HomeMy WebLinkAboutORD 2004-77 - Downtown TIRZORDINANCE NO. 4004"77
AN ORDINANCE DESIGNATING A CONTIGUOUS GEOGRAPHIC
AREA WITHIN THE CITY OF GEORGETOWN CONSISTING OF
APPROXIMATELY 66(+/-) ACRES IN SIZE, GENERALLY LOCATED
AROUND THE WILLIAMSON COUNTY COURTHOUSE SQUARE,
SOUTH OF THE SOUTH SAN GABRIEL RIVER AND NORTH OF
UNIVERSITY BLVD., FOR TAX INCREMENT FINANCING PURPOSES
PURSUANT TO CHAPTER 311 OF THE TEXAS TAX CODE;
CREATING A BOARD OF DIRECTORS FOR SUCH ZONE;
CONTAINING FINDINGS AND PROVISIONS RELATED TO THE
FOREGOING SUBJECT; AND PROVIDING A SEVERABILITY
CLAUSE.
WHEREAS, the City Council of the City of Georgetown, Texas (the "City") has
determined that the creation of a reinvestment zone by the City, as authorized by the Tax
Increment Financing Act, Chapter 311 of the Texas Tax Code, Vernon's Texas Codes Annotated
(the "Act") within the area of the City as described in Exhibit "A" attached hereto (the "Zone"), is
in the best interests of the City in accordance with Article VIII, Section 1-g of the Texas
Constitution as the area is predominantly open, underdeveloped and, because of obsolete platting,
substantially impairs the sound growth of the City; and
WHEREAS, the City has prepared a preliminary reinvestment zone project and financing
plan, a true and correct copy of which is attached hereto as Exhibit `B" and on file with the City
Secretary, which plan provides that a portion of City of Georgetown ad valorem taxes
constituting its tax increment are to be deposited into the hereinafter created tax increment fund,
and that taxes of other taxing units may be utilized in the financing of the proposed Zone; and
WHEREAS, the City, on August 26, 2004 the City provided written notice of the City's
intention to create the proposed Zone, complying with the requirements of Section 311.003,
Texas Tax Code, to the governing body of all taxing units levying taxes on property in the
proposed Zone; and
WHEREAS, a notice of the October 26, 2004 public hearing on the creation of the
proposed Zone was published on October 17, 2004 in the Williamson County Sun, a newspaper
of general circulation in the City; and
WHEREAS, at the public hearing on October 26, 2004 interested persons were allowed
to speak for or against the creation of the proposed Zone, its boundaries, or the concept of tax
increment financing and owners of property in the proposed Zone were given a reasonable
opportunity to protest the inclusion of their property in the proposed Zone; and
Ordinance No. 4R00 — 71
Downtown Tax Increment Reinvestment Zone
Page 1 of 7
WHEREAS, evidence was received and presented at the public hearing in favor of the
creation of the proposed Zone and its boundaries under the provisions of Chapter 311, Texas Tax
Code; and
WHEREAS, no owner of real property in the proposed zone protested the inclusion of
his property in the proposed Zone; and
WHEREAS, not more than 10 percent of the property within the proposed Zone is
currently used for residential purposes, as that term is defined in Section 311.006(d) of the Texas
Tax Code; and
WHEREAS, the City has provided all information, and made all presentations, given all
notices and done all other things required by Chapter 311, Texas Tax Code, or other law as a
condition to the creation of the proposed Zone; and
WHEREAS, the City has not previously created any tax increment reinvestment zones or
any industrial districts; and
WHEREAS, the total appraised value of taxable real property in the proposed Zone does
not exceed 15 percent of the total appraised value of taxable real property in the City.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF GEORGETOWN, TEXAS:
Section 1. Findings. a) That the facts and recitations contained in the preamble of
this Ordinance are hereby found and declared to be true and correct and are adopted as part of
this Ordinance for all purposes.
b) That the City Council further finds and declares that the proposed improvements in
the Zone will significantly enhance the value of all the taxable real property in the proposed zone
and will be of general benefit to the City.
c) That the City Council further finds and declares that the proposed reinvestment Zone
meets the criteria and requirements of Section 311.005 of the Texas Tax Code because:
(1) The proposed Zone substantially impairs and arrests the sound growth of the City,
retards the provision of housing accommodations, constitutes an economic and
social liability and is a menace to the public health, safety, morals, or welfare in
its present condition and use because of:
a. the predominance of defective or inadequate sidewalk or street layout;
and/or
Ordinance No. 004 - 77
Downtown Tax Increment Reinvestment Zone
Page 2 of 7
b. faulty lot layout in relation to size, adequacy, accessibility or usefulness;
and/or
(2) The proposed Zone is predominantly open and, because of obsolete platting,
deterioration of structures or site improvements, or other factors, substantially
impairs or arrests the sound growth of the City.
d) That the City Council, pursuant to the requirements of Chapter 311, Texas Tax Code,
further finds and declares:
(1) That the proposed Zone is a contiguous geographic area located wholly within the
corporate limits of the City of Georgetown;
(2) That the total appraised value of taxable real property in the proposed Zone, does
not exceed fifteen percent of the total appraised value of taxable real property in
the City and in the industrial districts created by the City;
(3) That the proposed Zone does not contain more than fifteen percent of the total
appraised value of real property taxable by Williamson County;
(4) That the development or redevelopment of the property in the proposed Zone will
not occur solely through private investment in the reasonably foreseeable future;
(5) That less than ten percent of the property in the proposed Zone is used for
residential purposes within the meaning of Section 311.006(d), Texas Tax Code;
and
(6) That the improvements proposed to be implemented in the proposed reinvestment
Zone will significantly enhance the value of all taxable real property in the
proposed reinvestment Zone.
e) The City Council finds and declares that the creation of the Zone is in conformance
with the following Policy Statements in the City's Century Plan:
1.0 The community enjoys the benefits of well-planned land use in which conflicting
needs are balanced.
9.0 Citizens and commercial goods move safely and efficiently throughout all parts of
the City.
10.0 Georgetown's citizens and businesses enjoy an attractive community with a unique
sense of place and a positive, identifiable image, at a cost which is consistent with other
city social and economic priorities.
Ordinance No. - 77
Downtown Tax Increment Reinvestment Zone
Page 3 of 7
13.0 All municipal operations are conducted in an efficient business -like manner and
sufficient financial resources for both current and future needs are provided.
15.0 The City manages its resources in a sound and fiscally conservative manner.
Section 2. Designation of the Zone. That the City, acting under the provisions of
Chapter 311, Texas Tax Code, including Section 311.005(a), does hereby designate as a
reinvestment zone, and create and designate a reinvestment zone over, the area described in
Exhibit "A" to promote the redevelopment of the area. The reinvestment zone shall hereafter be
named for identification as "Reinvestment Zone No. 3, City of Georgetown" (the "Zone"), which
also may be referred to as the Downtown Tax Increment Reinvestment Zone.
Section 3. Board of Directors. That there is hereby created a Board of Directors for the
Zone, which shall consist of five (5) members.
The directors appointed to Positions One, Three and Five shall be appointed for two year
terms, beginning on effective date of the zone while the directors appointed to Positions Two and
Four shall be appointed to one year terms beginning on the effective date of the Zone. All
subsequent appointments shall be appointed for two-year terms. The member of the Board of
Directors appointed to Position One is hereby designated to serve as chair of the Board of
Directors for the term beginning on the effective date of the Zone, and ending upon the
expiration of the initial term of Position One. Thereafter the City Council shall annually
nominate and appoint a member to serve as chair for a term of one year beginning January 1 of
the following year. The City Council authorizes the Board of Directors to elect from its members
a vice chairman and such other officers as the Board of Directors sees fit. Notwithstanding the
foregoing, the term of any City Council member serving on the Board of Directors shall
automatically expire when their term on the City Council ends.
The Board of Directors of the Zone shall comply with Chapter 551, Texas Government
Code (the Open Meetings Act) and Chapter 552, Texas Government Code (regarding public
records and information). The Board of Directors shall make recommendations to the City
Council concerning the administration of the Zone. The Board of Directors shall prepare or
cause to be prepared and adopt a project plan and a reinvestment zone financing plan for the
Zone as described in Section 311.011, Texas Tax Code, and shall submit such plans to the City
Council for its approval. The City, pursuant to Section 311.010(a) of the Texas Tax Code hereby
authorizes the Board of Directors to exercise all of the City's powers necessary to administer,
manage or operate the Zone and to prepare the project plan and reinvestment zone financing plan,
including the submission of an annual report on the status of the Zone. Notwithstanding the
foregoing, the Board of Directors shall not be authorized to issue tax increment bonds or notes,
impose taxes or fees, exercise the power of eminent domain or give final approval to the project
plan and reinvestment zone financing plan. The Board of Directors of the Zone may not exercise
any power granted to the City by Section 311.008 of the Texas Tax Code without additional and
prior authorization from the City.
Ordinance No. cZ001/ • 77
Downtown Tax Increment Reinvestment Zone
Page 4 of 7
Section 4. Duration of the Zone. That the Zone shall take effect immediately upon the
passage and approval of this Ordinance, and termination of the operation of the Zone shall occur
on December 31, 2029, or at an earlier time designated by subsequent ordinance of the City
Council in the event the City determines in its sole discretion that the Zone should be terminated
due to insufficient private investment or other good cause, or at such time, subsequent to the time
that all project costs, tax increment bonds, notes and other obligations of the Zone, and the
interest thereon, have been paid in full.
Section 5. Tax Increment Base; Amount of Tax Increment. That the Tax Increment
Base of the City or any other taxing unit participating in the Zone for the Zone is the total
appraised value of all real property taxable by the City or other taxing unit participating in the
Zone and located in the Zone, determined as of January 1, 2004, the year in which the Zone was
designated as a reinvestment zone (the "Tax Increment Base"). The amount of the tax increment
for a year is 100% of property taxes levied and collected by the City and all or a portion of
property taxes of other taxing units participating in the Zone and located in the Zone (as set forth
in an agreement to participate in the Zone) for that year on the Captured Appraised Value of real
property taxable by City or other taxing unit participating in the Zone and located in the Zone.
The Captured Appraised Value of real property taxable by City or other taxing unit participating
in the Zone for a year is the total appraised value of all real property taxable by the unit and
located in the Zone for that year less the Tax Increment Base.
Section 6. Tax Increment Fund. That there is hereby created and established a Tax
Increment Fund for the Zone which may be divided into subaccounts as authorized by subsequent
resolutions or ordinances. All Tax Increments, as defined herein and in the Texas Tax Code,
shall be deposited in the Tax Increment Fund. Any expenditure to be made from the Tax
Increment or any contract related thereto, must be approved by the City Council prior to such
expenditure being made or contract being executed. The Tax Increment Fund and any
subaccount shall be maintained at the depository bank of the City and shall be secured in the
manner prescribed by law for funds of Texas cities. The annual Tax Increment less any amounts
that are to be allocated pursuant to the Act shall be deposited directly into the Tax Increment
Fund. All revenues from the sale of any tax increment bonds, notes or other obligations hereafter
issued for the benefit of the Zone by the City, if any; revenues from the sale of property acquired
as part of the project plan and reinvestment zone financing plan, if any; and other revenues to be
used in the Zone shall be deposited into the Tax Increment Fund. Prior to the termination of the
Zone, money shall be disbursed from the Tax Increment Fund only to pay project costs, as
defined by the Texas Tax Code, for the Zone, to satisfy the claims of holders of tax increments
bonds or notes issued for the Zone, or to pay obligations incurred pursuant to agreements entered
into to implement the project plan and reinvestment zone financing plan and achieve their
purpose pursuant to Section 311.010(b) of the Texas Tax Code.
Section 7. Purpose of Zone. That the City Council hereby finds that the creation of the
Zone and the expenditure of moneys on deposit in the Tax Increment Fund necessary or
convenient to the creation of the Zone or to the implementation of the project plan for the Zone
constitutes a program to promote local economic development and to stimulate business and
Ordinance No. •
Downtown Tax Increment Reinvestment Zone
Page 5 of 7
commercial activity in the City. The City Council further finds that the Zone will facilitate a
program of public improvements to allow and encourage the development and redevelopment of
downtown Georgetown into a mixed use, pedestrian oriented environment consistent with the
goals of the City's Downtown Master Plan. Construction of the public improvements is
anticipated to take place in phases over a number of years and timed in coordination with new
development and redevelopment projects in the Zone.
Section 8. Severability. If any provision, section, subsection, sentence, clause or phrase
of this Ordinance, or the application of same to any person to set circumstances, is for any reason
held to be unconstitutional, void or invalid, the validity of the remaining provisions of this
Ordinance or their application to other persons or set of circumstances shall not be affected
thereby, it being the intent of the City Council in adopting this Ordinance that no portion hereof
or regulations connected herein shall become inoperative or fail by reason of any
unconstitutionality, voidness or invalidity of any portion hereof, and all provisions of this
Ordinance are declared severable for that purpose.
Section 9. Open Meetings. It is hereby found, determined and declared that a sufficient
written notice of the date, hour, place and subject of the meeting of the City Council at which this
Ordinance was adopted was posted at a place convenient and readily accessible at all times to the
general public at the City Hall of the City for the time required by law preceding its meeting, as
required by the Open Meetings Law, Texas Government Code, Ch. 551, and that this meeting has
been open to the public as required by law at all times during which this Ordinance and the
subject matter hereof has been discussed, considered and formally acted upon. The City Council
further ratifies, approves and confirms such written notice and the contents and posting thereof.
READ, CONSIDERED, PASSED AND APPROVED ON FIRST READING by the
City Council of Georgetown at a regular meeting on October 26, 2004, at which a quorum was
present and for which due notice was given pursuant to Section 551.001, et. seq. of the Texas
Government Code.
READ, CONSIDERED, PASSED AND APPROVED ON SECOND AND FINAL
READING by the City Council of Georgetown at a regular meeting on the November 9, 2004, at
which a quorum was present and for which due notice was given pursuant to Section 551.001, et.
seq. of the Texas Government Code.
PASSED AND APPROVED on first reading on the 26th day of October, 2004.
PASSED AND APPROVED on second reading on the 9th day of November, 2004.
Ordinance No. 400
Downtown Tax Increment Reinvestment Zone
Page 6 of 7
r
1
Gary Neloln, Mayor
City of Georgetown, Texas
ATTEST: '?
Sandra Lee
City Secretary
APPRO ED AS TO FORM:
By: a G
Patricia Carls
City Attorney
Ordinance No.
Downtown Tax Increment Reinvestment Zone
Page 7 of 7
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DESTRICT GOUNOARY
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PRELIMINARY
PROJECT PLAN
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REINVESTMENT ZONE FINANCING PLAN
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REINVESTMENT ZONE
October 26, 2004
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Par- t .f 11
TABLE OF CONTENTS
I. INTRODUCTION
I-1
II. PROJECT PLAN
II -1
A.
Existing Uses and Conditions (311.011(b)(1))
II -1
B.
Municipal Ordinances and Agreements (311.011(b)(2))
II -1
C.
Zone Non -Project Costs (311.011(b)(3))
II -1
D.
Relocation (311.011(b)(4))
II -1
III. FINANCING PLAN
III -1
A.
Project Cost Description (311.011(c)(1))
III -1
B.
Location of Proposed Public Improvements (311.011(c)(2))
III -1
C.
Anticipated Budget for Project Costs
III -1
D.
Economic Feasibility Study (311.011(c)(3))
III -2
E.
Estimate of Bonded Indebtedness to be Incurred (311.011(c)(4))
111-2
F.
Time of Incurring Monetary Obligations (311.011(c)(5))
III -2
G.
Method of Financing (311.011(c)(6))
111-2
H.
Current Appraised Value/Captured Appraised Value (311.011(c)(7)(8))
III -3
1.
Duration of the Zone (311.011(c)(9))
111-3
IV. BOARD OF DIRECTORS OF THE ZONE
IV -1
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TABLE OF EXHIBITS AND APPENDICES
Exhibit A Map Indicating Existing Conditions
Exhibit B Zone Boundary Map
Exhibit C Preliminary Project List
Exhibit D Projected Captured Appraised Value and Tax Increment
Appendix 1 Economic and Market Feasibility Studies
ak.o... Z,004.17
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I. INTRODUCTION
Downtown Georgetown Reinvestment Zone (the "Zone") is a tax increment reinvestment zone,
proposed to be designated by the City of Georgetown (the "City") pursuant to the Tax Increment
Financing Act, as codified in Chapter 311 of the Texas Tax Code (the "Act"). The Zone is
proposed to cover approximately 66(+/-) acres, is located entirely in Williamson County (the
"County") and within the corporate limits of the City, and is generally located around the
courthouse square, south of the South San Gabriel River and north of University Blvd. The Zone
is proposed to be created for a 25 -year duration.
