Improved demographics in Louisiana, Alabama and Mississippi have piqued the interest of national retail chains in search of strong markets. The sunbelt states of Alabama, Louisiana and Mississippi traditionally have not been at the top of the expansion list for most retail chains. Smaller population totals and low income figures limit the demographic numbers retailers are seeking. But in recent years, this has been gradually changing.
As many large markets become saturated with stores, retail chains are shifting focus to areas they have all but ignored in the past. In addition, changes such as legalized gambling, revived industries and the recruitment of major employers have augmented population and income growth, which better meets retailers' expectations.
For example, in both Louisiana and Mississippi, casino gambling has increased tourism income and created thousands of relatively high-paying jobs for residents. And in Alabama, the influence of the NASA complex in Huntsville has created a strong, high-tech labor force, which has resulted in population and income growth in the northeastern part of the state.
"Growth is slower and it takes longer for market areas to develop in these states, but the numbers continue to trend upward," says Carl Bartlett, senior vice president of Montgomery, Ala.-based Jim Wilson & Associates Inc.
As increases in population and income catch the attention of retailers anxious to beat the competition to new markets, many cities in these three states are reaping the benefits of this new interest.
Retailing in Bayou Country Louisiana's economy has been at record high levels for the past five years since recovering from the dog days of the early 1980s when the oil and gas industries collapsed. The state spent 1987-93 regaining the jobs that had been lost. Since that time, the economy has been expanding at a rate of 2.1% per year.
"We are experiencing our 11th consecutive year of growth," reports Loren Scott, director of the division of economics, development and forecasting at Louisiana State University in Baton Rouge. Although projections call for a slowdown in growth to 1.8% this year, the state is still expected to add 67,000 new jobs in the next two years, he says.
This compares favorably with some of the strongest periods in the state's history. "Employment levels are ahead of those posted during the heyday of the oil boom in the late 1970s," says Marty Mayer, executive vice president of Covington, La.-based Stirling Properties.
"Oil and gas extraction was gold for the economy from 1995-97," Scott says. Although oil prices have dropped somewhat in 1998, he says, the health care, gaming, shipbuilding and telecommunications industries are taking up the slack.
The health care industry continued to grow right through the recession, Scott says, and the state's gaming industry has grown from no employees in 1992 to 17,000 in 1997. On the coast, both the Edison-Chouest and Bollinger shipyards are expanding because of Navy contracts or their own shipping needs. "They are attracting many skilled laborers to the coastal regions, and these are good-paying jobs," he says.
Other areas of the state also are benefiting. Shipbuilders are opening plants in northern Louisiana to produce parts that can be delivered via truck or barge to their coastal shipyards. In addition, call centers for communications-based companies have added hundreds of new jobs to the state, Scott says.
Louisiana's population in 1997 was 4,352,000, and it continues to grow, Scott says. The state's per-capita income has risen in recent years and now stands at $20,700.
"Even though a drop in oil prices has dampened enthusiasm recently, the state has made steady progress in economic diversification, employment and retail sales," Mayer says.
In metropolitan New Orleans, retail sales increased by $500 million to $14.58 billion in 1997, according to the Real Estate Market Data Center at the University of New Orleans. Most of the city's growth is taking place on the north shore of Lake Pontchartrain, north of New Orleans in the cities of Mandeville and Covington.
Stirling Properties is developing Premier Center, a 300,000 sq. ft. center in Mandeville, anchored by Del Champs Premiere grocery, Stein Mart and Old Navy. In addition, Wal-Mart, Sam's Club, Home Depot and Albertson's have recently opened stores in the area.
"The idea from the retailer's point of view is to be the last stop before motorists get on the causeway that leads across the lake to New Orleans," says Brian Murphy, vice president of Dallas-based Staubach Retail Services.
In general, the city's retail space is tight because of a land shortage. "If you want to build something in New Orleans, it usually involves tearing down another building," says Richard Stone, vice president and director of the commercial sales group for New Orleans-based Latter & Blum Realtors.
The Real Estate Market Data Center reports that overall retail vacancy is less than 10% in the city, and retail rents for the local MSA increased from $10.72 to $12.15 from November 1995 to November 1998.
Many retailers have difficulty finding the multiple locations they usually seek for an initial foray into a market. "It took Circuit City two years to lock into just three locations," Stone says. Furthermore, Lowe's, noting Home Depot's success in the city, has looked hard at the market but has found it difficult to penetrate.
In Metairie, on the west side of New Orleans, Borders has followed Barnes & Noble into the market. And one proposed project teams Wal-Mart SuperCenter, Old Navy and PetsMart with a multi-screen Palace Centre theater. A similar Palace theater has done well in the suburb of Harahan. "Its numbers have been so significant that every theater chain is now looking to find strategic locations in the city," Mayer says.
