New report shows number of downtown Lawrence retailers on a significant decline; new numbers for citywide vacancy rate

In recent years I know downtown Lawrence has produced more of some things: more apartments, more hotels, more reasons for my wife to wear a disguise when she sees a parking control officer. But one thing it is has produced less of is one of its more important commodities: retail stores for shoppers to spend money.

The number of retail stores in downtown Lawrence is at its lowest point in years, according to a new study released by City Hall. The 2015 Retail Market Report prepared by the Lawrence-Douglas County Planning Department found that there are only 82 businesses in downtown Lawrence that actually fit into the “retail” category. That’s down from 116 in 2012 and down from a recent high of 126 in 2006.

Obviously, there are more than 82 businesses in downtown, but most of them aren’t shops or stores. The majority of them are either offices, bars and restaurants, hotels or other uses. In total, the planning department lists 310 businesses in downtown. That means retail makes up only 26 percent of the downtown business uses. Back in 2006 that percentage was 43 percent.

Thus far, the change isn’t raising a large red flag with city planners.

“My thought is that we are seeing a little bit of a shift in the retail market,” said Jeff Crick, a long-range planner that was part of the group that compiled the report. “Downtown has become more of a specialty retail market than a general retail market, and the numbers are starting to show that.”

Nonetheless, the numbers are interesting. Retail is such a major part of downtown’s identity. It has been clear the number of retail businesses in downtown has been dropping, but to see it drop by 8 percent from 2012 to 2015 is eye-opening. At one point it looked like the retail numbers might be rebounding. The 2012 report counted 116 retail businesses, which was two more than was counted in 2011.

The numbers are most interesting when you look at how much things have changed since 2006. Back in 2006, retailers were the most prominent types of businesses in downtown by quite a bit — retailers were at 43 percent while restaurants/bars and office/service businesses each were at 23 percent.

Today, offices/services businesses — think attorneys, accountants, doctors and other office users — are No. 1 on the list at 36 percent. Further, restaurants and bars are about to overtake retailers as the second largest group of businesses in downtown. There are 80 bars and restaurants in downtown compared with 82 retailers.

Here’s a look at how much things have changed since 2006:

• Retail stores: 82 in 2015, down from 126 in 2006

• Restaurants/bars: 80 in 2015, up from 68 in 2006

• Nonretail/office: 111 in 2015, up from 67 in 2006

• Hotels: four in 2015, up from two in 2006. (Jeopardy question: The four hotels in downtown Lawrence. The Eldridge, Springhill Suites by Marriott, TownPlace Suites by Marriott and . . . . The Eldridge Extended on Vermont Street. Oh, I’m sorry, you did not answer in the form of a question.)

Another interesting number to look at is how much downtown’s overall market share has declined in Lawrence. In 2009, downtown captured 14 percent of all retail sales tax dollars in Lawrence. In 2012 it grew slightly to 15 percent. But in 2015, downtown’s market share has dropped to 9.5 percent.

Here’s a look at the top five retail areas in Lawrence based on their sales tax collections:

• South Iowa Street: 40.9 percent in 2015, up from 37 percent in 2009

• West 23rd Street: 12.8 percent in 2015, down from 16.3 percent in 2009

• Downtown: 9.5 percent in 2015, down from 14.6 percent in 2009

• Sixth and Wakarusa: 9.1 percent in 2015, up from 8.9 percent in 2009

• West Sixth Street: 7.9 percent in 2015, up from 6.2 percent in 2009

What will be most interesting, though, is to see what happens next for downtown. These numbers don’t look great, but if you looked at building permit numbers for downtown, they would look pretty impressive. There’s been a lot of new investment in downtown.

But it has not been on the retail front. Take the intersection of Ninth and New Hampshire: Three new high-rise buildings totaling more than $50 million in construction either have been built or are underway at that intersection. In terms of retailers added, however, there will be a grand total of one, as it stands now. That one is City Wine Market, which is open on the ground floor of the Marriott building. Port Fonda, which also is on the ground floor of that building, is a restaurant. The Summit in the 901 building is a fitness center that counts as a service business, not a retailer. The new building under construction at the northeast corner primarily will house a bank on its ground floor, another example of a nonretail use.

But all three new buildings are creating significant new spaces for people to stay the night in downtown, either through new apartments or new hotel rooms. City leaders are betting that more people living and staying in downtown will boost retail uses in the downtown district. Certainly, the idea of a grocery store in the former, and now vacant, Borders bookstore building is still being actively pursued. That potential retailer could move the needle significantly on downtown retail sales.

The retail report did produce one other number that usually gets a lot of attention: the overall retail vacancy rate for the city. The report found that it hasn’t changed much, and is still below the regional average.

Planners calculated Lawrence has an overall commercial vacancy rate of 7.4 percent. That’s pretty much unchanged from 2010 and 2012 when the rate checked in at 7.3 percent and 7.2 percent respectively. It is up slightly from the 6.7 percent rate in 2006 when the economy was humming along at a pretty good clip. The average vacancy rate for the Midwest-Great Plains region is 8.7 percent. City planners typically have listed any vacancy rate under 8 percent as healthy.

The vacancy rate number has been used in the past as a measuring stick for whether the city ought to approve new retail areas for development. As we’ve reported, city commissioners next month are expected to vote on a rezoning for about 250,000 square feet of retail space southeast of the SLT and Iowa Street interchange.

This report likely will provide ammunition for both sides of that argument. The overall vacancy rate likely isn’t a great weapon to argue for denial of the proposal. Lawrence has added retail space over the last decade, and it seems to have had negligible impact on the overall vacancy rate in the city.

“The market is impressively stable,” Crick said of his view of the vacancy rate. “It has had really good trends since 2006.”

But the new numbers about downtown and its declining market share and retail presence likely will be part of the argument. City leaders likely are going to have to ask themselves how much they really believe some of the proposed big retailers on South Iowa Street — Academy Sports, Old Navy and Marshalls/Home Goods have been mentioned as likely tenants — will impact downtown retail. Are the changes in downtown retail all about South Iowa Street competition, or are the millions of dollars in new investment just causing downtown to morph into something different than what it used to be?

It will be an interesting debate to listen to. This may come down to a very old argument in Lawrence: How much should you protect downtown Lawrence? How much can you protect downtown Lawrence?

In other news and notes:

• Just a quick update from the Planning Commission meeting last night. Planning commissioners unanimously recommended approval for two projects we reported on yesterday: Plans to redevelop the former Sunrise Garden Center in east Lawrence and plans to convert the KU Tennis Center in west Lawrence into a new facility for Genesis health clubs. Both projects now will go to the City Commission for final approval in the next few weeks.