Des Moines Business Record
05-26-07
Des Moines suffers from suburbs' retail growth
By Sarah Bzdega
sarahbzdega@bpcdm.com
John Peterson, director of the Ankeny Community Planning and Building
Department, points out Briarwood Center, a new neighborhood retail area. Photo
by Duane Tinkey
Des Moines officials call it the doughnut effect.
Total retail sales in Greater Des Moines have risen steadily over the past few
years, but sales growth has shifted away from the capital city to the surrounding
suburbs.
Although the Dallas County side of West Des Moines, where Jordan Creek Town
Center is located, had the largest increase in retail sales from 2004 to 2006,
Ankeny and Altoona also experienced significant gains, a sign that retail growth
is balanced around Des Moines.
And it appears that much of this money is coming from outside Central Iowa.
"Any growth to the metropolitan area, almost all of it comes at the expense of
other parts of the state," said Iowa State University economist Dave Swenson,
who with economist Liesl Eathington prepared the report "Recent Trade Shifts in
the Des Moines/West Des Moines Metropolitan Region."
"With regard to net new trade capacity, we believe [retail development] is
bringing sales into this region that otherwise weren't coming here," Swenson
said. "We think Altoona and Ankeny are creating as much if not more net new
sales to the region as Jordan Creek, so it's a complicated and diverse story."
The study looked at changes in retail sales in a five-county area (Polk, Dallas,
Warren, Madison and Guthrie counties) from fiscal year 2004, ended March 31 of
that year, before Jordan Creek Town Center was constructed, to fiscal year
2006, a year after the mall was completed.
The big picture
Adjusted for inflation, real total retail and service sales in the five-county area
increased 5.5 percent from fiscal 2004 to fiscal 2006. This growth exceeded the
statewide sales gain of 1 percent as well as the area's 3.6 percent gain in
population, suggesting that a major part of the sales growth came from residents
outside the metropolitan region.
The portion of West Des Moines in Dallas County had the largest influx of sales
with an increase of more than 500 percent in real sales, or $310.8 million, in two
years. Almost all of this growth came from residents of other communities inside
and outside the five-county area, the report said.
During the same period, Des Moines had the largest decrease in total retail
sales, with $193.6 million less in sales in 2006 than in 2004, $143.7 million of
which was estimated to be the net value of retail and service trade shifts
elsewhere.
"Retail is always going to follow population patterns," Swenson said, "and what
has happened in Polk County, primarily over the last 30 years, is mostly a
persistent shift west."
However, Swenson said a more surprising discovery was the amount of retail
growth in other areas of Greater Des Moines, particularly in the northeast
suburbs of Ankeny and Altoona. Ankeny's retail sales rose 17 percent, or $74.6
million, and Altoona's sales jumped 46.7 percent, or $104 million, reflecting
population growth east of Des Moines.
A shift in retail trade affects not only the amount of sales tax that local
governments and school districts collect, but also job opportunities. "Retail rarely
creates new jobs," Swenson said, adding that new stores tend to be larger and
more efficient than older ones, meaning retailers need fewer workers.
Moving northeast
Though West Des Moines has captured a large portion of the retail shift in
Greater Des Moines, the combined retail sales growth of Ankeny and Altoona
suggests that regional development is balanced.
"Our goal is to try to make sure the north and east side of the metro grow so that
we're balanced around the central city of Des Moines," said John Peterson,
director of the Ankeny Community Planning and Building Department.
In less than a decade, Ankeny's Delaware Avenue has become a major retail
corridor with the development of several big-box retailers and strip centers
housing smaller businesses. Now, Peterson said, his city is also seeing the
emergence of smaller commercial centers in growing neighborhoods, which
provide basic services to nearby residents.
The ISU study suggests that most of Ankeny's retail growth resulted from its
huge population increase since 2000, with 83 percent of its retail sales gain
attributed to population and income growth.