Downtown, in the Riverwalk/Canal Place/Jack's Brewery section along Canal Street and the Mississippi River, a boom in hotel building is spurring retail growth. The Ernest Morial Convention Center is undergoing its second expansion, and the downtown market has added 10,000 hotel rooms in the past few years to support anticipated increases in conventions and tourism.
Mayer says two of the most noteworthy projects are hotel conversions on Canal Street. The former Maison Blanche department store is being converted into a Ritz-Carlton hotel, which will include a ground-level retail component with restaurants and nightclubs, and the former D.H. Homes Department store building also is being resurrected as a hotel.
Throughout the New Orleans market, mall developers have reason to be worried. The acquisition of Maison Blanche by Dillard's has resulted in a redundancy of stores, which could affect more than 1 million sq. ft. of space, according to the Real Estate Market Data Center.
"Some of the malls are experiencing problems," Stone admits.
Mayer notes that Dillard's has announced the closing of five stores in the market. "With anchors dwindling, I would be surprised to see another mall anytime soon," he says.
The grocery market is dominated by Winn-Dixie and Schwegmann's, a local chain recently acquired by New York-based KKR, Mayer reports. Del Champs also is in the market, and Albertson's recently opened its first New Orleans store and is having difficulty finding additional sites. The battle over corner locations for freestanding drugstores continues between Rite-Aid and Walgreens.
The state's strongest retail market is probably its capital, Baton Rouge, approximately 100 miles northwest of New Orleans. "The petrochemical industry is heavily concentrated in Baton Rouge and the city has a very diversified economic base," explains Scott.
In October 1997, Jim Wilson & Associates opened the Mall of Louisiana, which has been very successful in its first year, Bartlett says. "Baton Rouge was one of the top 100 cities in the country [by population], yet had only one enclosed mall before our project."
In Lake Charles to the southwest and Shreveport/Bossier City to the northwest, gaming has greatly increased tourism and employment, which, in turn, has attracted retail. Wal-Mart, Lowe's, Old Navy and Bed Bath & Beyond have opened new stores in Lake Charles in the past year, and Wal-Mart, Home Depot, Barnes & Noble, Kroger, Old Navy and Party City have been active in the Shreveport/Bossier City market.
Mississippi Mississippi's slow population growth is still a concern to retailers, but the state is showing signs of a retail spark in some markets. Population was at an all-time high of 2.7 million in 1997, but its growth is slow in relation to other states. As a result, it could even lose a seat (from five to four) in the House of Representatives.
However, income growth has been strong throughout the 1990s, says Mike Bowen, an economist at the Center for Policy Research and Planning with the Mississippi Institutions of Higher Learning.
"In 1994, 1995 and 1996, per-capita income in the state rose 6.5%, 5% and 4.9% respectively, all above the national average of 4.8%," says Bowen. Although per-capita income rose only 4% in 1997, he stresses that the decade has been good for residents' spending power.
Retail growth has been strongest in the affluent suburbs of Jackson and along the Gulf Coast, where the gaming industry and residential growth have combined to attract retailers. "The Gulf Coast markets are really driven by gambling," Mayer says. New jobs create a need for housing, and where there are residents, retail follows.
While some observers say the largest wave of casino growth has already occurred, it is not over yet. Steve Wynn, owner of Las Vegas' Mirage Hotel, is developing Beau Rivage hotel and casino in Biloxi. The project is scheduled to open early this year, providing more jobs and a continued boost to tourism. "The area has always been a strong tourist area," Murphy says. "And the number of new, well-paying jobs has practically eliminated unemployment."
Albertson's, Barnes & Noble, T.J. Maxx and Party City recently opened stores in the Gulfport/Biloxi market, and Edgewater Mall in Biloxi is close to being fully leased, he adds.
In the state capital of Jackson, the northern and eastern suburbs have proven attractive to national retailers. Wal-Mart SuperCenter, Home Depot and Office Depot have opened in the city within the past year. Jim Wilson & Associates and Montgomery, Ala.-based Aronov Realty are both considering projects in the north Jackson area, Murphy says.
Jackson is the main draw but is not the only attractive area. "After retailers see the success they have (in Jackson)," Murphy says, "they are eager to expand to some of the state's other trade areas."
In Hattiesburg, in the south-central part of the state, some retail development is still occurring around Turtle Creek Mall, owned by Chattanooga, Tenn.-based CBL & Associates Properties Inc.
Jitney Jungle and Kroger are the grocery market leaders across the state, Murphy says. But he warns that Wal-Mart's Neighborhood Market concept, if expanded, could spell trouble for all the major chains. "With Wal-Mart's resources behind it, their grocery concept would be a formidable challenger," he says.
