5 Retail Market Study
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
BUilding Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.mn.us
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MEMORAMDUM
TO:
Todd Gerhardt, City Manager
FROM:
Kate Aanenson, Community Development Director
DATE:
December 12, 2005
~
SUBJ:
Market Analysis Proposal
At the City Council work session on November 28th the proposal from the McComb
Group was presented and discussed. Members of the Chamber of Commerce were
present to support the study. The Chamber of Commerce agreed to lend support in
the amount of $5,000.
Staff was directed to provide a funding source. We recommend that funds from the
Entertainment TIP District be used since retail is an allowable use in redevelopment
TIP Districts only.
As the City continues to develop, there is additional pressure to make land use
changes. This issue was recently examined in the Town and Country project. With
the update of the comprehensive plan and construction of Highway 212, I think it is
important the City re-examine the City's commercial and industrial land use. The
McComb Group, Ltd. specializes in market studies for public and private uses. They
have been used by developers in Chanhassen and are highly recommended. Attached
are their proposal and a summary of the study that they conducted for Prior Lake.
Staff is recommending the City Council approve the attached contract for the Market
Analysis Study to be completed by McComb Group, Ltd. and using Entertainment
TIP District as the funding source. Staff also recommends the City Council accept
the $5,000 contribution from the Chamber of Commerce.
ATTACHMENTS
1. McComb Group, Ltd. Proposal for Market Analysis dated November 16,2005.
2. Summary Report of Prior Lake Development Potential dated February, 2004.
g:\plan\ka\marketing study\worksession cc 11-28-05.doc
The City ot Chanhassen . A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
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MCCOMB GROUE Ltd.
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REAL ESTATE AND
RETAIL CONSULTANTS
November 16,2005
Ms. Kathryn Aanenson, AICP
Community Development Director
CITY OF CHANHASSEN
7700 Market Boulevard
P. O. Box 147
Chanhasse1i, Minnesota 55317
Re: Proposal for Market Analysis
Dear Kate:
This will confirm our earlier discussions concerning our proposal for market analysis of the
Chanhassen area. As I mentioned, we generally complete a study such as this in about four
months. For example, if you give us authorization to proceed on December 1,2005, then the
study would be completed near the end of March or early April 2006. If a specific completion
date is preferred, I am confident we can accommodate your needs. Also note that this assumes
timely participation and cooperation of area businesses for the business interviews and customer
survey tasks as outlined in the proposal.
Concerning payment and anticipated timing of payment, the proposal outlines our normal billing,
i.e. approximately one-half ($21 ,000) of the total estimated project budget payable in advance, as
a retainer, and then, mid month and month-end invoices for professional services and expenses
as the work progresses. The retainer is applied after the first $21,175 of the project budget has
been billed and paid. If you have questions concerning our billing process, or have other billing-
related issues that should be addressed, I am confident that we can accommodate these as well.
Assuming we don't talk sooner, rii wait to hear back from you after your meeting with the City
Council on November 18.
illiam A. Gorton
Executive Associate
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Copy: James B. McComb
222 South Ninth Street Suite 380 Minneapolis, Minnesota 55402 · (612) 339-7000 Fax: (612) 338-5572
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MCCOMB GROUE Ltd.
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REAL ESTATE AND
RETAIL CONSULTANTS
November 4, 2005
Ms. Kate Aanenson
Community Development Director
CITY OF CHANHASSEN
7700 Market Blvd.
P. O. Box 147
Chanhassen, MN
Dear Kate:
Enclosed is a preliminary draft of a proposal for market analysis of the Chanhassen area. I
believe that this addresses the primary objectives that we discussed when we last met.
Please review and let me know if we have captured your understanding of the objectives and the
scope of what you may want help in evaluating. The budget is a ballpark estimate that at least
gives a general idea of costs for the various tasks and the project as a whole. I would anticipate
refining the budget based upon your feedback on the proposal and to better address your specific
budget objectives.
If there are any other issues that you think we should consider, please let me know. I also
welcome any comments you might have. I look forward to your response.
Best r ards,
c,-j:5.
William A. Gorton
Executive Associate
McComb Group, Ltd.
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Enclosure
222 South Ninth Street Suite 380 Minneapolis, Minnesota 55402 · (612) 339-7000 Fax: (612) 338-5572
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MCCOMB GROUE Ltd.
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REAL ESTATE AND
RETAIL CONSULTANTS
November 4, 2005
DRAFT PROPOSAL
Ms. Kate Aanenson
Community Development Director
CITY OF CHANHASSEN
7700 Market Blvd.
P. O. Box 147
Chanhassen, MN 55317
Dear Ms. Aanenson:
In response to your request, we have prepared a preliminary work program to conduct market
analysis to determine future demand for retail space, residential, and office/industrial
development in Chanhassen
OBJECTIVES
The City of Chanhassen has a number of issues that may require attention in the near future. For
example, there are retail businesses interested in developing new locations in Chanhassen and, in
some cases, the city has concerns about overbuilding or over saturation of certain retail
categories. They are concerned that excessive retail development may exceed the city's demand
for such products and services.
