Retail migration: Could Stonefield threaten Barracks?
Last week, we looked at store vacancy data for the Downtown Mall, completed in July by the City's Office of Economic Development, but what about the City's other retail centers? And what effect might the coming shops at Stonefield (known for some time as Albemarle Place) have on our existing centers?
Long-successful Barracks Road enjoys a zero percent vacancy rate, with only the former Quiznos sub shop unoccupied, and not counted because it has been closed for only a few months. Vacancy rates on the Corner and Preston Plaza are also now at zero with the arrival of the Java Dragon coffee shop in Preston, which replaced the Blue Ridge Eco Shop (which moved to the Downtown Mall), and clothing store Jack Wills on the Corner, which replaced the Corner Market.
Seminole Square continues to have the most vacancies of the studied districts. In January 2011, the rate was 13 percent, but it had fallen to 9.4 percent by the time the July study was completed. Currently, there are five empty stores in Seminole Square.
So how might Stonefield affect the shopping center next door with the historically high vacancy rate?
Leigh Hughes, a senior associate with Seminole Square's landlord, CB Richard Ellis, says Stonefield's arrival will be a "net positive" for the shopping center, as the eventual completion of the $35 million Hillsdale Drive Extension and the planned $4.7 million 250 Bypass on-ramp widening project will address traffic issues and create a "vibrant commercial corridor."
"We can visualize the intersection of Hydraulic Road and Route 29 becoming the equivalent of our area's 'corner of Main and Main,'" says Hughes, referring to a term that, in commercial development circles, means the most sought-after location.
Of course, it's still too early to know exactly what Stonefield will become. It's being billed as an "elegant mix" of retail, office space, apartments, and an as-yet unnamed boutique hotel, but so far the only known tenants are a Trader Joe's, a 14-screen Regal Theater, and two restaurants, Osaka Sushi and Travinia Italian Kitchen. There's also no telling when the VDOT road projects that Hughes mentioned will be complete, as VDOT has no timeline for the on-ramp project, and funding for extending the Hillsdale project beyond the Seminole Regal theater won't be available until 2015.
However, if that "elegant" retail arrives at Stonefield, it won't be Seminole Square that will have to worry, says one local real estate development expert. It will be Barracks Road.
"There's a tremendous demand for retail in Charlottesville," says Hook real estate expert Richard Spurzem. "Barracks Road isn't real fancy or all that special, but it is phenomenally successful. And that's because there are no other options."
The way Spurzem sees it, if Stonefield follows through on its promise to bring high-end retail shops to Charlottesville, Barracks Road might have reason to worry.
"If and when Stonefield gets high-end little stores," he says, "there's a real risk that they would pull the best shops out of Barracks. If that happens, Barracks would be dead."
Should that happen, Spurzem thinks that Barracks would be wise to become more downscale. That transformation, should it come to pass, could also give city leaders pause, as sales and real estate taxes from Barracks provide a big chunk of city revenue. Indeed, according to city records, the real estate alone at Barracks is assessed at nearly $100 million.
As Spurzem recalls, early plans for Fashion Square Mall called for it to be located on city property, where Seminole Square is now, but it was eventually moved to county land down the road.
"The city was furious," says Spurzem.
Indeed, should top-performing stores in Barracks, or new ones that haven't come to town yet, be lured to Stonefield, we could see another big loss of city revenue.
"So much attention is given to the Downtown Mall," says Spurzem, "but Barracks is everything."
Curious about that, the Hook asked Commissioner of Revenue Lee Richards for a breakdown of sales and meals tax revenue by area, but unfortunately, says Lee, the city's current software system cannot track such things. Oddly enough, Lee says, they used to be able to provide that information in the past, but until the current system is updated, it's impossible to tell which areas of town are contributing the most to city coffers. But it's not hard to guess.
"The Hydraulic Road Kroger's probably funds the city more than the entire Downtown Mall," Spurzem speculates.
However, Spurzem has his doubts that Stonefield will get those high-end little shops anytime soon, or the residential properties promised.
"Stonefield will probably just have big-box stores for awhile," he says. "If that's the case, Barracks and Seminole Square won't be affected."