An Analysis of the Expanding Downtown Footprint and Retail Spending Power
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An Analysis of the Expanding Downtown Footprint and Retail Spending Power DOWNTOWN INDIANAPOLIS BE RETAIL SPENDING POWER HERE NOW This report was conducted by Hunden Strategic Partners, a real estate development advisory firm based in Chicago. Founded in 2006, HSP provides economic research, master feasibility analysis and planning services to both public and private sector clients. INTRODUCTION 3 EXECUTIVE SUMMARY: DOWNTOWN INDIANAPOLIS SPENDING POWER 5 RESIDENTIAL GROWTH AND SPENDING 10 TOC VISITOR GROWTH AND SPENDING 17 EMPLOYMENT GROWTH AND SPENDING 21 DOWNTOWN INDIANAPOLIS RETAIL SPENDING POWER 2 INTRODUCTION Downtown Indianapolis is racing faster than statistical reports and government data can track. The character of a place changes so remarkably that old paradigms are hard to shake. Both of those facts are true about the incredible story of the “new” downtown Indianapolis marketplace. Not only has Indianapolis shown quick, recent and underreported growth in residents, employees and visitors, but the very geographic definition of downtown Indianapolis has changed. This has an exponential impact on retail (and other) spending power for the downtown Indy community. As a result, downtown can now support retail that was unheard of a few years ago. It is a place that supported just one small grocery for decades, yet now fully supports several major and upscale grocery stores. For example, downtown Indianapolis has added more than 1,000,000 square feet of first floor commercial space in the last eight years and will add an additional 400,000 square feet in the next few years. The spending power of residents, visitors and employees now could support major general merchandize retailers, furniture stores, and other small and large-format brands. DOWNTOWN INDIANAPOLIS RETAIL SPENDING POWER 3 INTRODUCTION Downtown Indianapolis leaks nearly $100 million in potential retail sales annually HSP was engaged to evaluate the growth in the Based on the analysis, HSP estimates that retail spending power in a 2.5 mile radius from Down-town Indianapolis leaks nearly $100 the center of downtown. The composition and million in potential retail sales annually in just measurement of the market is unique within general merchandise, furniture and home the state related to the growth of all sectors improvement stores alone to areas outside evaluated: residents, students, visitors and of downtown. That figure will only increase employees. This report captures data, facts over time and means that retailers and other and development plans that tells an incredible should take a closer look at the opportunities to story of growth and investment that is uniquely capture this spending power in downtown. downtown Indianapolis. HSP utilized various data sources for this JULIA M CARSON TRANSIT CENTER This analysis assesses the ”new downtown” analysis including information from CBRE, and what it means for those considering Nottingham Reality, Visit Indy, The United investing in and capturing its economic power. States Census Bureau, The Polis Center, The HSP considered: Indianapolis Business Journal, The Bureau of Labor Statistics, The Bureau of Economic • How has the buying power of residents Analysis, Indy Vitals and Downtown Indy, Inc. changed, given all of the new apartments and new/renovated homes. • How has the buying power of employees changed, given the increasing downtown employment and higher incomes? • How has the spending power of visitors changed, given the increase in events, attendance and hotels? • In total, what is the retail spending power of all those who make up the downtown economy? DOWNTOWN INDIANAPOLIS RETAIL SPENDING POWER 4 EXECUTIVE SUMMARY HIGHLIGHTS: SPENDING POWER Downtown spending power is made up of four key segments. 1 RESIDENT AND STUDENT SPENDING 2 EMPLOYEE DAYTIME SPENDING 3 DAY-TRIP VISITOR SPENDING 4 OVERNIGHT VISITOR SPENDING INDIANAPOLIS CITY MARKET DOWNTOWN INDIANAPOLIS RETAIL SPENDING POWER 5 EXECUTIVE SUMMARY CUMMINS GLOBAL DISTRIBUTION HEADQUARTERS AND MARKET 360 The key factors that support each spending Retailers have long recognized the power of component have been increasing at a rapid rate downtown Indianapolis, even though the since 2000. Projects and events announced that character of the market and relevant retail has will occur or be completed through 2024 strongly changed over time. suggest this expansion will continue. In 1995, Circle Centre Mall opened and immediately succeeded in capturing the pent up demand of the Total retail spending power visitor, employee and resident market. When the has increased from less than mall opened, visitors accounted for approximately half of the mall’s sales. In Indianapolis and many $200 million