The new Highway 212 corridor, when completed, will extend across the southern third of the
City of Chanhassen and the city wonders what impact this may have on future residential
development in the city, future retail/commercial development, as well as office and office
industrial demand. There are questions concerning the impact of future commercial
developments on the downtown Chanhassen area. The city would like additional information to
help them intelligently address these issues in a timely and effective manner. The objectives of
this engagement are to:
. Delineate a retail trade area for Chanhassen and estimate future residential
development and households for 2005,2010,2015,2020, and 2025.
. Identify shopping areas that are competitive with Chanhassen and those that are
likely to develop in the future.
. Estimate demand for retail, service, and office service uses in Chanhassen for 2005,
2010,2015,2020, and 2025.
. Evaluate existing retail, and office/industrial locations in Chanhassen.
222 South Ninth Street Suite 380 Minneapolis, Minnesota 55402 · (612) 339-7000 Fax: (612) 338-5572
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Ms Kate Aanenson
November 4, 2005
Page 2
. Identify the type of shopping environment that the projected retail, service, and
office service uses are likely to desire. Identify the types of shopping and stores not
currently available in Chanhassen and the likelihood that they could be attracted to
Chanhassen.
. Evaluate proposed development locations that maybe under consideration by
Chanhassen.
. Determine the long term demand and space absorption for a business park/industrial
development in Chanhassen.
. Prepare a market driven estimate of residential development in Chanhassen.
. Identify the types of housing suitable for development in Chanhassen.
The work program described below is designed to fulfill these objectives and describe how
demand for retail and office/industrial space is estimated for future years.
WORK PROGRAM
The work program outlined below is designed to fulfill the above objectives. Specific work tasks
are described below.
. Study Area Evaluation
Retail, business park and industrial locations in Chanhassen will be evaluated to
determine their suitability for development. Factors to be evaluated include, but are not
limited to: location, ingress and egress, access, visibility, relationship to adjacent uses,
current and future traffic counts, as well as estimated impacts of traffic volume changes,
congestion and other factors that may result from the new Highway 212 and that would
affect the Chanhassen area.
. Competitive Shopping Areas
Shopping areas competitive with Chanhassen commercial areas will be identified and
evaluated to determine competitive impacts on future retail development. Principal
competitors will be identified and evaluated for tenant mix, retail GLA, and anchor
stores. Future developments and redevelopments in the study area will be identified to
the extent possible.
. Business Interviews
Owners and managers of businesses in Chanhassen will be interviewed to obtain their
observations on retail trends, competitive pressures, where their customers live, and other
information pertinent to the study, including their opinion about downtown Chanhassen
strengths and weaknesses, and ideas concerning possible impacts of the new Highway
212 on the downtown Chanhassen area.
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Ms Kate Aanenson
November 4,2005
Page 3
. Customer Survey
Businesses in downtown Chanhassen will be asked to participate in a survey of their
customers to determine where they live and work, and why they shop at that business. As
contemplated, employees of each store will conduct the survey as customers pay for their
goods or services. The budget assumes 25 to 30 business participants and that client can
arrange for distribution of survey forms and instructions, and collection of completed
survey instruments. Each merchant participant will be provided with survey results for
their business. This information will be used to help identify the primary trade area for
the downtown Chanhassen commercial area and the amount of inflow patronage.
. Trade Area
The primary and secondary trade areas for downtown Chanhassen and other Chanhassen
commercial areas will be delineated based on arterial road patters, drive times, and
McComb Group experience. The economy of the trade area will be analyzed to identify
and quantify those factors that generate support for retail and service establishments.
Factors to be evaluated include, but are not limited to: employment, population,
households, building permits, and household income. Comprehensive plans for adjacent
communities will be evaluated to determine residential and commercial development
potential. Past growth trends in the southwest growth corridor will be evaluated to
determine trade area share of Metropolitan Area residential growth. This analysis will be
used to prepared market driven estimates of future household growth. Trade area growth
trends will be evaluated to determine residential growth potential for target years of 2005,
2010, 2015, 2020 and 2025. Retail and service purchasing power of trade area
households will be estimated.
. Retail Development Potential
Future retail development potential for Chanhassen will be estimated taking into
consideration competitive impacts, trade area demographics, and trade area purchasing
power and estimated market share. Future retail and service sales potential for
Chanhassen will be estimated by business type based on purchasing power, competitive
shopping centers, and current retail trends. Estimates of retail, service and office service
space supportable by sales potential will be prepared for target years of2005, 2010, 2015,
2020 and 2025. The type of shopping center environments suitable for the potential uses
will be identified, as well as suitable locations.
. Developer Interviews
Developers, brokers, and retailers interested in either retail or office/industrial locations
in the Chanhassen active area will be interviewed to determine their development plans
and their ideas of the type of businesses or development that is suitable for the area.
. Office/Industrial Demand
Market analysis will be conducted to determine the historic absorption of office, office
warehouse, office showroom, and industrial uses in the southwest metro area. The
portion of that absorption that has been captured in Chanhassen will be quantified.
