Why retail CAN work Downtown?

[gthomas]

There's some hard numbers here, too.

http://www.crainsdetroit.com/article...ws-from-office

Quote:
Building purchases by Dan Gilbert:
1. Madison Theatre Building: $1.4 million
2. Chase Tower: $16 million
3. Two Detroit Center parking deck: $10.5 million
4. First National Building: $8.1 million
5. Dime Building: $15 million

New developments under discussion or under construction:
6. David Whitney Building: Hotel and apartments, $3.3 million purchase price, $80 million project cost, awaiting financing
7. Broderick Tower: Apartments, $53 million, under construction
8. Somerset Collection CityLoft: 4,000 square feet of retail from Somerset Collection in Troy. Apple store in Chase Tower.

Other projects include a Meijer store likely at the site of Redford High School, $25 million; a Meijer as part of the $90 million Gateway Park project; and a Whole Foods Market, price and location not disclosed.

Suburban companies opening Detroit offices:
9. Sachse Construction, Birmingham: 1,100 square feet, Guardian Building
10. Friedman Integrated Real Estate Solutions, Farmington Hills: 800 square feet, Penobscot Building
11. Brownrigg Cos., Auburn Hills: 1,000 square feet, 333 W. Fort St.

Suburban companies moving headquarters/substantial numbers of employees downtown:
12. Blue Cross Blue Shield [[from Southfield) to Renaissance Center: Moved 300 employees, the rest of the 3,000 to move over the next year, taking 465,000 square feet
13. Quicken Loans Inc. [[from Livonia): 240,000 square feet in the first wave, an additional 2,000 people; likely to take 140,000 square feet in Chase Tower
14. Skidmore Studio [[from Royal Oak): 10,000 square feet in Madison Theatre Building
15. Jack Morton Worldwide [[from Troy) to One Woodward Ave.: 6,000 square feet
16. Michigan Women's Foundation [[from Grosse Pointe) to 333 W. Fort St.

Companies expanding in Detroit:
17. University of Phoenix: Leaving small presence in the Dime Building to take 20,000 square feet at 1001 Woodward Ave.

Additionally, Health Alliance Plan of Michigan is seeking another 25,000 square feet in the city.

Companies new to the region in Detroit:
18. Big Fuel: The New York advertising firm is opening a 7,000-square-foot office at 150 W. Jefferson Ave.

19. 94% occupancy rate in Midtown and Downtown. Including Corktown, Lafayette Park District, and Southwest Detroit.

20. Why aren't more residential development happening? Demand is clearly there. Build it and they will come.

[stasu1213]

Good facts. I think that a Meijers should consider opening in the Jefferson Village strip mall where Farmer Jacks once was. Target would be an alternative choice if Meijers would be a bad idea.

[corktownyuppie]

Good facts. I think that a Meijers should consider opening in the Jefferson Village strip mall where Farmer Jacks once was. Target would be an alternative choice if Meijers would be a bad idea.

I'm a realist when it comes to growth and development in business, but I think there is plenty of room for retail to grow if done smartly. The problem is that the demographic data really needs to be looked at with a highly analytic eye.

At first glance, it might seem that a brand name like Whole Foods could never make it in Detroit, for example. With Farmer Jack failing, how could we ever support a Whole Foods?

Fact is, I'm not sure that we can.

But I would also argue that the demographic in this little pocket of Midtown/Downtown is worlds away from the overall demographic of the city. In fact, while we have yet to demonstrate that a Meijer -- which operates 24 hours on a gigantic footprint -- could survive in the city limits, a small-sized Whole Foods on Woodward could do well for a few reasons:

[[1) Whole Foods is not just a grocery store, it's also a restaurant. In fact, I would surmise that their prepared foods, buffet, deli, etc. have much higher profit margins because the food is marked up for the convenience and service. And if Detroit has one thing to offer, rock bottom service wages is it. You can't do much to change the price of cereal. But food service has all sorts of ways to fiddle with profit margins if you can just get people in the door.

And Whole Foods is kind of name that would do it.

[[2) There is a stark income gap between midtown/downtown and the rest of Detroit. They might as well be two different cities. Midtown has median household income exceeding 70k, right? City of Detroit is less than half that.

[[3) Midtown/Downtown has a secondary population of commuters that come from the suburbs. It's much more rare to hear of someone commuting from their residence in Troy to their job at 7 Mile and Kelly Rd. But there a many who come from Troy and work downtown. Now if you're from Royal Oak or Berkley, are you honestly going to be excited about a Kroger opening up on Woodward? No. But those same people will go to Whole Foods for lunch or drop by there on the way home to pick up groceries rather than drive out to Birmingham.


