end grocer The Fresh Market Inc. (Nasdaq: TFM) as its first tenant.

According to the most recent U.S. Census Bureau data, the five-county Springfield MSA population is roughly 452,300.

However, other demographic data are just as critical. Retailers analyze traffic counts and rooftops in targeted areas. Then, there’s a bottom-line question: How much can potential shoppers spend?

That’s where commercial property brokers say there’s a rub in the Springfield market – especially when talking with the likes of Neiman Marcus, P.F. Chang’s and Sullivan’s Steakhouse.

“The income demographics don’t look too good, and they pay a lot of attention to stuff like that,” said CJR Commercial Group manager Ron Tappan, who’s courted all of those higher-end companies for clients in Springfield. “They don’t think the neighborhoods or community can support their price points.”

The average annual mean wage in Springfield is $37,790, nearly $10,000 below the U.S. average, according to the U.S. Bureau of Labor Statistics.

Still, Thessing said Glenstone Marketplace has garnered commitments by five other retail tenants from outside of this area. He declined to name them until lease terms are finalized.

“If I name my tenants, people will start calling on them. I might have been working with them for a year, and it doesn’t help the cause,” Thessing said of his and partner Ken Guffey’s efforts to build on the former Howard Johnson hotel site, 3333 S. Glenstone Ave.

Behind the Target store on Primrose Street, piles of rubble are all that remain of the hotel.

“We are finalizing lease terms with national tenants,” Thessing added. “We already have the (letters of intent) done; we’ve already agreed to the economics.”

One retailer that’s been hard to hook is Trader Joe’s. Thessing unsuccessfully courted the grocery store for Glenstone Marketplace, and consumers have created a Facebook page asking Trader Joe’s to come to Springfield. The page had 3,673 likes, as of last week.

But the market isn’t attractive enough.

“At this time, Springfield is not in our two-year plan for selecting a location,” Trader Joe’s spokeswoman Alison Mochizuki said. “We don’t disclose the decision-making processes connected to selecting a location.”

Thessing said the 500,000 MSA population could help the cause, but there is no magic number for retailers.

“They would just as soon have 750,000 or 1 million here,” he said.

Curtis Jared, a developer and CEO of commercial property management firm Jared Enterprises Inc., has fielded more calls from national retailers and restaurant chains in the past year than the year prior. But representatives of the national brands hit a roadblock in the lack of move-in ready property.

“The south-central and southeast corridor is absolutely on fire,” Jared said. “The thing they run into is a lack of readily available space to make preparations to enter the market. The ones that do have interest, they have to wait for developers and existing property owners to make accommodations for them. That’s a longer, drawn-out process.”

In late October 2014, Springfield City Council approved Jared’s rezoning requests for a 40-acre office district and 52-acre retail district south of James River Freeway and Campbell Avenue adjacent to James River Commons – the development home to Sam’s Club, Wal-Mart Neighborhood Market and Academy Sports.

Declining to disclose names, Jared said interest has come from companies in health food to home furnishings and sporting goods to restaurants. Though several letters of intent are signed, he said no deals have closed.

Commercial property broker Todd Chambers of Chambers Real Estate Services LLC said retailers and restaurants particularly are interested in areas near residential developments.

“They don’t want to go out where there is a lot of undeveloped land,” he said. “They want housing that’s nearby. They want good traffic flow. Accessibility and visibility are important to them. They also want synergy with other retailers and restaurants.”

Noting a majority of the 100,000-square-foot Glenstone Marketplace is spoken for, Thessing said Fresh Market plans to open its 21,000-square-foot store in the fall. He said the location along the Glenstone retail corridor has been a key consideration for the retailers.

“The retailer that wants to be here, that’s not here yet, wants to be in and around the mall,” Thessing said.