Darkness on the Edge of Town

Although Newman Development Group would have us believe that Lowe’s would never consider closing the doors of a future Geneseo location, anyone not on their payroll should recognize this as nonsense. Big Boxes close all the time, whether because of a shift to a new store design, a larger store, a better location, or poor store performance.

We saw this first hand when Wal-Mart moved across the street and left its old store dark for several years. Henrietta has seen Hechingers, Builder’s Square (remember them?), Dick’s Sporting Goods, and many others come and go. At their opening, each store appeared fresh and solid and permanent, “anchors” of vital plazas. Before long, they were closed, dark, and blighted, detritus of a restless and reckless retail economy.

Recognizing this, the Town Planning Board requested that Newman provide some assurance against a future dark store; either a promise to tear down an empty store or build it in a way that made it easier to reuse. Showing the same level of sensitivity to local concerns that it has displayed throughout this long ordeal, Newman said that the Planning Board’s concerns were “foolish” and “implausible” and that Lowe’s would not be leaving this store. Moreover, Newman said, the Town lacked the authority to require them to provide any protection against a future dark store.

I wonder if Lowe’s gave the same assurances to State College, PA, Wooster, OH, Potomac Mills, MD, Newport News, VA, Greenville, SC, Prince William Co, VA, Elizabeth City, NC, West Columbia, SC, or any other of the numerous communities in which it has closed stores in recent years?

I wonder if Wal-Mart gave such assurances to any of the 261 communities across the country with presently vacant Wal-Marts? That’s right, 261 stores, or approximately 35 million square feet of retail space.

If business continues to go well for Lowe’s, we can expect them to move to a larger store or a “better” location, perhaps closer to 390. If business doesn’t go so well, we can expect lower performing stores and stores in marginal markets to be closed. Only if business is just right – call this the Goldilocks scenario – is Lowe’s likely to occupy this location for more than ten or twelve years. After that, the empty store is ours to keep.

I’m not much for fairy tales, not with daily headlines about the bursting housing bubble, the 68% increase in home foreclosures, the expectation that housing values will fall 20-30% nationwide, and predictions that the bottom of this fall is still several years off.

In an economy in which incomes have not kept pace with consumer spending, families can no longer look to the equity in their homes to balance their books. Add to this rising gas prices and sharply increased inflation and retail growth looks likely to slow or stall or even reverse. This situation would seem to be particularly acute for home improvement retailers. After all, far fewer houses are being built, sold, bought, remodeled, and furnished.

So, I think the Planning Board is wise to seek some assurance against a future dark store. I don’t know whether the board has the authority to require such assurance. However, if the flexibility provided by the PDD law is worth anything, it ought to be able to be used to encourage Newman to give Geneseo something the board has requested and the community needs.

Stormy Weather in the Forecast

Clouds are building on the horizon. Beyond the horizon, there are reports of quite a storm. Though forecasts vary, in both the timing and the intensity of the storm, forecasters are coming into the agreement that we are in for some unpleasantness.

The elements of this storm are not wind, snow, and frigid temperatures, though all of those are also in the local forecast. The storm I’m concerned about is caused by the combination of increasing inflation, flat incomes, declining home values, and increasing gas prices.

Headlines about foreclosures, a credit crunch, weak holiday sales reports, and $3.00 gas are abundant. Read deeper than the headlines and you find forecasts of $100/barrel oil and $4/gallon gas in 2008. There are predictions that foreclosures will surge, the housing recession will deepen, and house prices will fall 20-30% before the market hits bottom in a few years.

All of this leads to talk of a recession, even a serious recession. Some forecasters think it has already begun. Others think it will begin by spring. More and more think it is unavoidable, a view few shared even a month or two ago.

As we all know, sometimes the forecasters are wrong. Sometimes the storm fizzles and we get an inch instead of a foot or rain instead of snow or it misses us entirely. The old joke goes that economists have predicted nine of the last five recessions.

Only time will tell. A few points are worth noting, however. The recent surge in retail development – in Geneseo and across the American landscape – happened because of an extended period of really favorable weather, a kind of economic global warming. As I’ve written about before, cheap gas and cheap money conspired to give us cheap prices in cheap buildings.

Those sunny days are over. Now we get to see just how much too much retail sprawl occurred. Expect slower retail growth and more vacancies. There are early signs of this in Geneseo, and the retail bubble has only started to deflate.

A more important point is that it is conditions like these that should remind us the value of smart growth. Growth that is planned, that provides for a mix of development, and that respects the character of the community in which it occurs is growth that is sustainable. No economy is recession-proof. However, an economy that supports local businesses, that understands that not every day is sunny, and that understands that people need places to make money and not just spend it, is an economy that will withstand the storm.