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Ms Kate Aanenson
November 4,2005
Page 4
Estimated future absorption for office, office warehouse, office showroom, and industrial
space will be estimated for the southwest submarket and Chanhassen. Future absorption
will be analyzed by type of product and location criteria, and compared with potential
development areas within Chanhassen.
. Residential Market Demand
Market driven demand for housing in Chanhassen will be estimated utilizing results of
analysis described in the trade area task. Market demand for housing types suitable for
Chanhassen will be identified. Housing types to be considered include single family and
multi-family. The multi-family analysis will address, but not limited to: detached
townhomes, townhouses, row housing, garden apartments, and other types of housing in
rental and for sale products.
. Development Strategy
The estimated future demand for retail and office/industrial uses in Chanhassen will be
compared with the available supply of developable land and its location. Developable
sites will be evaluated for retail and office/industrial use. Development areas will be
prioritized as to their suitability for retail and/or office/industrial development.
Alternative retail and office/industrial development absorption estimates will be prepared
for development locations that are suitable for both uses. The objective of this task is to
compare estimated future absorption with land available for each type of development
and estimate likely land absorption for the potential uses.
. Design Consulting
McComb Group personnel will be available to meet with City staff to review
development potential as it relates to specific areas in Chanhassen and discuss how and
where to accommodate future growth potential. The budget provides for four hours of
meeting time.
The results of our work will be documented in a final report designed to meet client needs. The
report will contain appropriate graphics and explanations of our principal findings, conclusions
and recommendations.
MEETINGS
Four meetings, excluding design consulting, are planned during the course of the evaluation and
include the following:
. Start-Up Meeting will be held at the beginning of the engagement to finalize research
objectives and obtain client-provided information.
. Client Meeting to discuss preliminary results of market research tasks.
. Report Meeting to discuss results of work tasks and findings. This meeting will cover
all aspects of the research program.
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Ms Kate Aanenson
November 4, 2005
Page 5
. City Council Meeting to report results of findings and recommendations. This meeting
will cover all aspects of the research program.
The budget provides for four client meetings as described above. Additional meetings will be
billed at our normal hourly rates plus expenses.
QUALIFICATIONS AND EXPERIENCE
McComb Group, Ltd. is a full-service retail and real estate consulting firm specializing in market
research and financial feasibility. The firm has extensive experience in the retail industry and
has conducted market research for retail stores and shopping centers of all types including
regional malls, community centers and specialty centers.
McComb Group, Ltd. has a team that is qualified to conduct the research described in this
proposal. McComb Group's professional staff associated with this engagement includes the
following:
. James B. McComb, President, founded the predecessor of McComb Group in 1974
following six years as a member of the corporate staff with Dayton Hudson Corporation.
His experiences at Dayton Hudson and daily association with merchants and shopping
center developers provided the impetus for McComb Group's approach to shopping
center and retail market research and financial feasibility, which includes strong elements
of design and merchandise sensitivities. The firm's approach to shopping center research
and marketing has undergone continuous development and refinement over the past 20
years.
. William A. Gorton, Executive Associate, has over 25 years experience developing
supermarkets and retail shopping centers, representing supermarket chains as well as
prominent independent supermarket owners. Mr. Gorton provides advice and assistance
related to real estate development, leasing and contract negotiations, business
acquisitions, project management, sales forecasting, site evaluation and market analysis,
financing, capital planning, financial forecasting, business planning, strategy
development, business development and the marketing of programs and services.
Mr. Gorton has provided these services while employed Fairway Foods, Inc., subsidiary
of Holiday Stationstores, Inc.; Kohl's Food Stores, Inc., subsidiary of the Great Atlantic
& Pacific Tea Company; SuperValu, Inc.; Loblaw's, Inc.; and Stearns Bank N.A. St.
Cloud, MN. He received a JD from William Mitchell College of Law and is a member of
the Minnesota State Bar Association.
. Linda Die, Associate, conducts market research, demographic and consumer analysis for
client engagements. Ms. Die manages the firm's geographic information systems (GIS)
and demographic databases using a variety of computer platforms and proprietary
software.
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Ms Kate Aanenson
November 4, 2005
Page 6
Prior to joining McComb Group, Ltd., Ms. Oie was employed as Marketplace
Information Manager at SuperValu, Inc. Her responsibilities included conducting
strategic consumer-based analysis of existing and prospective supermarkets, profiling
SuperValu customers, and delineating trade areas for existing and proposed stores.
. Susan Nache, Consultant, performs market research, demographic analysis, and
consumer research tasks. Ms. Nache conducts consumer research analysis and cross-
tabulation on McComb Group's survey processing software; and is familiar with software
programs used by McComb Group, Ltd. for financial feasibility and statistical analysis.
Mr. McComb will be responsible for managing and directing the overall research program and
will participate directly in findings and conclusions. Individual work tasks will be assigned to
personnel within the firm based on qualifications and experience.
BUDGET
The budget for the work program and work products described in this proposal is shown below. .