[[4) Midtown/Downtown has another population set of college students. Most of these college students commute. The ones that do live near campus are bringing the income average *down*, not up. But that demographic has more disposable income than their household income depicts. This demographic might only show up with incomes of $20,000 but with student loans supporting their living expenses, they don't shop the same way as a family of four with the main earner making $10/hr.

[[5) "Price out the riff-raff". I hate to say it, because its one of the uglier truths of our society, but people with money don't like to share space with people in poverty. Living here in the downtown area, I shop at Honey Bee market twice a month and Meijer out in the suburbs twice a month. Many of my friends skip the Honey Bee and just drive out to Meijer every week.

Now how many grocery stores do I pass driving from here to Allen Park, or here to Troy. PLENTY. There are hundreds in the city alone. So why do we spend the time, gas money, etc? In short, the "Whole Foods Crowd" doesn't want to congregate with the "Wal-Mart Crowd" to be blunt.

So now the question is, are there enough of the Whole Foods crowd in Midtown? It's strange when you think about it...opening up a Meijer or Kroger won't make suburban commuters change their behavior because they could just go to one closer to their house. But Whole Foods? I'm willing to bet that Grosse Pointers working in the City would be thrilled to stop there on the way home than make the drive in the Bloomfield store.

I hope.

[rencense]

nice list gthomas!

I've been trying to keep up with companys moving/expanding into the city for my job hunt. My first pick is a job in the city [[or thats planning on moving there) ideally i wouldnt even have to drive. It sucks to have to spend 1-2 hours in the car everyday just to commute.

[rhythmc]

I'm a realist when it comes to growth and development in business, but I think there is plenty of room for retail to grow if done smartly. The problem is that the demographic data really needs to be looked at with a highly analytic eye.

At first glance, it might seem that a brand name like Whole Foods could never make it in Detroit, for example. With Farmer Jack failing, how could we ever support a Whole Foods?

Fact is, I'm not sure that we can.

But I would also argue that the demographic in this little pocket of Midtown/Downtown is worlds away from the overall demographic of the city. In fact, while we have yet to demonstrate that a Meijer -- which operates 24 hours on a gigantic footprint -- could survive in the city limits, a small-sized Whole Foods on Woodward could do well for a few reasons:

[[1) Whole Foods is not just a grocery store, it's also a restaurant. In fact, I would surmise that their prepared foods, buffet, deli, etc. have much higher profit margins because the food is marked up for the convenience and service. And if Detroit has one thing to offer, rock bottom service wages is it. You can't do much to change the price of cereal. But food service has all sorts of ways to fiddle with profit margins if you can just get people in the door.

And Whole Foods is kind of name that would do it.

[[2) There is a stark income gap between midtown/downtown and the rest of Detroit. They might as well be two different cities. Midtown has median household income exceeding 70k, right? City of Detroit is less than half that.

[[3) Midtown/Downtown has a secondary population of commuters that come from the suburbs. It's much more rare to hear of someone commuting from their residence in Troy to their job at 7 Mile and Kelly Rd. But there a many who come from Troy and work downtown. Now if you're from Royal Oak or Berkley, are you honestly going to be excited about a Kroger opening up on Woodward? No. But those same people will go to Whole Foods for lunch or drop by there on the way home to pick up groceries rather than drive out to Birmingham.


[[4) Midtown/Downtown has another population set of college students. Most of these college students commute. The ones that do live near campus are bringing the income average *down*, not up. But that demographic has more disposable income than their household income depicts. This demographic might only show up with incomes of $20,000 but with student loans supporting their living expenses, they don't shop the same way as a family of four with the main earner making $10/hr.

[[5) "Price out the riff-raff". I hate to say it, because its one of the uglier truths of our society, but people with money don't like to share space with people in poverty. Living here in the downtown area, I shop at Honey Bee market twice a month and Meijer out in the suburbs twice a month. Many of my friends skip the Honey Bee and just drive out to Meijer every week.

Now how many grocery stores do I pass driving from here to Allen Park, or here to Troy. PLENTY. There are hundreds in the city alone. So why do we spend the time, gas money, etc? In short, the "Whole Foods Crowd" doesn't want to congregate with the "Wal-Mart Crowd" to be blunt.

