Downtown Lease Rates May Hurt Ability to Recruit Businesses: Analysis

High downtown rental costs may be impeding business development in Royal Oak, according to the report of a retail and market analysis commissioned by the city for $48,000.

A representative of The Retail Coach LLC, a national retail and consulting firm based in Tupelo, MS, told Royal Oak city officials this week rents are “too high” in certain circumstances, which could make the city vulnerable to a nationwide trend for retailers to move away from downtown areas, The Daily Tribune reports.

Aaron Farmer, vice president of the consulting group, discussed the findings of the analysis Monday with members of the City Commission and Downtown Development Authority.

Restaurants, bars and other entertainment venues bring big crowds to downtown Royal Oak, but officials want to lure more retail businesses to the Woodward Avenue corridor. A top objection among those looking to do business in Royal Oak is lease rates, said Farmer, whose firm reached out to 43 retailers to recruit them to the city.

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Three retailers said they’re interested in doing business downtown, and four are considering Woodward Avenue locations, Farmer said. About a dozen of the 50 developers Retail Coach is trying to recruit expressed interest.

His firm’s analysis also suggested that retailers stay open later at night to capture some of those coming to Royal Oak for entertainment. About 70 percent of retail purchases occur from 7-11 p.m. nationally, he said.

“If you are open from 10 a.m. to 4 p.m. you are really catering to the unemployed,” he said.

Farmer advised city officials to concentrate on luring already established small retail businesses looking to add more locations. Big national retailers require spacious parking lots, he said.

While some big retailers are interested in coming to Royal Oak, they’re not looking at the downtown area. Still, Royal Oak shouldn’t discount their importance because they’re more stable than small businesses in general and are less likely to go out of business Farmer said.

Mayor Jim Ellison said it’s important for Royal Oak to “have the right mix of retail.”

“I’m personally not interested in a big box (store),” he said. “Our goal is to enhance the downtown environment” and on Woodward.

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Photo via City of Royal Oak