Professional Services
Study Area Evaluation
Competitive Shopping Areas
Business Interviews
Customer Survey
Trade Area
Retail Development Potential
Developer Interviews
Office/Industrial Demand
Residential Market Demand
Design Consulting
Report Preparation
Meetings
Total Professional Services
Budget
$ 3,600
3,100
1,500
3,000
3,800
2,800
1,600
8,800
3,300
2,000
1,100
4,000
$ 38,600
Expenses (Estimated)
Mileage
Demographics
Computer
Report Production
Reproduction
Miscellaneous
Total Expenses
TOTAL BUDGET
$ 250
350
275
1,500
350
850
$ 3.575
$ 42.175
The professional fees for the services outlined in this proposal total $38,600 and will be
performed at a price not-to-exceed that amount. Expenses estimated at $3,575 are to be
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Ms Kate Aanenson
November 4, 2005
Page 7
reimbursed based on actual cost. The budget is based on the amount of time required to perform
the work tasks and our normal hourly billing rates of $230 for principals, $190 for executive
associates, $125 for senior associates, $90 for associates, and $75-$85 for consultants.
Company policy requires a retainer of approximately one half of the estimated budget for the
project or $21,000. The retainer will be applied to the final invoice as a credit for billing of
professional services and expenses. Invoices for professional services and expenses will be
rendered at mid-month and month-end as our work progresses.
Standard billing terms are net ten days. A finance charge of 1.5 percent will be charged on all
unpaid balances outstanding more than 30 days.
REPORT PURPOSE
This proposal was prepared with the understanding that the results of our work will be used by
the client to evaluate retail, office/industrial and residential development potential in relation to
the comprehensive plan. Our report will be prepared for that purpose and will be subject to the
following qualifications:
. Our analysis will not ascertain the legal and regulatory requirements applicable to this
project, including zoning, other state and local government regulations, permits and
licenses. No effort will be made to determine the possible effect on the proposed project
of present or future federal, state or local legislation, or any environmental or ecological
matters.
. Our report and analysis will be based on estimates, assumptions and other information
developed from research of the market, knowledge of the industry and discussions with
the client. Some assumptions inevitably will not materialize and unanticipated events
and circumstances may occur; therefore, actual results achieved will vary from the
analysis.
. Our analysis will not evaluate management's effectiveness or be responsible for future
marketing efforts and other management actions upon which actual results are dependent.
. Our report will be intended solely for the purpose described above and should not be used
for any other purpose without our prior written permission. Permission for other use of
the report will be granted only upon meeting company standards for the proposed use.
These qualifications will be included in our final report. If the report is used for purposes other
than specified above, we reserve the right to review the materials for proper use of our work.
ACCEPTANCE PROCEDURES
To indicate acceptance of the proposal, please sign a copy of the proposal and return it to us
, , .
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Ms Kate Aanenson
November 4, 2005
Page 8
together with your check for the retainer as authorization to proceed with this engagement.
We appreciate the opportunity to submit this proposal and look forward to hearing from you
soon. If you have any questions concerning the proposal, please call me at (612) 339-7000.
Accepted By:
McComb Group, Ltd.
Company:
Title:
James B. McComb
President
Date:
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Prior Lake Development Potential
Obieclive. of . RetaU, Re.idential-and -Business Park Market Study
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DaNntown Prior Lake is. one of the target areas for physical and
economic redevelopment.
A morket study, targeting
potential commercial, resi-
dential, retail and business
park development in Prior
lake from 2005-2025, was
completed by the McComb
Group LTD in January
2004.
The purpose of the study
was three-fold:
1. Determine potential
acreages for commer-
cial / industrial devel-
opment ond high-
density residential de-
velopment.
2. Predict the timing and
magnitude of develop-
ment for specific land
uses.
Make recommendations In
a general manner, as to
the most appropriate loca-
tlon(s) for the various types
of developments.
The complete study consists of
over 50 pages of maps, charts
and accumulated data. This
report is intended to summarize
the data, and highlight the
findings of the report.
A copy of the full report is
available on-line at
www.cityofpriorlake.com by
dicklng the "Document Center"
link, and opening the
"McCombs Study" folder.
For further information on de-
velopment in Prior Lake, con-
tact Community Development
Director John Sullivan by tele-
phone at 952.447.9805, or by
email at
jsullivan@cityofpriorlake.com.
Expected Land Use Changes by MaiorCategories
Multi-Family - There is
an anticipated demand
of 1200 additional units
by 2025 which trans-
lates to an additional 50
to 60 acres. The City's
existing 2020 Camp
Plan designates 636
acres for multi-family.
The new plan will de-
crease the multi-family
designation by 580
acres.
Commercial- Uses
(including retail, services,
health care, etc.) are
anticipated to triple be-
tween 2005 and 2025
fram approximately
300,000 sq. ft. today to
900,000 sq. ft. by
2025. This will mean the
addition of 62 acres of commer-
cial usage City-wide.
Business Park - At prEtsent, the
City has approximately 200,000
sq. ft. of business park uses (office,
warehouse, showroom, manufac.
turing, etc.). By 2025, there will be
an increase to 2 million sq. ft.
which will require an additional
135 to 185 additional acres for
development.
DID YOU IJlOW??
. POOR lAKE IS LOCATED IN
THE 8TH FASTEST GROW-
ING COUNTY IN THE NA-
TION.