CVS is the drugstore leader throughout the state, says Bob Flowers, executive vice president of The Mattiace Co., Jackson. But Walgreens opened two stores in Jackson last year, and more are planned. Flowers expects the chain to eventually move into all of the state's major markets.
Alabama Alabama's population in 1997 was estimated at 4.32 million, according to statistics compiled by NationsBank. The state has grown by only 300,000 in the 1990s, and similar slow growth is expected in the next decade.
A decline in the textile industry has slowed the state's economy, says Mary Kassis, research coordinator for the Economic Forecasting Center at Georgia State University in Atlanta. However, a retooling of the state's industrial base -- to attract more high-tech jobs -- is augmenting employment and incomes.
Birmingham, the state's largest city, has seen an increase in retail in recent years, and more is on the way. The major growth centers are along the Highway 280 corridor to the southeast near the upscale suburbs of Mountain Brook and Vestavia Hills; and nine miles south of downtown in the Riverchase Galleria trade area.
"The trend in Birmingham, as elsewhere in the country, has been the expansion of typical mall tenants into higher-end neighborhood locations," says Milton M. "Bubba" Smith, president of locally based AIG Baker Development.
The Riverchase Galleria area is the first Alabama location sought after by national retailers, according to Smith. The 1.6 million sq. ft. mall, owned by Jim Wilson & Associates, has always done well and further strengthened itself recently by adding Sears to its anchor lineup.
Smith says every big-box chain wants to locate in the Galleria submarket, but available sites are scarce. This has pushed some retail growth west of the Galleria, where it is meeting with opposition from homeowners groups. Barnes & Noble, Bed Bath & Beyond and Home Depot have located in this area, and a Wal-Mart SuperCenter is on the way. Planned road improvements around the Galleria should help alleviate congestion and potentially could open up new areas for development.
Home Depot, Lowe's and Academy Sports, a regional sporting goods chain, have opened stores in the Highway 280 corridor, and drug chains Walgreens and CVS are just beginning to open freestanding stores, Smith continues.
Winn-Dixie has been the most active grocery chain in the market, adding numerous locations in the city's suburbs. Bruno's Food World and Del Champs also are players.
In northeast Alabama, Huntsville is experiencing strong residential and income growth. Its local economy is driven by high-paying technology companies that are attracted by a well-educated workforce forged by NASA and the nearby U.S. Army Aviation and Missile Command (AMCOM).
Most of the retail growth is in west Huntsville toward the communities of Decatur (50,000 pop.) and Athens (20,000 pop.), says Joe Vallely, director of economic development for the city. Wal-Mart SuperCenter, Lowe's, Circuit City, Linens 'N Things and Old Navy are the most recent additions. Many chains are looking for in-fill sites, he says.
Winn-Dixie, Kroger and Bruno's are the main grocery store players, but Publix recently opened three stores in the market. Rite-Aid and CVS are the dominant drug chains, with Rite-Aid being the most aggressive about expansion. "They are paying top dollar for corner lots for freestanding stores," Vallely says.
In the heart of the state, Montgomery is seeing less development, although Wal-Mart has proposed two SuperCenter stores with one already under construction, says Bartlett of Jim Wilson & Associates.
On the Gulf Coast, Mobile is seeing some growth led by the aggressiveness of the drug chains. CVS, Walgreens and Rite-Aid are opening new stores, says Howard Jones, vice president of commercial brokerage for The Mitchell Co., Mobile.
Jones says the west side of Mobile has experienced steady growth for the past 30 years, which continues today thanks to road improvements in the area. Lowe's has opened a superstore in the market and is upgrading another store on the west side, he adds.
Additionally, new prospects are showing up on the east side of Mobile Bay in the cities of Daphne and Fairhope. "These towns have seen a lot of residential growth, but retail has yet to catch up," Jones says.
Mobile's two malls are located across the street from one another. Bel Air Mall is anchored by Dillard's, which recently purchased the parent company of Gayfers, an anchor at Springdale Mall. Jones says despite the proximity of the stores, both are expected to remain open.
Because land near the malls is very expensive, some national retailers are being scared off, Jones continues. "PetsMart, Borders Books, Just For Feet -- none of these are in our market," he says. "There is a demand for new retail here, but finding the right location is a challenge because retail space is very tight."
Gulf States Development Projects ALABAMA
* University Mall in Tuscaloosa has a new look thanks to a seven-month renovation of the center last year. Updates include a grand mall entrance featuring a new mall logo; brighter interior with new floor tile and seating throughout; new fountains and landscaping; redesigned center court; new "street cafe" atmosphere in the food court; and a refreshed merchandise mix. The 740,000 sq. ft. center, owned and managed by Montgomery, Ala.-based Aronov Realty Management Inc., is anchored by Parisian, McRae's, JCPenney and Sears and features nearly 90 specialty stores and eateries.
* Montgomery, Ala.-based Jim Wilson & Associates Inc. recently completed one renovation project and has another one under way at two centers in Birmingham.
