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
WNW,ci ,chanhassen, mn .us
MEMORAMDUM
TO:
Planning Commission
FROM:
Kate Aanenson, Community Development Director
DATE:
January 17,2006
SUBJ:
Retail Market Study
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
(Liberty on Bluff Creek). 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.
At their December 12,2005 meeting the City Council approved the study and it's
funding. The Chamber of Commerce is participating in funding the study.
Attached is the approved contract. At the work session I will be prepared to
discuss the study in greater detail and talk about the impact on land use and
zoning. I will also answer any questions the Commission may have.
g:\plan\ka\marketing study\pc ws 1-17-06.doc
The City 01 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.
PROFESSIONAL SERVICES AGREEMENT
AGREEMENT made this J~+h day of'be-ce fY'\ bPr
CITY OF CHANHASSEN, a Minnesota municipal corporation ("City")
("McComb").
, 2005, by and between the
and McComb Group, Ltd.
IN CONSIDERATION OF THEIR MUTUAL COVENANTS THE PARTIES AGREE AS
FOLLOWS:
1. SCOPE OF SERVICES. The City retains McComb to furnish the services set forth on the
attached Exhibit "A". The McComb agrees to perform the services.
2. COMPENSATION. McComb shall be paid by the City on an hourly basis in accordance
with the attached Exhibit "B" but .an amount not to exceed $42,175 inclusive of reimbursable expenses.
McComb shall bill the City on a monthly basis and the City shall make payment within thirty days of
receipt of an invoice.
3. COMPLETION DATE. The McComb must complete the service specified in Exhibit "A"
on or before April 15th, 2006. The obligation to provide further services under this Agreement may be
terminated by City without cause upon written notice to the McComb. Upon termination McComb shall
only be paid for work actually performed.
4. DOCUMENTS. The City shall be the owner of all documents, reports, studies, analysis
and the like prepared by the McComb in conjunction with this contract.
5. COMPLIANCE WITH LAWS AND REGULATIONS. In providing servIces
hereunder, McComb shall abide by all statutes, ordinances, rules and regulations pertaining to the
provisions of services to be provided.
6. STANDARD OF CARE. McComb shall exercise the same degrees of care, skill, and
diligence in the performance of the Services as is ordinarily possessed and exercised by a professional
under similar circumstances. No other warranty, expressed or implied, is included in this Agreement.
City shall not be responsible for discovering deficiencies in the accuracy of McComb's services.
7. INDEMNIFICATION. McComb shall indemnify and hold harmless the City, its officers,
agents, and employees, of and from any and all claims, demands, actions, causes of action, including costs
and attorney's fees, arising out of or by reason of the execution or performance of the work or services
provided for herein and further agrees to defend at its sole cost and expense any action or proceeding
commenced for the purpose of asserting any claim of whatsoever character arising hereunder.
8. INSURANCE. McComb shall secure and maintain such insurance as will protect McComb
from claims under the Worker's Compensation Acts, automobile liability, and from claims for bodily injury,
death, or property damage which may arise from the performance of services under this Agreement. Such
insurance shall be written for amounts not less than:
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1
Commercial General Liability
$1,000,000 each occurrence/aggregate
Automobile Liability
$1,000,000 combined single limit
Before commencing work the McComb shall provide the City a certificate of insurance evidencing
the required insurance coverage in a form acceptable to City.
9. INDEPENDENT CONTRACTOR. The City hereby retains the McComb as an
independent contractor upon the terms and conditions set forth in this Agreement. McComb is not an
employee of the City and is free to contract with other entities as provided herein. McComb shall be
responsible for selecting the means and methods of performing the work. McComb shall furnish any and
all supplies, equipment, and incidentals necessary for McComb's performance under this Agreement. City
and McComb agree that McComb shall not at any time or in any manner represent that McComb or any of
McComb's agents or employees are in any manner agents or employees of the City. McComb shall be
exclusively responsible under this Agreement for McComb's own FICA payments, workers compensation
payments, unemployment compensation payments, withholding amounts, and/or self-employment taxes if
any such payments, amounts, or taxes are required to be paid by law or regulation.
10. SUBCONTRACTORS. McComb shall not enter into subcontracts for services provided
under this Agreement without the express written consent of the City. McComb shall comply with
Minnesota Statute g 471.425. McComb must pay Subcontractor for all undisputed services provided by
Subcontractor within ten days of McComb's receipt of payment from City. McComb must pay interest
of 1.5 percent per month or any part of a month to Subcontractor on any undisputed amount not paid on
time to Subcontractor. The minimum monthly interest penalty payment for an unpaid balance of $100
or more is $10.