. IN 2003, THE CITY AND
SPRING l.AJa: 'lDwNsHIP
ENTERED INTO AN AGREE-
MENT THAT PROVIDES FOR
THE ANNEXATION OF OVER
3000 ACRES INTO THE
OTY OVER THE NEXT 20
YEARs.
. BY 2025, THE CITY's
POPULATION IS PROJECTED
TO REAOI NEARLY 42,000.
CONTAa US
We're Qa tilt....
find out mote obout Prior
Lake of
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Oty Hell
16200 Eagle Creek Ave.
Prior Lake, MN 55372
Ph. 952.447-4230
Fox 952.447,4245
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Prior lake Development Potential
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16200 Eagle Creek Ave. SE
Prior Lake, MN 55372
Ph. 952.447.4230
www.c1tyofprlorlake.com
John Sullivan, Community
Development DIrector
Our Market
. . .
The population within the
trade area is younger than
the Mlnnespolis / St. Paul
metro area with those under
17 years of age making up
29% of the population, and
those over 65 year old mak-
ing up 4.8%. This compares
to the MSP area at 24.5%
and 9.7010 respectIvely.
From 0 household income
perspective, the trade area
has an average of $97,304
which is expected to increase
to $112,025 by 2007. This
average household income is
34% higher than the average
for the Metro area at
$71,000. By 2007, over
18% of the households In the
Prior Lake trade area will
have an income of greater
than $150,000, and 43.3%
will have an income over
$100,000.
Location of Land Uses
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the remainder north of CSAH 42 Just west of Crest Avenue.
','
Those areas presently designated as multi-family in the 2020 Camp Plan which exceed
proJected needs are most likely to be designated low or medium density residential. The
additional 62 acres to be developed as commercial are most likely to be concentrated in
the three existing nodes indudlng: Downtown Prior Lake, Gateway, and Priordale. The
additional 135-185 acres of business park are most likely to be located in the Deerfield
Business Park (30 acres), the Vierling property (40 acres) at CSAH 21 and CSAH 42, and
Gas I Convenience Food -
20,000 sq. ft. of convenience
food and gas Is predk:ted by
2005 which more than doubles to
50,000 sq. ft. In 2025.
Home Center - While the mar-
ket will not be able to sustain
such 0 facility by 2005, 120,000
sq. ft. wIll be sustainable by
2025.
Auto Parts I n.. I Accessories
- A total of 24,000 sq. ft. can
Liquor Sto.... - By 2005, be supported In 2005. 42,000
12,000 sq. ft. for liquor soles sq. ft. In 2025.
Is profected with 0 2025
saturation at 33,000 sq. ft.
Food Service (Full rlt$fouront,
limited, deli) - 29,500 sq.ft.
are expected for 2005,
while 56,500 sq. ft. Is pro-
Jected by 2025.
. . .
The Bottom Line: Specific' Land Use Findings
- 8,800 sq. ft. appear sus-
tainable In 2005, with 37,900
profected for 2025.
Personal Service. (beauty, dry
deoning, nails, fanning) -
9,600 sq. ft. for 2005, and
24,500 by 2025.
Physical Fitness- 16,000 sq.
ft. In 2005. 45,000 sq. ft. In
2025.
Professional Services
(affomey, accounting, archilKt)
- 9,000 sq. ft. In 2005 con-
strasted by 25,000 sq. ft. In
Fumiture I Home Fumishin,. - 2025.
8y 2005, 0 total of 14,000 sq.
ft. con be supported. The pro-
Jected need In 2025 Is 22,000
sq. ft.
Miscellaneous ShoDpinv
(;ewe/ry, pet, hobby, oHice, book)
Auto Reaalr & Marnt. - The
market appears saturated for
2005. By 2025, on additional
6,500 sq. ft. Is possible.
For More Information on tllis Study, tIle Orderly Annellation Agreement. or tile many exciting Commercial and Economic Developmenl
Opportunitie~ in Prior Lake, contuel Community Development DirE'etor Jol1l1 Sullivan and takc~ advantage of wllat Prior Lake 110s to oHer!
The study Identifies the num-
ber of square feet the mar-
ket con absorb Tn 2005 and
In 2025. It does not indicate
the number of square feet
already devoted to each use
In 2004.
Supermarket-By 2005, a
supermarket of 25,000
square feet con be ab.
sorbed which grows to
65,000 sq. ft. by 2025.
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SUMMARY OF FINDINGS
PRIOR LAKE DEVELOPMENT POTENTIAL
Market analysis was conducted to determine demand for retail, business park and residential
development in Prior Lake. The results of this analysis are summarized below.
RETAIL DEVELOPMENT
Prior Lake lies at the southern edge of the Twin Cities urbanized area and its trade area includes
agricultural areas to the east, west and south. These agricultural areas will be developed with
homes as the MUSA line is extended. Factors that support retail and service potential in Prior
Lake include:
. Rapid household growth within Prior Lake's primary and secondary trade areas.
. Development in the Spring Lake Township annexation areas will reinforce existing
retail locations along TH-13 in Prior Lake.
