Home / Archive / Elk Grove: Mystery Retailer
Thursday, May 17, 2012
Regional Focus: August 2007
Mystery Retailer
A community and mall developer ponder future tenants
Story by Samantha Bronson
With final plans moving forward for the 1.1-million-square-foot Elk Grove Promenade, there is no doubt residents in this bedroom community will eventually be spared the hassle of battling traffic to shop in nearby cities. The City Council approved the mall’s plans in July despite concerns over its open-air design and potential tenant mix. The mall developer, General Growth Properties, hopes to be open in time for the 2008 holiday shopping season.
Regardless of its opening date, one thing is clear: The need for such a mall will persist.
“I like the concept of a shopping mall, and I think the south county definitely needs one,” says Elk Grove Mayor Jim Cooper. “I believe Elk Grove and the surrounding communities definitely have the demographics to support it.”
Elk Grove’s population of roughly 136,000 has a higher median household income than neighboring communities at $83,000, according to the U.S. Census Bureau’s 2005 American Community Survey. The average household size is 3.3 people, which means there are plenty of children to buy for.
The mall would provide Elk Grove with a sizeable chunk of money for the city coffers. Yearly sales tax revenue from the mall is estimated at between $6 million and $8 million, and with the growth demands placed upon Elk Grove’s infrastructure, that’s certainly money that could be put to good use.
The mall’s impact would also be felt in other ways. Elk Grove has an uneven jobs-to-housing ratio, with much more housing than employment. While the Promenade itself likely wouldn’t affect this ratio dramatically, city leaders hope it could serve as a catalyst for job creation in the area. They also envision the mall as the starting point for development of nearby offices that would bring in more jobs and further create a customer base for the shopping Mecca.
As with any growth, transportation can be a concern, especially since Elk Grove’s transportation infrastructure was originally created for a rural community. Upgrades are essential and construction is already under way to widen the interchange closest to the proposed mall, Grant Line Road and Highway 99. Fees from the mall’s development would help pay for improvements.
Additionally, the mall’s opening would take cars off the road throughout the region by providing residents with a local shopping alternative, according to city leaders. As currently envisioned, the mall includes bike and walking paths and a transit stop to encourage alternative modes of transportation.
The mall would also include various play areas for children and other gathering spots for shoppers. Yet precisely which stores will be at the mall has remained a source of contention.
So far, Chicago-based developer General Growth Properties has announced tenants Macy’s, Barnes & Noble and Cinemark theaters. JCPenney and Target are rumored to be possibilities, which has brought on criticism about the mall’s lack of high-end retail. Residents and city leaders alike have said they would like to see the mall house upscale department stores not found elsewhere in the region. They point to Nordstrom, Dillard’s and Neiman Marcus as examples of what they believe would work to lure shoppers.
Did you know...
Sutter Health has plans for the first hospital in Elk Grove? The medical group already owns a 43-acre campus at the corner of Big Horn Road and Laguna Boulevard that includes two medical offices. Details are still being worked out, but the 140,000-square-foot hospital is slated to have 60 beds and a labor-delivery center. More details will emerge by early 2008, and if all goes well, the hospital will open by early 2012.
Yet not everyone is sure that the city’s household income automatically translates into support for high-end retailers. Councilman Pat Hume says that while Elk Grove residents do tend to have higher-than-average incomes, they also tend to have children and sizeable mortgages. That combination may leave them with less disposable income than their overall household income might suggest at first glance.
As Councilman Gary Davis sees it, the support for high-end retail will arrive — in due time. With 20,000 more jobs and the Laguna Ridge area closer to buildout, Elk Grove could definitely support a tenant like Nordstrom, he says.
General Growth is continuing its discussions with various companies, including high-end retailers, says company spokeswoman Nicole Spreck. But, she says, retailers conduct their own market research and may set higher demographic thresholds.
While she wouldn’t discuss specific companies for Elk Grove, Spreck pointed to retailers that have opened in recent General Growth developments: Coach, Ann Taylor Loft and The Sharper Image. The agreement with the city promises at least a dozen A-list tenants and another 30 stores from B-list tenants, such as the Body Shop and Forever 21.
Hume believes these types of retailers are precisely the sorts of higher-end stores that residents would like. Most critics of the proposed tenant mix talk only about department stores, he says, yet a continued strong future of department stores is not necessarily a given, considering buyouts, bankruptcy filings and competition from specialty stores. That could lead retailers to be even more cautious about coming into an untested market such as Elk Grove, he says.
“I would hate to build a mall for a Nordstrom and have it not be a viable Nordstrom,” Hume says.
Prior to city approval, some residents also expressed concerns over the open-air design of the project. There was doubt that an open-air mall would work in Elk Grove, given the region’s extreme climate variations — hot summers and cold, rainy winters. Instead, they point to enclosed malls such as Arden Fair and the Galleria at Roseville as more appropriate.
Enclosed centers, however, have fallen out of favor. Now, so-called open-air lifestyle centers are the trend across the country, sprouting up in locales that have a range of climates. In a survey of large center openings planned for 2007 and 2008, the International Council of Shopping Centers found that all have open-air designs.
The reason for the trend — and for the Elk Grove Promenade’s design in particular — is simple: Both shoppers and retailers prefer open-air, Spreck says. Developer-led focus groups held two years ago with residents revealed support for the open-air concept. Additionally, open-air designs generate more revenue than their enclosed counterparts. In a recent study, the ISIC found that open-air centers generated an average of $332.08 in sales per square foot for 2005. Enclosed shopping centers generated $274.89 in sales per square foot that year.
Those sales statistics are part of what persuaded Councilman Davis that an open-air design was the right way to go. Initially among those skeptical of the design, Davis did his own research on malls and found that open-air designs seem to work well regardless of whether the climate is hot or cold. In fact, ISIC’s list of planned openings includes open-air centers in hot-weather locations such as Texas and Arizona as well as colder-weather regions such as Michigan and Massachusetts. As Davis explains: “You’re probably going to spend most of the time inside shopping.”
Hume says he understands residents’ concerns about the weather, but points out that extreme heat and cold are not events that last for months at a time. Besides, he says, consider the larger impact on the power grid of having to heat and cool an enclosed mall.
The open-air design might be new to Elk Grove, but not to California. Open-air designs are already found throughout the state, including at Westfield Downtown Plaza in Sacramento. The potential impact of the Elk Grove Promenade on the Downtown Plaza and Arden Mall isn’t yet clear, but its effect on Elk Grove is, despite any lingering concerns: close-to-home shopping, a boost in city revenue and a much-needed chance to expand the city’s job base.
