Oklahoma City!
As retailers slice and dice new store growth plans in 2010, one market that bears a second look is smack dab in the middle of the country.
Oklahoma City is a sleeper cell coming into its own, awakened by a massive revitalization project coined Core to Shore that will expend $3 billion in public and private funds to develop a mix of uses from the southern edge of the city’s downtown core to the Oklahoma River.
Planning for the Core to Shore project launched a decade ago with the Oklahoma Department of Transportation’s decision to remove the deteriorating Crosstown Expressway Bridge and relocate Interstate 40 to a new alignment. Essentially removing the southern boundary of the downtown core, the project raised concerns from both downtown and neighborhood groups. The answer was to connect the downtown to the river by creating a continuous park and open-space system surrounded by new neighborhoods, as well as to build a pedestrian bridge over the new I-40 alignment and a new boulevard to replace the old Crosstown Expressway Bridge.
Components of the 10-plus-year project, which launched phase one in 2008, include major public parks, a state-of-the-art convention center and hotel, more than 3,000 residential units, office and civic uses, a multi-modal transportation center and up to 550,000 sq. ft. of retail.
But will the retailers come?
With a population of 1.3 million people in the metropolitan area and core improvements that already include a downtown NBA arena in a transformed, bustling warehouse district now labeled the Bricktown Entertainment District, you would think there would be some draw. In fact, according to Devon Wolfe, managing director, Americas Strategy & Analytics Services, for Troy, N.Y.-based Pitney Bowes Business Insight, “Oklahoma City has been a beacon of hope throughout the economic crisis, buoyed by a strong energy business, large government and educational employment, and a diversified private sector.”
While other markets have seen wild swings in their economies during this recession, Oklahoma City has seen a moderate impact, added Wolfe. “As the recovery continues, Oklahoma City will see growth rates that are slightly lower than average, but this is only because it has much less of a decline to make up.”
Add Core to Shore into the mix, and there is even more to offer retailers looking to expand to meet hungry demand.
And Oklahoma City residents are starved for more retail. A “wish list” from the city’s Chamber of Commerce produced such retail names as Nordstrom, Ikea, Neiman Marcus and Brooks Brothers—none of which have a presence in the market.
Chain Store Age talked to the retailers on the wish list about any upcoming plans to expand their store counts to Oklahoma City. For the most part, the state isn’t on these retailers’ radars, mainly due to density constraints.
“When it comes to expanding our concept, that decision is based on population and density,” said Joseph Roth, director of expansion public affairs for Plymouth Meeting, Pa.-based Ikea. “To support one Ikea store, we need a major metropolitan area with 2 million people within one media market and a 40-mile radius or 30-minute drive time. And we actually prefer even larger markets that can support more than one store.”
Neiman Marcus also likely won’t consider Oklahoma City as a future home for the upscale department store chain. “We have looked at the Oklahoma City market, and while it is a great area with a lot to offer, what we at Neiman Marcus have found is that our Midwest stores are generally the lower performers in the chain,” said Wayne Hussey, senior VP for Dallas-based Neiman Marcus. “Therefore we are not looking to do any additional stores in the Midwest.”
The city might, however, have a shot at a few names on the wish list. Brooks Brothers said it would entertain a downtown street location for a flagship market entry should the apparel chain ramp up its expansion plans, which are currently on hold. And Au Bon Pain likewise would consider an Oklahoma City debut if it could justify multiple store openings.
“Our nearest cafes are in Dallas, so getting our products into Oklahoma City would be cost prohibitive,” said Ed Frechette, senior VP marketing for the Boston-based bakery-cafe chain. “We would need to get sales volume to a significant level very quickly in order to make it economical to truck our products that distance.”
That would require several strong cafes, not just one or two, explained Frechette, “so we would need to have a clear sightline to opening these several cafes profitably in a relatively short time.
“It would come down to the right sites for us, available at competitive rates,” he added.
A retailer that has found success in the market not only as a base for stores but also as its headquarters city is Hobby Lobby. “If another retailer asked me what Oklahoma City has to offer, I would tell them that it has many advantages,” said Scott Nelson, assistant VP real estate for the locally based chain. “It has a solid work force from which to hire employees, the cost of living is among the lowest in the country so expendable incomes are high, and there are numerous retail cores with dense population and middle to upper-middle incomes.”