The Zone will facilitate a program of public improvements to allow and encourage the
development and redevelopment of downtown Georgetown into a mixed use, pedestrian oriented
environment consistent with the goals of the City's Downtown Master Plan. Construction of the
public improvements is scheduled to take place in phases over a number of years and timed in
coordination with new development and redevelopment projects in the Zone.
Public improvements scheduled for the Zone include, but are not limited to, the construction of:
(i) sidewalks, cross walks and pedestrian crossing systems (ii) storm sewers and drainage ponds,
(iii) sanitary sewers, (iv) landscaping, streetscape, fountains, works of art, and street furniture, (v)
plazas, squares, pedestrian malls, trails, and other public spaces, (vi) parking lots and roadways,
(vii) utility line relocation and installation, (viii) water system improvements (ix) parks, and
outdoor performance spaces, (x) bicycle routes and facilities, (xi) public transportation projects,
(xii) signage, and (xiii) other related necessary or convenient public improvements (collectively,
the "Project Costs").
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A PROJECT PLAN
A. Existing Uses and Conditions (311.011(b)(1))
The City will designate approximately 66 (+/-) acres as Downtown Georgetown Reinvestment
Zone. Exhibit A is a map illustrating the existing conditions of property within the Zone, as
required by Section 311.011 (b)(1) of the Act. The area currently includes several different uses
including retail, restaurant, office, institutional and limited residential. The purpose of the Zone
is to facilitate a program of public improvements to allow the development and redevelopment of
downtown Georgetown into a mixed use, pedestrian oriented environment consistent with the
goals of the City's Downtown Master Plan.
For illustrative purposes, Exhibit B depicts the vicinity and boundaries of the Zone.
B. Municipal Ordinances and Agreements (311.011(b)(2))
All of the property located within the Zone is within the corporate limits of the City.
The City has agreed to participate in the Zone by contributing 100% of its tax increment.
The proposed development does not anticipate any additional changes to the City's
comprehensive plan, City ordinances or building codes other than those relating to the creation of
the Zone or those ordinances or comprehensive plan amendments already approved by the City
for the development.
C. Zone Non -Project Costs (311.011(b)(3))
Non -Project Costs represent the expenditures estimated by public and private investors necessary
to complete the development and redevelopment efforts in downtown Georgetown. It is difficult
to quantify the maximum extent of non -project costs as these investments will happen over time
by multiple parties. There are currently plans for three projects to be initiated in 2004 and 2005
with a combined budget of over $10 million. All three projects are mixed use projects with retail,
restaurant, office and residential components. Over the life of the reinvestment zone it is
anticipated that substantial new investment will occur within the zone.
D. Relocation (311.011(b)(4))
No residential relocation will be required as a part of the creation of the Zone. Less than 10% of
the property within the Zone is currently used for residential purposes.
III. FINANCING PLAN
A. Project Cost Description (311.011(c)(1))
Project Costs will include all costs associated with the projects listed in Exhibit C and will
include:
1. Capital Costs
a. water system improvements;
b. storm sewers and drainage ponds;
C. sanitary sewers;
d. utility line relocation and installation;
e. parking lots and roadways;
f. streetscape and landscape areas;
g. public areas and plazas;
h. sidewalks, cross walks and pedestrian crossing facilities;
i. parks, trails and outdoor performance areas;
j. public transportation projects; and
k. bicycle routes and facilities.
2. Design, Architectural, and Engineering Fees
The public improvements will require professional services for design and engineering,
including inspecting/testing of soils and construction materials and overseeing
construction operations. Additionally, certain studies, including market and economic
feasibility studies, will be prepared.
3. Zone Administration - Over 25 -Year Life of Zone
The ongoing administration of the Zone will require services including, but not limited to,
such services as accountants and bookkeepers, engineers, legal counsel, planners or other
administrative services deemed necessary by the Zone Board to implement this Plan.
B. Location of Proposed Public Improvements (311.011(c)(2))
The approximate location of the proposed public improvements, as required to be demonstrated
by Section 311.011 (c)(2) of the Act, is shown on Exhibit B, which follows. The public
improvements will be constructed in phases consistent with the development and redevelopment
of properties within downtown Georgetown.
C. Estimate of Project Costs
Project Costs will vary depending on the nature, timing and number of development and
redevelopment projects within the Zone. It is anticipated that total Project Costs will not exceed
$25,000,000. Project Cost expenditures will vary from year to year and may range from $500,000
to $1,000,000 annually. Such Project Costs maybe paid from the tax increment on deposit from
01+.0• 'a004 ."?I
EXhib;}
Pi ye & o; t'1
time to time in the Fund, defined below, or through the issuance of bonds, notes or other
obligations (the "Obligations").
D. Economic Feasibility Study (311.011(c)(3))
A market analysis and recommended action plan as well as a master plan for the proposed Zone
have been conducted. See Appendix 1 for a copy of these studies.
E. Estimate of Obligations to be Incurred (311.011(c)(4))
The City will finance certain Project Costs described above necessary to develop the property in
the Zone. The City will finance such Project Costs through using funds on deposit in the Fund,
the issuance of Obligations or any combination thereof depending upon the growth of the tax
increment and the number of other taxing jurisdictions participating in the Zone. The City
estimates that it will issue Obligations in one or more series in an aggregate amount not to
exceed $25,000,000 at such time and amount as financially feasible based upon the tax increment
and the nature and scope of development and redevelopment projects within the zone.
F. Time of Incurring Monetary Obligations (311.011(c)(5))
The repayment term on any Obligations ,issued is estimated at 20 years. It is anticipated that
Obligations will be issued no sooner than City of Georgetown fiscal year 2006.
G. Method of Financing (311.011(c)(6))
Any Obligations issued by the City will be secured in whole or in part by ad valorem taxes
collected by the City on the incremental increase in the assessed value of real property located
within the Zone.
For purposes of this financing model, it is anticipated that the City will participate in the Zone at
a participation rate equal to 100% of its total tax rate. The City anticipates requesting the County
to participate in the Zone.
The City will establish a Tax Increment Fund (the "Fund") for the Zone in the ordinance
designating the Zone. In accordance with Section 311.013 of the Act, each participating taxing
jurisdiction will pay into the Fund the amount of increment generated by the taxing jurisdiction.
The tax increment deposited into the Fund will be used to pay Project Costs, Obligations issued
to finance Project Costs and costs related to maintaining, operating and administering the Zone.
H. Current Appraised Value/Captured Appraised Value (311.011(c)(7)(8))
The Plan will be implemented in part through the Zone's ability to capture and utilize incremental
ad valorem tax revenue generated from real property in the Zone, known as the captured
appraised value. The base value, from which captured appraised value is calculated, is the total
assessed taxable value of all property within the Zone on January 1, 2004, as shown on the rolls
of the Williamson County Appraisal District.
On. ao04 -77 1111-2
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The development and redevelopment in the Zone is anticipated to occur over a number of years,
the projected captured appraised value will increase as development continues. Exhibit D shows
the projected captured appraised value and tax increment over the 25 -year duration of the Zone.
I. Duration of the Zone (311.011(e)(9))
The Zone will have a duration of 25 years.
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III -2
IV. BOARD OF DIRECTORS OF THE ZONE
The City will create a Zone Board of Directors composed of 5 members in the Ordinance
designating the Zone. It is anticipated that other taxing entities within the Zone will waive
appointment to the Board of Directors. However, if the County participates in the Zone, and
does no waive appointment, the County will be entitled to appoint one director to the Board of
Directors. The City will appoint the remaining four members of the Board of Directors.
The Board of Directors of the Zone will prepare (i) an Annual Zone Budget; (ii) an Annual
Report of Zone activities; and (iii) an Annual Financial Statement prepared in accordance with
Generally Accepted Accounting Principles for presentation to the City.
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EXHIBIT A - MAP INDICATING EXISTING CONDITIONS
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EXHIBIT B -ZONE BOUNDARY MAP
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ZONING
Market Value
(Based on Data Supplied by
the Wliamson County
Appraisal District)
2003
Total Market Value:
$89,812,886
- Commercial:
$85,462,263
- Residential:
$3,636,093
- Vacant:
$714,530
2002
Total Market Value:
$68,873,219
2001
Total Market Value:
$66,430,401
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CITY OF GEORGETOWN
TAX INCREMENT REINVESTMENT ZONE:
4. DISTRICT BOUNDARY
AUGUST 16, 2004
0 300 600
Feet
1 inch equals 600 feet
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Legend
= A (Agriculture)
IM OF (Office)
m RE (Residential Estate)
C -N (Neighborhood Commercial)
RL (Residential Low Density)
m C-1 (Local Commercial)
RS (Residential Single -Family) ® C-2 (Downtown Commercial)
MH (Manufactured Housing)
11111111 C-3 (General Commercial)
TF (Two Family)
11111111 IN (Industrial)
= TH (Townhouse)
CMD Proposed TIRZ District
11111111 MF (Multifamily)
EXHIBIT C - PRELIMINAR Y PROJECT LIST
Project
1. Construct additional surface and structured parking
2. Re -configure on -street parking to maximize number of spaces
3. Install additional landscaping around existing surface parking lots
4. Develop a master landscape and streetsca a plan
5. Expand pedestrian amenities throughout zone to include: bike racks, benches, trash
cans, lighting, public restrooms, public art, pedestrian crossing systems
6. Develop a festival street on 8thStreet
7. Construct new City and County offices and facilities within the zone
8. Develop additional small parks within the zone
9. Develop an "Old Jail Park" on the site of the historic 'ail
10. Establish a downtown arts district
11. Construct and outdoor performance space
12. Add public art along sidewalks
13. Create a scenic overlook for the San Gabriel Rivers
14. Create pedestrian bridges across the San Gabriel Rivers
15. Bring all sidewalks into compliance with Downtown Master Plan sidewalk hierarch
16. Install brick crosswalks
17. Install pedestrian controlled street crossings
18. Create bike routes
19. Build a direct connection from Austin Ave. to the San Gabriel River Trails
20. hn rove pedestrian access to Blue Hole Park
21. Improve pedestrian links from parking lots to the Square
22. Construct a pedestrian path from Southwestern to the Square
23. Create a public transit shuttle service to downtown
24. Create additional downtown housing units
25. Create a downtown hotel and convention site
26. Create a wayfinding signage program and install signage
27. Improve signage along trails
28. Bury overhead utility lines
29. Replace and upgrade water and sewer lines
30. Build a regional water quality system for the zone
31. Make Austin Ave. more pedestrian friendly
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APPENDIX 1- MARKET ANALYSIS AND DOWNTOWN MASTER PLAN
00
Economics Research Associates
,x4 4 &ch line n+ - 4-o
orae Aooq.-17
FINAL REPORT,
Market Analysis
Strategic Retail Plan
And Recommended Action Plan
Prepared for
City of Georgetown, Texas
Submitted by
Economics Research Associates
November 2001
ERA Project No. 13792
1101 Connecticut Avenue, NW Suite 750
Washington, DC 20036 ERA is affiliated with Driv— loons
202.496.9870 FAX 202.496.9877 www.econres.com
Los Angeles San Francisco San Diego
Chicago Dallas Washington DC New York London
4e, a
Credits
City of Georgetown
City Council
MaryEllen Kersch, Mayor
Llorente F. Navarrette, District 1
Clark Lyda, District 2
Doug Smith, District 3
Jack Noble, District 4
Sam L. Pfiester, District 5
Charles (Ross) Burson, District 6
Ken Evans, District 7
Susan Hoyt, former member
Lee Bain, former member
Ferdinand L. Tonn, former
member
Main Street Advisory Board
Patty Eason, Chair
Bryant Boyd
Glenda Overfelt
Virginia Stubbs
Daniel Vasquez
Judith Manriquez
Josh McClure
Main Street Advisory Board
Economic Restructuring
Subcommittee
Virginia Stubbs, Chair
Daniel Vasquez
Renee Hanson
David Hays
Nancy Knight
Michele Barton
Steve Turner
Steve Doering
Economics Research Associates
1101 Connecticut Avenue, NW
Suite 750
Washington, DC 20036
202.496.9870
Tom Moriarity, Principal in Charge
Patty Folan, Project Manager
Adrienne Brown, Project Manager
Coordinating Consultant
Renee Hanson
116 W. 81h Street
Suite 110
Georgetown, TX 78626
512.869.7979
Special Thanks
A special thank you to all the
downtown property owners,
tenants, and interested persons who
participated in the workshops and
public hearings during the report
process. Also, the Williamson
County Appraisal District, City of
Georgetown Development
Services, Brashear Properties, and
the members of the Main Street
Advisory Board Economic
Restructuring Subcommittee who
assisted in data -gathering for the
report.
Strategic Retail _Plan
City of Georgetown, Texas
TABLE OF CONTENTS
I. INTRODUCTION AND EXECUTIVE SUMMARY 4
11. NEEDS AND POSSIBILITIES 10
Downtown Needs and Problems 10
Possibilities/Opportunities 12
I11. RETAIL MARKET DEMAND 14
Georgetown's Downtown Development Context 14
Analysis of Market Demand 21
Local Resident Markets 21
Downtown Employee Market 28
Visitor Market 31
Summary of Market Potential by Market Segment and Total
Supportable Retail Square Footage 35
IV. POTENTIAL NICHE STRATEGIES/ LEASING TARGETS 39
Impulse Food Service 48
Services 49
Office Related Retail Categories 50
National Chain Tenant Recruitment Parameters 51
Entertainment 52
V. LEASE REVIEW
54
VI. LEASING STRATEGY AND TENANT RECRUITMENT
PROGRAM 61
Attracting National and Regional Retailers 65
2 . Final Report
l<o mlu
Strategic Retail Plan
City of Georgetown, Texas
C
Responsibility for These Actions
71
VII. IMPLEMENTATION/ACTION PLAN
72
Recommendations
72
C
Recommended Action Plan Schedule
91
C
Months 1-6
91
Months 7-18 and Beyond
92
C
Longer Term Implementation Strategies and Approaches
94
Establishment of a Local Real Estate Investment Trust (REIT):
94
Staggered Return Equity Based Development Corporation
98
C
VIII. ADDENDUM
101
C
Tactical Steps for Near Term Action
101
C
The David Love Building
106
C
APPENDICES
112
C
Retail Locations - Georgetown, Texas
113
C
Proposed Retail Locations - Georgetown, Texas
117
C
Inventory of Commercial Space by Category
118
Trade Area Demographics
125
.
C
C
C
G
' 3
icenemlc. R.... rch A.wcl.e..
Final Report
Strategic Retail Plan
City of Georgetown, Texas
I. Introduction and Executive Summary
Economics Research Associates (ERA) was retained by the City of
Georgetown to prepare a Retail Master Plan for the downtown
commercial district. Georgetown, Texas, the county seat of Williamson
County, is located 30 miles north of Austin. Williamson County was the
fastest growing county in Texas, according to the 2000 Census.
The information used to complete ERA's analysis was provided by
volunteers, store and business owners, realtors and brokers, City and
County employees and others. The data was collected and verified over a
period of months, and represents the best data available at the time of the
study; for purposes of analysis, the study used data available until June,
2001, with selective updates to accommodate several key changes which
have occurred downtown since then.
Georgetown has been, and will continue to be, profoundly affected by
population and job growth in the region. The greater Austin area is
experiencing rapid growth (the 2000 Census indicates that the Austin -
San Marcos Standard Metropolitan Statistical Area (MSA) has increased
its population by almost 34% since the 1990 census, to approximately
1.25 million residents). Williamson County's population grew by over
79%; one of the fastest growing counties in the U.S., to a population of
almost 25.0,000. It should be noted, however, that downtown
Georgetown has not yet materially benefited from this level of growth.
Whether a result of the location of the County's new retail growth (closer
to the NW Austin and Round Rock commercial corridors) or the lack of
habitual repeat shopping in downtown Georgetown, it seems that many
new residents are not spending around the square.