in 2000 to more cities across the nation, residents and visitors have shifted demand for traditional retail to restaurants than $450 million in 2018. and experience based entertainment concepts. As more office, hotel and residential projects are The retail landscape has shifted beyond the built, the total spending power in downtown is convention district toward the numerous expected to reach more than $640 million by burgeoning neighborhoods that have expanded 2024. Major booked events like the NBA All- the relevant footprint of downtown, highlighted Star Game, two upcoming NCAA Final Fours, by multiple urban grocery stores, including Big Ten Championships and College Football Whole Foods. Championship highlight dozens of major future booked events that bring massive retail spending influxes into downtown. TOTAL ESTIMATED RETAIL SPENDING POWER $700MM But episodic events cannot support daily retail alone, which is why the expanding residential and $600MM student mix is so critical to the long-term viability $500MM of downtown retail. $400MM $300MM The report will detail the various elements that factor into each segment. $200MM $100MM 0 2000 2010 2015 2018 2021 2024 l RESIDENTS l EMPLOYEES l DAY-TRIP VISITORS l OVERNIGHT VISITORS DOWNTOWN INDIANAPOLIS RETAIL SPENDING POWER 6 SOURCE: HUNDEN STRATEGIC PARTNERS, VARIOUS SOURCES EXECUTIVE SUMMARY HIGHLIGHTS: SPENDING POWER Downtown spending power is made up of four key segments. INDIANAPOLIS CITY MARKET AVG. DAILY DOWNTOWN RESIDENTS, VISITORS & EMPLOYEES 300K 250K 200K 150K 100K 50K 0 2000 2010 2015 2018 2021 2024 l RESIDENTS l EMPLOYEES l DAY-TRIP VISITORS PER DAY l OVERNIGHT VISITORS PER DAY SOURCE: HUNDEN STRATEGIC PARTNERS, VARIOUS SOURCES DOWNTOWN INDIANAPOLIS RETAIL SPENDING POWER 7 EXECUTIVE SUMMARY AMELIA’S BAKERY, LOCATED IN FLETCHER PLACE The retail spending power increases not only due The visitor market continues to expand, as the to the expansion of residents, hotels, students and convention center and event infrastructure employment, but due to the demographics and improves. New, large and unique hotels have been spending power of each segment. developed and many more are in development. The announcement of two convention hotels The income levels of downtown residents has totaling 1,400 new rooms, along with a major increased substantially over the past 18 years and ballroom expansion of the convention center will is on track to continue this trend. This was led by support future growth. the massive renovation and redevelopment of downtown-adjacent neighborhoods, which have HSP assessed the average total daily population of experienced significant improvement over the past downtown to get a measure of the power of down- several years. That reinvestment in downtown town’s retail potential. The results are impressive. neighborhoods continues and as it does, will attract more and higher-income residents, which supports more and more retail. Since 2000, the average daily downtown The income and spending ability of downtown population – made up of visitors, residents employees has increased as well. The injection and workers – has increased from 200,000 of new technology companies has perhaps been the biggest change over the past 20 years, as the to 238,000 and is projected to increase investment of Salesforce into Indianapolis created numerous entrepreneurs from the transaction with to nearly 262,000 by 2024. Exact Target. This has resulted in either the creation or relocation of more than 100 tech companies The definition of what the market and people in the in downtown Indianapolis. These tech hubs have area consider to be downtown has grown, from the led to a wider array of high-paying jobs and traditional downtown Regional Center to a larger transformative companies. radius of roughly 2.5 miles from Monument Circle. HSP’s analysis compares this new radius of activity from 2000 through 2024. For an apples-to-apples comparison, the same geographic area was used for all years. DOWNTOWN INDIANAPOLIS RETAIL SPENDING POWER 8 Highlights: Expanding Spending Segments Indianapolis Downtown Retail Capture 2.5 Mile Radius from Monument Circle DueDue to investmentto investment and changingand economic changing connectivityeconomic of downtown livingconnectivity of Downtown living to the central business to the central business district, the geography of the downtown marketplace district,has grown to athe 2.5-milegeography radius from Monument of the Circle. DowntownDuring prior decadesmarketplace has grown to a 2.5-mile radius from Monument(1970s to the early 2000s),Circle. most of During those employedprior downtowndecades commuted(1970 s to the early 2000s), most of those employed from the suburbs. In the past 10 years, there has been a renaissance in new Downtownresidents that havecommuted reconnected near-downtownfrom the