Des Moines Regisster
05-19-07
Study: Shoppers bypass D.M.
Over 2 years, mall, other stores help spending soar in suburbs
By PATT JOHNSON
REGISTER BUSINESS WRITER
The West Des Moines gold rush has siphoned retail sales from Des Moines and
other parts of the metro area, according to a study released Friday by
economists at Iowa State University.
"We knew this was going on, but we didn't know the magnitude of losses,
especially to the city of Des Moines," said David Swenson, a research scientist
and economist at ISU, who completed the study with Liesl Eathington, an
ISU economist.
The study of retail sales tax figures for fiscal years 2004 and 2006 in Polk,
Dallas, Warren, Madison and Guthrie counties showed that overall retail growth
for the area in that period was 5.5 percent, better than the state's growth of 1
percent.
But the growth in some areas came at the expense of other areas, the study
said.
Retail sales shot up 500 percent in the portion of West Des Moines that sits in
Dallas County, in large part because of Jordan Creek Town Center.
The $200 million, 200-acre retail center helped boost retail sales in Dallas
County, as expected. The mall opened in August 2004 and has spurred other
retail development nearby.
Mall officials had said Jordan Creek would draw shoppers from at least a 100mile radius, but the declines in nearby cities suggest that the booming retail
center in West Des Moines is adding shoppers at the expense of places like Des
Moines, the portion of West Des Moines that sits in Polk County, Perry, Guthrie
Center, Earlham and Adel.
The shift in shopping patterns has also siphoned away local-option sales tax
revenue from Polk County school districts.
"Nearly 100 percent of this growth was driven by capture of customers from other
communities inside and outside" the metro area, the study said.
It showed that retail sales in the Dallas County portion of West Des Moines
increased $310.8 million from 2004 to 2006.
Retail growth in the western part of West Des Moines also hurt sales at Valley
West Mall, which is located in the portion of West Des Moines that sits in Polk
County, according to the study. That part of West Des Moines, including retail
areas like historic Valley Junction and big box stores along University Avenue,
saw retail sales decline 2.4 percent during the period.
Steven Watson of Watson Centers Inc. in Minneapolis, which manages Valley
West Mall, said sales have finally leveled off after the initial hit when Jordan
Creek first opened.
"They added nearly 50 percent more retail space to the metro area," he said.
"We knew everyone was going to feel it. We figured it would take three years to
level off, and that's what happened."
The only way sales in the area will return to pre-Jordan Creek levels - and start to
grow again - is if the retail trade area is expanded and the number of shoppers in
the area increases, he said.
In the meantime, Valley West Mall is "working a whole lot harder at getting local
and regional tenants," he said.
The biggest loser in the fight for shoppers appears to be the city of Des Moines,
where sales dropped 5.2 percent, or $194 million.
The study said that about $144 million of that total appears to be spending
shifted to areas outside the city.
Swenson said that trend could change in the next few years as more people start
living in downtown Des Moines, spurring additional retail and services to serve
them.
Polk County Supervisor Robert Brownell said that although Dallas County saw a
huge retail sales increase, total retail sales in the city of Des Moines were still
higher than in Dallas County. Brownell represents the area of Polk County that
includes West Des Moines.
"There are highs and lows in any retail cycle," he said. "The novelty of the new
mall is going to become less," prompting other businesses to bounce back, he
predicted.
Retail sales figures are watched by closely by county officials as they look at the
"Yes to Destiny" proposal, a 1-cent regional sales-tax increase that would be
used for property tax relief and regional attractions.
Voters in Dallas, Polk and Warren counties are scheduled to vote on the increase
July 10.
Smaller communities like Guthrie Center, Earlham and Adel, all west of the new
mall, saw declines in retail sales after the mall opened. Perry, which is in Dallas
County, saw retail sales decline 16.8 percent, or $16 million, during the period
measured.
Cities like Grimes, Dexter and New Virginia saw substantial increases in retail
sales during the period.
Swenson said retail outlets have been added in Grimes and north Urbandale in
recent years, attracting shoppers commuting from places like Perry and Granger.
Reporter Patt Johnson can be reached at (515) 284-8367 or
pjohnson@dmreg.com