Large retailers and outlot specialty stores to flourish
Combination developments, in which small specialty stores and restaurants occupy space on the parking pads of larger chain stores, will become more predominant in the metropolitan area in 2003.
Peter Glaser, retail broker with The Polacheck Company, Milwaukee, expects discount retailers to continue to invade the market, opening up opportunities for others to ride their coattails.
"Big-box" retail "will spark a lot of the new developments in the (this) year," Glaser said. "That leads to the creation of pad sites and outlot development that could include freestanding restaurants, family dining. The chains that are expanding will keep expanding. In the small tenant standpoint, casual dining and service retail will predominate."
Large discount stores will continue to grow in the Milwaukee metro area, he said.
"The retailers in growth mode tend to be the Wal-Marts and Kohl’s stores, along with some Target projects announced in the city. We are also seeing selective expansion of the home-improvement retailers, including Menards, moving from an older 90,000- to 100,000-square-foot store to a new prototype at 160,000-square-foot store in Germantown."
While discounters are being ballyhooed as the boom market during the current economic slowdown nationwide, they have always dominated the market in metro Milwaukee. Value-conscious, frugal Milwaukeeans tend to avoid spending as much on consumer goods as do consumers elsewhere in the Midwest.
But even so, Bruce Westling, president of NAI-MLG Commercial’s brokerage division, is bullish on high-end specialty retail.
"I disagree," Westling said to the notion that discounters will win the day in 2003. "There is always going to be interest in the big-box retail, but I have removed the words big-box retail from our vocabulary, as I have removed the words strip mall. It is a perpetuated blight. It is open-air shopping centers, not strip malls. It is national retailers, not big-box. But there are clearly areas of our market that are not served as well by national retail. There is a lot of room in this market for creative shopping opportunities."
Westling pointed to two properties his firm represents – Bayshore Mall and Brookfield Square – as prime candidates for specialty retail.
Some retailers that may be giving southeastern Wisconsin a second look include restaurant chains such as Maggiano’s Little Italy, owned by Dallas-based Brinker International, and high-end retailers such as Crate and Barrell, Northbrook, Ill.
The trend toward swankier stores is already evident, Westling said, in the announcement that Framingham, Mass.-based TJ Max and Clifton, N.J.-based Linens ‘n Things are coming to downtown Milwaukee’s Shops of Grand Avenue.
Westling also cited substantial "bleed" of retail dollars from Milwaukee to Chicago as proof of the Milwaukee market’s potential.
However, one analyst who has studied metro Milwaukee for decades said that while southeastern Wisconsin will land some specialty retailers, the region’s ability to support those stores may be limited.
John Melaniphy III, executive vice president with Melaniphy & Associates, Chicago, pointed to Mayfair Mall as an indicator that there is demand for specialty retail in the area, but he claimed the retail bleed to Chicago actually hurts the chances for the hipper, trendier retail outlets to do well here – at least with more than one or two stores.
"Specialty retail is what has made Mayfair the most popular mall in Milwaukee," Melaniphy said. "One of the difficulties in bringing higher-end specialty stores to Milwaukee is the proximity to Chicago. You can reach Vernon Hills’ Hawthorne Center or Old Orchard in Skokie in and hour and a half, depending on your location in the Milwaukee market."
Melaniphy also said some of the regulatory burdens and planning requirements in the collar communities of metro Milwaukee were deterrents for some national chains to locate here.
"There has been a lot of talk about Grafton and Oak Creek, in terms of lifestyle centers. But thus far, none of the projects proposed was actually approved," Melaniphy said.
Those local zoning and storefront regulations in metro Milwaukee may be slowing a trend that conversely is growing in northern Illinois, he said.
"At one lifestyle center, they were able to take a mall store that was generating $400 per square foot and move it to a lifestyle center, where sales at bigger store increased by $600 per square foot in performance. In the meantime, the store, which was in the Deer Park Town Center adjacent to Barrington, Ill., had lower operating costs because it did not have to pay for maintenance of the common areas."
In the meantime, Melaniphy stressed that regional malls here have been sinking.
"Assessed values of malls declined by 75 % in the last 10 years," Melaniphy said.
Of course, some malls will be more attractive to retailers than others, according to Melaniphy, stressing that Bayshore Mall, the most accessible mall to the freeway system, has a distinct advantage.
High-end retailers are also considering other malls in the market, according to Melaniphy, but retailers feel they are in a position to ask for concessions from a municipality before committing to making the move.
"There is potential for the vacant Younkers store at Southridge," Melaniphy said. "They were getting some interest from Von Maur out of Davenport, Iowa."
Melaniphy described Von Maur as a "junior Nordstrom’s — very upscale, customer-service oriented — with free shipping, no finance charge on your credit card. They would certainly bring a new element to the upscale department store assortment in Milwaukee. But most of these department stores want a lot of money to come to a particular area."
Jan. 10, 2003 Small Business Times, Milwaukee
