FEDRAC PKT 10-11-2004
I
City of Federal Way
City Council
Finance/Economic Development/Regional Affairs Committee
Monday, October 11, 2004
5:30 p.m.
City Hall
Hylebos Conference Room
AGENDA
1. CALL TO ORDER
2. PUBLIC COMMENT
3. COMMITTEE BUSINESS
A. Approval of the September 14 and 20 Meeting Minutes
B. Discussion of Potential City Center Lifestyle/Retail Market Analyst Firms
Action
Action
4. OTHER
5. FUTURE AGENDA ITEMS
6. NEXT MEETING:
FEDRAC - Economic Development: November 9,2004
FEDRAC: October 26, 2004
Committee Memhers:
Lric Faison, ('hair
Jeanne Burbidge
Jim Ferrell
(,itv Stafr
fwen Wang, Management Services Director
Jason Su:::aka, Management Analvst
(253) 661-4061
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Hylebos Conference Room
MINUTES
Committee Members in Attendance: Chair Eric Faison, Member Jeanne Burbidge, and Member Jim FerrelL
City Council Members in Attendance: Mayor Dean McColgan, Deputy Mayor Linda Kochmar, Councilmembers
Jack Dovey and Michael Park.
Staff Members in Attendance: Iwen Wang, Management Services Director; David Moseley, City Manager; Pat
Richardson, City Attorney; Patrick Doherty, Deputy Director of Community Development; Jason Suzaka,
Management Analyst.
Others in Attendance: Dini Duclos and Tom Pierson, Federal Way Chamber; Bob Couper, Lloyd Enterprises; Gary
Martindale, The Commons at Federal Way; Erica Hall and Debbie Kaufman, Federal Way Mirror.
1.
CALL TO ORDER
Chair Eric Faison called the meeting to order at 5:36 p.m
2.
PUBLIC COMMENT
None.
3.
COMMITTEE BUSINESS
a)
Approval of the August 10. 2004 meeting minutes
Motion to approve the August 10, 2004 minutes. Motion seconded and carried.
b)
Presentations from Potential City Center Lifestyle/Retail Market Analysis Firms
1) Bob Gibbs - Gibbs Planning (Birmingham, MI)
(Handout given out by Mr. Gibbs)
. Performs services such as sales forecasting, siteplanning, tenant mix, signage/development
codes, and market studies.
. Roughly half of his clients are in the public sector; has worked on projects in Charleston, SC,
Cambridge, MA, Beverly Hills, CA, and Issaquah, W A.
.
Weare currently seeing a reinvention of retail; there is a move towards outside mixed-use
projects.
Few malls are being built; developers are seeing full retail projects as too risky.
.
.
Mr. Gibbs uses a three-step market study process:
i. Supply/Demand Study (using U.S. census info)
ii. Store visitslInterviewslField inventories
iii. Retail industry reviewlResults of study
He will create three models:
.
A-I
1.
11.
A status quo model, forecasting the next five years.
A "Max" model, which incorporates a market-driven process, without any
government intervention.
A mutually agreed upon model.
lll.
The committee took a break at 6:30pm, reconvening at 6:39pm.
2) Anne Ricker - Leland Consulting (Denver, CO)
Paris Rutherford - RTKL Associates, Inc, (Dallas, TX)
(Handout passed out to the Council)
This was a joint presentation between the two companies. Leland Consulting performs market
analysis, fiscal/fmancial analysis, and economic development strategies. RTKL specializes in
planning and urban design architecture.
The team focuses on market strategy, rather than market studies.
When asked what companies should be targeted to come to Federal Way, Ms. Ricker stated that
the city may not need to target specific comp~nies. Developers may be able to bring in retailers
through their relationships.
The committee took a break at 7:37pm, reconvening at 7:42pm
3) Paul ScWesinger - Buxton (Texas)
(Handout passed out to Council)
.
Buxton specializes in retail site selection
0 They match the buying habits and lifestyles of people in a given area with retail and
restaurant concepts where they will most likely buy their product.
Local projects include Mill Creek, Shoreline, and Lacey
"
.
They focus on "customers," not people.
0 They look at behavioral tendencies of customers (i.e. drive times, spending habits, etc.),
using an exhaustive amount of data.
0 Results include individual retail/restaurant match reports
The committee recessed at 8:35pm to go into executive session.
Left executive session at 8:35pm to go back into FEDRAC.
.
Q&A session
4.
OTHER
None.
5.
FUTURE AGENDA ITEMS
6.
NEXT SCHEDULED MEETING
October 12, 2004 at 5:30 p.m. in the Hylebos Conference Room.
