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Small Towns Join Cities in Stepping Up Efforts To Lure Retailers

Putting Boots on the Ground at Trade Shows Emerges As Part of the Strategy
Officials from Hoffman Estates, Illinois, met with New Jersey developer Ralph Zucker at an ICSC conference in Las Vegas, leading to the purchase and redevelopment of a former AT&T corporate campus. The interior of one of the buildings is shown. (CoStar)
Officials from Hoffman Estates, Illinois, met with New Jersey developer Ralph Zucker at an ICSC conference in Las Vegas, leading to the purchase and redevelopment of a former AT&T corporate campus. The interior of one of the buildings is shown. (CoStar)
CoStar News
June 17, 2024 | 2:02 AM

Seven years ago, officials of a Chicago suburb sought a developer to revitalize a nearly 30-year-old vacant office campus. It was no small task: They wanted to re-imagine and add uses, including retail at a former AT&T outpost with roughly 1.6 million square feet of space.

Local economic development representatives from Hoffman Estates, Illinois, arranged to connect with an out-of-state developer at the retail real estate industry's biggest trade show, the ICSC conference, in Las Vegas. The New Jersey developer came to see the AT&T site — and ended up buying it. Now the $200 million redevelopment, called Bell Works Chicagoland, is underway.

More municipal and county officials across the country are taking a cue from counterparts in places including Hoffman Estates by proactively seeking out, meeting and courting retailers and developers. Government and economic officials are heading to conferences such as ICSC's annual gatherings in not only Las Vegas but New York and other cities. There were roughly 80 municipalities on the retail real estate trade show's floor last month at the Las Vegas Convention Center.

At the event, representatives of large cities such as Washington, D.C., Las Vegas, and Newark, New Jersey, rubbed shoulders with officials from places such as Albertville, Alabama — population about 28,000 — to promote their locations. Kevin Kramer, Hoffman Estate's economic development director, was part of an ICSC panel this year that included Lynn Spruill, the mayor of Starkville, a college town that's the home of Mississippi State University, an institution with more than 22,000 students and about 800 faculty members.

"Over the last 10 years, a lot of communities are starting to realize how important retail recruitment is," said Elliott Cook, director of real estate for Retail Strategies, a national real estate consultant to municipalities on retail recruitment.

These cities and towns seek the kind of results Hoffman Estates had in 2017, a redevelopment case study Kramer presented at ICSC. In April 2017, a Kramer colleague attended an American Planning Association in New York, later toured Bell Works and had a meeting at ICSC before Holmdel, New Jersey-based Inspired by Somerset Development bought the 150-acre AT&T campus at 2000 Center Drive in Hoffman Estates for $21 million in March 2019. A spokesman said Zucker was out of the country and couldn't be reached to comment.

Of course, small towns aren't the only ones stepping up the self-promotion. Some big cities undergoing transformations are looking to change outdated perceptions about themselves and to tell their success stories to retailers and developers. In some cases, that means offering updates on the luxury multifamily housing that's planned for their downtowns, a move aimed at bringing new residents and creating demand for grocery stores, service-oriented shops like nail and hair salons, eateries and entertainment venues.

Seeking Economic Drivers

There are several reasons why not only cities but towns are more proactively reaching out to attract retailers. In some cases, stores have replaced factories in terms of creating local jobs, making retail more important to municipalities.

A Walmart or Costco nowadays can be a big employer in a town rather than a manufacturing facility, according to Cook.

Kevin Kramer, director of the Hoffman Estates Economic Development Authority, second from left, and Lynn Spruill, the mayor of Starkville, Mississippi, far right, were part of a panel at the 2024 ICSC conference in Las Vegas. (Linda Moss/CoStar)

And employers doing hiring need to offer workers — and their families — attractive lifestyle features including shopping and dining, Cook told CoStar News. Millennials considering relocating to smaller markets still want a selection of coffee shops, breweries, restaurants and stores that they were accustomed to in large cities, he said.

Jason Simpson was part of the delegation that the Albertville Commercial Development Authority sent to the 2024 ICSC conference in Las Vegas. (Linda Moss/CoStar)

"We work in a lot of tertiary and rural markets. A lot of times, cumulatively, retail is the No. 1 employer in that town," Cook said.

And with U.S. retail space so tight right now, at a roughly 4% vacancy rate, expanding chains are being forced to open in smaller towns, real estate professionals said. That's giving municipalities in tertiary markets a better shot at attracting retailers — if those towns make themselves known.

