Predicting the future is hard. Just ask the people that forecasted sustained $200 per barrel oil, the Guiliani Presidency, or the Bengals’ win over the Packers in last year’s Super Bowl. Actually, don’t ask them. What you’re likely to get is a long-winded rationalization. The truth is when experts assign probability to future events in an uncontrolled environment and without solid data-driven supporting evidence it’s only marginally better than guessing—they just get paid more.
So, this isn’t an article of predictions, but rather a series thoughts for consideration—hence the title. The singular prediction in this article is as follows–I’m predicting the first installment will be so wildly popular that I’m making this a two part series. If I’m treated like the political and sports pundits—I’ll be celebrated if I’m right and you won’t remember if I am wrong.
1. The northwest side of Harrisonburg is gaining some traction
This one has a little less punch now than when I wrote it a few weeks ago, but the activity on the north side of Harrisonburg isn’t limited to the grocery announcement. In recent months, interest has increased among retail and office users in this quadrant of Harrisonburg. Don’t expect development similar to that of the east side of the City, but some are finally starting to recognize commuting patterns in addition to the solid and stable population base occupying this area that is in need of additional services.
Traffic counts and population density on the north side aren’t all that different than other areas of the City with retail coverage. The lack of interest may be attributed to the absence of large daytime employment centers sufficient to attract retailers. However, this doesn’t fully explain the deficiency of quick service restaurants and convenience offerings. Perhaps the best explanation has been the availability of better options on the south and east side of the City. The herd mentality of retailers can make sheep look like independent thinkers—so with the potential grocery and other activity in the area; I would venture to guess this deficiency wouldn’t last much longer.
2. There will be at least 700,000sf of new retail developed over the next five years.
Solid retail absorption rates have caused relative scarcity within the primary retail corridors (think the E. Market Street, Reservoir Street, University Boulevard triangle) and an overall retail vacancy rate of 5.2% with retail demand among national tenants rising. Coupled with the completion of the Southeast Connector, the area is primed for a retail surge not seen in more than a decade. Largely, this new development will occur along the Connector Road with Stone Port leading the way (85,000sf already under contract), but infill development of new strip centers and freestanding units will contribute to the equivalent of a 15% increase in total retail product over the next half-decade.
3. The Southeast Connector will shift the path of progress in the Harrisonburg metro area
First, a little context–for years, national retailers and restaurants have believed that if a store is to be located in Harrisonburg, it must be on E. Market Street. After all, the road is surrounded by other national retailers, an interstate interchange, with excellent population in close proximity and produces 29,000 cars per day. The average price per acre is approximately $950,000.
The South East Connector is already attracting national retailers, neighboring a regional hospital, connected to every primary commercial corridor, closer to an affluent and higher density population, and is expected to produce traffic counts of 31,100 cars daily. The average price per acre is approximately $750,000 for available pad ready land.
The completion of the Southeast Connector is likely to represent more than just a cost effective competitive alternative for local and national businesses—it is more likely to signify a major shift in the path of progress for commercial development in the region for three primary reasons. 1. Commercial development follows residential development and the east side of Harrisonburg has been the primary source of residential development for a decade. 2. Space on traditional retail corridors (E. Market, Reservoir) is limited and prices reflect this fact. 3. Much of the development on the Southeast Connector will meet or exceed retailer’s standards previously only found in the E. Market Street area, but land is at a lower price point (for now). As larger retailers recognize this opportunity, others are likely to follow.
4. We don’t have too many restaurants
An estimated $168 million dollars is spent at restaurants in the Harrisonburg metro area annually. New restaurant openings continue to outpace closures and lead many in our community to wonder how we can sustain them all. In reality, we can support these restaurants and more because demand exists for all these restaurants and more. In fact, we have $7.5 million dollars of unfilled demand in the full service restaurant category alone and this is before outside demand in the form of tourists, employment commuters, interstate traffic, and population growth is considered. These statistics don’t mean we won’t see restaurants close from time-to-time due to shifts in popularity, management issues, location, and a myriad of other reasons—we will. What they do portray is an extremely healthy market that is continually growing, reinventing, and being eaten up by consumers in and outside our political boundaries.
Tim Reamer provides commercial real estate brokerage and consulting services with Cottonwood Commercial and specializes in retail representation, investment property (multifamily | commercial | NNN), and development projects. Learn more at www.timreamer.com.