7.
ADJOURN
Chair Eric Faison adjourned the meeting at 8:46p.m to go to executive session.
Recorded by Jason Suzaka
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MINUTES
Committee Members in Attendance: Chair Eric Faison, Member Jeanne Burbidge, and Member Jim Ferrell.
City Council Members in Attendance: Mayor Dean McColgan, Deputy Mayor Linda Kochmar, Councilmembers
Jack Dovey and Michael Park.
Staff Members in Attendance: Iwen Wang, Management Services Director; David Moseley, City Manager; Karen
Kirkpatrick, Deputy City Attorney; Patrick Doherty, Deputy Director of Community Development; Jason Suzaka,
Management Analyst. '
Others in Attendance: Gary Martindale, The Commons at Federal Way.
1.
CALL TO ORDER
Chair Eric Faison called the meeting to order at 7:03p.m
2.
PUBLIC COMMENT
None.
3.
COMMITTEE BUSINESS
a) Presentations from Potential City Center Lifesty1e/Retail Market Analysis Firms
1) Blount Hunter - H. Blount Hunter Retail & Real Estate Research (Norfolk, VA)
(Handout given out by Mr. Hunter)
Mr. Hunter stated that he would be teaming with Greg Stoffel of Gregory Stoffel & Associates on
this project (Mr. Stoffel was unable to be present at this meeting).
He currently sees The Commons as having three main obstacles that keep it from thriving:
. The mall is seen as having only one "fashion anchor" (Macy's). It needs more variety.
. It is stuck between powerhouse Southcenter in Tukwila and an upcoming Tacoma.
. No Nordstroms.
That being said, he does say that the redevelopment of The Commons by the new ownership is a
step in the right direction.
Retailers usually do not look at municipal boundaries and associates themselves with a particular
city. They control risk by working with developers (such as leasing costs) and moving en masse.
The challenge with developers is that if they are making money, they may not have an incentive to
do things differently then they already are. They need to have an incentive that will make them
even more money.
A3
The Commons will face a similar challenge that Redmond Town Center (another project Mr.
Hunter worked on) had: The town center was situated between Bellevue Square and Alderwood
Mall in Lynnwood.
When asked about the amount of civic investment needed, Mr. Hunted stated that the developer
would tell the city if any is needed. Developers are under a lot of pressure from retailers to lower
leases.
Mr. Doherty was asked by the Council to summarize the four flITllS, with Deputy Mayor Kochmar
suggesting that Mr. Martindale's comments be incorporated into the summary.
Mr. Moseley suggested contacting former clients of the firms for their thoughts as a sort of
"reference check"
4.
OTHER
None.
5.
FUTURE AGENDA ITEMS
6.
NEXT SCHEDULED MEETING
October 12, 2004 at 5:30 p.m. in the Hylebos Conference Room.
7.
ADJOURN
Chair Eric Faison adjourned the meeting at 8:20pm.
Recorded by Jason Suzaka
H\FINANCE\FINCOMM1ì2004\O914\0920 Minutes,doc
AY
CITY OF FEDERAL WAY
MEMORANDUM
Date:
To:
Via:
From:
October 11, 2004
Finance, Economic D
David H. Mos
Patrick Doh
Selection of e az
lopment and Regional Affairs Committee
nager
lrector, Community Development Services
ifestyle Center Market Study Consultant
Subject:
BACKGROUND
Pursuant to the City Council-approved City Center Redevelopment Strategies work plan,
on September 14 and 20, 2004 four retail/lifestyle center market study consultant firms
made presentations to FEDRAC of their scope of services for conducting retail/lifestyle
center market studies for the Federal Way City Center.
PROPOSAL
Attached you will find a spreadsheet that summarizes the analytical components of each
of their proposed scopes of services, deliverables and fees, plus a list of pros and cons,
based on staff observations, references and opinions.
The written materials from each of the firms' presentations are attached to this memo, as
well. Among these materials you will find that Leland/RTKL, in response to staff
request, submitted a subsequent scope of services more focused on just the retail/lifestyle
center market study, rather than the full scope of planning/development services
presented on 9/14/04.
COMMITTEE ACTION
"I move to recommend that City Council authorize engagement of
for a retail/lifestyle center market study for the City Center, for an expenditure of
approximately "
Committee Chair
APPROV AL BY
COMMITTEE:
1Jo ít~~tRM
FIRM
Gibbs
Leland/RTKL
m
r
Buxton
Hunter
Comparison of Retail Market Study Consultants
ANALYSIS COMPONENTS
DELIVERABLES
Define Trade Area
10 customer base
Demographic data from census + buying patterns
10 other major retail centers/competition
Factor in traffic, new/proposed projects, etc.