* Galleria boasts a new look with the addition of porcelain and marble tile flooring; 50-foot light towers and streetlamps; upgraded entrances; and all new furniture and landscaping. The 1.5 million sq. ft. mall is anchored by Macy's, Rich's, Parisian, Sears, McRae's and JCPenney.
* Eastwood Mall, a renovation/redevelopment project is converting the 598,059 sq. ft. center from a traditional mall to a power mall by attracting a broad mix of big-box tenants. The project will be completed in the fall. Eastwood Mall is anchored by Parisian, Service Merchandise and Books-A-Million.
* Ground has been broken on VisionLand Outlet Center, a $28 million, 300,000 sq. ft. project in Bessemer, located 16 miles from downtown Birmingham. The first phase of the center, which will include approximately 45 stores in 185,000 sq. ft. of space, is expected to open later this year. The center also will feature a 9,000 sq. ft. food court, an outdoor play area for children and a freestanding, full-service restaurant. It is a development of The CMC Group, Greensboro, N.C.
* Several new retailers have joined the tenant lineup at Century Plaza in Birmingham, including Bath & Body Works, Dollar Tree, Rave, Gamestop, Footlocker Triplex and Ming Tree. Owned and managed by Chicago-based General Growth Properties, the 726,000 sq. ft. mall is anchored by McRae's, JCPenney, Sears and Rich's.
* Burlington Coat Factory recently joined the anchor lineup at Eastwood Festival in Birmingham. Other anchors include Home Depot, Regal Theatres, Goody's, Office Depot and Michaels. The 438,305 sq. ft. center is owned and managed by Cleveland-based Developers Diversified Realty Corp.
* Phase I of the Shoppes at Athens, a 160,000 sq. ft. outlet center in Athens, located approximately 20 minutes from Huntsville, is expected to open in August. Tenants announced for the project include Dress Barn, Casual Corner and Famous Footwear. Victor E. Vance of Auburn, Ala.-based Lease America is the owner and developer of the center.
* New York-based Mall Properties Inc. has two projects under way in Baton Rouge. Fringe development continues around The Mall at Cortana, a 1.5 million sq. ft. center anchored by Sears, JCPenney, Dillard's, Parisian, Service Merchandise and Mervyn's. Tenants on the mall's periphery include Wal-Mart, Lowe's, Books-A-Million, OfficeMax, Old Navy, Babies 'R' Us, Just For Feet and Gateway Country. The new development follows on the heels of a renovation of The Mall at Cortana last year.
* Lane Marketplace, a 375,000 sq. ft. power center anchored by Wal-Mart SuperStore, Lowe's and Cinemark Theaters, is being expanded. Sam's Club will be joining the center along with five as-yet-unnamed big-box tenants of approximately 190,000 sq. ft. Completion is expected for this fall.
* Covington, La.-based Stirling Properties has two new developments in the works in the state. The 164,838 sq. ft. first phase of Premier Centre opens this month in Mandeville. Construction also will begin this month on the 95,000 sq. ft. second phase, expected to be completed in November. Major tenants include Delchamps Premier, T.J. Maxx, Stein Mart, Old Navy, Rack Room Shoes, La Madeleine, Bath & Body Works and Hallmark.
* Hammond, the company is developing Palace Centre, a 175,000 sq. ft. to 185,000 sq. ft. upscale retail center located between Hammond Square Mall and a new Palace Centre theater. No anchors have been announced for the project, which is expected to be completed this year.
* An expansion and renovation recently were completed at Prien Lake Mall in Lake Charles. The 454,000 sq. ft. center increased to 800,000 sq. ft. with the addition of Dillard's, Sears, 30 specialty shops and a food court. Other anchors are JCPenney, Montgomery Ward and White House. Prien Lake Mall is owned and managed by Indianapolis-based Simon Property Group.
* Plans are under way on the redevelopment of Value Fair Mall in Meridian. The 400,000 sq. ft. regional mall is being converted from a two-anchor center into a center with five smaller-sized anchors. No tenants have been announced. The center is owned and managed by Meridian-based Paul Broadhead Interests. The project is expected to be completed in spring 2000.
* An extensive, aesthetic renovation has been completed on Northpark Mall in Jackson. Work included a new food court, upgraded entrances, marble floors, new light levels and amenities. The 1 million sq. ft. mall, owned and managed by Chicago-based General Growth Properties Inc., is anchored by McRae's, JCPenney, Dillard's and Gayfers.
* Beau Rivage, a $600 million beachfront resort in Biloxi on the Gulf Coast, is expected to open early this year. A development of Las Vegas-based Mirage Resorts, the project will feature 1,780 guest rooms, a casino, meeting facilities, upscale retail shops, 12 restaurants and various other amenities.