Southeastern Michigan’s recovering economy is encouraging some retailers and food-service giants to increase their investments in Metro Detroit, particularly in the well-off suburbs and key sections of Detroit.
A dozen national and locally based companies are scheduled to announce their expansion plans for Michigan on Thursday at Retail Runway. The event, organized by the Metro Detroit chapter of the International Council of Shopping Centers, hasn’t been held since 2005 because of the state’s long-running recession.
Art Van, Pet Supplies Plus and others declined to divulge their plans until the event. But 7-Eleven, Zoup!, Emagine Entertainment and McDonald’s outlined their intentions for The Detroit News.
Retail Runway is part of the shopping center group’s annual Michigan IDEA Exchange, where landlords, developers and real-estate experts will wheel and deal for two days at The Henry in Dearborn.
This year’s overall event is expected to draw about 400 participants — up from last year’s 327 — attracted by auto industry growth, attractive rental rates and a glut of inexpensive, empty storefronts.
“Overall, we’re back on the radar screen and we’re recovering quicker than other markets,” said Jim Stokas of Stokas Bieri Real Estate, an event organizer who will moderate the Retail Runway.
“This marks a turning point for commercial real estate in Michigan,” said Kristin Frohn, an associate broker at Mid-America Real Estate-Michigan Inc. in Detroit and a co-chair of the runway event.
Retailers in the runway event are optimistic about Metro Detroit’s direction, so they want to declare their intentions publicly, organizers said.
Mike Anderer, a senior real estate representative in Michigan for Dallas-based 7-Eleven, said the convenience store chain intends to open 20 stores in Metro Detroit — including six in Detroit — next year, in addition to seven new stores already under way.
Since 7-Eleven averages 10 employees per store, the expansion adds about 270 employees in the next two years. 7-Eleven has such high hopes for developing and franchising in Michigan that the company hired Anderer about 10 months ago to cover Michigan; previously, this area was farmed out to its Chicago office.
Michigan is a natural target, officials said, especially since 7-Eleven declared Detroit the Slurpee capital of the United States.
“We do see an opportunity for growth in Michigan,” said Dan Porter, 7-Eleven’s vice president of store development. “We’ve got an appetite to do more, whether it is walk-up stores in the (downtown Detroit) financial market to the strip centers to gasoline and convenience stores in the more suburban markets.”
McDonald’s expects tospend $36 million on major remodeling of Michigan restaurants and $26 million on new construction this year, company officials said, but wouldn’t be more specific.
“We are always looking for new locations to add to our already great ones,” said Ruth Daniels, a spokeswoman for Novi’s Emagine Entertainment, which has seven movie complexes in southeastern Michigan and will add one in 2013. An additional theater complex would add 50 to 100 employees, according to the company.
Zoup! founder and CEO Eric Ersher said he will introduce the chain’s newest product, Good, Really Good Chicken Broth. He also will highlight franchise expansion — the Southfield-based fast-casual restaurant chain, which serves soups, salads and sandwiches, has 17 franchise locations in the works that could translate into 200 to 270 workers. It has 43 stores overall with 15 in Michigan.
Retailers have noticed Michigan’s bump in business, said Jackie Goforth, a partner at PricewaterhouseCoopers in Detroit who focuses on retail issues. This development bodes well for areas that still need stores, particularly Detroit, he said.
“Right now, there’s a big inventory of real estate available,” Goforth said. “If retailers can afford to invest for the future, they’re able to find real estate at a very good price. And, in many cases, the landlord has capital available now and is able to do more in terms of a build-out.”
But consumers and retailers are proceeding with care because of political uncertainties, limited job growth and a focus on value-based retailers, said Ed Nakfoor, a Birmingham-based retail analyst and public relations consultant. “The growth and development will be methodical, and I think it has to be,” Nakfoor said.
Nakfoor said there is “enthusiasm across all categories” of consumers and retailers.
“But the focus is on high and low,” he said. “Products in the middle are faced with more of a challenge.”
These outlooks are backed up by strong May retail sales in Michigan, according to an index by Lansing-based industry group Michigan Retailers Association and the Federal Reserve Bank of Chicago. The association’s survey found that 66 percent of state retailers expect sales during June-August period to increase from a year ago.
Nationwide, retailers generally are acting cautiously because of political uncertainty and ongoing signs of a sluggish economic recovery, said Melinda Crump, a spokeswoman for financial information company Sageworks Inc.
While there is similar caution in Metro Detroit, the return of the Retail Runway event gives retailers, developers and real estate agents hope.
“We have sustained challenging times but emerged with vigor,” said Frohn of Mid-America Real Estate, former director of real estate at the now-defunct Borders Group. “The lineup of national retailers participating in the Retail Runway is stellar and exhibits the renewed interest and activity that we can anticipate.”
By: Karen Dybis, The Detroit News