Williamsburg-area retail vacancies could be 'red flag'

svaughan@vagazette.com

Although business has picked up since the end of the recession, retail sales in greater Williamsburg still aren't what they should be, according to some observers.

You can tell that by the number of vacant stores in the area.

Those empty stores could be a "red flag" as a candidate for City Council recently opined, or it could be that businesses are just moving closer to where the customers are. And a certain number of vacancies are normal, reflecting the coming and goings of businesses.

"About 7 to 8 percent is a normal vacancy rate," said Chris Henderson, a commercial real estate broker and developer. "If you look at some parts of our retail sector, it's above that. New Town certainly is. For the Monticello (Avenue) corridor as a whole, I think that's right about where we are."

Is the area overbuilt, as far as retail is concerned?

"If you look at it just from the viewpoint of the area's population compared to the number of retail stores, we're certainly above the national average," Henderson said. "But that comes with a big asterisk."

The asterisk is that the area's retail sector serves more than the area's population.

"Much of our retail sector is in the form of outlet stores, which are less about serving the population -- and we have tourists, not as many as we once had, but we still have 3 to 4 million people who come to the area each year who also frequent our stores."

Is Richmond Road a 'red flag'

Richmond Road, once the area's major shopping corridor and still home to prime shopping attractions like Williamsburg Premium Outlets, has a high number of vacant stores, particularly along the stretch inside the city.

It's a phenomenon that has not gone unnoticed.

In his unsuccessful campaign for City Council, city businessman Greg Granger noted vacancies along Richmond Road, once the city's prime retail corridor.

"When I was growing up here, people jockeyed to get onto Richmond Road," he said.

He believes the vacancies are a "red flag."

Williamsburg Economic Development Manager Michele DeWitt said last week that what Granger noticed, is real.

"Yes, over the last year we've become concerned about the number of vacancies on Richmond Road," she said. "It used to be that we didn't really have to promote much there. Richmond Road sort of took care of itself."

Henderson said the unusual number of vacancies on Richmond Road start with the Williamsburg Shopping Center, once the hub of city retail.

Large areas of that shopping center, which is on the market again, have been vacant for years, after former anchor stores Roses and Steinmart closed. The city is hoping to see redevelopment at the center which will revitalize it as a retail hub and protect several long-term businesses there — including the Food Lion, the closest supermarket to downtown, Peninsula Ace Hardware and Sal's by Victor.

Henderson said there are other locations along Richmond Road that are also ripe for redevelopment.

"There are two large hotel sites," he said. Those closed hotels could be redeveloped.

He also suggested that the former miniature golf course between Ripley's Believe It Or Not and Wendy's is an obvious opportunity.

"You could re-open that for very little investment," he said.

The number of vacancies on Richmond Road could reflect that the center of the area's population has shifted, making the Monticello Avenue corridor a more convenient shopping destination for most of the area's population.

Most residential growth in the area in the last decade has been in York and James City counties. The city has limited undeveloped property that could become housing.

New businesses replace old

Karen Riordan, president of the Greater Williamsburg Chamber & Tourism Alliance, said she isn't hearing concerns about retail in the city from the chamber's members.

"JCC may have more shopping centers, but we do not get the feedback from our members that they are unhappy with retail in the city. Merchant's Square is full and the High Street Shops have a new company, the Shopping Center Group, to fill vacancies," she said. "GWCTA has gone to some new ribbon cuttings for Kilwins, Mad about Chocolate, Hound's Tale and LoKal in the city so it has been active."

DeWitt said that's true.

"We have had a lot of openings recently," she said. "They just haven't been on Richmond Road."

And the city does have about the same number of businesses as it has for the past few years. There were 796 in April and 819 in June 2012, according to information on the city's website.

"We tend to go back and forth from about 790 to about 805," DeWitt said.