Project immediate/long-term growth customer base can support
10 retail growth categories + detailed list of potential tenants
Use Status Quo, Max Growth models
Qualitative opinion on retail opportunities, incl amount of sq. ftge
Excess/deficit of existing retail by category
List of retail/entertainment bsns as potential new tenants
Contact RE brokers, developers, tenants, ICSC Conf, ULI Conf, etc.
Includes professional peer review at his expense
Market Strategy vs, Market Study
Site and market reconnaissance
10 Trade area
Historical and projected economic/demo data (census, Claritas, ESRI-BIS)
Competitive supply analysis (incl comparative analysis of projects, stores + interviews)
Market demand analysis (incl niche opportunities, anchors + forecast for 5-10 yrs)
Development programming (mix of uses, market niches, price/lease, amenities)
Development strategy (potential sites, roles, phasing, financing, etc.)
Market Reconnaissance Report
Competitive Supply Analysis
Retail Inventory and Void Analysis
Market Demand Analyses (retail, some residtl, employ)
Market Positioning Strategy
Development Programming for Key Catalyst Projects
Phase 1- Retail Trade Area Determination
Product demand analysis (ave. annual household purchases against national ave.)
Analysis of households (psychographic profiles)
Product demand analysis (ave. annual household purchases against national ave.)
Phase /I - Retail Site Selection and Tenant Analysis
Analyze potential retail center
Tenant selection and analysis
Analysis of similar retail centers
Map of drive-time trade areas
Household psychographic profiles
Product demand analysis for drive-time trade area (20 top retailers)
Trade area polygons overlaid on map
Household profiles compared to retailers' target area profiles
Dominant segment household densities
Marketing binder
Retailer-specific marketing packages (up to 20)
Lifesty/e Center as first step in creating multiuse urban(e) center
10 functional trade area (drive time analysis, local area sales, competitive market assessmenUmapping)
Define demographics and use locally generated info (PSRC), not just census, etc.
10 sales support for "lifestyle retailers" in FW trade area (focus on different retailers than mall product)
Analyze potential transfer of sales from existing "lifestyle" centers
Comparison with analogous projects
Nuances: Long-term perspective of regional retail market
Access to trade area perspectives from selected retailers
Experience with site selection criteria used by critical tenants
Projected sales volumes from FW trade area
Supportable retail rents from FW trade area
Merchandise programming
Key tenant strategies (key retailers)
Develop marketing piece for developer solicitation
Present to approx. 10 lifestyle center/retail developers
FIRM
Gibbs
Leland/RTKL
\}Ó
~
Buxton
Hunter
FEE
$25,000 + travel/expenses
$42,500
$60,000 = up to $2,000 travel/expenses
(after 11/1/04 - $70,000)
$15,750 +approx. $3,000 travel/expenses
Comparison of Retail Market Study Consultants
PROS
Retail and planning experience
Focus on neourbanist, town-center development
Identifies retailers our market could support
Would identify what City could do to enhance market forces
Would share FW report with "many" retail/developer contacts
Lower cost
"Whole package" of retail, planning and development experience
Detailed review of demographic data - not just census
Provide demand for retail, office, limited housing
Identifies retailers our mark~t could support
Would provide development strategy
Included timeline
Detailed demographic/psychographic analysis
Focused comparison to retailers' criteria
Provide market packages for up to 20 retailers
Included timeframe - not timeline
Retail and planning experience
Recognizes "big picture" for FW City Center
Detailed demographic analysis - with local info
Detailed retail demand/rent/programming analysis
Would present FW case to 10 lifestyle center developers
Has Federal Way experience
Provided timeline with hourly break-down
Lowest cost
CONS
May rely excessively on census data
Does not provide "development" services
No timeline provided
Inclusion of planning services may "fatten"lIengthen scope
Higher cost
No planning or lifestyle center orientation
Does not provide "development" services
May be overly focused on Buxton client list
Highest cost
Does not provide "development" services
L:
SCOPE OF WORK
Leland Consulting Group's approach to a (re)development project such as this is to
develop an understanding of the demands of the marketplace, barriers to investment
(regulatory, financial, physical and market), and valued assets of the area and
surrounding environs, while educating and building support. A critical distinction in
our approach is the formulation of a market strategy vs. a market study. We feel
strongly that a market strategy will provide you with a thorough understanding of: the
environment within which development exists; user group profiles for various product
types; factors necessary for success; and, a platform for action. Key components of the
market strategy will include:
.