. Average household income in Prior Lake's trade area was estimated at $96,658 in
2002 and is estimated to increase to 110,496 in 2007. This is 35 percent above the
Minneapolis-St. Paul MSA average of $71,738 and $81,129 for 2002 and 2007,
respectively.
. Retail development at CSAH 42 and TH-13 is anchored by stores that emphasize low
prices, limited service and high volume.
. Prior Lake can compete with this concentration of budget and lower moderate price
points by attracting stores whose products and services are more in line with trade
area incomes and lifestyles.
Prior Lake's retail areas along TH-13 have the opportunity to develop and redevelop with stores
and services that appeal to Prior Lake's favorable demographics.
Retail Development Potential
Prior Lake development potential for retail stores, food service, and services is closely related to
trade area household growth. Trade area households, shown at the top of Table i, are estimated
to increase from 12,918 in 2005 to 27,407 in 2025. Household growth projections are based on
market demand development estimates. If residential development exceeds or is below this
estimate, development potential will be higher or lower than projected.
Categories of retail stores and services, and square footages that are possible in Prior Lake are
contained in Table i for each target year (2005, 2010, 2015, 2020 and 2025). Supportable retail
space is estimated to increase from 279,200 square feet in 2005 to over 900,000 in 2025. These
estimates include existing businesses in Prior Lake as well as the additional space that can be
added in the future. These businesses will seek to locate in downtown, or in the TH-13 retail
areas. There may be migration of retail stores between each ofthese areas. The other retail areas
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identified in the comprehensive plan are likely to evolve as convenience retail and service
locations and will have a smaller square footage of space than the TH-13 retail areas.
Table i
PRIOR LAKE SUPPORTABLE SPACE
BY MERCHANDISE CATEGORY
(Gross Leasable Area)
Merchandise Category 2005 2010 2015 2020 2025
Households 12,918 16,388 19,791 23,458 27,407
Convenience Goods 111,500 148,000 188,000 230,900 273,900
Shopping Goods 28,800 53,300 66,600 89,600 112,400
Building Materials 34,112 156,861 160,131 164,061
Auto Parts & Accessories 24,000 27,000 35,000 35,000 42,000
Services 48,400 66,800 88,100 113,400 135,600
Health Care 48,500 65,100 82,500 109,500 133,200
Other Services 18,000 24,000 30,000 38,000 45,000
Total 279,200 418,312 647,061 776,531 906,161
Source: McComb Group, Ltd.
Retail, food service, services, and office development potential in Prior Lake is likely over the
long term to include businesses that are new to Prior Lake and businesses that relocate from
other locations within the community as their space needs increase. Table ii lists those business
types that can be accommodated within the community as trade area households increase. This
table identifies the store type, median store size, and the store size range in each category. This
table includes businesses for which square footage demand cannot be quantified, but can be
accommodated based on the increasing size of Prior Lake's trade area.
Table ii
PRIOR LAKE POTENTIAL RETAIL TENANTS
Square Feet Typical Size
Establishment Type 2005 ~ 2015 2020 2025 Median Range
-
Convenience Retail
Supermarket X X X X 48,775 29,000 65,000
Specialty Food Store X X X X 3,140 1,100 23,000
Drug Store X X X X X 11,153 7,500 32,100
Hardware X X X X X 7,857 3,100 25,000
Liquor X X X X X 4,000 1,300 6,700
Florist X X X X X
Food Service
Full Service Restaurant X X X X X 5,124 2,100 9,275
Limited Service X X X X X 3,113 1,645 9,575
Snack & Beverage X X X X X 1,500 750 2,500
Convenience Store/Gasoline X X X X X 2,250 1,500 5,100
Shopping Goods
Women's Clothing 3,000 1,000 8,800
Family Clothing X X X X 6,000 2,200 26,225
Fumirure X X X X X 4,860 2,400 24,200
Floor Coverings X X X X X 3,826 1,100 11,500
Home Furnishings X X X X X 3,500 1,800 19,200
Radio, TV, Electronics X X X X X 3,013 1,400 7,100
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Table ii (cont.)
PRIOR LAKE POTENTIAL SERVICE TENANTS
Square Feet Typical Size
Establishment Type 2005 2010 2015 2020 2025 Median Range
-
Shopping Goods (cant.)