A significant part of Austin's recent growth has been fueled by the
technology sector, with Williamson County and Georgetown/Round
Rock particularly affected by the northward expansion of Dell Computer
and the selection of a north Austin site by Samsung for its first major
U:S. manufacturing location. The result of this growth has been a steady
spreading of residential, hotel/motel, retail, and other commercial growth
beyond Austin's city limits, through Round Rock and on toward
On 4 Fina[ Report
Strategic Retail Plan
City of Georgetown, Texas
4
.1
Georgetown. Although there has been a downturn in the past half year,
over the long term, it is not expected that the trend of northward sprawl
and technology expansion will be stopped, it will only happen more
slowly.
To those traveling north on Interstate 35 who do not understand the
history of the Georgetown/Round Rock area, it is often difficult to know
when leaving one jurisdiction and entering another. The undifferentiated
commercial corridor that runs along I-35 is almost uninterrupted from the
former Austin MuellerAirport site to the southern edges of Georgetown.
From a perception standpoint, the new cluster of auto dealerships now
developing in the southern part of Georgetown will close the last large
gap of open land between Georgetown and the northward sprawl of
Austin/Round Rock. In ERA's view, this decreasing lack of
differentiation is both a problem and an opportunity for Georgetown. t
As a result of this growth, new retail development is proposed for the
area surrounding the town, particularly to the north and west. But as a
vestige of the traditional Texas courthouse town, downtown
Georgetown's historic square, architectural character, well-preserved
buildings, and pedestrian scale represent enormous opportunities for
increased sales to both visitors and residents. Growth is not necessarily
a negative factor for historic towns, but the manner in which growth
is planned and managed can make the difference between
maintaining a community's identity and losing it. Georgetown's
ability to wrestle.with that growth will be significantly affected by
decisions resulting from creation of a new comprehensive plan. The
introduction of fast food, discount retailers and other typical commercial
development along I-35 was predicted 20 years ago in the original Texas
Main Street Program recommendations report, but Georgetown did not
have adequate planning and economic development infrastructure in
place to effectively differentiate the result from other Texas commercial
corridors. The view of the historic Williamson County Courthouse dome
is still visible from I-35, but the surrounding highway context of fast
food and strip malls is increasingly undistinguishable from the Round
Rock corridor along I-35. We believe that Georgetown can achieve
something better.
5 Final Report
�car.��wlu MN�KM AttK��t��
Strategic hccail Plan
City of Georgetown, Texas
The focus of this report is the development of future market and
development strategies for the retail program in downtown Georgetown,
including implementation strategies which address key opportunity sites
and actions for the downtown district.
This report includes the following sections:
L Introduction and Executive Summary
II. Needs and Possibilities
III. Retail Market Demand Analysis
IV. Potential Niche Strategies/Leasing Targets
V. Lease Review
VI. Leasing Strategy
VII. Implementation/Action Plan
VIII. Addendum —Case Study Analysis for David Love Building
Appendix- Area Retail Projects Summary
In addition to the retail market and development strategy described in this
report, ERA worked with local volunteers to organize and package data
on commercial properties located in the downtown district. This property
book, to be submitted, will be a separate document; its purpose is to
provide a database and record from which future monitoring of property
availability, value and opportunities for leasing and redevelopment may
be managed.
6 Final Report
�ae�wAlu MM�.sY A�t�l�t��
Strategic Retail Plan
City of Georgetown, Texas
Executive Summary
The actions, conclusions, and recommendations in this report are based
on ERA's research and participation in meetings and work sessions with
a range of individuals and organizations in Georgetown. The
opportunities in Georgetown are real and growing (especially in the
tourist/visitor market along I-35), but the rapid expansion of the regional
market and limited capacity to plan and implement downtown (and other)
municipal improvements in the community due to staff overload and
vacancies in the Economic Development and Planning departments have
taken their tolls on the downtown area. New competition from major
regional and national big -box and discount retailers such as Wa1Mart has
also affected many downtown businesses through loss of market share
and reduced volume. That notwithstanding, ERA recommends that
several policy, financial and implementation steps be taken to carry out
the downtown retail strategy for Georgetown. A summary of major
findings and conclusions follows:
• The retail market in downtown -Georgetown has been affected by
rapid expansion of competing retail offerings in the immediate area
and in Round Rock, and by introduction of big -box retailers such as
Wal-Mart. These large discount chains consolidated many of the
merchandise lines formerly sold in multiple downtown stores, and
locally owned businesses often find it difficult to compete without a
differentiated product and customer experience. Because of the
historic character and scale of the square and the surrounding
commercial blocks, ERA believes that downtown Georgetown can
compete with nearby ` suburban -format' retailers, especially for food
service and specialty retail goods expenditures by residents and
visitors.
• The current supply of downtown retail, estimated at approximately
200,000 square feet of space (not including auto -related uses such as
dealerships and repair businesses located downtown), is roughly in
balance with the current capture of resident based expenditures and
sales productivities. This balance is a reflection of a number of
factors: the current mix of stores and retail goods offered downtown;
the amount, quality, price level and proximity of new retail offerings
in other areas of Georgetown (particularly along 135 and Williams
Drive) to recent residential development; and changes in shopping
patterns over the past ten years (the growth of discount and high-
volume `Big Box' retailers such as Super*Wal Mart, Home Depot
and others). ERA's analysis of the demand and supply balance
downtown is explained more fully on page 35 of this report. This is
not to say that downtown Georgetown cannot increase resident
7 Fina! Report
�cen�w.lu M���Kh I4�KI�tH
Strategic Retail Plan
City of. Georgetown, Texas
expenditures over time. But during the near term, ERA believes that
incremental growth in downtown retail offerings will be supported by
visitors attracted off I-35. To attract additional customers, consumer
sales, and the businesses they support, downtown will need better
signs directing visitors from the highway to the central business
district, an expanded range of food service offerings (most likely
including sales of liquor by the drink), additional efforts to recruit
new retailers and restaurants, a focused advertising campaign and
program targeting tourists and visitors, an organized program to
foster recruitment of additional individually -owned and selected
national specialty retail stores, availability of convenient parking, and
a concerted effort to preserve and protect the charm and character of
the historic buildings downtown.
• The primary existing markets for downtown retail in Georgetown are
local residents (including' Sun City), Southwestern University
students and their visitors, and downtown employees. Additional
support for more retail can be generated by tourists and short-term
visitors coming downtown from I-35.
At approximately $70,000 per year, average household incomes in
Georgetown are relatively high. This, combined with regional
growth trends, makes Georgetown attractive to retail recruitment
prospects, particularly regional businesses that know the Georgetown
market. National tenants may be more difficult to recruit in the near
term; until resident and visitor numbers reach higher levels
downtown Georgetown will not meet the formula population
requirements that many national retailers have as site location
criteria
ERA estimates that, of total potential retail sales of approximately
$263 million per year from the resident; student and employee
markets, downtown Georgetown can capture between $20 million
and $29.4 million in sales if appropriate improvements are
implemented. In addition to this figure, ERA estimates that an extra
$6.7 million to $9.8 million in sales can be attracted from tourists and
visitors attracted from I-35. Total overall estimated downtown sales
could range from $26.7 million to $39.2 million per year.
The character of the historic downtown and surrounding
neighborhoods has been eroded by strip development along principal
roadways and I-35. A Master Plan and Design Guidelines for
physical improvements will complement the strategies described in
this Retail Master Plan to protect and reinforce this character.
8 Final Report
liw.�1111ea M���rcI. IJ�KI�tH
Strategic Retail Plan
City of Georgetown, Texas
As a real estate investment area, downtown Georgetown is in
transition. Some property owners have dramatically increased rents
without making investments in their buildings, increasing pressures
on street -related retail to generate higher sales. The growth in
Williamson County has resulted in significant expansion of County
office and support spaces downtown, as well as conversion of some
former retail spaces into professional offices.
• There are a number of priority redevelopment sites downtown,
including larger locations such as the Hewlett site, the Draeger site
(in the future), the Williamson County Academy block, as well as
smaller parcels near the Courthouse expansion and smaller, more
underutilized light industry/warehousing locations west of the square.
According to the 2000 Census, Georgetown's resident population is
approximately 51,200; projected growth from planned and platted
new residential development could add up to 45,000 additional new
residents, almost doubling the population of the area. This growth
represents a strong opportunity for downtown retail over time,
particularly from the trade area residents within the northern and
eastern portions of the five and ten -mile radius rings where there is
less competitive retail than in Round Rock and Lakeline.
The recommended implementation structure for the downtown retail
plan is to establish a new Georgetown Downtown Development
Corporation (DDC), incorporating efforts by the City, retailers and
local property owners to implement short and long-term
recommendations and to provide incentives to downtown
development.
Downtown would benefit by completion of an overall Master Plan
and adoption of Design Guidelines for new development. Without
careful urban design and development, the benefit of downtown
Georgetown's historic character will not be maximized. Part of the
Downtown Master Plan should include a review of parking
requirements and provisions by the City, the County and downtown
property owners and retailers.
A range of public and private financial incentives, partnerships and
long-term investment strategies should be explored and carried out to
encourage implementation of the retail plan. Possibilities include
TEA -21 transportation funding, creation of a special tax assessment
district (when a majority of property owners support the idea),
investment by Southwestern University, access to the Texas Small
Business Loan Program, etc.
em 9 Final Re,
�co.wmlu 11ccNKh Ncocl�[oc
Strategic Retail Plan
City of Georgetown, Texas
II. Needs and Possibilities
This section lists ERA's assessment of Needs and Possibilities in the
downtown area, as well as comments on policies and practices that have
affected downtown development. It should be noted that some of the
Needs/Problems (such as issues regarding consensus on the future of
downtown Georgetown) are the purpose of this report and plan. It should
also be noted that reaching the Possibilities described below will require
cooperation and multiple joint efforts over time between the public and
private sectors.
Downtown Needs and Problems
a) There is no single point of contact or responsibility for downtown
Georgetown — who will coordinate/direct downtown development in
the future?
b) Fragmented participation and inconsistency of leadership has
sometimes limited downtown development activities between some
property owners and retailers
c) There is no apparent consensus on the future role for downtown
within the larger community context — this report represents a first
step at identifying opportunities and actions; the Comprehensive Plan
update will be critical in linking downtown development into
Georgetown's larger community environment and long-term vision.
d) Local growth and planning policies have not protected downtown
Georgetown as a retail/commercial center; planning and economic
development practices should be put into place to support
downtown's future as a principal commercial center.
e) Capacity and management of downtown parking is a -problem that
must be addressed by the City and Williamson County — a
Downtown Master Plan and development program is needed. The
plan could potentially allow for the creation of a City -County
sponsored Parking Authority to develop and manage surface lots and
structured parking.
■ 10 Final Report
ac•n•..w M••.nh Aua<I.t.•
a_. ategic Retail Plan
City of Georgetown, Texas
f) A retail recruitment program is needed to attract new stores,
restaurants and businesses downtown.
g) Redevelopment sites are keys to future downtown commercial
growth in Georgetown, but the future of certain locations are unclear
from a public policy standpoint.
h) The square represents a large part of Georgetown's identity, but it is
not promoted effectively to potential spenders on I-35.
i) Downtown property values (both perceived and real) are sometimes
ahead of retailers' abilities to achieve necessary sales levels.
j) Both local and regional media can provide more constructive
assistance in marketing downtown Georgetown.
k) Landlord expectations for increased rents will drive out some existing
tenants, but a system for relocation/retention into `second tier' retail
spaces downtown is not available.
1) The City, Williamson County and (over the longer term)
Southwestern University are the most likely public sources of
funding for downtown development, but the level of capacity for
financial commitment by the City is uncertain and Williamson
County has not offered financial assistance other than through
expansion of its own facilities. Southwestern University has not
committed to any type of downtown development investment, either
through its endowment or through an alumni -sponsored capital effort.
m) Apparel and accessories offerings are somewhat limited downtown,
although selected locally -owned apparel and gift stores appear to
serve their markets well.
n) Downtown store hours are not consistently maintained, and are not
always in synch with the hours that shoppers want (nights and
weekend days).
o) TxDOT's proposed project to replace the bridges and widen Austin
Avenue could have a very detrimental effect on downtown unless
planned to mitigate changes in traffic speed, volume and design.
■ 11 Fina[ Repon
�cRRH..Iu R��RRKR Ay�cINN -
Strategic Retail Plan
City of Georgetown, Texas
Possibilities/Opportunities
1) The City Council, County Commissioner for downtown Georgetown
and local downtown advocacy groups understand that there is a
problem, and are seeking solutions through this report and other
activities.
2) There is unmet market demand for additional food service and
restaurants downtown.
3) At approximately $70,000 per year, average household incomes in
Georgetown are relatively high; this combined with regional growth
patterns will be attractive to retail recruitment prospects.
4) The local commercial brokerage community is well informed and
interested in downtown, and can complement/participate in
recruitment activities.
5) There is a core of locally -owned businesses (particularly in the
antiques, housewares, and gifts categories) that will validate the
leasing base for additional retail and restaurant recruitment.
6) Sun City and other major residential development in the area offer
significant market opportunities for downtown, and should be
targeted as markets through recruitment of additional stores,
restaurants and provision of easy, accessible downtown parking.
7) Renovation of the Palace Theater is an ambitious community project
that will bring additional people and spending power downtown; the
theater should be programmed as often as possible.
8) Southwestern University is a community asset that should take a
greater role downtown, both as consumers of goods and services and
potentially as an institutional real estate investor with a stake in
downtown Georgetown's long term stability as an active commercial
center.
9) Although the current market and supply of retail space is roughly in
balance downtown, the opportunity to better serve specialized market
segments such as Southwestern University students and visitors, Sun
. 12 Fina[ Report
■c.+rwn.l<c Mc��rch AccscMtc<
Strategic Retail Plan
City of Georgetown, Texas
C
C
City residents, and tourists/visitors from I-35 and the region will be
the source of future downtown retail expansion and growth.
10) The traditional character of the downtown area can be enhanced
relatively inexpensively and staged over time, as historic area
"gateway" elements become affordable. This "gateway" function can
be achieved through construction of properly designed urban design
elements along Austin Avenue and other major entry roads
(according to the Downtown Guidelines recommendations for a
Master Plan from the design consultant Nore Winter). The gateway
markers could include one or more of the following: made of local E
Georgetown limestone, introduction of a system of directional signs t
from I-35 to the square, addition of more pecan trees through the
historic neighborhoods, special lighting pole standards, or other E
elements..
11) The increasing volume of traffic along I-35 is a vast, and relatively
untapped market resource. Downtown Georgetown's charm and
historic character, enhanced by a stronger retail/restaurant mix in the
future, should be marketed on the highway as a reason to pull off for
a visit. The Texas Highway Department should be approached to
provide (or cooperatively share the costs of) a series of national -
standard brown `visitor -oriented' signs. mentioning the historic
downtown district and the close distance/off-on proximity at key
entry points. The same type of signs should also be added further up
and down I-35 to allow drivers to plan a stop before reaching the
appropriate exit. This ease of access is not clear today, but can be
easily remedied if the Highway Department will cooperate. As an
alternative (or complementary) sign strategy, downtown Georgetown
retailers may also want to consider promotional billboard signs
promoting the historic square as a potential stop not far off the
highway.
12) The demographic/marketing story for downtown Georgetown is
strong; it can be used to create retail and business recruitment
materials to bring in new retailers and restaurants, if properly
summarized, packaged and distributed (see Section VII for specific
suggestions and recommendations).
13 Final Report
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Strategic Retail, Plan
City of Georgetown, Texas
III. Retail Market Demand
This section summarizes the context for the downtown retail study and
highlights the key findings of the market analysis,. merchandising
strategy and implementation recommendations for downtown
Georgetown.
Georgetown's Downtown Development Context
All downtown areas go through transitions; like other small towns across
the United States, downtown Georgetown's role as a market center has
changed several times since its founding in the 19th century. Through
each shift in prosperity and expansion in the regional economy,
downtown Georgetown's historic square and distinctive limestone
buildings have provided an architectural link to the past, and have
sustained a special pedestrian character that has provided a unique
identity. Establishment of the Main Street program almost twenty years
ago was a major step at managing change in the downtown, and the small
number of vacancies and general attractive appearance of the square and
the blocks surrounding it is a credit to both the Main Street office and to
the City of Georgetown for maintaining the program. Unlike many other
small towns, both in Texas and in other states, Georgetown is located in a
rapid growth area that has strained both the planning and utilities
infrastructure of the City and Williamson County; it has also shifted
traditional development pdttems, has introduced substantial amounts of
new retail not located in the traditional downtown area around the
Square;'and has introduced new residents whose shopping habits are not
necessarily grounded in shopping downtown — there are many alternative
choices that do not direct traffic to' downtown Georgetown.
