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The Right Fit: A look at the future of retail in Iowa City

BY QUENTIN MISIAG | FEBRUARY 11, 2013 5:00 AM

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Brooklynn DeVan loves Iowa City, from its "buy-local" mentality found in the many aroma-filled coffee shops and eclectic clothing boutiques to its restaurants of many flavors. But the University of Iowa sophomore from the Dallas area also finds a lot to miss from her hometown — larger national retailers, restaurants, and entertainment venues she thinks could fit in.

DeVan doesn’t have a car and doesn’t want to have to rely on a bus or her friend’s transportation to take her — and her money — to Coralville. She wants to spend it in Iowa City. If there were more options downtown and closer to campus, she said, she wouldn’t shop online as much.

Despite all of the city-center investment — which is overwhelmingly local and amounts to 1.2 million square feet of commercial development among nearly 280 businesses in the downtown and North Side Marketplace — many residents of Iowa City would also like to see more affordable, well-known retailers have a presence downtown or within walking distance.

Despite demands, the economy plays a substantial role in what kind of store chooses to set up shop. This is further complicated by what experts call the “hidden economy” in Iowa City.

According to a 2011 Divaris Real Estate survey commissioned by Iowa City and the UI, several factors might skew the reasons why some national retailers choose not to do business in Iowa City: median income, demographics, and available space. Its findings identified that approximately 11,000 UI students are counted in the U.S. census as households with little or no income. If you remove the student households, the survey said, the true average household income is $92,205 versus $44,136 in the one-mile radius of downtown.

“I don’t think Iowa City is being overlooked as far as the retail segment goes,” UI economics adjunct lecturer Patrick Barron said. “Retailing isn’t what it used to be. [Retailers] don’t have to have a huge store anymore. If there is a retailer that doesn’t have a presence in Iowa City, it may have concluded that Iowa City just isn’t a big enough market for it yet.”

Nancy Quellhorst, the president of Iowa City area Chamber of Commerce, said what makes the local retail market unique is the differentiation and emphasis on local businesses, coupled with the ease of accessibility and thorough city planners.

“Our economy is differentiated from most of the other downtowns throughout the country because of our unique boutiques,” she said. “What I think what might surprise people is how many people come here from Chicago and Des Moines to experience what we have here … There are many great malls and cookie-cutter environments [in the U.S.], but we have access to what you wouldn’t find elsewhere. I think our greatest compliment is the different retail areas.”

But students still hope for more accessible options.

“I would like to see a legitimate shoe store, not just ones focused on running, like an Aldo or Foot Locker, better nail salons, and an H&M,” UI sophomore and Des Moines native Royonah Brown-Marble said. “There are not a lot of places to go in the whole area that aren’t alcohol-related.”

Brown-Marble, along with UI junior and Chicago native Jordan Brandt and DeVan, all liked the idea of an Express returning to downtown, along with “urban, youthful” shops including Apple Store and Urban Outfitters and entertainment attractions including Dave & Buster’s and a permanent outdoor skating rink. They each named Target, the United State’s second-largest retailer, as a necessary component in the proximity of UI students, faculty and staff, and community residents.

All three students named the accessibility from campus and atmosphere that downtown offers as positives, but they stressed the need for fewer drinking establishments and more entertainment and retail amenities. On average, Brown-Marble, Brandt, and Devan said it takes them 15 minutes of travel time to reach affordable clothing and grocery stores.

“When we came here [for Orientation], it seemed like there was a lot [in downtown and Iowa City], but there really isn’t,” Devan said. There’s no fun alternative to drinking. It’s really a last resort.”

Nancy Bird, the Downtown District executive director, said demographics, available space and timing, and income levels are critical areas companies examine when deciding to expand into new markets.

“The demand for specific retailers or uses downtown by the general public is important to understand,” she said in an email statement Friday. “We at the [Downtown District] are working closely with the  city of Iowa City this year to define a strategy to help express this demand to key businesses in a manner that meets their location criteria.”

The Divaris survey — which cost Iowa City roughly $15,000 with 17 questions — asked UI students, faculty, and staff, as well as local residents, about their retail needs. It not only asked why people shop where they do but also asked for specific retailers and restaurants they would like to see downtown, merchandise categories, and input on parking.

The survey revealed the top retail venues where the three consumer groups shopped were Coral Ridge Mall at 82 percent, Coralville free-standing retail stores at 73 percent, downtown Iowa City at 71.5 percent, and the Internet at 71.4 percent.

