An evolving Roanoke-area economy attracts new retail players
- September 1, 2008
by Michelle Baron Long
Take a stroll down South Main Street in Blacksburg, and it’s hard not to notice the changes. Abandoned mom-and-pop storefronts are making way for new development. Next month brings the opening of one of the biggest new retail projects in years: First & Main, a $40 million, mixed-use lifestyle center. If all goes as planned, it will throw open its doors on Oct. 4.
In the first phase of what could eventually be as much as 335,000-square-feet of new retail space, patrons will be able to shop at such upscale boutiques such as Jos. A. Bank and Talbots. Also on the
tenant roster is Coldwater Creek, a national retailer of women’s clothes, making its first appearance in the Roanoke/New River Valley region. Besides shopping, people can catch a movie or grab a bite to eat at Bull & Bones Brewhaus & Grill.
The plaza-style, outdoor center is the baby of Cleveland-based Fairmount Properties. It’s one example of how the Roanoke region’s evolving economy — from a railroad/manufacturing center to a research-driven technology corridor — is drawing new retail players and other amenities.
On Nov. 8, the region celebrates the opening of the Taubman Museum of Art in downtown Roanoke. Its soaring, unconventional architecture and expanded space for collections is expected to boost the Star City’s cultural profile, drawing out-of-town visitors. Plus, construction begins this fall on the Virginia Tech Carilion School of Medicine, described by local real estate executive Edwin C. Hall as “the most exciting thing that’s happening in this community for the next two to three years.” The joint venture between Carilion Clinic and Virginia Tech will be part of a $195 million technology park in downtown Roanoke.
Virginia Tech a major anchor
Meanwhile, back in Blacksburg, Tech plans to begin building a second million-square-foot facility at the university’s corporate research center. The presence of Virginia Tech — one of the country’s top research universities — is viewed as a hugely important anchor by Fairmont, which considers college and university campuses economic catalysts.
In fact, Fairmont sees a region underserved in terms of shops, restaurants and entertainment venues. Ask why the company is investing in Blacksburg — a college town of 40,000 residents — and Fairmont principal Randy Ruttenburg makes this case: “First and foremost are the millions of dollars each year that Blacksburg shoppers are taking to places like Roanoke, Charlotte and Richmond to purchase better quality goods.” Plus, he adds, research shows significant increases in catalog orders from the area to retailers that typically participate in a Fairmont project.
The company’s demographic research shows that Tech’s growing technology industry is driving up salaries and giving shoppers the discretionary income to support a lifestyle center. For instance, within 20 minutes drive time of First and Main, Fairmont identified more than 100,000 esidents who aren’t Virginia Tech students. These year-round, mostly family households have average incomes ranging from $63,322 to $72,445.
Throw in the company’s figures of $42 million in estimated annual student spending (for things other than tuition, room, board and school supplies) and $18 million by non-student Hokie football fans who attend the games in droves, and you understand why Fairmont continued with the project at a time when other lifestyle centers are on hold because of the slow economy.
The center, located off U.S. Route 460, is viewed as a welcome addition by the Blacksburg Partnership. Formed in 2003, the public-private economic development group has focused on getting more retail. “We didn’t have a lot of retail here that would keep residents local,” says President Diane Akers. “We’re trying to complement what’s already here by recruiting additional upscale and specialty retail.”
The group is pleased with the outcome of First & Main. However, the project has drawn opposition. In the second phase, the developer plans to bring in a big-box retailer, yet to be named, although rumored to be a Wal-Mart. “Some people are concerned about the size of that development, that it is next to a school and the impact it would have on other retail,” says Akers.
Catering to Hokie fans
Not far from First and Main a local developer plans luxury hotel condominiums to serve wealthy Hokie sports fans. The Colosseum, a six-story, $80 million development, has been designed to offer 241 units. They would range in price from $189,000 for a one-bath, 335-square-foot unit for two people to $750,000 for a 1,656-square-foot, three-bath, penthouse suite designed for as many as eight.
Developer Mark Kinser, president of Unlimited Construction Inc. in Radford, says he has secured construction financing and plans to break ground on the substructure next month, pending approval from a state board that regulates condominium development.
With the economy slowed by the housing downturn and increased fuel prices, the Roanoke region has seen the same sluggish job growth over the past year as other Virginia regions. The region’s job market was stagnant overall and is expected to be that way this year, too, with growth of less than 1 percent, according to projections from Chmura Economics & Analytics in Richmond. While the region lost jobs in seven of 12 categories in 2007, including manufacturing and business and professional services, it saw a 4.6 percent gain in education and health jobs, largely because of expansions by Carilion Clinic as it prepares to move to its new medical school model.
So, it’s not as if a new store is popping up on every corner. However, economic development officials report plenty of interest and visits to the region by new potential corporate players, which bodes well for future retail development.
Some visitors check out the research facilities at the Virginia Tech Corporate Research Center (CRC). The small businesses spawned there are long-term economic drivers for the region, say area leaders. Engineering and technology companies such as SAIC, AVID and G3 Systems Inc. are just a few of the high-tech success stories that came out of the center’s first phase. Center President Joe Meredith says the first million square feet of corporate research space led to the creation of 3,000 jobs. He expects the 23 buildings in phase two to attract even more businesses with high-salaried employees.
Other retail developments
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If shoppers can’t find what they want at Blacksburg’s new lifestyles center, they may find it just down the road in neighboring Christiansburg. A $9 million expansion at the New River Valley Mall added
more than a dozen movie theaters, large retailers such as Dick’s Sporting Goods and new restaurants.
Farther down the road in Roanoke is 310 Rosemont, a high-end men’s and women’s clothing boutique located on the City Market. The shop is built around the concept of a “denim bar” where customers can shop for a wide assortment of jeans while sipping freshly brewed Starbucks coffee. Another specialty shop in Roanoke is Chocolate Paper. Catering to the discriminating chocolate aficionado, it offers chocolate from all over the world and plans to open a second Roanoke store in September.
Much of the retail growth in the Roanoke region comes from smaller shops as opposed to large niche market retailers such as Gander Mountain, which opened a store in Roanoke County in May. “The success of the small shops will help us prove that there is a market in Roanoke for the larger shops,” says Roger Elkin, vice president of operations for Hall Associates Inc., a commercial real estate firm in Roanoke.
Growing the economy is the focus of many area leaders. The crux of the issue for retail, says Hall, president for Hall Associates, is changing the demographics of the household income. While Blacksburg’s figures come in pretty high, Roanoke’s 91,500 residents have a median family income of $49,283. That’s 10 percent below the median household income for Virginia, which stood at $55,500 in 2006.
Yet, Hall takes solace in the city’s recent developments. “The new medical complex and clinic, the new art museum and other things will start to change the type of shopping, restaurants and entertainment that this community will want, support and desire. But it is not an overnight thing.”
Looking forward, he predicts the new medical clinic and school will be a big economic driver. “It’s not like the headquarters of a bank or a railroad,” notes Hall. “Those types of things can move. You don’t move your health-care facility, because that’s where your people are.”
Carilion Clinic is Roanoke’s largest employer, providing 11,500 jobs and a $632 million payroll. The $58.5 million medical research-based MD program plans to admit its first 40 students in 2010. The school will be part of Riverside Center, a 75-acre technology park that will also include Carilion Biomedical Institute (CBI), a 100,000- square-foot office and laboratory facility and Carilion Clinic, a $70 million, 250,000-square-foot building.
Overall, Hall says Roanoke is “looking and acting more like a cosmopolitan area.”