Like other mature Main Street communities in rapid growth areas, the
basis for downtown revitalization in Georgetown has evolved beyond a
primary focus on marketing and design improvements alone. This
program can continue to provide benefits to downtown Georgetown, but
the best solution will also involve actions directed at real estate
economics and creating incentives to attract a complementary mix of
uses, especially if those uses are implemented within the context of a
Downtown Master Plan. The realities of changing local markets, more
retail competition and a population base dispersed over a much larger
001 14 Final Report
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Sty ktegic Retail Plan
City of Georgetown, Texas
area are an indication to ERA that downtown Georgetown has the
opportunity to address three strategies:
1. To identify and better serve downtown's target customer markets,
2. To carry out an action plan to attract retail and food service uses to
bring these markets downtown (or bring customers downtown more
often), and
3. To use public policies and private incentives to reposition downtown
as part of a larger context.
The population growth moving north along the 1-35 corridor has added
local and regional real estate development pressure.to the mix, as well.
Recent increases in rental rates for downtown retail spaces, increased
investment in historic buildings and speculation by property owners and
investors has stoked the next transition in downtown Georgetown. But
unlike past efforts, in which -much of the initiative for revitalization was
internally generated by volunteers, local property owners and local
government, the current transition is in the greater part a reaction to
outside forces. In ERA's view, these outside forces represent both
extraordinary opportunities to channel new investment in positive ways,
aswell as the a more troubling potential to negatively alter the unusual
quality that -downtown Georgetown possesses. Without commitments
to a clear plan of action, decisive roles for government and the
private sector, and an aggressive, ongoing effort to market
downtown Georgetown to residents and visitors, ERA is concerned
that the current status of the downtown area will decline and be far
more difficult to sustain and enhance. If unplanned growth is allowed
to move across the community without a strategy to manage the resulting
changes and guarantee that downtown will have a major role to play, the
outcome in other locations suggests that downtown will enter a difficult
economic decline.
Georgetown is in a transition period now, and the intent of the City of
Georgetown and its citizens in commissioning this study, as well as the
preparation of the Design Guidelines for.- the Downtown Business District
by other consultants, is to structure a way to deal with change positively,
and to address potential negatives with conscious actions.
15 Final Report
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Strategic Retail Plan
City of Georgetown, Texas
Downtown Retail Expansion Potential: According to
industry standards for retail capture rates of available sales, average sales
productivities for viable retail and food service operations, and the
expected level of retail performance based on today's downtown
merchandise mix, the amount of space currently used as retail in
downtown Georgetown is approximately the amount that the current
resident population will support, when alternative shopping areas are
considered. This does not, however, mean that there is not any retail
growth potential downtown. In ERA's view, the earliest, most cost
effective and most easily achieved growth in retail support will come
from visitors and travelers along I-35. This market segment is already
passing through Georgetown; they simply need to know what is available
downtown to be attracted off the Interstate. This increment of expanded
sales will also help resident -based sales; because the growth in spending
power from visitors will help. support new businesses and restaurants
downtown (therefore expanding the overall range of options for retail and
food service), downtown will also become more attractive to resident
expenditures. The impact of new visitor dollars (and the businesses they
help support) will make downtown,Georgetown more interesting for
residents, as well, and will encourage them to shop downtown more
often.
The initial strategy should be to strengthen and reinforce the retail
locations around the square and along Austin Avenue. These are the
stronger retail locations due to exposure and identity (Gold's Department
Store slogan "On the Square in Georgetown" is still a powerful
marketing identity for customers over 40 years of age). As additional
retailers are recruited downtown and tenants unable to pay top rents need
to relocate, secondary retail locations just off the square should be
identified and positioned to absorb these retail relocations and shifts,
rather than losing businesses.
This conclusion suggests that more retail space be added over time, with
appropriate changes in the merchandise mix and better marketing toward
the I-35 visitor. But in terms of resident -based sales, despite overall
population growth and the impact of new developments such as Sun City
Texas, the additional retail development added and planned outside the
downtown area in locations along. the I-35 east and west access roads,
T 16 Final Report
lc�nomlcl Itic�lcch M��eMel•
Strategic Retail Plan
City of Georgetown, Texas
along Williams Drive, toward Round Rock, and Lakeline Mall has
absorbed the additional potential demand that might otherwise have
supported businesses in downtown Georgetown. Absent an updated
Comprehensive Plan and a cooperative effort with Williamson County,
this growth market will likely remain difficult to capture downtown.
In ERA's view, the most immediate growth potential for additional new
retail and food service space downtown will come from two sources:
increased capture of visitor traffic from the Interstate; and from attracting
and retaining a higher percentage of resident -based sales, primarily
through addition of more food and beverage operations and new specialty
and service retail uses downtown.
New office growth in the downtown area (particularly the County's
expansion and new commercial office space) will also increase retail
sales potential. If the appropriate categories of stores and restaurants are
available (quick service and table service food, business supplies and
services, convenience shopping and some apparel and gifts retailers),
each downtown office worker can be assumed to support approximately
7 to 10 square feet of retail space. Described in a different way, every
125 new office employees located in the downtown area represents
enough market support for an additional retail business. The City of
Georgetown's current plans to relocate some City departments from the
Old Post Office is, in our view, nota problem; the number of employees
reported to be under consideration for moving is less than 50, and City
Hall will remain downtown on the Square, (perhaps in a different
configuration, or expansion of the current City Hall building), as a
destination for meetings, hearings and the administrative center of City
Government. The loss of these City employees will be somewhat offset
by the planned doubling of the County office facilities west of the square.
The overall point is that office workers support retail and food sales, and
ERA encourages Georgetown to retain public facilities such as the
Library, County offices which attract business and visitors, and City
facilities in the downtown area, as they create traffic and generate sales
during the week. Evening and weekend sales will be more strongly
supported by residents and tourists.
The County's plans to expand the jail offer the opportunity to share
panting in County facilities with downtown uses and events. Over the
17 Fina! Repo
Kc Ics w.....cn w...c�.c«
Strategic Retail Plan
City of Georgetown, Texas
short term, construction of the expansion could disrupt traffic flow to and
around downtown, and a construction mitigation plan should be
developed to minimize the project's effects during construction. Over
the longer-term, the jail expansion project could require growth of
County -held properties into locations which would preclude future
downtown commercial development. The long-term balance between
commercial tax base enhancements should be weighed against near-term
needs for a single use building that will not add vitality to downtown
Georgetown.
As property values rise downtown, it should be expected that density and
development pressures on underutilized buildings and sites will increase.
Among the best potential development locations, the Hewlett site is one
of the largest and most visible; the Williamson County Academy site and
Draeger Motors are equally visible and about the same size. Because the
Hewlett site is currently for sale (and presumably could be the first to be
redeveloped at a large scale), ERA believes that the manner in which new
development is encouraged and designed there Will present a significant
precedent for future private -sector development in downtown
Georgetown. ERA strongly encourages that each of these sites should be
targeted for appropriate future commercial development (when warranted
by private market and development interests). ERA also suggests that
completing and incorporating the new design guidelines for new
development in the downtown business district will be a critical tool in
managing how new density is added to the current one -to -three story
historic building stock. If new buildings do not `fit in' to the character of
downtown, the value of the square as a marketing identity for
Georgetown will be compromised.
Changes in the Merchandise Mix: The biggest underserved
category ERA found downtown was the limited number of food and
beverage operations. While Wildfire remains open for lunch and dinner,
Geaux Fish has recently transitioned from a full service restaurant to a
limited service/events facility. The sale and planned redevelopment of
the Masonic Building has also resulted in the closing of the Orient
Square restaurant. As a community which serves both residents and
visitors, the limited number of full service restaurants in downtown
Georgetown represents a short-term impediment, but a longer term
18 Fina[ Report
S__ ategic Retail Plan
City of Georgetown, Texas
opportunity. ERA recommends that the earliest stages of
Georgetown's retail recruitment efforts focus on adding at least
three new full-service restaurants to other locations on or near the
square, as the remaining downtown operations do not present enough
critical mass to market downtown as a dining destination (we would
suggest that six to eight downtown restaurants would be a better target
number, with at least five open in the evenings). Specific details on how
to structure a retail/restaurant recruitment program are explained in the
Implementation/Action Plan in Section VII. Experience in other cities
has shown that a concentration of food service operations will expand the
market, rather than subdividing current sales levels; a downtown
restaurant cluster is also highly marketable to I-35 travelers, providing
that parking is available. Food service is a retail category that can attract
expenditures and draw traffic from all sectors — resident -based sales,
business meals, food service tied to entertainment (such as live theater)
and tourists/visitors from I-35.
Retrofitting a historic building for restaurant use is complex, and can
require costly installation of special venting and exhaust systems.
Because the Orient Square Restaurant already has kitchen facilities
installed, its leasability as a restaurant is enhanced; the existence of a
kitchen facility in the Masonic building is a leasing asset that should be
promoted in contacting prospective restaurant tenants. There are a
number of other older buildings in downtown Georgetown that could
accommodate new kitchens by adding new structures to the rear of the
first floor of existing buildings and concentrating kitchen equipment
there. The leasing recruitment goal should be to attract enough food
service operators to market downtown Georgetown as a destination
dining district to residents and visitors alike. The rapid growth in both
chain -affiliated and locally owned restaurants in Austin suggests that
there may be recruitment targets there. At the regional level, the Austin
partnership that owns Hula Hut and Chuy's restaurants has been very
successful in marketing destination locations, and could be approached
about opening a branch or new concept in Georgetown. The recent
opening of a Chuy's restaurant on 135 in the Round Rock area suggests
that there is already an awareness of the Georgetown/ 135 corridor as a
business opportunity; the company should be contacted regarding near -
19 Final Repo)
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1
1 ■.
1
Strategic Retail Plan
City of Georgetown, Texas
and long-term expansion plans, presenting Georgetown as a possible
location for either new or established restaurant concepts.
Key Development Sites: The most immediate key development site
downtown is the Hewlett site. ERA considers this to be a prominent and
opportune location to encourage new mixed-use development downtown.
But it is not the only opportunity that is available; over the longer term
(and as current priorities change) other key development sites include:
• City -owned properties on and near the Square;
• Underutilized parcels west of the square currently used as surface
parking;
• The Williamson County Academy Building
• Should the current use ever change, the buildings occupied by Gold's
Department Store can be considered a retail development site
• Other one-story industrial buildings and surface parking locations in
perimeter locations within two blocks of the square;
• Should the dealership ever elect to move, the Draeger Motors site
offers potential similar to the Hewlett site
ERA also notes that we would not consider conversion of residential
properties to .office or retail use to be appropriate as part of the retail
strategy; there is a significant amount of space and land that can absorb
considerable commercial development before the downtown district's
residential buffers should be changed.
Implementation Recommendations: To address these
opportunities, a specific Implementation /Action Plan is described in
Section VIl. Because both the City and County have a stake in the future
viability of downtown Georgetown, "we recommend that both take a more
active and cooperative role in the Action Plan. The City has the most
direct role; as it controls zoning and economic development policies; but
Williamson County is also part of the problem (problems resulting from
all -day employee parking around the square) as well as part of the
solution (a concentration of county employees that represent a market for
20 Final Report
Arategic Retail Plan
City of Georgetown, Texas
downtown goods and services,, and professional office occupants who
need to be near the County complex); the County is also a potential
funding source for public facilities, such as a shared public parking
garage.
Analysis of Market Demand
The following discussion presents ERA's findings with respect to the
market support for retail in downtown Georgetown. The market demand
model provides a method to determine the amount of space which is
ultimately supportable downtown and also provides insights regarding
which mix of retailers might be most appropriate for downtown
Georgetown. An understanding of the market is also critical in
developing and carrying out marketing strategies to reinforce downtown
as a shopping area.
ERA's retail market demand model includes the potential retail market
support provided by four key segments -- local residents, downtown
employees, students at Southwestern University, and visitors from outside
of Georgetown (whether tourists who have chosen to visit the town or I-
35 motorists who might be attracted to visit Georgetown on impulse, that
is for a meal or a drive through in response to highway signs and other
marketing and promotional programs.
Local Resident Markets.
For purposes of our analysis, ERA has defined a resident trade area
which encompasses the City of Georgetown, and includes approximately
51,200 residents today. The resident trade area includes the city limits,
resident areas within a five -mile radius, as well as selected zip code
districts that extend slightly beyond the five -mile radius. A map of the
trade areads shown on page 25; a more detailed description of resident
demographics is included in the Appendix. The trade area also includes
other residents within a 5-10 mile radius, although residents of areas
south and west of Georgetown (in Round Rock and in the Lakeline area)
would be less likely to shop frequently around the square due to
significant amounts of competing retail closer to those population
centers. Residents north and east of Georgetown, where there is less
competition can be assumed to be more likely to shop downtown. The
' 21 Final Rep
�LOM�wIi! M���Rh A��KI�t�1
Strategic Retail Plan
City of Georgetown, Texas
trade area definition is based upon the assumption that many of these
residents will shop/dine in downtown Georgetown on occasion, given an
improved retail mix. The trade area extends approximately five to ten
miles from downtown Georgetown (but, again, the area south to
Highway 620 reaches into central Round Rock and the large
concentration of new retail along I-35, reducing the ability to attract as
many sales from southern and southwest Williamson county commercial
centers). Obviously residents from outside the trade area will also shop
in Georgetown; however, their visits will likely not occur as frequently.
' ERA's analysis has accounted for visitation from outside of the trade area
as "inflow". Typically inflow from outside of the trade area accounts for
about 25 percent of total sales in a shopping district.
The immediate trade area is anticipated to grow by over 15,000 residents
over the next five years — a substantial rate of growth and also an
indication that the outward growth from Austin has reached the
Georgetown area. The high rate of growth is further verified by the
number of residential units proposed for the Georgetown area over the
longer term (as shown on the table and map entitled New Residential
Development, both of which follow on pages 21 and 23). According to
plans provided by the City's Development Services office, over 16,000
lots are proposed for the surrounding area (over 4,600 have already been
platted). Using the 2000 Census average size of 2.82 persons per
household, the more -than 16,000 proposed lots could represent an
increase over a longer time period of over 45,000 new residents. If the
majority of those residents were retirees,.a smaller household average
size of 1.7 persons per household would suggest an increase of 27,400
new residents. Platted lots would add another 7,900 to over 13,150 new
residents (again, depending upon whether residents are retirees and
empty -nesters — adults whose children have left home — or families with
children living at home). In either case, the impact on potential retail
sales over the next ten years will potentially be significant enough that
downtown Georgetown can sustain vitality and strong property values,
assuming that downtown is positioned and marketed to capture its fair
share of total sales.
Significant portions of these lots are located to the north and west in Sun
City and Georgetown Village. This information is critical for potential
22 Final Report
leorw�nlu M.��rth Aa.�Ll�t�.
ategic Retail PIan
City of Georgetown, Texas
retailers, as it represents the source of new market support that will be
the increment of real growth in potential sales. This type of data should
be part of any retail recruitment/marketing packages assembled for use
by a broker and/or local leasing team (see Section VII for further data)
Total expenditure potential for the resident market is based on the
number of households, average disposable income, and typical spending
patterns for goods such as apparel, general merchandise and furniture,
which is typically about 22 percent of disposable income, based on
spending surveys conducted by the US Census.
Proposed New Residential Development
Georgetown, Texas
Proposed Platted
Lots Lots
Cimmaron Hills 601 141
Fountainwood Estates
258
258
Fountainwood Woods
258
258
Georgetown Village
3,723
258
Sun City .
9,500
3,153
Berry Creek Reserve
436
73
Katy Crossing
487
288
Summer Crest
259
62
Riverchase
n/a
90
Escalera
520
44
Westlake of the Woods 197 41
TOTAL 16,239 4,666
Source: City of Georgetown Development Services, Economics Research Associates
NOTE: This list is illustrative, and should not be considered exhaustive or inclusive of all
developments under consideration.
23 Final Repon
wct�mlta Mtww,cw IW«I««
ategic Retail Plan
City of Georgetown, Texas
Resident Expenditure Potential
Georgetown, Texas Retail Plan
City of Georgetown Trade Area 1/
Population (2000 Census) 51,198
Number of Households (HI3) 17,852
Average HH Income $ 74,024
Total Spending Potential
Retail $ 197,692,877
Meals and Beverages $ 58,144,964
OTAL EXPENDITURE POTENTIAL $ 255,837,840
1/ Trade area includes incorporated Georgetown (and Sun City) and selected zip codes
within the immvriiatr. (5-10 mile radius) .curraundinv area.