The three main reasons the consumer groups shopped were convenience, selection, and price. All groups wanted Pottery Barn, the Cheesecake Factory, P.F. Chang’s China Bistro, Apple Store, Urban Outfitters, Sephora, Forever 21, and J. Crew to have a presence downtown.

Of the top 15 retail uses identified in the survey, two are being addressed. A cinema and bowling alley returned the second and sixth most responses, respectively. Come September, FilmScene will open its Scene 1 85-seat cinema, and the Chauncey — with the bowling alley inside — has been approved.

Calls to a number of national retailers who are often located in college towns turned up varied results.

Nicole Christie, the manager of expansion for H&M’s Press Department, could not be reached for comment as of last week as to whether a new Iowa City location is in the works, and representatives with Forever 21 said no new store in Iowa City or the state is planned at this time.

“We don’t have any set openings yet,” Brittany Green, an Anthropologie expansion representative said. “A couple are to be declared, but at this time, none are listed for the state of Iowa. The list openings are for this spring and next spring.”

One business that has been a literary and community staple since opening downtown in 1978 is optimistic about the area’s future, but it anxiously awaits the arrival of new developments, mainly large-scale high-rises, and how they will affect the district.

Mary Taft, a bookseller for Prairie Lights, 15. S. Dubuque St. — a bookstore and café that has been open downtown since 1978 — said she sees both the advantages and disadvantages to the recent construction. In addition to FilmScene’s Scene 1 cinema, she said she would like to see additional nonalcoholic establishments such as open mike-night venues and a furniture store open.

“I think things are in flux, and I’m just anxiously awaiting to see what shakes out,” she said. “I think the character of the downtown will change with the [high-rise] proposals.”

Other parts of the city where regional and national chains have a presence seem optimistic. Officials from Sycamore Mall, which said they currently have an 88 percent occupancy rate, said they’re not concerned with their current retail conditions.

“We’ve got a lot of serious calls concerning the Von Maur space,” general manager Kirk White said. “Last fall, we opened up 10,000 square feet of new retail. I think Title Boxing Club is a really great addition to the mall.”

White said that in 2012, two stores, Dollar Tree and the University of Iowa Quick Care, expanded, while three stores — Ben Franklin, Radio Shack, and Claire’s — have renewed their leases.

Sycamore Mall, built in the 1960s, faced increasing competition when the newer Old Capitol Town Center opened in the 1980s. Coral Ridge Mall opened in 1998. As a result, downtown Iowa City has transitioned itself from the center of retail in the community to a unique destination.

Barron said even in economic downturns, towns with a large university and health-care systems, such as Iowa City, are often shielded from high unemployment rates and periods of stagnation.

“Universities bring in a lot of steady money, and even in downturns, [they have] become real havens for cultures,” he said. “People still want to send their kids to a good university. Education is one of the last things people tend to cut.

Barron pointed to the Peninsula Neighborhood, North Liberty, and the Iowa River Landing as areas of mass appeal — from starter families and young professionals to retirees. Nonetheless, he said, he believes the area is served well with a varied retail, commercial, and residential selection.

Jeff Davidson, the Iowa City director of planning and development, said that although retail in the Iowa City area has changed over the last several decades, growth opportunities remain, particularly downtown, the Riverfront Crossings, Old Town Village, Towncrest, and the Sycamore Mall area.

“Obviously, in the last 25 years, there has been a major retail shift from downtown to Coralville, namely the Coral Ridge Mall area,” he said. “We believe that downtown can also be a retail enclave. Downtowns have certain retail niches. We feel that it’s really understated in terms of the spending capacity with the UI students here.”

One local realtor maintains a positive outlook about Iowa City’s future investment.

Jeff Edberg, a commercial real-estate broker for Lepic-Kroeger Realtors who deals with approximately 30 percent of Johnson County commercial properties, said he believes that although the local market is strong, potential and further development remains. He said the area’s rather small but affluent populations with a lot of disposable income are among the drivers.

“There has been consistent commercial activity in leasing, and to me, that is the heartbeat [of the real-estate market],” he said. “Retail lease rates are high [downtown]. I would like to see, and I think downtown proponents would like to see, national and regional stores fill vacant spaces downtown … Only the right businesses can survive there. If we can demonstrate to [retailers] that they can make money, they will come. If we can’t, they won’t.”


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