"These cities aim to entice developers with their demographics and attractive incentive packages, and new developments or redevelopments can lead to new economic opportunities and vibrant communities," Stephanie Cegielski, ICSC vice president of research and public relations, said in a statement.

The Washington D.C. Economic Partnership had a large booth set up last month at the ICSC annual trade show in Las Vegas. (Tony Wilbert/CoStar)

The Washington D.C. Economic Partnership — a nonprofit public-private organization — has been coming to ICSC for some time and this year was no exception, according to Richard Lake, who was part of the delegation and is a former co-chair of the group.

"Cities are all trying to reinvent themselves," he told CoStar News. "And retail is a big part of that reinvention, because without the ground plan, without the conveniences of retailers and the place-making that retailers can offer, really what is the compelling reason why to either go into work or go into downtown? So you need those services ... and retailers are a big part of that experience."

As a result, "more cities are seeing the benefit of putting themselves out there," according to Lake.

Meeting Companies

"If you're trying to attract these businesses to come into your city, you need to meet them where they are, and you need to listen to them and understand what their needs are. ... Don't set up calls and say, I want Nordstrom to go to a neighborhood that makes no sense for Nordstrom," Lake said. "It's just a good old-fashioned know-your-customer kind of approach."

Newark, New Jersey's largest city, hasn't had a presence at the Las Vegas ICSC since 2019. But this year Invest Newark, a nonprofit economic development agency that works closely with Mayor Ras Baraka's office, opted to be proactive and had a booth with a contingent of six people. The group's ICSC theme was "Newark and Proud of It."

New Jersey's largest city, Newark, attended the ICSC conference last month. (Invest Newark)

Newark has seen a surge of multifamily development that's expected to bring thousands of residents to the city, and an arts-and-entertainment district is being developed near the New Jersey Performing Arts Center. Newark is also home to several college campuses, for schools such as Rutgers University, Seton Hall University and the New Jersey Institute of Technology.

This year prior to the conference, Newark had racked up successes like attracting three national retailers — Burlington Stores, JD Sports and Cold Stone Creamery, Marcus Randolph, president and CEO of Invest Newark, told CoStar News.

"Downtown Newark is changing," Randolph said. "We are getting more residents. And so we need a variety of amenities and services for residents who are living downtown. We also have storefronts that have long been vacant that we'd like to get occupied, as well as some of the retail [space] that's come into some of the new development. So we thought it would be a great time to go [to the ICSC conference] to supplement some of our other initiatives."

Coming out of the show, Invest Newark has had follow-up conversations with at least two grocery store operators and a family-friendly entertainment venue, according to Randolph.

California's Riverside County Office of Economic Development had representatives from its 14 city partners at the latest ICSC trade show. (Linda Moss/CoStar)

There were also ICSC exhibitors that were promoting more than one municipality or county. TeamCalifornia — a private nonprofit organization that represents every city, county and economic development agency across the Golden State — had a booth, for example.

And California's Riverside County Office of Economic Development was on the conference floor with representatives for its 14 city partners, a group that included Riverside, Hemet, Palm Springs, Temecula and Coachella. It expanded its booth this year because it had representatives from more cities attending, according to Stephanie Stethem, a development specialist for the county economic office.

Watching Costs

Pooling resources can be a cost-effective way for smaller cities to have an ICSC presence by not having to pay for an individual booth but still market themselves, she told CoStar News.

"We are looking to promote not only our unincorporated areas, which the county represents, but also all of our cities," Stethem said. "We mostly, try to meet with developers and brokers to let them know what we have up and coming in different areas, and then what they're looking for, to see if we can be a good match and just build relationships."

Albertville's ICSC contingent included its mayor, Tracy Honea, and officials from the Albertville Commercial Development Authority. The city is just 53 miles from Huntsville, Alabama, which is home to the U.S. Army's Redstone Arsenal, NASA's Marshall Space Flight Center, the Army Aviation and Missile Command and an FBI operational support headquarters.

But Albertville wants to keep residents shopping in-town and increase its tax base, Jason Simpson, who was part of the city's delegation, told CoStar News.

''We've been speaking with developers, retailers, consultants," Simpson said. "The main reason is we want everyone in our city to be able to shop inside of our city and not have to go outside of our city limits. So that's our goal."

It often takes some time for a solid deal with a retailer or developer to materialize after an ICSC meeting, according to some municipal officials.

"I was often asked, 'Is/was it a good show?' to which I respond, 'I don’t know yet. Check-in with me in six months and I’ll tell you then,'” Hoffman Estate's Kramer posted on LinkedIn.

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