Claritas, Economics Research Associates
. 24 Final Repo
■colw�wlcs R����rcR I1��ec1�[��
&rategic Retail Plan
City of Georgetown, Texas
25 Fina! Repoi
Strategy . Retail Plan
City of Georgetown, Texas
ft�
. 26 Final Report
isanelwlsJ 11����rch /1a,Ncl�c�c
...rategic Retail Plan
City of Georgetown, Texas
University Student Market
According to information provided by university representatives,
Southwestern University currently has an enrollment of about 1,256
students. Based on a survey conducted by the National Association of
Campus Stores, on average, university students in the United States
spend approximately $2,000 per year for food and retail purchases off
campus. As shown on the table below, this national average translates
into a total annual spending potential of about $2.5 million by
Southwestern students. The availability of these expenditures does not
necessarily mean that downtown Georgetown is attracting most (or even
its fair share)'of student expenditures, however. The amount and
frequency of their spending is determined by the availability of the goods
they wish to purchase, the price levels and merchandise preferences they
desire (in ERA's experience, it is more likely that students attending
universities and colleges in smaller communities make a higher
percentage of their purchases while at home or in nearby larger cities
with greater assortments of goods and the opportunity to combine
shopping trips with entertainment and other attractions). While several
stores in downtown Georgetown draw from Southwestern for employees
and for sales (particularly noted during parents' weekends), ERA
believes that there is additional opportunity to attract sales from students
at Southwestern, in particular in casual apparel and accessories.
STUDENT EXPENDITURE POTENTIAL
Georgetown, Texas Retail Plan
SOUTHWESTERN UNIVERSITY
Total Student Population 1,256
Average Annual Student Spending
Retail. $ 803
Meals and Beverages: $ 1.204
Total $ 2,007
Total Expenditure Potential
Retail: $ 1,008,317
Meals and Beverages: $ 1.512.475
Total $ 2,520,792
Source: Southwestern University, National Association of Campus Stores, Economics Research
Associates.
27 Final Ref
�G�M,wlb MNyth A��KIN��
Strateb_c Retail Plan
City of Georgetown, Texas
Downtown Employee Market
Downtown employment in Georgetown is estimated at approximately
2,000 workers. ERA's estimate is based on data collected locally, and
incorporates the Downtown Business District; the District's boundaries
extend from 2nd Street on the north to Martin Luther King on the west,
and from University on the south to Myrtle Street on the east.
Employment data -was based on employment information available
through the census. Because the Georgetown employment market is a
dynamic one, it can be expected that these numbers may change slightly
as growth and change continue within the city.
Employee spending patterns are similar to student spending. A national
survey indicated that downtown office workers spend, on average, about
$2,117 annually.for various retail goods and food and beverage purchases
during business hours in the week. Approximately 45% of the total is
spent on retail purchases (specialty retail such as apparel, accessories and
shoes and gift items) and service retail (dry cleaners, film development,
shoe repairs, etc.). The remaining 55% is spent on food service
(breakfast, lunch and snacks). For the 2,000 estimated employees in
downtown Georgetown, this translates into approximately $4.2 million of
total annual spending potential by workers. It should also be noted that
in smaller communities, the amount spent on food away from home may
be less than national averages, as some employees are located close
.enough to go home for lunch. Also, public employees frequently spend
less on food away from home than private sector employees. Finally, the
amount spent for food and beverage and retail is affected by the number
-and types of stores and restaurants available for workers.
Downtown office workers represent an important market segment for
sales of food and beverage as well as general merchandise. Using
average expenditure rates for office workers and typical sales
productivity levels for viable businesses ($200 to $300 per square foot
per year), each downtown office worker supports about 7-10 square feet
of retail space in some location (meaning that the expenditures will
happen somewhere, but not necessarily downtown). However, if the
goods and services are located conveniently nearby (in the downtown
28 Final Report
�csne.nlcc Mc��rcl. Ncecl�<�c
6..rategic Retail Plan
City of Georgetown, Texas
area) and include enough variety to encourage repeat visitation, the
greater proportion of those expenditures will occur downtown. Thus the
`lost sales' impact of relocating City and County offices out of the
downtown area should be carefully weighed. While it may become
necessary to relocate some employees, the loss of their expenditures will
be felt by downtown businesses unless replaced by other employees,
whether public or private sector.
ERA believes that addition of some new office space on key sites such as
the Hewlett site or other larger sites can have a very positive effect on the
long-term stability of the downtown retail market. Our reasoning is as
follows:
• Because it is currently available, the Hewlett site is both ready for
redevelopment and large enough to accommodate a bigger
development vision than other small, or more fragmented downtown
properties
• The site is already assembled, and development of the entire site
could be phased over time
• The Hewlett site and the Draeger sites are immediately proximate to
the square and each (as well as the Williamson County Academy site
at the comer of University) has great visibility to Austin Avenue, a
major vehicular corridor serving downtown
• The current buildings and density levels do not match long-term
opportunities to create two or possibly three story commercial
buildings and parking that will blend with the character of the square
and the historic district
Office users patronize retail and food service primarily during the day,
supplementing sales by residents. One of the buyer behaviors that has
changed in the U.S. over the past twenty -years has been the amount of
available time for shopping. Due to personal time constraints/a limited
amount of time for resident -based shopping trips, ease of parking and
extended store hours become a major part of shopper decisions on where
to go. In response, major national retailers and shopping mall developers
are open late, seven days a week. Wal-Mart has responded more
` 29 Final Report
Strategic Retail Plan
City of Georgetown, Texas
dramatically, remaining open 24 hours, seven days a week in many
locations, in order to be available to customers whenever they are
interested in making a purchase. Of course, this is not possible in
downtown areas or for small business owners who cannot be open
around the clock or over seven days a week. But as most visitor and
resident shopping trips are scheduled in the evenings and on weekends, it
will be increasingly important for downtown Georgetown retailers to
coordinate store hours (and market when stores will be open and closed)
so that shoppers are not disappointed. Because downtowns should strive
to serve multiple markets (residents, visitors and workers) ERA suggests
that maintaining and serving a stable base of downtown office workers
will spread sales more evenly over the week.
WORKER EXPENDITURE POTENTIAL
Georgetown, Texas Retail Plan
Current
PRIMARY MARKET 1/
Total Estimated Employment 2,000
ANN'L EMPLOYEE SPENDING 2/
Retail. $941
Meals and Beverages: $1,176
Total $2,117
TOTAL EXPENDITURE POTENTIAL
Retail. $1,882,000
Meals and Beverages: $2,352.000
Total $4,234,000
I/ Primary market defined as the downtown area.
2/ Based on Int 7 Council of Shopping Center survey data
Source: Claritas, Economics Research Associates.
Using these sales assumptions, the impact of office workers on
downtown retail can also be expressed in another manner. Sales
productivity of $250 per square foot (a reasonable basis for operation of a
. 30 Final Report
lceno.nlu Recoerch AccoNetec
Stra..egic Retail Plan
City of Georgetown, Texas
viable business) applied against the sales potential of approximately 125
new office workers ($2100 times 125 employee spenders) equals
sufficient sales support for a 1,000 square foot business. In other words,
every 125 new employees brought into downtown Georgetown equals
the sales support for an additional retail business.
Visitor Market
As mentioned earlier in this report, Georgetown's real opportunity for
expansion of retail offerings downtown will rely in large part on the
downtown area's ability to attract expenditures from visitors, either those
already spending time in Georgetown, or those who can be attracted to
plan a trip or make an `impulse' stop while traveling along I-35. This
visitor market is sometimes referred to as "inflow", as it represents
spending that might not ordinarily occur in a community.
Based on conversations with various retailers in downtown Georgetown
area and our experience in other markets, ERA has estimated that
"inflow" from the surrounding areas (e.g. Austin, Dallas, Houston, out-
of-state) will account for an additional 25 percent of total sales within the
downtown area. In large part this current inflow of sales is attributable to
expenditures by visitors to Georgetown. Visitor -based sales include
those made by individuals and groups who are either staying in local
lodging facilities or are day -trip visitors.
Visitors may also include either business travelers or leisure/vacation
travelers. Visiting friends and family guests are known as VFR's
(Parents' weekend visitors to Southwestern University would fall into
this category). Each of these visitor types can reasonably be expected to
generate sales in specialty and food and beverage retail categories.
Downtown Georgetown's current high concentration of specialty/gift and
antiques and collectables retailers suggest that a higher than average
percentage of retail sales are attributable to these various visitor
categories, accounting also for the higher than average "inflow"
percentage (a more typical inflow for less appealing settings/more limited
offerings of visitor -oriented goods would be about 15-20 % of total
sales).
al"T 31 Final Repor!
lcw.�.nlcc Mc�l.eh AlwtlltN
Strateg.e Retail Plan
City of Georgetown, Texas
The ability to capture visitor expenditures relies on several factors:
An interesting, different series of retail offerings, providing an
alternative to typical strip mall and `big box' /discount retail
environments; downtown already has many local specialty stores that
provide a differentiated shopping experience, which will be
strengthened by recruitment of additional specialty retailers and
restaurants.
An easily understood series of directional signs showing how to get
to the destination downtown, plus some sense of how far off the path
the visitor must travel (downtown Georgetown offers an easy
proximity).
Well marked places for visitors to park must be provided. The
`perception' of available street parking is critical for visitors, as is the
need for directional signs to off street lots if no street parking is
available.
According to 1999 traffic counts by the Texas Department of
Transportation (TxDOT), Austin Avenue just north of the square carries
approximately 15,000 vehicles per day. This is not an inconsequential
number of vehicles, and represents a very good flow of traffic and
visibility for the square and the stores along its west side and down
Austin. (it also highlights the opportunity represented by the Hewlett site,
which has both land and exposure to Austin Avenue vehicular traffic).
But from a market potential point of view, ERA sees the real
opportunity is the volume of vehicles passing Georgetown along
Interstate 35.. According to the same TXDOT traffic survey, Interstate
35 carried approximately 127,000 vehicles per day, eight and one-half
times the volume of cars traveling along Austin Avenue. While too
much'traffic from I-35 would be detrimental to downtown and its road
infrastructure, the sales impact of even a small percentage capture of
visitors for food and beverage, for specialty retail or other categories of
sales would have a significant effect on achieved sales and supportable
square footage downtown.
32 Final Report
lconsmlc. R..ee[[h Mwelec..
StraL„gic Retail Plan
City of Georgetown, Texas
As an example, if only'/2 of 1% of daily traffic along I-35 (approximately
635 cars per day) could be attracted to enter downtown Georgetown and
spent an average of a modest $10 per vehicle, additional retail space of
over 9,000 square feet would be supportable. That is equivalent to nine
new retail businesses (at about 1,000 square feet per store), three new
restaurants (at about 3,500 square feet per restaurant), or some
combination thereof. The traffic survey has not been updated since 1999,
but according to TxDOT, traffic volume on I-35 has increased by 6%
over the earlier figure. Using the same approach, this increase in traffic
volume would increase supportable space by about 800 square feet, or
almost an additional retail business. The importance of capturing a share
of I-35 traffic as potential spenders cannot be overstated.
To reinforce the ability to capture a share of this market, downtown
Georgetown will need to achieve three goals —
(1) to more effectively `announce' downtown through highway signs
(preferably brown tourist -oriented signs provided by the Texas
Highway Department at suitable exits from I-35 or through privately
funded signs at those exits); commercial billboard signs promoting
Georgetown's square as a shopping destination were also mentioned
by several retailers as a downtown marketing tool that has succeeded
in the past. While these types of signs would most likely be privately
funded or through tourism promotion funds, they can provide an
effective `notifier' that a specialized visitor experience is present just
off 135. Of course, any signs should be located far enough ahead of
the appropriate exits to give drivers time to make the decision to stop,
and directional signs from the exit to downtown must also be placed
to make it easy for visitors to follow unfamiliar routes to the square.
Along major entryways, the `gateway elements' identifying the edges
of the downtown area should be considered part of the same graphic
system to signal that visitors are entering the central business district.
(2) to attract and recruit more restaurants and specialty stores (apparel,
quality antiques and gifts, and specialty foods) to highly visible
downtown locations (attraction and recruitment issues and strategies
are explained in greater detail in Sections IV and VI); and
MITI 33 Final Report
�ssrw�nlet II���rcM Mwc1�tM
Strati .c Retail Plan
City of Georgetown, Texas
(3) to market and promote the historic character of the downtown district
as part of Georgetown's overall advertising and public relations
efforts (also addressed in greater detail in Section VI).
Visitors want to see and do something that is different from their typical
daily experience, and historical areas rank high for older, more affluent
travelers as destinations. This can have a direct bearing on the retail
future of downtown Georgetown, but it requires that the special historic
features downtown be preserved and reinforced as a destination. The
character of downtown Georgetown is a marketable commodity
representing a quality of life that many visitors and residents find
appealing. But unless that character is protected, visitors who exit the
highway only to find the same stores and goods they can purchase at
home in undifferentiated commercial strip developments will not
recommend Georgetown as a suitable stop to others, much less return
themselves.
The `quality difference' in Georgetown's character should be protected
and reinforced by the proposed Downtown Design Guidelines to
recommend the appropriate scale, detailing and placement of new infill
buildings over time, so as not to compromise the character that the
downtown has today. This might mean appropriately designed stone
gateway signs at the edges of the downtown historic district,
reinforcement of residential corridors by requiring planting and/or
replacement of Georgetown's pecan tree -lined residential streets,
maintaining sidewalk and building setback lines that reinforce the current
streetscape pattern, or other design suggestions. The central point is that
downtown deserves special design treatments to signal to visitors and
residents alike that they have entered a special area. Marking the edges
of the downtown business district, which incorporates the historic
district, with signs, symbolic markers or some other design elements is
part of the larger package of downtown design interventions that will
reinforce the identity and special nature of the town's historic core. We
believe that the most effective way to plan, locate and implement an
effort to mark the edges of the downtown business district is to create a
Downtown Master Plan. The Master Plan is needed to provide a clear
sense of where improvements can be made, how they should be designed
and how they might be funded.
. 34 Final Report
[canamin h --h
-c rategic Retail Plan
City of Georgetown, Texas
Summary of Market Potential by Market Segment
and Total Supportable Retail Square Footage
To summarize the relative relationship between the above described
market segments, this section illustrates how available sales can be
evaluated as a basis for `supportable' square footage of retail space.
Market potential can be translated into total supportable retail space by
estimating the "capture" of potential spending by the various markets.
The capture rate is dependent on several factors such as proximity to the
retail district, ease of access, the competitive environment, and the
quality and quantity of the offerings within the retail district. The capture
of the resident market is significantly lower since the expenditure
potential reflects annual spending on all -retail goods and shopping
options are plentiful for nearby residents (e.g. regional malls, strip
centers, etc.). Total captured spending potential by the Southwestern
University student market, the current (2000 Census) resident -based
market, and the downtown worker market is reflected on the following
page. It should be noted that the potential for visitor -based expenditures
is not included in this summary, as the increment of growth in visitor
expenditure capture will be based on future changes in elements which
affect visitor spending decisions - better road signs and directional signs,
expanded/improved retail and food offerings and access to available
parking.
. 35 Final Rc
�censmla M.��r�A Mw<Nt��
Strai._ eic Retail Plan
City of Georgetown, Texas
TOTAL CAPTURED SPENDING POTENTIAL
Georgetown, Texas Retail Plan
SUBTOTAL
Inflow @ 20 percent (visitor market)
TOTAL
Note: Assumes that capture rate increases with improved offerings.
Source: Economics Research Associates
aunu�wis� w���wrch Aw�el�tw�
RATE I POTENTL4L SALES
65.0%
$
Potential
Baselin,
SOUTHWESTERN UNIVERSITY
75.0%
$
983,109
Retail
$
1,008,317
55.0%
Meals and Beverages
$
1,512,475
65.0%
TOTAL
$
2,520,792
15,815,430
RESIDENT MARKET
$
5,814,496
$
Retail
$
197,692,877
5.0%
Meals and Beverages
$ ;
58,1.44,964
10.0%
TOTAL
$
255,837,840
75.0%
EMPLOYEE MARKET
1,646,400
$
1,764,000
Retail
$
1,882,000
60.0%
Meals and Beverages
$
2,352,000
70.0%
TOTAL
$
4,234,000
$
SUBTOTAL
Inflow @ 20 percent (visitor market)
TOTAL
Note: Assumes that capture rate increases with improved offerings.