However, Peterson believes Ankeny is becoming more of a destination shopping
area with a diverse mix of businesses, including a compact commercial center
along Interstate 35 and other services remaining within the city. Nearly all of
Ankeny's constructed retail space is occupied, he said.
City officials believe this rate of growth won't taper off any time soon.
"I would expect that the growth would continue with the number of people
interested in moving to Ankeny. ... The rooftops are going to drive even more
retail growth," said Tim Moerman, Ankeny's economic development director.
Already Ankeny is expanding its retail corridor along Delaware south of Oralabor
Road. Mills Fleet Farm, a Minnesota-based retail chain similar to Tractor Supply
Co., is going through the city approval process to build a 273,200-square-foot
store on Southeast Delaware Avenue, which Peterson said "is bigger than any
other existing big-box store we have in town." A strip center is being built nearby,
with Old Chicago Restaurant as the anchor tenant.
In addition, the 1,000-acre Prairie Trail development will create a retail and office
hub around a town center and Crosswinds Business Park will provide 800 acres
for development east of the Corporate Woods interchange.
Peterson sees the Jordan Creek development as a possible benefit to Ankeny in
the future. "I think it's complementary almost, to the extent that in time, Ankeny
may see some of those Jordan Creek businesses look over here for their second
store," he said.
Altoona also expects to continue its fast-paced growth, especially in its western
commercial district by the U.S. Highway 65 bypass.
But unlike Ankeny, most of Altoona's retail sales growth is from people outside
the city. According to ISU's study, 14 percent of Altoona's $104 million retail
sales growth was attributable to local income and population growth.
"We've known eastern Polk County has been largely underserved," said John
Shaw, the city's community development director, "so with the commercial
growth Altoona has had, it has put a focus on the eastern Polk area."
In addition to focusing on the western commercial development, Altoona has
updated its First Avenue interchange with Interstate 80, which Shaw said has
spurred commercial development in that area.
The core
Since Jordan Creek was built, and spinoff development began around the mall,
several Des Moines retailers have moved to West Des Moines, including Berardi
Bros. Custom Tailors and Schaffer's Bridal and Formal Wear. Josephs Jewelers
opened a store in the western suburb in addition to its downtown location and
has had better success there than at its Des Moines store. Younkers closed its
flagship 141,000-square-foot department store downtown and Merle Hay and
Southridge malls have experienced some turnover.
These are signs of a shifting core.
"We knew that Jordan Creek would have this effect, particularly on the malls,"
said Matthew Anderson, an economic development coordinator for the city of
Des Moines.
Still, city officials believe there is an opportunity to capitalize on needs that
shopping centers don't fulfill to continue to attract shoppers to Des Moines. This
includes focusing on specialty shopping areas in neighborhoods such as
Ingersoll Avenue, Beaverdale and the East Village.
"We may not be able to compete on quantity," Anderson said, "but [could on]
quality of retail."
Architect Erin Olson-Douglas, who is nearing completion of a one-year study on
downtown Des Moines, said that the fact that retail sales in the five-county area
grew faster than its population is good. "Now how do we complement the good
things that they have done at Jordan Creek in West Des Moines, Altoona and
Ankeny?" she said. "They've sort of sucked away from some things we had in
Des Moines, and I think Des Moines, specifically downtown, can do some things
different to help balance this out."
Olson-Douglas believes that downtown could support pedestrian retail centers,
such as in the East Village, especially now that housing developments have
brought more residents downtown and Martin Luther King Jr. Parkway and
Interstate 235 reconstruction have created greater visibility for downtown.
As retail development develops outward, it could begin to affect suburbs close to
Des Moines as well.
Already the portion of West Des Moines in Polk County has suffered, with a $22
million decrease in retail sales for the two-year period. Based on population
increase and income growth, it should have had a $22.3 million increase.
Cities farther from Des Moines also have experienced a fall in retail sales,
including Perry, which had $16.1 million less in sales in 2006 than in 2004. "The
good news is it's spread around the center," Olson-Douglas said. "We just don't
want to be the doughnut."