Music X X X X 3,432 1,300 7,100
Sporting Goods X X X X X 5,100 1,700 42,600
Jewelry Store X X X X X 1,350 600 2,500
Card Shop X X X X X 3,000 1,500 9,600
Optical Shop X X X X 1,500 900 3,400
Hobbyrroy & Game X X X X 7,000 1,250 41,900
Camera/Photo Supply X X 1,501 1,000 3,400
Pet Store X X X X 3,600 1,200 24,800
Frame Store X X X X 1,400 800 3,000
CosmeticslBeauty Supplies X X 1,527 750 2,950
Other Retail Stores
Home Center X X X 115,000 80,000 135,000
Nursery, Lawn and Garden X X X X 15,000 10,000 25,000
Paint, Glass, Wallpaper X X X X 3,233 N/A N/A
Outdoor Power Equipment X X X X N/A N/A N/A
Auto Parts & Accessories X X X X X 6,000 1,800 11,400
Tire Dealers X X X X X 1,950 1,800 4,100
Services
Beauty/Nai\!fanning X X X X X 1,400 900 2,100
Dry Cleaning X X X X X 1,750 1,000 2,600
Interior Decorator* X X X X X 1,500 1,000 2,500
Travel Agent* X X X X X 1,200 800 3,100
Film Processing* X X X X 1,150 650 1,900
Mailing Package* X X X X X 1,400 1,000 2,000
Copy Shop. X X X X X 3,200 1,100 6,300
Video Rental X X X X X 6,000 3,400 7,500
Community
Daycare* X X X X X 4,800 4,000 7,000
Physical Fitness X X X X X 6,000 1,350 12,400
Financial
Bank* X X X X 3,500 1,500 7,500
Insurance* X X X X X 1,000 600 2,300
Real Estate* X X X X 1,800 600 5,000
Income Tax Preparation. X X X X X 1,600 1,000 2,500
Finance Company X X X X 1,560 1,150 2,500
Brokerage X X X 1,050 500 3,500
Other
Legal X X X X X 1,705 1,000 3,000
Accounting X X X X X 1,600 1,000 2,500
Employment Agency X X X X X 1,300 900 1,900
Medical
Medical Practitioners/Clinic X X X X X 1,800 900 5,400
Dentist X X X X X 1,800 900 5,400
Chiropractors X X X X X 1,600 900 5,400
Physical Therapists X X X X X 1,600 900 5,400
N/A: Not Available.
. Other potential stores based on trade area size and sales potenlial in other calegories.
Source: McComb Group, Ltd.
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RESIDENTIAL DEVELOPMENT
Metropolitan area residential development has changed dramatically over the past ten years.
These changes include:
. Increasing levels of homeownership stimulated by low interest rates during the past
three years.
. Low interest rates made higher priced homes more affordable.
. Developers responded by producing more entry level housing, both single family and
townhomes.
. Low interest rates enabled many additional households to qualify for home
mortgages. This permitted many former renters to become homeowners.
. This shift reduced the demand for rental housing.
. Increasing land values reinforced townhome development trends as developers strove
to maintain low entry level home prices.
. More expensive townhome and multi-family product was constructed in response to
lifestyle changes by empty nesters and other households that preferred a maintenance-
free lifestyle.
These changes resulted in a dramatic increase in the proportion of multi-family housing units
constructed in the metropolitan area, Scott County, and Prior Lake.
Single Family and Multi-Family Trends
Prior Lake began the decade with multi-family buildings representing 4.4 percent of all building
permits. Since 1994, multi-family development in Prior Lake has exceeded ten percent in all but
two years, increasing to 35.9 percent in 2002. Building permits for the first nine months of2003
in Prior Lake indicate that townhome development represents over two-thirds (67.6 percent) of
2003 building permits.
Of the many forces that stimulated the increase in multi-family home production, only interest
rates represent a cyclical event. Interest rates are sure to rise in the future. As they do, this will
place increasing pressure on developers to maintain affordable monthly payment in each of their
market segments. This will most likely result in higher proportions of multi-family
development, although higher interest rates may reduce overall residential development.
Residential development projections, contained in Table iii, indicate that Prior Lake can add over
12,000 housing units by 2025. This would bring Prior Lake's household count to about 18,700.
This represents a trend line projection; and individual years could be above or below the 25
percent market share. Based on the increase in building permit activity in Prior Lake, it is
possible that this represents a conservative estimate of household growth.
Prior Lake has experienced increased multi-family housing construction over the past few years.
In the future, single family is estimated to be about 40 percent of building permits. Townhomes,
twinhomes, and other medium density townhomes are estimated at 50 percent and other higher
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density multi-family at ten percent. During the analysis period with approximately 12,100
building permits, single family would total about 4,800, townhomes 6,000 and other multi-family
over 1,200 units as shown in Table iii.
Year
2003
2004
2005
2006
2007
2008
2009
2010
20 II
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Total
Tableiii
PRIOR LAIrn
BASELINE RESIDENTIAL DEVELOPMENT PROJECTIONS: 2003 TO 2025
SINGLE F AMIL Y, TOWNHOME AND OTHER MUL TI-F AMIL Y
Total
444
451
458
465
471
479
486
493
500
508
516
523
531
539
547
555
564
572
581
589
598
607
616
12,093
Building Permits
Single Townhome
Family Twin Home
178 222
180 226
183 229
186 233
188 236
192 240
194 243
197 247
200 250
203 254
206 258
209 262
212 266
216 270
219 274
222 278
226 282
229 286
232 291
236 295
239 299
243 304
246 308
4,837 6,047
Other
Multi-Family
44
45
46
47
47
48
49
49
50
51
52
52
53
54
55
56
56
57
58
59
60
61
62
1,209
Source: McComb Group, Ltd.
Density
The mix of units contained in Table iii would require over 2,100 developable acres as shown in
Table iv. Assuming an average single family density of3.3 units to the acre requires about 1,466
acres; while a medium density often units per acre utilizes 605 acres. Other multi-family would
need about 41 acres. Average density is 5.7 units per acre.