Source: Economics Research Associates
aunu�wis� w���wrch Aw�el�tw�
RATE I POTENTL4L SALES
65.0%
$
554,574
$
655,406
75.0%
$
983,109
$
1,134,356
$
1,537,683
$
1,789,762
8.0%
$
9,884,644
$
15,815,430
15.0%
$
5,814,496
$
8,721,745
$
15,699,140
$
24,537,175
70.0%
$
1,129,200
$
1,317,400
75.0%
$
1,646,400
$
1,764,000
$
2,775,600
S
3,081,400
S
20,012,423
$
29,408,337
$
6,670,808
$
9,802,779
S
26,683,231
$
39,211,116
36
Final Report
Serving the resident
market will remain
critical in sustaining
downtown retail in
Georgetown, and
leasing should reflect
the importance of
this market.
Strategic Retail Plan
City of Georgetown, Texas
Following is an estimate of the breakdown of current market support by
market segment. Note that residents continue to represent the most
important market segment among the four subcategories:
Sales Potential by Market
Universlty
Visitors
Students
25%
Employees: -`
8%
Residents
62%
The amount of total supportable retail space is derived by dividing the
total captured sales potential by the estimated average sales productivity
(sales per square foot) for the downtown district. Based on the data
available for the study period ending in June, 2001, ERA's estimates
show that, based on the potential sales from residents, students and
downtown employees, the downtown area can support between 107,000
and 197,000 square feet of productive retail space; potential growth in
supportable retail area beyond this range will be attributable to
ezpenditures'by additional visitors and I-35 travelers drawn to
downtown Georgetown by its stores, restaurants, special events and other
attractions which should be promoted along the Interstate via'tourist-
oriented signs. As the retail offerings in the downtown district improve,
individuals will be more likely to shop downtown and the amount of
supportable space will approach the upper end of the range.
ERA estimates that there is approximately 180,000 to 200,000 square
feet of existing retail space (including service space such as dry cleaners)
in downtown Georgetown today. These are estimates based on data
provided by the Williamson County Appraisal District, owners, tenants,
and property managers. Since complete data is not available regarding
accurate retail tenant sizes, some assumptions were made in order to
derive the total figure. Also, this figure includes all tenants located in the
Downtown Business District. Two designations are included in the
37 Final Report
I
Strategic Retail Plan
City of Georgetown, Texas
tenant list — those retail businesses located within the nine block historic
area as well as retail businesses located within the District. These tenants
are noted and listed by retail category in the Appendix of the report.
A commonly accepted retail industry standard is that it takes
approximately 200,000 square feet of specialty retail and food service
space to create a destination retail district or center. It is assumed that
some of the existing space which is either vacant or underperforming
(e.g. declining sales, too much of certain retail categories that are over=
allocated within'the Downtown Business District) will eventually'be
replaced with more productive retail space. If the market were
exclusively defined as residents, students and workers, ERAwould not
suggest that there is sufficient market demand to accommodate a
significant amount of new retail space. Expansion of retail offerings
which will draw tourist/visitor expenditures will comprise the increment
over the `natural' market.
TOTAL. SUPPORTABLE SPACE
Georgetown, Texas Retail Plan
Baseline Optimistic
Total Potential Sales $ 26,683,231 $ 39,211,116
Total Supportable Sq Ft
@$200 per square foot 133,400 196,100
@$250 per square foot 106,700 156,800
Source. Economics, Research Associates
38 Final Report
�es.wmlC. R...�rc� A...<I.t.•
Str4,egic Retail Plan
City of Georgetown, Texas
IV. Potential Niche Strategies/ Leasing Targets
A new discount shopping center, to be anchored by large discount stores
such as Super Wal*Mart and Home Depot, is proposed for a site just
west of I-35 within the City of Georgetown (the Rivery). This
development will obviously have strong implications for downtown. It is
critical that retailers in downtown Georgetown continue to differentiate
themselves from typical shopping centers anchored by large national
tenants. This is possible given the historic character and unique retail
offerings (apparel and accessories, household and gift items, antiques and
collectibles, unusual dining experiences) of Georgetown. It is very
difficult to compete directly with large superstores like WalMart since
they can offer deep discounts and can adjust inventories daily based on
sales. Although the market is growing, the immediate resident market
remains relatively small (many chain affiliated retailers require a base
population of at least 100,000 persons within a close driving radius
before they will even consider a location). Thus, the ability to attract
expenditures by residents and visitors from outside of Georgetown will
become increasingly critical in proving the viability of the market,
especially to local, regional and national retailers that are recruitment
targets.
From a merchandise mix standpoint, it will be important to differentiate
downtown Georgetown from surrounding retail development — implying
that regional and local (rather than national) tenants are preferable in
most cases. It may also prove difficult to attract certain types of national
retailers to downtown Georgetown. National retailers are sometimes
hesitant to locate in markets that are not already proven (e.g. few national
tenants want to be the first to commit to a new area or district unless they
believe the financial risk is minimal or there is an unrecognized market
opportunity). But the presence of national retailers can represent several
important characteristics — confidence in the market, potential to attract
additional markets, level of professionalism in store operations, etc. —
that can reinforce the overall downtown mix. National tenants may
increase landlord expectations for achieved rent levels (since national
39 Final Report
Strategic Retail Plan
City of Georgetown, Texas
chain tenant frequently are accustomed to/can pay higher rents), but there
are some positive aspects, as well.
Local retailers are less likely to be able to support the increasing
Georgetown rents; national tenants also provide amore stable building
occupant, as few new businesses take fewer than three years to
eventually turn a profit. Thus, a few key national tenants may provide
the added draw necessary to sustain Georgetown into the future. While
some local retailers have expressed concern about trying to attract
national retailers downtown, it should be remembered that all national
retailers are not big box chains. It may be worthwhile to point out the
similarities and differences between types of nationally -affiliated stores.
Chains are store categories in which all new business locations are
owned by one parent corporation. Management and operating
decisions are centralized in the parent company, with the same brand
and business formula used in all locations. Profits all go back to the
parent corporation, as well.
• Franchises also use the same brand and business model, but differ
from chains in that the business is owned and operated by a local
1 person or company. The local operator has purchased the right to
operate the business under the brand, and receives marketing, brand
and distribution support from the "franchisor", which has made its
1 money selling the: rights to use its brand and business practices to a
1 local owner
Cooperatives are an organized method for individual locally owned
businesses to benefit from some centralized services (such as
wholesale purchasing and brand identity) for a merchandise category
while retaining local ownership and control. This has been
particularly useful for locally -owned hardware stores such as
Georgetown's True Value Hardware and Ace Hardware.
Consolidators are -national companies that purchase most or all of the
i equity in a locally owned business, and continue to run the business
31as if it's ownership is unchanged. Consolidators retain the name and
frequently the management of the business, with the former owners
El
40 Final Report
Strategic Retail Plan
City of Georgetown, Texas
becoming corporate employees. This approach has been most
common among business supply companies and funeral homes.
Therefore, chain -affiliated retailers as True Value Hardware and
Walgreens are both `national' and local, as they are owned and operated
by Georgetown merchants, but are connected to a national
purchasing/brand/distribution network Franchised stores and licensed
operations can be strong members and participants within the retail
community, while operating as representatives (or branches) of national
retail companies.
As reflected in the chart below, there appears to be a heavy concentration
of gift/antique stores within the downtown district. A more diversified
tenant mix may create a stronger destination for residents. It is important
to remember that any leasing strategy is ultimately dependent upon the
physical limitations of available space.
Total Estimated Square Footage by Retail Category
Clothing Commtmication,
3% Electronics
Body/Health Care 2% Jewelers
1% 0.3%
Home Furnishings, Moor, Services
Antiques �- 10%
15%
Children's
1%
Boob; and Music
3%
Food Service
19%
Miscellaneous
13.7%
neat Store
9%
Art Galleries, Gifts, Craft
22%s
A strong restaurant niche can increase the trade area while increasing
repeat visitation by residents.. Several successful downtown areas have
been able to create a destination by developing a critical mass of
restaurants. The small city of Manuyunk, Pennsylvania, located about
fifteen miles outside of Philadelphia, has 32 food service establishments
— with 23 of them located along the historic Main Street. Although
DMI 41
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Fina[ Report
f
Leasing Strategy
Focus:
• Food service
• Local specialty
retail and
services
• National and
regional chains
• Office -related
tenants
lca.w.wlcc Mc•�.ch N a<1�<�<
A
Strategic'Retail Plan
City of Georgetown, Texas
Philadelphia represents a much larger market than Austin, the Manuyunk
example points to -the success of creating a restaurant district in an
historic downtown setting.
U.S. consumers are currently spending more than ever on food away
from home — with the amount of spending for food away from home
highly dependent upon average household income levels. The increase in
spending for food away from home is notable at and above- the threshold
household income level of $70,000, which parallels the average income
in Georgetown.
The following table points to the large spending potential for food service
within the trade area alone.. At the time of the analysis, based on
estimated total potential food sales of just over $3 million in the
downtown district, ERA estimates that downtown Georgetown captured
only about 11 percent of the potential available dollars; this amount has
reduced further since the closing of Orient Square. and shift to limited
events catering service at Geaux Fish. In ERA's view, part of the reason
for this. shortfall is that there are not enough choices downtown to attract
more frequent dining visits, and to market downtown as a dining district.
RESTAURANT ANALYSIS
Georgetown:, Texas Retail Plan
Trade Area
Total households 17,852
Ave. household annual expenditure - food away from home $ 1,921
Total expenditures — food away from home $ 34,293,692
Estimated food service space in downtown Georgetown
Estimated average sales per sq ft
Total estimated food service sales
Capture of Market
National Restaurant Association, Economics Research Associates
42
15,000
$ 250
$ 3,750,000
11%
Final Report
Strawgic Retail Plan
City of Georgetown, Texas
One constraint with respect to creating a restaurant niche is the ability to
find appropriate space. Restaurants typically require special space
requirements for the kitchen, loading and unloading, etc.
Food service does not imply only restaurants. Food service can also
include ice cream shops, bakeries, and specialty food markets such as
Whole Foods, based in Austin. If a gourmet market were a desired use
within the downtown core, only the Hewlett site presently offers enough
land area to accommodate a 50-602000 square foot gourmet grocery store
and its required adjacent surface parking lot. Whole Foods is among the
more profitable grocery chains in the country, and as an Austin -based
shareholder corporation it has both the geographic proximity and the
sophistication to respond to urban streetscapes and architectural design
patterns in existing areas, as shown by the Whole Foods complex at 6h
and Lamar Boulevard in Austin. While this example should not
necessarily be precluded as a potential use, ERA recommends that the
Hewlett site would be better used over the long term as a mixed use
multi -floor development. A mixed-use project would offer better long
term returns and contribute more to the downtown tax base than a
grocery store.
There is another significant factor that will affect Georgetown's ability to
attract new restaurant operators — the availability of liquor by the drink in
downtown restaurants. Successful restaurant operators depend on the
profits from liquor sales to sustain overall sales and profitability. A good
restaurant operation with a liquor bar would expect to reach 15-20% of
total sales for beverages, but about 60 to 70% of the total profits. The
current "club membership" system for alcoholic beverage service in
Georgetown is workable, but cumbersome for visitors and infrequent
diners. From a business standpoint, it is not ideal, and should be replaced
by allowing liquor by the drink as part of a food service operation. This
recommendation is not based on any moral or political attitudes
regarding liquor by the drink — those are decisions that must be made
locally. But ERA does recommend that the liquor -by -the -drink issue
be re -opened if the town is serious about recruiting restaurant
operators to the downtown retail district. We believe that Georgetown
is undersupplied in food service, and adoption of liquor by the drink
43 Final Report
.e.n.�nlu A•u..<b wo•<ia..
Stratcgic Retail Plan
City of Georgetown, Texas
would remove a significant economic obstacle to recruitment of good
restaurant operators to locate downtown.
Several retailers expressed concern about the prospects for national
tenants locating in downtown Georgetown. In some respects, the arrival
of national tenants in downtown would signal that the market has been
recognized as a strong one, as national retailers operate on population
density and income formulas.. In ERA's view, downtown Georgetown
already has an interesting coffee shop in Cianfrani's. The location on the
square in a historic building activates the east side of the square
throughout the day and contributes to the life of the street. Should
Cianfrani's decide to discontinue retail coffee shop sales (perhaps
switching to wholesale -only activities for their bean roasting business),
ERA believes that downtown Georgetown might attract a Starbucks
Coffee location or a similar high volume/high margin food product. We
would not encourage that a Starbucks be recruited to compete with
Ciaufrani's, as viable locally owned small businesses are an asset to any
9
44 Final Report
community. A better solution would be to more effectively advertise and
promote Cianfrani's as `Georgetown's downtown coffee house' to I-35
travelers, as an incentive to take a break off the road.
Experience suggests that the -arrival of national tenants would also .
elevate expectations for achieved rent levels among local property
owners. It is difficult to prevent national tenants from locating in an area
they want, as this could be construed as restraint of trade. However,
ERA believes that Georgetown's current market. -size and population
density will not draw many national tenants'to the downtown area around
the square. The more likely leasing targets are regional chains and
specialty retailers and restaurateurs, probably from larger cities such as
Austin, or from similar central Texas towns with substantial visitor
populations such as Salado or Fredericksburg who are already familiar
'
with the type of resident/retiree/visitor market characteristics that exist in
Georgetown. The implications of this fact on future recruitment efforts
S
suggest that Georgetown should focus its efforts on recruitment of
specialty retailers and operators within Texas and the region.
S
Nationally, a small number of downtown areas have successfully
'
marketed retail spaces in their central business districts at national
leasing conventions such as the International Council of Shopping
9
44 Final Report
Strategic Retail Plan
City of Georgetown, Texas
Centers (ICSC). The ICSC holds a national gathering in Las Vegas each
March as an opportunity for national retail and food tenants to meet
developers with space for lease. Until recently, most of the leasing
activity at these meetings is directed toward filling space in traditional
shopping malls, in part because national chains have considered
downtowns to be too fragmented in ownership and management to be
considered a better risk than a mall operated by an established developer
and retail management company. Traditional mall developers also offer
their retail prospects other elements that downtown areas frequently
cannot:
• Financial incentives called tenant improvement allowances, or TIA's
(up front money provided to tenants to pay for interior finishes,
casework and display cabinets, specialized lighting, floors and wall
coverings, etc.)
• Retail industry -standard triple net leases (in which tenants pay costs
for utilities, taxes and insurance on a pass through basis); tenants'
willingness to accept these types of leases are an indication that they
are confident they can generate enough sales to warrant the higher
occupancy costs in malls than in downtown areas. Confidence in the
ability to reach higher sales in the mall is based on established
patterns of shopper volume that most downtowns cannot
demonstrate. When national retailers consider a site, they want to
have a reliable base of resident and visitor population and proven
shopper traffic levels. In ERA's view, downtown Georgetown is not
yet at the point that these shopper volumes can be proven to most
national chains, particularly men's and women's apparel and shoe
stores.
Mall developers also have another advantage that downtowns cannot
offer, in that they can market locations in multiple malls in multiple
cities, rather than just locations in one market. National chains are
typically more reluctant to consider unproven downtown areas; they
respond best if one or two pioneering national operators have tried the
downtown area and made it work economically. They are most
comfortable with familiar formats (enclosed malls and strip malls owned
by developers that they know), rather than downtown areas that may not
fit their narrowly defined location criteria. Therefore, ERA
45 Fina! Report
Strater,ac Retail Plan
City of Georgetown, Texas
recommends that the most appropriate niche for retail recruitment
in downtown Georgetown is regional and Texas-based retailers and
restaurant operators who will understand the opportunities
presented by proximity to 135, the unique character of the historic
downtown area and the nature of the evolving market in the greater
Georgetown area. As the downtown is stabilized and new tenants are
recruited, it may become possible to then approach national retailers, but
for the near term (the next two to four years) ERA suggests that tenant
contacts'and promotion be addressed toward prospects already in the
region and state.
The prospects should then be provided with market and property
materials (based on this report and available spaces documented in the
Downtown Property Book) packaged in an attractive loose-leaf leasing
information folder, similar to what a visitor's bureau might send a
potential tourist, but with a real estate focus. Then the prospects should
be invited to Georgetown to see available sites to meet with property
owners and commercial brokers, representatives of the downtown
merchants and Downtown Georgetown Association and City leaders.
