June 24, 2014
While site preparation is under way at the 85-acre Drexel Town Square development site, a team of real estate experts is working behind the scenes to secure buyers and tenants for the site’s retail areas.
WISPARK LLC has engaged the Milwaukee office of Mid-America Real Estate Group to market the available parcels for purchase or lease. Dan Rosenfeld, principal and director of Property Representation of Mid-America, is leading a three-person team to attract buyers that will locate on the parcels along Drexel and Howell Avenues on the eastern part of the development.
The buyers, Rosenfeld explained, “could be sit-down or casual restaurants; banks or credit unions or any variety of free-standing retailers. We have had a considerable amount of interest in the outlots and continue to entertain new leads.”
Significant time is invested to conceive a plan that will optimize the DTS development and serve the interests and needs of Oak Creek and the surrounding area. The real estate team develops what is called a merchandising matrix to identify categories of retailers to provide an attractive mix. For example, one category is restaurants. Within the restaurant category are types such as brew pubs, sub/sandwich shops, coffee houses/cafes, or those featuring Italian or Mexican food, to name a few. Now that Water Street Brewery has announced its commitment to the project, the team is focusing their efforts on concepts that will complement the popular brew pub.
In addition to the sale of parcels along Drexel and Howell, tenants are being sought to lease the retail areas that will line Oak Creek’s new Main Street within DTS. The tenants will lease from 1,000 to 3,000 square feet of space, typically for five years although lease terms may vary. Filling these spaces also requires a merchandising plan “to make sure the Main Street retail area offers services that the community will benefit from,” Rosenfeld said. Lease tenants may include small specialty stores, dry cleaners, medical professionals, insurance companies or other services.
After the merchandising plans are finalized and the types of buyers/tenants are identified, the real estate team looks at businesses already in the market. “We review which restaurants and retailers are already doing business in Oak Creek and determine if they are properly sized. We may offer an existing business the opportunity to relocate to DTS but want to do this carefully so as not to create other vacancies in the Oak Creek market,” Rosenfeld said.
After reviewing the current market, the team looks at other restaurants and retailers that are operating in southeast Wisconsin. They will identify a successful prospect that would be a good fit. Their plan also seeks to introduce retailers that are new to Wisconsin. “We tap retailers in the Chicago and Minneapolis markets as well, to bring new retailers to the area and more choices for consumers,” Rosenfeld said.
Considerable homework and preparation is involved before Rosenfeld and his team calls a prospect. “We have to show the retailer that Oak Creek and southeastern Milwaukee County is a market they are missing. We bring data to them regarding population, household spending for consumer goods, etc. We also show them projections for sales from a new location here and demonstrate that these sales won’t cannibalize sales from their other stores.” Helping the prospects understand their competitors’ success in the market is also important, he said. It may take six to nine months to turn a prospect into a buyer or leased tenant.
The Mid-America team is currently working with about two dozen retail prospects for DTS.
One particular challenge is the fact that each retailer defines their trade area differently, Rosenfeld said. “Some larger retailers who are already in the Southridge/76th Street corridor believe they are serving the Oak Creek market and don’t need a location further east and south.”
DTS is not only competing with other regional developments but in fact is competing with all other states in the country for the consideration of major retailers.
“In the dynamics of real estate, a unit is a unit,” Rosenfeld explained. “Major national chains’ business plans call for them to open a certain number of units per year. For example, Cheesecake Factory needs to open 50 units a year. That means we are competing with cities across the country for one of the new units.” Further, the retail tenants have been the hardest hit commercial real estate sectors when it comes to impacts from the Internet. Many retailers are reconfiguring their stores to much smaller suites. “We are confident that the Main Street area of Drexel Town Square will create a positive environment for the emerging retail model,” Rosenfeld said.
The other reality is that the Oak Creek area has been underdeveloped with its bifurcated retail areas – there is some retail along S. 27th Street on the western end of the city as well as the Howell Avenue district. With easy access from the Drexel Avenue exit off of I-94, the DTS development offers an opportunity to centralize a number of retailers with a variety of services. “We’re creating a critical mass,” Rosenfeld said.
Despite these challenges, there is good news. From an economic standpoint, the market is much better than it was in the years following the Great Recession. In the years from 2008 to 2012, retailers were watching expenses and made limited capital investments. With the improvements in the economy they’re back in the market opening stores, according to Rosenfeld.
Mid-America also operates offices in Detroit, Minneapolis and Chicago.