Finding a Retail Renaissance
Valley View Mall (in the picture) and Collin Creek Mall are familiar names if you grew up in this area. The classic suburban shopping malls like in every 1980’s teenager movie. But if you moved here in the last five years though, you’ve probably not heard of either, because one is dead and the other is dying.
As usual, the internet gets the blame. The shift to online shopping has taken its toll on traditional mall anchors, such as Macy’s, JC Penney and Sears. But there are other issues. America has too much retail space and too many crappy malls. “It’s much less about technology than it is about overbuilding,” says Bruce Batkin, chief executive of Terra Capital Partners, a commercial real estate lender.
In other words, there are too many options.
Retailer debt is a big issue, (that article explains why the big retail chains are all looking at big financial trouble in the next couple of years as interest rates rise), along with a shift in consumer interest in convenience (why go to a large indoor mall and try to park and then get all the way inside to the one store for the one thing, when I can pull up right in front of a store at a center like Watters Creek or Legacy West). Ecommerce and the general shift away from brick and mortar shopping is also a factor obviously.
Frisco needs to be nervous about the “retail apocalypse”.
Frisco regularly is in the top 10 cities in the State of Texas for sales tax collection. We only come in behind cities like Houston, San Antonio, Dallas, El Paso, Austin, places with 1 million or more residents. We collect so much sales tax because we have great tourism programs and a strong retail corridor between DNT/Preston/Warren/121, and we can move all that sales tax money into our general fund and into EDC and CDC.
So if that goes away, because brick and mortar retail is dying, what then? How can we afford things like The Star and Toyota Stadium and Grand Park? Will our property taxes go up? Frisco collected about $40 million in sales tax revenue in 2017, and about $37 million the year before, and it’s been trending upward since the recession.
So what happens when people stop shopping in stores and malls? Where do we make up that money?
We are already doing a good job at “reinventing” Stonebriar Centre. The new Hyatt Regency that will be going in near Nordstrom, along with Kidzania (both projects aided by our CDC and EDC funds), are two good projects that will help draw event and experience traffic and keep that retail area vibrant. But will those be enough?
Four of the biggest anchors at Stonebriar Centre are already on every major “retailer death watch” list in the last year: Sears, Macy’s, JC Penney, Barnes & Noble. That could be a whole lot of empty square footage, and then once you lose one big anchor, things deteriorate quickly.
Leading a Retail Renaissance
I would like to see the Frisco EDC develop a plan specifically around researching solutions and innovations to continue to build up our major retail districts—as market forces and the inevitable slow-down of brick and mortar consumer spending chip into our sales tax collection.
Of course, Amazon could come here with HQ2 and that would be great. But I’m not putting all our eggs in that basket.
Why has the Mall of America in Minnesota stayed so vibrant while other similar centers have closed? How is it working out, in the malls where major supermarkets have moved recently into vacant anchor spaces? What about the malls in Ontario where a REIT is planning for the end of e-commerce with future multi-family development?
There are tiny pockets of innovation already happening out there when it comes to reinventing retail. Why shouldn’t Frisco be one of the pioneers of it? The time to start talking about saving Stonebriar can’t be at the point where sales tax has already begun to decline.
As with so many things in Frisco (Safetytown, The Star, the FISD CTE Center, and more), people could come here from all over the world to see what and how we have reinvented our lucrative retail districts, and made them “recession-proof” and “e-commerce proof”. I’m a medical guy, not a retail guy, so I won’t claim to have the bullet-proof answer.
But I would certainly like to see the City of Frisco take the lead on researching and resolving this issue… one that could have drastic implications on our funding and city development. I believe the answer to “The American Retail Renaissance” is right here, waiting to be discovered.