Potential retailers and restaurateurs who are willing to come to
Georgetown can be assumed to be seriously interested enough that
potential financial or other incentives should be discussed and prepared
to be offered as part of a negotiation for a site. These incentives might
include offering tenant improvement allowances (TIA's), which are
funds offered to prospective tenants for space improvements, display
fixtures and finished, etc. Tenants which invest their own funds for store
space improvements might also seek to have some (or all) of their rent
payments deferred or cancelled during the early months to allow time to
recoup their initial investment in the space.
A key advantage is the current rent rates for space downtown, which, by
comparison with even secondary specialty retail locations in Austin, will
seem more affordable (this will not apply to Austin's empty strip mall
spaces or class C retail areas).
The initial merchandise categories for recruitment should include:
Casual dining with bar service — Austin and San Antonio have well
established start-up restaurant communities, and Dallas has more
■ 46 Final Report
tcar�w�nlc/ M/��Kh A/wc1�aH
„crategic Retail Plan
City of Georgetown, Texas
restaurants per capita than any other major American city. Visiting these
cities to seek out successful operators who might consider expansion or
opening another concept is the first step. The price levels and menu
categories should not be too expensive, and addition of live performance
in the later evenings in some venues will help attract a second or third
seating.
Quality Antiques and Art Galleries — This merchandise category builds
on the existing concentration of antiques and collectibles dealers
downtown. By focusing on established dealers selling higher price -level
goods, Georgetown landlords will be better able to achieve higher rent
levels (since rents are a function of sales). The other category is art
galleries featuring crafts, paintings and other art forms that show well in
historic spaces and seek more affordable space. Just as a cluster of
restaurants can be marketed as a dining district, a cluster of galleries can
be marketed as a gallery district (a number of California towns with
affluent populations like Georgetown's have successfully cross -marketed
a collection of restaurants and galleries as evening resident and tourist
destinations).
Specialty Apparel and Shoes — Downtown has a limited supply of
apparel and shoes for men and younger adults (such as Southwestern
University students); women's apparel and accessories are represented
by several good retailers, but the overall mix would benefit by a wider
assortment of goods. ERA suggests that it will be individual apparel
retailers, not chains, that will be the best prospects for recruitment. The
upper price levels for quality casual apparel for men and women would
reinforce downtown's appeal in competing with WalMart and other
lower quality level apparel vendors.
Unique/Destination Specialty Retailers — The remaining specialty retail
category is more broadly defined and harder to recruit, but it is the niche
that defines the destination character of successful downtown areas.
These are one -of -a -kind retail businesses that serve a narrow customer
base that will seek them out — musical instrument craftsmen, hand-crafted
furniture makers, artistic crafts presented in a studio/gallery format,
custom bootmakers, etc. Attracting these types of tenants is almost
completely reliant upon establishing a relationship with an individual that
creates a product of the highest level and with a distinctive identity; these
• 47 Final Rep,
le�M�wIG f1�.��rch Iu��c1�Nt
1
Strategic Retail Plan
1 City of Georgetown, Texas
1
/
are not tenants who feel comfortable in conventional mall settings, and fit
1 best into traditional downtown areas. In ERA's view (and because this
j category of tenants often cannot pay higher rents), these tenants should
be recruited for secondary/less expensive spaces off the square. But their
presence in Georgetown would add a specialty focus that would bring
1 customers out of their way — these are the types of businesses that
1 specialty customers seek out, often traveling considerable distances to
find them. The attraction is the unique character of the products and the
1 skill of the craftspeople who produce them.
1 In addition to recruiting restaurants and impulse foods (candy, ice cream
1 and coffee), ERA suggests that home furnishings/office furnishings/
computers also presents a potential retail niche strategy for downtown
Georgetown. This category of uses would build upon the existing
concentration of antique dealers and home decorating services located in
downtown buildings, but would serve a larger segment of the resident
and student markets. Office furnishings/computer service retailers could
also service the nearby County Courts and local government offices.
Moreover, home offices continue to proliferate as residents increasingly
telecommute from home, increasing demand for home office supplies,
computers, and home office furniture. The more.affordable retail rental
rates in Georgetown could be appealing as expansion/leasing
opportunities for Austin -based retail operators selling computer
equipment/servicing and furniture.
I
lwRSR11u 11h
impulse Food Service
Ice Cream Shop/Dessert Shop: A small space user which would fit
in well with restaurants and the renovated Palace Theater and can
increase nighttime and weekend activity in the area. It appears that the
relocation of the ice cream shop from Austin Avenue to Main Street has
not been sufficiently marketed (or marked with signage from Austin
Avenue) to attract the same level of traffic that the shop had before
relocation. Part of the shop's attraction is offering Blue Bell Ice Cream,
which has successfully been branded as a Texas ice cream product.
Should the Blue Bell ice cream concept not be available, a regional
operator such as Amy's Ice Cream from Austin would be another locally
recognized brand, as well. Visible sidewalk seating should be part of the
store's identity, and operating hours should last well into the evening
48 Final Report
.'ategic Retail Plan
City of Georgetown, Texas
during peak summer months. The best advertising is to see patrons
eating ice cream on a bench on the square or in front of the store,
preferably from a higher volume traffic street such as Austin Avenue.
Typical space requirements — 650 to 1,200 square feet
Specialty Food Market: Could include a more upscale food market
such as Dean & DeLuca, and could also include take-out/prepared food
service. If physically possible, the store should also include spill -out
seating along the sidewalk, and will require adjacent parking.
The typical space requirements for these types of stores vary greatly, but
generally range from 6,000 to 12,000 square feet.
Popular -Priced Table Service Restaurants: The addition of three or
more restaurants within the downtown district could help to create a
critical mass of restaurants, or downtown destination. Local or national
restaurant operators could each be considered, .but Texas-based operators
should be the initial focus, in our view.
Typical space requirements — restaurant sizes vary greatly, but for
planning and analysis purposes for Georgetown, it is safe to assume
3,500 to 6,000 square feet per restaurant space is a size range that is
appropriate in a downtown setting.
Services
Downtown Georgetown competes directly with nearby retail centers,
such as Republic Square, which provide a wide array of services (e.g.
video stores, dentists, health clubs, etc.). Service businesses can be an
effective way to draw local residents to the downtown area on a
continuing/recurring basis. Clustering locally owned service businesses,
such as camera stores, hardware stores, frame shops, etc. creates a critical
mass effect, allowing businesses to develop local followings; this type of
cluster can provide a unique destination, differentiating the offerings in a
group of downtown shops from large, multi -concept discount stores such
as Wal Mart and Lowe's. The downtown retail recruitment team
recommended in Section VII should be established and should
investigate opportunities to recruit existing locally owned operators of
49 Final Repor,
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Strategy,_ � Retail Plan
City of Georgetown, Texas
these types of service businesses from elsewhere in Georgetown and the
region to spaces in the downtown district.
Office Related Retail Categories
Computer'Software/Office Furnishings (new or used). The recent
corrections in the technology industry have created a short term
opportunity for re-packagers/re-sellers of office systems and office .
furnishings no longer needed by downsized or closed dot-com
companies. This temporary supply of goods will disappear over time,
but for the near term (probably the next one to two years), this may be a
potential interim retail use for secondary locations in downtown
Georgetown. This tenant category is price sensitive, needs larger floor
areas, and easy loading and unloading facilities. ERA suggests that this
might be a placeholder/interim tenant that could be replaced as better,
stronger tenants can be recruited.
• 50 Final Report
■cenernlu R......h A-I-
strategic Retail Plan
City of Georgetown, Texas
National Chain Tenant Recruitment Parameters
National chain tenants are often hesitant to be the first national chain
tenant to locate in an as yet unproven (according to their site selection
criteria) market. The Downtown Retail Recruitment Program should
canvas several national chain tenants to find out if there is potential
interest in locating in downtown Georgetown. Current national retailers
turning to Main Street/downtown development projects include stores
owned by The Gap (The Gap, Kids Gap, Old Navy and Banana
Republic), retail concepts owned by The Limited Chain, such as The
Limited, Limited Express, Victoria's Secret, and Abercrombie and Fitch,
major bookstores such as Borders and Barnes and Noble, and Chico's
Women's Apparel. Big box stores are typically not a good alternative for
downtown districts, since they require much larger floor plates and
parking facilities. National chain tenants providing food service are also
a viable option. The Brinker restaurant chain is headquartered in Dallas,
and has pioneered several successful popular priced food concepts such
as Chili's, Eatzi's, and the Comer Bakery (see below).
As mentioned earlier, another obstacle with respect to recruiting national
tenants is Georgetown's lack of population density. Although the area is
growing rapidly, existing resident population densities are lower than the
population formulas required by most national retailers. However,
although certain densities are targeted, exceptions are made based on
other criteria such as high household incomes, etc. The relatively high
household incomes in Georgetown should be stressed in marketing the
downtown area. Also, given the relatively high percentage of retirees in
the market, Georgetown can also market itself as a prototype testing
location for national tenants introducing experimental or start-up'
concepts.
The following table highlights potential tenant categories for recruitment.
This is not an exhaustive list, but rather a starting point for further
discussion.
• 51 Final Rep
�ce�w�wlu Rece e.e� ANKINe•
Strate-lc Retail Plan
City of Georgetown, Texas
Sample of Potential National Retail and Food ServiceTenants to Contact
Tenant
Preferred Size (sq ft)
Target Density
Boston Market
3,000
40,000 w/in 3 miles
Comer Bakery (Brinker
4,500
150,000 Vin 5 miles
International)
Pier 1
9,000 to 10,000
150,000 whn 5 miles
Gap
6,000 to 10,000
Depends on store
concept and
demographics
Dean and Deluca
2,800 to 3,500
Limited to high
population centers and
affluent tourist traffic
Williams Sonoma
5,000 to 6,500
150,000 whn 5 miles
Entertainment
Renovation of the Palace Theater with programming for performances
and special events can be expected to draw repeat visit audiences to
downtown Georgetown, which will add an entertainment component that
is currently missing. There is currently a major transition underway in
the cinema industry in the U.S., with the operators of about 20% of all
screens in bankruptcy. This will result in consolidation of operators over
the next two years, but will make it very difficult for a community
Georgetown's size to attract a cinema theater operator for the near term.
The large multiplex cinema complex near Pflugerville likely precludes
downtown Georgetown from attracting a major theater operator, but the
Palace Theater could serve a special niche venue in presenting both live
performance/theater and limited-run/repertory film presentations.
Several retailers said they would stay open later on nights when the
Palace has an event. We believe that existing (and future) restaurants
will also benefit by the traffic the theater will generate. In fact, for many
consumers, clusters of restaurants combined with live performance
theaters can be considered an entertainment district, in that a package of
activities are combined to draw repeat visitation and multiple
52 Fina[ Report
lwnon.lu It�c�oreh AUKlotoc
,, Lrategic Retail Plan
City of Georgetown, Texas
entertainment Experiences. This is not to say that the square can (or
should) be converted to Sixth Street in Austin. That would be
inappropriate both in scale and market orientation since Austin includes
thousands of students. But expanding the list of current dining and
entertainment options will attract business to the square and downtown
that the area is not capturing today. ERA suggests that the Palace's
programming and marketing of events should be fully integrated into
promoting and marketing downtown Georgetown as an evening and
weekend destination. It should also be part of the recruitment package
for retailers and restaurants, as its completion represents a commitment to
downtown and an asset that will bring potential customers to downtown
Georgetown. The greater Austin market is not too far removed to be a
target audience for the Palace, particularly for performers with a
following in the region. ERA recommends that this new addition to the
local entertainment scene be heavily marketed to fill seats in the theater,
which will also fill seats in downtown restaurants.
53 Final Rel
■c�M�l.� M.��nh I1���sln�•
Strategic Retail Plan
City of Georgetown, Texas
V. Lease Review
A review of lease rates and lease structures among downtown merchants
and office tenants in Georgetown reveals the following:
• Downtown Georgetown lease rates reportedly range from about $6
per square foot per year (for older, less improved buildings in less
prominent locations) to about $12 per square foot per year (for
somewhat renovated historic structures in more visible locations).
Selective upper rents above $12 per square foot have been achieved
in renovation projects with high qualify design, interior finishes and
high visibility locations.
• Most of the current lease deals include a base rent plus additional
charges for the common area or separately metered utilities, such as
electricity. The common area charge reflects tenant subsidy of the
landlord's obligation to maintain and insure the common area, which
typically includes hallways and entryways to the building.
• Office rents are generally $3 per square foot higher than lease rates
for retail space, approaching $15 at the upper end. This explains why
some property owners have converted street -level retail space to
professional office uses.
Displacement of retailers by office uses in street level storefronts is
an important point of concern for downtown merchants, as they fear
that property owners will increasingly opt for the higher paying office
tenants. The best solution will be to provide more office space in
secondary locations or on upper floors, while also including retail at
the street (and sometimes mezzanine) level. Combining street -level
retail with upper floor offices is more complicated to construct and
finance than a single use building, but can also provide a better
Return On Investment (ROI) and more active streets. Mixed-use
projects also generate a higher residual value from the property,
whether as a result of re -using underutilized upper floors of existing
buildings (since the shell or outside structure is already built), or by
combining uses in newly constructed projects in high visibility
parcels (such as the Hewlett site) to achieve a higher income level
from each surface foot of the site.
. 54 Final Report
strategic Retail Plan
City of Georgetown, Texas
• According to several tenants, property owners, and property
managers, retail rents are steadily increasing on the square in
Georgetown. In some cases rents have reportedly increased by levels
approaching 100 percent over the past several years. The higher rents
appear to be moving in parallel with the increase in building purchase
prices. Current for -sale costs for downtown Georgetown buildings
reportedly ranged from $70 to $152 per square foot during the most
recent study period (early summer of 2001).
Most leases also provide for a periodic increase in minimum rent based
on the'rise in the average increase in the national cost of living, also
known as the Consumer Price Index (CPI). In some cases tenants
negotiate a cap on the rise in the CPI (e.g. not to exceed 8 percent). The
base year for the CPI increases is typically the year the tenant takes
occupancy. It is also possible to negotiate the frequency of the
adjustment (e.g. smaller amounts of increase each year of the lease term
versus a more significant `bump' or increase every three years). A
frequently used method is to provide that the increase will go into effect
when the tenant exercises an option to extend the term of the lease, which
is usually in three, five or ten year intervals.
Another option allowing for more flexible leasing terms is to base the
lease rates during the early years of occupancy on a straight percentage
of sales until customer traffic builds enough to stabilize business volume.
Of course, this requires that the tenant will make the monthly sales
records available to the landlord and for annual audit, a common practice
in malls between developers and national chains, but less common in
downtown areas between property owners and smaller, locally owned
businesses. This approach (percentage -only leases) is particularly
effective for restaurant tenants, since they normally require several years
to build a clientele, and generally incur substantial early investment or
debt to finance costly kitchen equipment and furnishings that restricts
cashflow.
A summary of existing and proposed retail centers in the Georgetown
areas is included in the Appendix of this report. As shown, downtown
lease rates are generally competitive with those in existing Georgetown
strip -style retail centers, or about $12 per square foot (exclusive of
Common Area Maintenance, also known as CAM charges).
55 Final Rc
�caMmlu R�e��.eh A�c�el�c�s
Strategic Retail Plan
City of Georgetown, Texas
Lease Characteristics
Georgetown, TX
$12.00
1,375
Total
$12.00
926
Type
Rental Rate
Sq Ft
CAM/other
Term (years)
zse Deals:
tenant pays electric
$15.00
2,264
tenant pays electric
Office
$12.00
1,275
$2.40
3
$18.55
2,380
+electric
3
$19.25
1,355
+electric
3
$15.50
2,143
$5.50
3
Average
$16.33
Retail
$12.00
1,475
$2.40
3
$15.00
1,500
$3.50
3
$14.00
650
$3.50
3
$12.00
1,941
$1.80
3
Average
$13.25
$12.00
1,375
$1.80
$12.00
926
$1.80
$6.00
2,500
tenant pays electric
$10.00
850
tenant pays electric
$15.00
2,264
tenant pays electric
$15.00
370 - 874
$3.50
Average $11.50
• Local Brokers, Economics Research Associates
Lease Terms Issues Affecting Retail Recruitment
Several issues should be considered in reviewing current and future lease
structures as they may affect retail recruitment. ERA's research
suggested that there are many different types of leases in use in
downtown Georgetown. The general retail industry standard for leases is
what is known as a triple net lease. Often used by property owners with
56
•�.�.. �� M...;...,,..«�.... Final Report
strategic Retail Plan
City of Georgetown, Texas
multiple retail spaces in the same property, under this structure the
landlord charges a base rent (an amount that is due every month) plus a
`pass through' charge for a series of pro -rated expenses, usually based on
square footage of the leased space, including property taxes, insurance
and utilities. The term, or amount of time the lease will be in place,
depends on several factors:
• The type of business -- Retail tenants usually negotiate a five year
lease, but food service tenants need more time to amortize their
higher expenses for kitchen equipment and finishes, so their leases
run up to ten years. Also, some merchandise categories, such as
jewelry, can generate higher profits per square foot of leased area,
and may be more appealing to landlords than lower -rent paying
tenants that want more space (such as furniture). Generally, retail
tenants can afford to pay between 6% and 10% of total sales as rent.