So now the question is, are there enough of the Whole Foods crowd in Midtown? It's strange when you think about it...opening up a Meijer or Kroger won't make suburban commuters change their behavior because they could just go to one closer to their house. But Whole Foods? I'm willing to bet that Grosse Pointers working in the City would be thrilled to stop there on the way home than make the drive in the Bloomfield store.

I hope.

All very true.

By the way, how do you price out the riff-raff without pricing out the artsy crowd that seems to be the necessary first step to bringing in more yuppies to support Whole Foods and like establishments?

[corktownyuppie]

All very true.

By the way, how do you price out the riff-raff without pricing out the artsy crowd that seems to be the necessary first step to bringing in more yuppies to support Whole Foods and like establishments?

Ah, the million dollar question. Is "organics" the new "plastics"? lol. That's one of the beauties of Whole Foods. The artsy types won't do their grocery shopping there. But they'll gladly stop and have a fresh soup, salad, and sandwich.I mean, Whole Foods will never compete with Mudgie's, because, y'know...Mudgie's is Mudgie's. But there's no shortage of artsy hipsters there gladly paying $7-8 for a sandwich.

In the final analysis, I think that's what Whole Foods would do that a Farmer Jack could never do. Price out the riff-raff but draw in the hipsters.

[esp1986]

As far as residential is concerned, build it and they will come isn't exactly on the minds of developers... rental rates have just recently begun rising from their rock-bottom levels. Developers will likely wait a bit longer to see where prices are heading so they can be sure that these projects are financially viable. In the past, every residential project downtown had been historical renovation, heavily leveraged by tax credits. With rental rates where they are downtown, new construction is far from a slam dunk financially, and we've seen in the past how difficult it has been for prospective developers to put together financing for renovating older buildings. If prices continue to rise, new construction will eventually get to the point where there are a number of developers wanting to build, but it is probably still a little ways off.

A couple of projects that weren't mentioned here are the Free Press Building and David Stott Building. Both of these projects are also in search of financing [[by the same developer) and are aimed at residential use. The Free Press Building was announced at a $70 Million price tag for rehab, when it was awarded a state tax credit. The developers more recently announced, coinciding with the opening of the SkyBar in the Stott Building, a floor by floor renovation of the David Stott Building. They admitted that this renovation will be more financially viable in the near term and would be ahead of the Freep Building in terms of rehab. Rehab for both of these buildings is still probably a ways off, but at least is on the radar.

With demand seemingly rising, it shouldn't be too much longer before we hear of another developer attempting to put together a big downtown project. Whether or not it happens, like always, is another story.

[De'troiter]

Using terms like "Price out the riff-raff" should not be used because it causes the same elitist/segregationist attitudes that destroyed this city years ago and continue to keep the environment socially divided. Terms like these feed into what Black residents of the city proper, feel is a plot to price them out by means of gentrification. Also, those "riff-raff" as they are called probably have more disposable income in the food department than those conveted "yuppies"....just food for thought.

[gthomas]

Wonder why Target haven't consider locating Downtown or the planned Gateway Park retail outlet?

[esp1986]

Wonder why Target haven't consider locating Downtown or the planned Gateway Park retail outlet?

On this note, it is alarming how many grocery stores are setting up at the same time in the Downtown/Midtown areas. All these years, Detroiters have complained about the lack of grocery stores, but grocers were reluctant to set up shop in the city for a variety of reasons, chiefly theft and lack of density [[density being what provides enough business to pay the bills). Now, with three or four setting up shop at once, my worry is that they will all be doomed to fail because the clientele will end up being spread so thinly among them that none of them gets enough business to survive. We have Eve's in Washington Square, Lafayette Foods in Lafayette Park, another poster yesterday said they were looking to set up shop in the CBD and the possibility of Whole Foods coming to Detroit remains. I am sure I heard of another one too. It is great to get a grocery store, the area can probably support one really good one, but two or three or four? I worry that a couple are doomed to fail from lack of demand for that much supply.

[DetroitPlanner]

Wonder why Target haven't consider locating Downtown or the planned Gateway Park retail outlet?

Target did have a Detroit Store not too far from Gateway at Bel-Air. It was the last hold out in the dead strip-mall. It held out well past the closing of Builder's Square, Toys R Us, and Farmer Jack. If I was that company I'd not want to be in the position of being in a big box power center so close to one that failed.

