Could Oklahoma City support a retail lifestyle center? Price Edwards & Co. thinks so, with caveats.
Jim Parrack, senior vice president and retail specialist, makes a good case for it in the firm's year-end retail market report. He argues that the apparent obstacles could be overcome. It's worthy of a look as a whole.
Parrack: We firmly believe that Oklahoma City could support a more upscale shopping center; we have the incomes equal to or greater than many of our competitive cities, our challenge being that our higher-income households tend to be scattered throughout the city. It will take a developer and retailers who understand that we'll drive further and spend more than their typical formulas suggest.
The definition of “lifestyle center” varies depending on who you are talking with; the International Council of Shopping Centers doesn't even include a definition among its general retail classifications. For our purposes, let's call a lifestyle center a project with higher-end retail, restaurants, and perhaps mixed-use characterized by open-air design, heavily landscaped common areas and pedestrian friendly. None exist in Oklahoma City; both Wichita (Kan.) and Little Rock (Ark.) have such centers, cities generally considered a step below Oklahoma City.
Follow this link to Bradley Fair in north Wichita, www.bradleyfair.com. Look at the pictures, notice the mix of tenants. Now go to www.chenalshopping.com. Red Development completed this project in Little Rock a few years ago.
The populations of the greater metro areas of Oklahoma City, Wichita and Little Rock are 1.3 million, 660,000, and 710,000 respectively. Retailers crave income. Each metro area has a median household income of between $42,000 and $45,000.
What about high incomes that are important to this kind of development? Incomes over $100,000: Oklahoma City, 8.7 percent; Wichita, 8.7 percent; Little Rock, 11.4 percent. Little Rock has a bit of an edge in high incomes, but if you look at the actual numbers, Oklahoma City has twice as many high-wage earners as Wichita and a third more than Little Rock. These numbers clearly suggest that we can support a similar development.
As referenced in the market study — www.priceedwards.com/market-trends — our high-wage earners are more widely dispersed (or, conversely, Wichita and Little Rock have a higher concentration), which is a driving factor as to why Oklahoma City does not have one. It also hurts us that there is no large commercial developer located here; these types of developments are expensive and require a developer to have close ties to retailers and access to capital.
Perhaps the most significant issue is the economics of lifestyle centers in general since the downturn. The anchors of these types of centers generally demand and get sweet deals; the developer makes up the difference on higher small-shop rent and pad sales. As the anchor deals have gotten sweeter, the centers have had to get bigger. Add to that dynamic the pullback by many national retailers over the last four years and the economics of getting a deal done is very hard.
But with retail in general getting healthy and Oklahoma City looking better than the rest of the country, now is the time for developers and retailers to be engaged here. They'll need some help looking beyond their traditional models — our shoppers have proved that they'll drive farther for the right development; and, our low cost of living gives Oklahoma City consumers more disposable income than our demographics suggest.