11. ASSIGNMENT. Neither party shall assign this Agreement, or any interest arising herein,
without the written consent of the other party.
-
12. WAIVER. Any waiver by either party of a breach of any provisions of this Agreement
shall not affect, in any respect, the validity of the remainder of this Agreement.
13. ENTIRE AGREEMENT. The entire agreement of the parties is contained herein. This
Agreement supersedes all oral agreements and negotiations between the parties relating to the subject
matter hereof as well as any previous agreements presently in effect between the parties relating to the
subject matter hereof. Any alterations, amendments, deletions, or waivers of the provisions of this
Agreement shall be valid only when expressed in writing and duly signed by the parties, unless.otherwise
provided herein.
14. CONTROLLING LAW. This Agreement shall be governed by and construed ill
accordance with the laws of the State of Minnesota.
15. COPYRIGHT. McComb shall defend actions or claims charging infringement of any
copyright or patent by reason of the use or adoption of any designs, drawings or specifications supplied
by it, and it shall hold harmless the City from loss or damage resulting there from.
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2
16. RECORDS. McComb shall maintain complete and accurate records of time and expense
involved in the perform<U1ce of services.
17. MINNESOTA GOVERNMENT DATA PRACTICES ACT. McComb must comply
with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter 13, as it applies to (1) all
data provided by the City pursuant to this Agreement, and (2) all data, created, collected, received, stored,
used, maintained, or disseminated by the McComb pursuant to this Agreement. McComb is subject to all
the provisions of the Minnesota Government Data Practices Act, including but not limited to the civil
remedies of Minnesota Statutes Section 13.08, as if it were a government entity. In the event McComb
receives a request to release data, McComb must immediately notify City. City will give McComb
instructions concernillg the release of the data to the requesting party before the data is released. McComb
agrees to defend, indemnify, and hold. City, its officials, officers, agents, employees, and volunteers
harmless from any claims resulting from McComb's officers', agents', city's, partners', employees',
volunteers', assignees' or subcontractors' unlawful disclosure and/or use of protected data. The terms of
this paragraph shall survive the cancellation or termination of this Agreement.
McComb Group, Ltd.
Thomas A. Furlong, Mayor
B~~
Its ~,
Dated: -DO.P...€c....L c,.,- Ie ,2005.
Dated: ~c.p YV'\ be,.. ~ ,2005.
AND: ?!~/ Li.1J;;\-
, Todd Gerhardt, City Manager
Dated:~L.eVY\,~, d-~ ,2005.
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3
ODD
0.0
ODD
MCCOMB GROUE Ltd.
REAL ESTATE AND
RETAIL CONSULTANTS
EXHIBIT "A"
November 4, 2005
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 retaiVcommercial 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
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.
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 of2005,
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.
. OfficelIndustrial 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.
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.
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, busines~
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 Oie, Associate, conducts market research, demographic and consumer analysis for
client engagements. Ms. Oie manages the firm's geographic information systems (GIS)
and demographic databases using a variety of computer platforms and proprietarylsoftware.
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
Bud2;et
$ 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
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 CJ.ssociates, 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.
Ms Kate Aanenson
November 4, 2005
Page 8
ACCEPTANCE PROCEDURES
To indicate acceptance of the proposal, please sign a copy of the proposal and return it to us
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:
James B. McComb
President
Title:
Date:
EXHmIT "B"
COMPENSATION
McComb Group, Ltd. Staff and Current Hourly Rates
StaffIPosition
Hourly Rate
Jam es B. Meeo mb, Prin cipal ............................................................................................$250.00
William A. Go rto n, Executive Associate .......... ........... ............ ....... .... ... .......... ... ......... .... ..$190.00
Lin da Oie, S enio r Asso cia te . ... ....... .............. ........... .... ..... ........ ........ ...... ....... ... ......... ........ .$125.00
Susan N a ch e, Asso cia te... .................. ..... .... ... ..... ... ... ...... ......... .......... ........... ....... ......... .... ... ..$90.00
Co nsultan ts . ... ... ..... ..... ......... ....... .......... ............ ...... ........ ........ ......... ...... .... ........... $60.00 to $ 7 5.00