[corktownyuppie]

Using terms like "Price out the riff-raff" should not be used because it causes the same elitist/segregationist attitudes that destroyed this city years ago and continue to keep the environment socially divided. Terms like these feed into what Black residents of the city proper, feel is a plot to price them out by means of gentrification. Also, those "riff-raff" as they are called probably have more disposable income in the food department than those conveted "yuppies"....just food for thought.

First, let me apologize in case I offended you; that was not my intention...and frankly, if the term is taken that way, then you are right...inflammatory language does not help me get my point across.

Second, I'm kind of dumb about what tore this region apart because I'm too young to have remembered anything before the late 80s/early 90s. My parents were more familiar with it, but even they didn't come to Michigan until the late 70s.

...and for what it's worth, during those times of institutionalized racial polarization, my family would've been on the wrong end of redlining, not the ones dishing it out.

But lastly, I want to respond to a comment you make:

because it causes the same elitist/segregationist attitudes that destroyed this city years ago and continue to keep the environment socially divided. Terms like these feed into what Black residents of the city proper, feel is a plot to price them out by means of gentrification.

I want to make the distinction between segregation by race vs. segregation by socioeconomic class. Now, of course, for many...they will interpret the two as one and the same, but I don't.

In no way am I justifying, encouraging, underhandedly implying, "winking at", or being willfully ignorant toward racial segregation. I'm young, but I'm old enough to notice how different racial attitudes are today than 20-25 years ago.

Socioeconomic segregation is not them same as racial segregation. Socioeconomic segregation separates by income, education level, etc. And as I said in my first post, it's a reality that people at different ends of the income scale have different needs and priorities. And the marketplace separates itself to cater to different peoples' needs.

For example, when I was young, our family was poor. We valued money over time. We had plenty of time. No shortage of boredom. But I couldn't scrape to quarters together to play a video game. But now, it's the opposite. I have more money to pay for goods and services, but time is in short[[er) supply. So when I go grocery shopping, I like the fact that Whole Foods has a policy that anytime there are more than 2 people in line, a new cashier's lane magically opens up, and I'm willing to pay for the level of service.

On the flipside, on the rare occasion I go to Wal-Mart, it's great for my pocketbook, but it's a huge headache as far as time is concerned. The place is disorganized, there are long lines everywhere, I can't even find a shopping cart. I've got groups of children that are running around.

Neither is "better" or "worse". They cater to different market segments who have different priorities and needs. Both are successful companies.

We do this at baseball and basketball games. You think I can afford the box suites or floor seats at half court? Um...no. I sit in the bleachers and the nosebleeds. And I don't have the money...I just watch it at home.

If we want Detroit to become a better place, we need to stop chasing away the Whole Foods crowd and welcome them with open arms. Even if we don't always like the attitudes that come with them, we like their commerce, their money, and their jobs.

And I assure you that if Whole Foods opens up in Midtown, their clientele will *hardly* be lily white WASPs.

[Bham1982]

And I assure you that if Whole Foods opens up in Midtown, their clientele will *hardly* be lily white WASPs.

Then who do you think their clientele will be?

I'm genuinely curious, because I've never seen a Whole Foods where privileged whites didn't comprise a plularity of the demographic.

I can guarantee you that Whole Foods, if they ever came to Detroit, would open based on the assumption that they would receive such patronage.

As to your economics vs. race explanation, I don't buy it. Economic segregation isn't healthier or more justified than race segregation. The reason that stores for "riff raff" exist in Detroit is because that demographic lives there. You won't eliminate the stores [[if that's your intenet) unless you kick out that demographic.

IMO, a healthy urban area has retail for both. Extreme economic exclusion isn't good for cities.

[corktownyuppie]

Then who do you think their clientele will be?

I'm genuinely curious, because I've never seen a Whole Foods where privileged whites didn't comprise a plularity of the demographic.

I can guarantee you that Whole Foods, if they ever came to Detroit, would open based on the assumption that they would receive such patronage.

I didn't think before I wrote. I meant to say that the clientele wouldn't be *just* lily white WASPs. If you go to a Whole Foods in NYC, you get a hodgepodge. I mean, the student population of Wayne State alone would be there all the time, and I would say that they include the entire spectrum.

As to your economics vs. race explanation, I don't buy it. Economic segregation isn't healthier or more justified than race segregation. The reason that stores for "riff raff" exist in Detroit is because that demographic lives there. You won't eliminate the stores [[if that's your intenet) unless you kick out that demographic.

IMO, a healthy urban area has retail for both. Extreme economic exclusion isn't good for cities.