Clearly defining the vision, theme and quality of (re)development;
Providing a "reality check" for conceptual planning efforts;
Quantifying market conditions and translating them into opportunities;
Identifying target markets and quantifying their depth;
Working in an iterative environment with other members of the team;
Understanding the financial implications of (re)development; and
Defining public and private sector roles.
.
.
.
.
.
.
Ultimately, the market strategy will provide you and your public and private sector
partners with an accurate, independent and market-driven" story" to tell potential
developer, lender and investor audiences.
Based on the assignment parameters and objectives discussed during our presentation, a
multi-task work scope for the market analysis portion of our approach has been prepared
and is presented as follows. Future phases of work could be defined together with the
City and its stakeholders to ensure that our approach most accurately reflects your needs
and those of the project. Preliminary conclusions will be provided in the form of
working papers and memoranda which will enable you to evaluate our analysis as it
progresses.
TASK 1.0 MARKET ANALYSIS ($42,500)1
1.1: Site and Market Reconnaissance
.
Identify surrounding conditions, and type and ownership of land uses;
Consider access and visibility of the area from major transportation
thoroughfares;
Evaluate availability of existing and planned infrastructure, including
road networks and utility lines;
Evaluate effect(s) of the market area's overall development image and
political climate;
.
.
.
1 Includes executive summary report 15 to 25 pages.
. The Leland Team, RedeH'fopmel1/ Strategists
Pllge 1
.
Research impacts of select (re)development concerns, e.g., zoning, water
rights, public works capacity and other restrictions; and
Meet with other project consultants to discuss physical factors which will
affect marketability of the area.
.
1.2: Trade Area Identification
Determine the trade area(s) for proposed land uses considering impacts from:
.
Physical barriers, such as highways, major arterials, etc.;
Location of possible competition, both within and outside the market;
Proximity to population and/ or employment concentrations; and
Market factors which will set values for development.
.
.
.
1.3: Historical and Projected Economic and Demographic Data
Analyze the follawing market indicators:
.
Characteristics of new and existing residents;
Population growth;
Household growth;
Household income levels;
Consumer spending patterns;
Lifestyle characteristics (psychographies);
Employment growth; and
Other indicators, as identified.
.
.
.
.
.
.
.
1.4: Competitive Supply Analysis
.
Complete a retail audit/inventory of stores and services in the trade area;
Complete an inventory of residential developments in the trade area
(limited);
Complete an inventory of" employment" uses (by product type) in the
trade area (limited);
Conduct interviews with market area planning and community
development officials regarding area trends/issues, planned projects and
developments currently under construction; and
Conduct a comparative analysis of competitive projects based on location,
size, character and theme, pricing, product type/mix, absorption rate,
target market, and sources of demand.
.
.
.
.
1.5: Market Demand Analysis
.
Consider impact of proposed and existing activity generators in the area;
Analyze factors which will impact future demand for (re)development
opportunities among various land uses;
.
. The Leland Team, Redevelopment Strategists
PaRe 1
.
Assess the market's ability to accommodate niche opportunities (quantify
their potential by use and type);
Consider the area's competitive position and ability to capture market
share;
Identify opportunities for building on existing retail/ service strengths and
strong commercial block clusters - developing a traffic-generating anchor
district;
Translate these opportunities into demand for commercial and non-
commercial spaces; and
Forecast demand for proposed land uses in market area over 5 to 10 years
and quantify potential market share for the project.
.
.
.
.
1.6: Development Programming
Work Products:
Work with the project team to analyze vacant and underutilized land in the study
area, awnership patterns, and the potential for assembly of significant parcels for new
development or redevelopment in catalyst locations. Prepare development program
recommendations which address the follawing factors:
.
Mix of land uses;
Market niches with provide immediate development potential;
Sale price and lease rate ranges;
Image and theme;
Amenities; and
Other critical factors.
.
.
.
.
.
Work with the project team to formulate a development strategy which includes the
following components:
.
Development strategy, i.e. ownership/ management position, lease/ sale
provisions, development process;
Organizational structure for implementing development of properties
(acquisition, assemblage, disposition);
Development partner roles and responsibilities;
Phasing program for priority public and private investments;
Positioning strategy for targeting properties to intended audiences; and
Financing strategy including tools and incentives.
.
.
.
.
.
Market Reconnaissance Report (Memorandum)
Competitive Supply Analysis
Retail Inventory and Void Analysis
Market Demand Analyses (Detailed Commercial, limited Residential and Employment)
Market Positioning Strategy
Development Programming for Key Catalyst Projects
. The Leland Team. Redevelopment Strategists
Page 1