Market OpportunitiesRetail Analysis & Office City of Dearborn Heights Tax Increment Finance Authority Real Estate Development Research, LLC in association with Wade-Trim May 2005 Market Opportunties AnalysisTitle Page Retail & Office Market Opportunities Analysis Prepared for: City of Dearborn Heights Tax Increment Financing Authority 25637 Michigan Avenue Dearborn Heights, Michigan 48125 Prepared by: Real Estate Development Research, LLC 920 Montrose Avenue Royal Oak, Michigan 48073 In association with: Wade-Trim 25251 Northline Road Taylor, Michigan 48180 May 11, 2005 DHT 6230-01T Market OpportuntiesRetail Analysis & Office Market Opportunties AnalysisContents Chapter 1: Introduction....................................................................1 Background ................................................................................................. 1 Methodology ............................................................................................. 2 Statement of Assumptions and Limiting Conditions ..... 3 Report Organization .......................................................................... 4 Chapter 2: Executive Summary...............................................5 TIFA District Existing....................................................................... 5 Business Mix ............................................................................................ 5 The Competitive Environment....................................................7 Retail and Office Market Opportunities................................8 Chapter 3: TIFA District Business Mix .............................. 9 Research Context...................................................................................9 Zoning Patterns......................................................................................9 Land Use Patterns............................................................................... 11 TIFA Area Retail & Office Establishments ........................ 15 Categories of Business Use ................................................................... 15 TIFA District Totals ............................................................................... 16 Building Use Mix by TIFA District Geographic Segment ................... 24 Market OpportuntiesRetail Analysis & Office Market Opportunties AnalysisContents Chatper 4: Underlying Market Characteristics.........27 Shopping Center Concepts ........................................................... 27 Locational Preferences.....................................................................29 Trade Area Definition .....................................................................30 Market Components.......................................................................... 31 Employment Base .................................................................................. 31 Passersby................................................................................................ 31 Trade Area Residents ............................................................................ 34 Consumer Lifestyle Segments ...................................................40 Expenditure Potential of Trade Area Households.......44 Chapter 5: Competitive Environment............................... 50 Commercial and Office Land Use Patterns....................... 50 Competitive Shopping Center Environment .................... 51 Competitive Office Environment .............................................56 Chapter 6: Opportunities Evaluation.................................61 Assessment of Trade Area Retailer Business Strength..................................................................................61 Sales Leakage ..........................................................................................63 Market Share......................................................................................... 64 Existing Market Share .......................................................................... 64 Enhancing Retail Market Share – Adding New Businesses ................ 64 Office Space Opportunities .................................................................. 67 Business Clustering Opportunities: Scale & Type ...... 68 Van Born – Beech Daly to Telegraph................................................... 69 Beech Daly ............................................................................................. 70 Southwest TIFA District ........................................................................ 70 Market OpportuntiesRetail Analysis & Office Market Opportunties AnalysisContents Maps 1. Dearborn Heights Tax Increment Finance Authority District .............................................................9, (b) 2. Southwest TIFA District : Inkster to Beech Daly.......................................................... 17 3. North TIFA District: Michigan Ave to Dartmouth ..........................................18 4. Central TIFA District: Dartmouth to Van Born......................................................19 5. Southeast TIFA District: Van Born - Gulley to Telegraph .................................20 6. East TIFA District: Telegraph Corridor................................................................ 21 7. Trade Area Context .....................................................30, (b) 8. Dominant Tapestry 2004 Tapestry Group by Census Block Group............................................. 42, (b) 9. Commercial & Land Use Cover: 2000 .........50, (b) 10. Competitive Retail Context.....................................51, (b) 11. Competitive Office Context .................................... 58, (b) #, (b) - # = in-text map image b - enlarged map image Market OpportuntiesRetail Analysis & Office Market Opportunties AnalysisContents Tables 1. Building Area Analysis: Retail/Commercial, Office & Similar Establishments.................................. 22 2. Shopping Center Definitions...........................................28 3 Average Daily Traffic Volumes: TIFA District & Vicinity .................................................. 32 4. Demographic Profile .............................................................. 35 5. Comparative Income Patterns: 2004.....................36 6. Consumer Segments: 2004 - Tapestry LifeMode Groups ................................................................... 41 7. Expenditure Potential & Opportunity Indicators by Selected Types of Retail & Service Establishments......................................................................... 46 8. Expenditure Density Comparison ............................ 48 9. Summary of Trade Area Retail Competition ...... 51 10. Commercial Competition: Shopping Centers & Larger Free-Standing Retailers......................................................................................... 53 Market OpportuntiesRetail Analysis & Office Market Opportunties AnalysisContents Tables (cont.) 11. Trends in Retail Leasing Rates...................................... 55 12. Office Market Conditions ..................................................59 13. Retailer Strength Assessment ........................................62 14. Analysis of Retail Leakage and (Store Surplus) ..65 Appendix A-1: Classification of Selected Uses & Selected Building Details within the SOUTHWEST TIFA District Inkster to Beech Daly A-2: Classification of Selected Uses & Selected Building Details within the NORTH TIFA District: Michigan Ave. to Dartmouth A-3: Classification of Selected Uses & Selected Building Details within the CENTRAL TIFA District: Dartmouth to Van Born A-4: Classification of Selected Uses & Selected Building Details within the SOUTHEAST TIFA District: Van Born from Gulley to Telegraph Market OpportuntiesRetail Analysis & Office Market Opportunties AnalysisContents A-5: Classification of Selected Uses & Selected Building Details within the EAST TIFA District: Telegraph Corridor A-6: Select Demographic Trends A-7: Household Income Details: 2004 A-8: 2004 community Tapestry Summary Table by LifeMode Group (and explanatory descriptions of the purchase & activity preferences of the Tapestry market segments for the 17 segments in and near the Dearborn Heights TIFA District Trade Area) Market OpportuntiesRetail Analysis & Office Chapter Introduction1 Background In 1986, the City of Dearborn Heights established the Dearborn Heights Tax Increment Finance Authority (TIFA) with a primary purpose to encourage the revitalization, redevelopment and reinforcement of the portion of the city located south of Michigan Avenue. Among the major activities undertaken by the TIFA since its establishment have been the following: ¾ Development of “A Plan for Commercial Revitalization – the Beech Daly Road Central Business District” in 1985, which provided the guidelines for public and private sector improvements along the South Beech Daly corridor, between Van Born and Michigan Avenue. ¾ Improvements to South Beech Daly including street widening, sidewalks, sewer and water construction. The first portion of this activity occurred in the late 1980’s between Van Born and Annapolis. Improvements were continued north to Michigan Avenue as part of a joint community effort with the City of Inkster in the latter part of the 1990’s. ¾ Development of the “City of Dearborn Heights Industrial/Business Park Study” in 1998, followed by the TIFA’s recommendation for rezoning of the southwest quadrant of the TIFA district to M-3 Business Industrial Park District as a means to encourage a broader base