And, while Richmond Road has struggled, other areas in the city have done better. The Second Street corridor has fewer vacancies than it once did and city officials have said the Quarterpath Crossing Shopping Center, on the city's periphery, is doing well with no vacancies.. Both are closer to residential developments in York County and James City County than the Richmond Road corridor.

Tax revenues continue

Both sales and meals tax receipts are up, both in the city and in James City County compared to last fall, although tax receipts still remain relatively flat compared to fiscal year 2008.

"Sales tax is up 6.6 percent for figures we have through Nov, 2015. Meals tax is also up 4.7 percent," Riordan said.

Meals taxes may be up because a large number of businesses opening in the area seem to be restaurants. At High Street, for example, where occupancy is at its highest since the 2009 opening, about half of the businesses are restaurants.

"The culinary and beverage segment is hot and meets a local and guest need, so we are not surprised to see new restaurants and breweries," said Riordan.

But running a restaurant is a tough business. The most recent research from Ohio State University shows that around 60 percent fail within the first year, according to cnbc.com.

A number of restaurants have closed in the area, recently, several in New Town, most recently Dudley's Bistro, which will close its doors Saturday.

"There have been a number of restaurant closings in New Town," Henderson said. "But then you have Blaze Pizza which is apparently doing great business there."

And, James City County Economic Development Director Russell Seymour, said a new restaurants have opened or are about to open in New Town, among them Pho 79, scheduled for the fall.

Shifting retail center

Last year it appeared that the retail center of the area may have moved west of New Town on Monticello Avenue to shopping centers like Settler's Market and Henderson's own, Courthouse Commons.

However retail vacancies have begun to appear there as well.

"I've got two vacancies," Henderson said. "And I think even Settler's Market has vacancies."

"Look at Marketplace Shoppes, the (S.L.) Nussbaum property across the street (Monticello Avenue) from Monticello Marketplace," Henderson said. "I can't remember the last time they had a vacancy. But I think they have three now."

One of them will soon be filled by a Jersey Mike's Sub shop, according to the shopping center's website. A second vacancy will be filled by an optician.

Seymour said that the county has seen a resurgence in two of its older shopping centers this year: Williamsburg Crossing, at the corner of John Tyler Highway and Route 199 and Colony Square near the corner of Route 199 and Jamestown Road.

"We've seen a number of vacancies filled in those," he said.

Monticello Marketplace itself is one of the more vital shopping centers in the area.

"It has strong anchors with Target and the Martin's," Henderson said. "And it has a Chick-fil-A."

On the other side of Williamsburg, at the western end of Route 199, the Mooretown Road/Rochambeau Road area offers a tale of two shopping centers.

The Walmart Super Center is busy, as are the nearby Lowe's and Home Depot. But Williamsburg Market Center doesn't draw nearly the number of shoppers it did before the Ukrops supermarket closed in 2008. It also lost a Petco store, which moved to Settler's Market. The center went on the market this month

"The Ross is still there and it does fairly well," Henderson said. "I think what the Ukrops discovered is that there are not enough people who live within three to five miles of that location, due to the presence of the reservoir and the interstate and large amount of undeveloped property, to sustain a grocery store."

No surge in spending

There could be many reasons that the area is seeing so many vacancies.

Henderson's theory is that the recovery from the recession, while real as evidenced by the increase in sales and meals taxes, isn't as big as it should be, given the underlying numbers. "Look at the price of gas, it's a $1 less than it was a year ago," he said. "Usually that has a real impact on consumer behavior."

However, Henderson said he doesn't think it is having that impact now.

"We're not seeing the surge of spending we should be," he said. "Maybe consumers are using that money to recover, but they don't seem to be spending it."

That's consistent with a Virginia consumer survey released Monday by Roanoke College that showed most consumers who had realized saving from low gas prices did not intend to spend that money, but to put it into savings or to use it to pay bills. Less than a third said they planned to spend the money.

Vaughan can be reached at (757)345-2343.

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