I wouldn't say my intent is to kick out anyone. Healthy urban areas do have retail for both. I think it's fair to say that in this part of the city, the upper middle and upper income classes are underserved. Way underserved.

[De'troiter]

Corktownyuppie you should take a look at this link http://detroit2020.com/2011/07/12/de...sing-and-race/ it gives a perspective of the history of Detroit.

[De'troiter]

Here is a better link http://www.youtube.com/watch?v=Pefix...layer_embedded

[softailrider]

Wonder why Target haven't consider locating Downtown or the planned Gateway Park retail outlet?

Because they don't feel they can make as large a profit in that location as they can make in others.

[DinNC]

I think Corktownyuppie is dead on with all his statements. I think people on this forum who are giving him hell are too dumb to understand what he's trying to say. No one wants to get rid of anyone. He is simply saying that there is a population of people who want to shop at a higher end grocery chain. I can't afford to do my shopping there, so I shop at Wal-Mart. I put up with the horrible service and sometimes shockingly disgusting customers to save a few bucks. If a Whole-foods opened in my town I wouldn't be pissed and think they are trying to segregate my town. ANY person can shop there. There are no signs that say "whites only" when you walk into wholefoods.

Just on a side note. I personally think a trader joes would be better for this area.

Have a great evening!

[HistoryNotHisStory]

To reasons why major retailers have not come to Detroit or Downtown Detroit.

1. Market Research - demographics of potential consumers.
2. The High Price of Insurance. Many major retailers [[Kroger, Target, and others) have cited the high price of insurance for leaving Detroit. Remember that these retailers are not non-profits. When the price of doing business becomes greating than the revenue, then the store must close.

[HistoryNotHisStory]

Then who do you think their clientele will be?

I'm genuinely curious, because I've never seen a Whole Foods where privileged whites didn't comprise a plularity of the demographic.

I can guarantee you that Whole Foods, if they ever came to Detroit, would open based on the assumption that they would receive such patronage.

As to your economics vs. race explanation, I don't buy it. Economic segregation isn't healthier or more justified than race segregation. The reason that stores for "riff raff" exist in Detroit is because that demographic lives there. You won't eliminate the stores [[if that's your intenet) unless you kick out that demographic.

IMO, a healthy urban area has retail for both. Extreme economic exclusion isn't good for cities.

Both sides have valid points. However, this is not an argrument on race. Major Retailers [[Target, Whole Foods, etc.) does not look at color when it does it Market Research. They look at the demographics in the area such as

1. Avg. Salary,
2. Most Likely shoppers.
3. Cost of Doing business.

A good case in point is that bookstores [[small or large) does not fare well in the City of Detroit. Why becomes studies show that too manyDetroiters do not read books and therefore cannot support a bookstore

Why should Whole Foods come to Detroit with prices that far exceeds what the normal Detroiter normally pays for food? It does not make good Business sense. They companies are in it for the money.

Detroit's present economy supports on hair salons, party stores, cell phone providers, check cashing joints, Subways, ALDI Grocery stores.

Whole Foods does not fit the marketable bill. It will close in a year.

[corktownyuppie]

Whole Foods does not fit the marketable bill. It will close in a year.

Well first, you might be right. Time will tell...and the damned company hasn't even announced its opening, so this is all kibitzing and speculation.

I agree with everything you say expect the part I quoted above. There is an underserved upper income class that lives in Midtown. There is an upper income class that commutes to Midtown, and while they probably wouldn't shop there if Kroger opened up...they'd gladly dine at the Whole Foods lunch counter.

There is a bar opening up on Michigan Avenue whose drink prices will go from $7-9 a glass. People from downtown are driving 20 minutes away to shop in the suburbs.

Like I say, I could be wrong...and it's not even an officially done deal. But retail is coming to downtown. It's just a matter of time. The population is starting to really hunger for it.

[English]

Whole Foods does not fit the marketable bill. It will close in a year.

Bet it won't. In fact, I'd be willing to put money on it.

[corktownyuppie]

3 years ago, before the Westin Book Caddy opened up, would you have guessed that Michigan Ave and Washington would be host to two restaurants...one at $20 per plate and the other at $40+ per plate? And good luck trying to get a table at Roast on a weekend night without reservations.

It's nuts.

[313WX]

Wonder why Target haven't consider locating Downtown or the planned Gateway Park retail outlet?

The same reason Kroger hasn't, their other Detroit locations failed epically.

[English]

Target was within Detroit city limits? It had to have been in the late 1990s, when I was in college... otherwise...