Table iv
PRIOR LAKE
BASELINE RESIDENTIAL ESTIMATED DENSITY: 2003 TO 2020
SINGLE FAMILY, TOWNHOME AND OTHER MULTI-FAMILY
Single Townhome Other
Year Total Family Twin Home Multi-Family
Units 12,093 4,837 6,047 1,209
Estimated Density
Per Acre 5.7 3.3 10.0 30.0
Acres 2,1l2 1,466 605 41
Percent 100.0% 69.4% 28.7% 1.9%
Source: McComb Group, Ltd.
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BUSINESS PARK
Prior Lake's industrial development is located along CSAH 21 on the eastern edge of the City.
This area includes older warehouse and industrial development north of the highway, as well as
Waterfront Passage Business Park. Business park development began in 1993 and its most
recent building was completed in 2002. Eight buildings total 199,643 square feet.
Office Warehouse
Estimated office warehouse absorption by five-year periods, is contained in Table v. During the
period 2005 through 2009, Prior Lake is estimated to capture 55,000 square feet of office
warehouse space, which would require about four acres at 15,000 square feet per acre. Annual
absorption increases gradually over the 20-year period to 107,000 square feet, which would
require eight acres. During the projection period, office warehouse space is expected to increase
from 55,000 square feet in the first five-year period to 107,000 square feet in the 2020 through
2025 period. This is a total of 310,000 square feet, which would require 23 acres at 15,000
square feet per acre.
Table v
OFFICE WAREHOUSE DEVELOPMENT POTENTIAL
ESTIMATED ABSORPTION AND ACRES
(In Thousands ofSquarc Feel)
Period
2005 - 2009
2010-2014
2015 - 2019
2020 - 2025
Total
Metro
Area
4,372.6
5,531.4
6,258.2
8,604.4
Southwest
Submarket
@ 12.5%
547
691
782
1,075
Prior
Lake
@10
55
69
79
107
310
Acres
@ 15,000
Sq. Ft.
4
5
6
8
23
Source: McComb Group, Ltd.
Office Showroom
Prior Lake office showroom absorption is estimated to increase from 63,000 square feet in the
initial five-year period to 320,000 square feet during the 2020 to 2025 time period. This estimate
results in estimated 49 acres at 15,000 square feet per acre.
Table vi
OFFICE SHOWROOM DEVELOPMENT POTENTIAL; 2025
ESTIMATED ABSORPTION AND ACRES
(In Thousands of Square Feet)
Southwest Acres
Metro Submarket Prior Lake @ 15,000
Period Area (a) 25% Percent Sq. Ft. Sq.Ft.
2005 - 2009 5,005 1,251 5.0 % 63 5
2010 - 2014 6,387 1,598 7.5 120 8
2015 - 2019 8,152 2,038 10.0 203 14
2020 - 2025 12,807 3,202 10.0 320 22
Total 706 49
Source: McComb Group, Ltd.
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Commercial Office
Estimated commercial office absorption by five-year periods is contained in Table vii. During
the period 2005 through 2009, Prior Lake is estimated at 77,000 square feet and increases to
376,000 square feet in the 2020 to 2025 time period. Assuming 12,000 square feet per acre
results in about 70 acres ofIand to accommodate commercial office.
Table vii
COMMERC;IAL OFFICE DEVELOPMENT POTENTIAL
ESTIMATED ABSORPTION AND ACRES
(In Thousands of Square Feet)
Southwest Acres
Metro Submarket Prior Lake @ 12,000
Period Area @25% Percent Sq.Ft. Sq.Ft.
2005 - 2009 10,234 2,559 3.0 % 77 7
2010 - 2014 11,987 2,997 5.0 150 12
2015 - 2019 14,031 3,508 7.5 263 21
2020 - 2025 20,031 5,008 7.5 376 30
Total 866 70
Source: McComb Group, Ltd.
Summary
Additional demand for office and business park land in Prior Lake through 2025 is summarized
in Table viii. Prior Lake office industrial land demand includes office warehouse, office
showroom, commercial office, professional services, and health care. The mid range estimates
for office warehouse and office showroom are 23 and 49 acres, respectively. Commercial office
is the largest category with an estimated 70 acres. There are some professional services and
health care uses that occupy office buildings. The mid range demand for these categories are
estimated at six and nine acres, respectively.
Table viii
PRIOR LAKE
ESTIMATED LAND DEMAND: 2005 TO 2025
Acres
Type Low Mid Range High
Office Warehouse 20 23 27
Office Showroom 42 49 57
Office 60 70 81
Services 5 6 7
Health Care 7 9 11
Total 134 157 183
Source: McComb Group, Ltd.
These land demand forecasts are realistic and reflect the fact that Prior Lake is interested in
knowing the potential for business park development and its better to be optimistic for this
purpose. Low range estimates are 15 percent below the mid range and high range estimates are
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15 percent above the mid range. The low range results in a total of 134 acres of land and the
high results in 183 acres through 2025.
These land area estimates should be viewed as guidelines and may be modified and adapted if
future events are different than projected. Any projection extending 20 years into the future can
be changed by unforeseen events.
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