Food and beverage tenants average about the same range, but (as
described earlier), if liquor sales are included, they generate a higher
percentage of profit; some restaurant operators support break-even
food sales with strong beverage sales. Leases can also be staggered
to charge different rent rates based on food and beverage sales (e.g., a
base rent of 6% of total food sales and 12-15% of liquor sales). Of
course, this means that the landlord has the right to monitor sales
register and transaction records, a practice that appears to be
uncommon in downtown Georgetown.
• Level of property owner commitment to a particular tenant — Some
businesses may not be willing (or able) to commit to a long-term
lease, or a landlord may not want to commit a property for a long
period. Month-to-month leases usually result in weaker tenants and
reduced willingness to commit funds for building improvements by
both landlords or tenants. Some of Georgetown's less improved
properties operate on a month-to-month lease basis. Over time, ERA
recommends that this structure should be transitioned, either through
changes in ownership to those who will make long-term
commitments to commercial property ownership and operations or
through improved tenants that will make longer term commitments in
exchange for longer leases.
■ 57 Final Rel
[[sn�n.lu M[�[nh AM�tl�tw
Strategic Retail Plan
City of Georgetown, Texas
Who paid for tenant improvements and how much they cost — If the
landlord has granted tenant improvement allowances (TIA's) as part
of the lease negotiation, the tenant's capital at risk is lower, and they
will be willing to take a shorter lease length, pay higher rent or be
willing to accept `kick -out' clauses that favor the landlord, since the
tenant has less at stake. Also, the amount of tenant improvement
allowance may increase the landlord's incentive to retain a particular
tenant in order to avoid tearing out improvements to attract another
tenant. Only a few landlords in Georgetown have offered TIA's to
retail tenants, according to our research. This will be a disadvantage
in recruitment efforts, particularly for food and beverage operations,
which require higher levels of front-end investment to .become
established and to operate.
• How desirable the tenant is — In the shopping mall world, destination
uses (such as major department stores, or entertainment destinations
such as movie theaters or other concepts) can negotiate more
favorable lease terms, because the property owners know that
commitment of an `anchor' use will draw other, smaller tenants who
will pay higher prices per square foot of space leased. It may be in
the landlord's interest to take a more disadvantageous rental
agreement for one space in order to get better leases from other
tenants attracted by the "loss leader". This system only works if the
landlord controls multiple spaces, either through ownership of a
multi -space building or as part of a master lease of multiple
properties.
What does this mean for future leasing and recruitment? Is master
leasing an option?
Since property ownership in downtown Georgetown is fragmented, and
is likely to remain so given current property values, the downtown
leasing strategy should be viewed as a multi -faceted approach, balancing
the interests and priorities of different property owners, rather than a
master -lease situation, in which property control is held by only one or
two landlords or managers. ERA's initial review of options for tenant
recruitment considered the possibility of a master lease in which
responsibility for leasing, tenant recruitment and management would be
58 Final Report
�aeno.wlaa Maa�nh Maaelataa
Strategic Retail Plan
City of Georgetown, Texas
centralized. There are widely differing priorities and investment
requirements among Georgetown's downtown property owners:
• Some are not willing to invest in their properties, can only attract
month-to-month tenants, and would reportedly only accept sale prices
far above the real value.
Others have stable relationships with retail tenants and have
structured longer-term leases, and would not benefit by giving up
leasing control to a third party.
Others have invested in considerable property rehabilitation, get
higher rents and/or have longer term investment horizons, and do not
need a master lessor to assure that their retail spaces will be filled.
In ERA's experience, downtown retail master leases occur either (1)
when property owners do not want to bother.with leasing for retail spaces
in their properties and are willing to transfer that responsibility to a third
party (this sometimes happens when the primary use of a property is
office or residential and the owner has little -retail experience), or (2)
when the leasing environment is so difficult that property owners cannot
attract any tenants at all (some communities have packaged multiple
retail locations simultaneously in a largely vacant downtown area as a
means to aggregate enough square footage to interest a developer in a
large area of low-priced property). In our view, Georgetown does not fit
either profile.
As a general strategy, ERA recommends that downtown Georgetown's
retail recruitment effort should be based on evolution of flat rents, short
term and month-to-month leases to longer-term, more conventional triple
net leases over five to ten year terms. This evolution implies that
landlords will be willing to commit enough investment to warrant a
longer lease, and that tenants in more valuable locations (such as those
along Austin Avenue and around the square) will be strong enough to
generate sales that can support higher rents over a longer term. For those
tenants whose merchandising categories and sales volumes cannot
support $12 to $15 dollar per foot rents (implying annual sales of around
$200 per square foot), secondary locations with lower rents should be
considered. The practice of charging retailers flat monthly rents may
59 Final Report
�t�M.wict R����Rh M�KIH�t
Strateg►.. Retail Plan
City of Georgetown, Texas
appear to be the simplest approach to filling space, but the longer term
implications are less stable. Landlord/tenant relationships are often
adversarial, rather than growing to partnerships, in which each has
something to gain by understanding and meeting the needs of the other
partner.
Of course, it is better to retain and relocate tenants downtown than to lose
them to unreachable landlord demands. Unlike malls, downtown areas
can provide a wider range of asking rents because properties and multiple
property owners have different requirements. In some cases, this may
also mean that property ownership should change, with part of the
revitalization effort focusing on finding new investors to replace reluctant
or undercapitalized property owners with those that will better
understand retail property management and retail leasing economics. But
the asking rents in downtown Georgetown would appear to be less costly
and therefore competitive with more expensive new construction
projects. Marketing downtown Georgetown as a more `affordable' retail
district to tenants with special character and charm for customers will
address both business and consumer desires.
60 Final Report
Focus on local and
regional specialty
retailers, service
businesses and
restaurants as
prospective tenants
National tenants
should not be
discounted, but will
need basic market
information.
otrategic Retail Plan
City of Georgetown, Texas
VI. Leasing Strategy and Tenant
Recruitment Program
Since the retail strategy is the core of the study, this section addresses
methods to approach recruitment of new retailers for downtown
Georgetown. There are several strategies which downtown advocates in
Georgetown can implement in order to encourage the desired leasing
direction for new and existing downtown buildings.
1. Continue to Foster Contacts with Property Owners and Brokers
Initial contacts made by local volunteers during this study have resulted
in additional focus on downtown retail sites by leading local commercial
brokers. Maintaining this type of relationship is important, as
commercial brokers are often the first contacts made by out-of-town
retail prospects. The Property Book can be a useful tool for information
and leasing efforts by the City's Downtown Development Corporation.
By continuing a dialogue with various downtown property owners and
brokers the city can work with them to encourage, for example, high
quality tenants or tenants which fit in with the leasing strategy identified
above. Certain landlords may be reluctant to deal with national chains
since the lease negotiations may be more complex, thus if the DDC were
involved it might be possible to convince the landlord that the
negotiations will ultimately benefit the landlord as well as the entire
downtown district.
2.. Serve as a Clearinghouse for Prospective Tenants Searching for
Space
As mentioned earlier, the Downtown Retail Strategy study has resulted
in a downtown Property Book, which centralizes data on commercial
retail properties located within the downtown study area. This document
has been designed to serve as a tool for future recruitment efforts to
attract prospective tenants seeking space in downtown Georgetown. The
property book is also available electronically so that changes can be
made as needed to the listings. The property listing includes information
61 Final Re,
Stratt.,,Ac Retail Plan
City of Georgetown, Texas
regarding the following:
--property address
--land area and improvementsibuilding size
--value of land and improvement
--current tenants
--year improvements were built
--owner's name and address
The DDC and its staff should be the central resource for maintaining and
updating the Property Book to keep it current as an information tool.
3. Identify Resident and Visitor Preference through a Random Phone
Survey and/or Intercept Survey
A telephone survey of residents living within the trade area will
determine what types of goods and services are typically purchased
downtown as well as determine overall impressions of downtown.
Telephone surveys are typically brief in order to ensure that a higher
percentage of surveys are actually completed. Samples need to be
selected to be statistically valid (that is, to reflect an accurate
representation and distribution of the community's age, income and
racial mix) and the questions in the survey instrument must be carefully
designed and phrased to assure a complete answer. Market research
firms exist in Austin which can administer and analyze consumer
telephone surveys. Telephone and intercept surveys can be moderately
costly (a typical statistically valid sample may run from $5,000 to
$10,000), but the data derived is highly useful in marketing downtown to
potential tenants, as well as identifying perceived strengths and voids in
the current offerings. As an alternative to hiring a professional firm if
funding is not available, explore a marketing class project to conduct and
analyze the surveys through Southwestern University or the University of
Texas at Austin (assuming close involvement with experienced faculty).
Conducting intercept surveys downtown, either on a random basis (on a
typical shopping day) or during festivals and events can also offer
valuable information about resident and visitor opinions about downtown
retail offerings. This type of survey is somewhat less representative of
the community as a whole, however, since those interviewed on an
• . 62 Fina[ Report
9-mlu h,t,,r[h
Strategic Retail Plan
City of Georgetown, Texas
intercept basis have already been motivated to come downtown in the
first place; they are customers who are already there. The missing part of
this type of survey is the group or groups of potential shoppers who do
not come downtown during a typical or events day, or who may not be
coming to downtown Georgetown to shop at all. Their opinions about
why they do not patronize downtown businesses can be equally
revealing, and are equally as important as those already pre -disposed to
come downtown; they represent potential future sales, if their wants are
met.
4. Develop an Effective Leasing Brochure for Downtown
Downtown Georgetown is competing with the I-35 corridor, the Rivery
and other commercial developments in the area for retail tenants.
Although the historic buildings and character will not appeal to many of
the retailers that will consider more suburban -type locations, the
downtown area will need a comparable leasing brochure to be
considered by serious companies.
The package or brochure should summarize ze the market information
contained within this report, including data on Georgetown's trade area,
demographics and income information on the resident population,
information on visitor and tourist volume, highway traffic statistics, and
property sheets on the particular site(s) that are available. The property
sheets should include a photo of the site or building along with
information about its size, age, rent or sales price, income (if a rental
property is for sale), available incentives (such as eligibility for tax
credits), etc.
The site listing should also include data about access, parking, signage
controls, permitting, etc. The leasing package need not be expensive —
color copies or computer printed sheets are fine — but should be
professionally designed and packaged. Downtown's leasing brochure
should represent the fact that Georgetown has organized itself,
understands its market, and has properties available that could work for
prospective tenants. ERA suggests that the brochure could be a folder
designed to hold general information about the town and its market and a
place to enclose property sheets for available locations. These brochures
can either be mailed to prospective retailers or their representatives, or
•
63' Final Rept
Strategic Retail Plan
City of Georgetown, Texas
used as `leave -behind' packages by the tenant recruitment teams
described below.
Because of the flexibility of the Internet, the data created for the leasing
brochure can also be made available on a Downtown Development web
site.
5. Establish and Carry Out a Retail Recruitment Program
As an interim step, ERA recommends that the DDC and local brokers
should continue to work with local property owners who are trying to
lease space, using the downtown property book as a basis for monitoring
of available space -and future leasing opportunities and as a strategic tool
to anticipate where vacancies might occur in time to seek new retailers.
Once the tenant recruitment brochure is complete, the DDC should
organize retail teams who would periodically make recruitment visits to
other locations to visit unique retail stores and restaurants that would fit
into Georgetown's downtown mix, to talk to retail business owners and
to `sell' Georgetown as a potential location/expansion site. When this
approach has been used in other commercial districts, recruitment teams
have included several different types of participants, each representing a
different perspective or question that a prospective tenant might have:
Caterory Purpose
A retailer To validate that there is a retailing market
A banker To .assure that financing is available
City/Main Street To show public commitment to downtown, assure
a friendly public approvals process and explain
public projects and/or incentives
Broker/Owner To provide details on available properties
Planner/DDC To describe how downtown is changing and what
assistance will be available to new retailers,
property investors and development projects
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The leasing recruitment visits to other communities usually last one to
two days (depending on travel distance); ERA recommends that
Georgetown's effort focus on Austin, Salado, Fredericksburg, each of
which offer a number of locally owned specialty retailers and restaurants
that would complement the downtown mix. It may take several trips
cold -calling on retailers to develop serious prospects, but specialty
retailers will share information with other businesses that downtown
Georgetown is aggressively seeking new recruits. A secondary benefit of
these recruitment trips is to build a sense of cooperation among local
downtown advocates. Concerns about the future of the square have
sometimes resulted in competitive tensions between Georgetown
retailers; we see the opportunity to overcome these issues by working
together on the goal of retail recruitment and representing the best
interests of downtown as a collective effort.
The recruitment packages can also be distributed at market by
Georgetown retailers, as buyers and vendors can also pass along that
there is space available.
Attracting National and Regional Retailers
In our interviews in Georgetown and subsequent discussions, the issue of
national retail chains as recruitment targets for downtown has been
raised. Some felt that Georgetown should not try to recruit national
tenants, as they would inflate rental rates and make it difficult for locally
owned businesses to compete. Others (particularly those who want more
apparel stores downtown) said that a Gap or a Banana Republic store
would be a welcome addition to the mix. ERA believes that, while a few
national tenants would add to the attraction value downtown, it will be
difficult to attract national retailers, at least in the near term. There are
two categories of criteria that retailers (particularly national chain -
affiliated retailers) use in determining whether they might be interested in
a particular location. The first is based on numbers :
• number of residents and visitors in the base population,
• demographic characteristics such as age, educational levels and
income,
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• growth rates and patterns,
• nature and amount of competitive retail supply and demand,
• vehicular and pedestrian traffic counts; and
• the relationship between prevailing rent levels and property values,
(is the property a bargain, etc.).
For the real estate departments of national retail chains, these numbers
are a critical threshold: unless there is a base population of at least
100,000 or traffic. counts of at least 25,000 vehicles per day past the site,
many chain affiliated retailers will not even consider a location for
expansion, frequently in spite of strong levels in other areas
(demographics, income, etc.). This fact sometimes confounds local
recruitment efforts, who feel that their community deserves a special look
by nationals. However, in our experience, these formulaic requirements
are interpreted by the retailers in a fairly rigid manner. They can be hard
to overcome to build interest by tenant prospects. Georgetown's current
population would likely restrict retailers from interest in downtown
locations, but they would consider sites within the 135 corridor because
of the massive number of vehicles passing by each day.
The second criteria is a combination of differentiating factors:
• Distinctive physical character.
• Concentration of unique specialty retailers that are doing well.
• One -of -a kind or destination uses and attractions that will draw
particular markets to smaller communities, such as a major tourist
destination, a large university, high volume recreational amenities,
etc. Examples include Colonial Williamsburg, the Shakespeare
Festival in Ashland, Oregon, or Penn State University in State
College, Pennsylvania.
• An active, involved local government committed to downtown
development (slow administrative processes, lack of financial
commitment to public infrastructure, and political infighting are `red
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flags' for many retailers, who will seek locations they view as more
stable and helpful).
• A clear sense of future direction and vision of how to get there (the
recent Downtown Design Guidelines and commitment to a new
Comprehensive Plan are two strong steps that indicate that
Georgetown is moving in a thoughtful way toward the future).
• Excitement and enthusiasm and a realistic economic perspective;
these may seem corny or obvious, but retailers can become "infected
with enthusiasm' when contacted by local recruitment efforts. The
trick is to also have a realistic understanding of their needs (a sense of
the market, possible initial financial incentives, affordable space)
when they arrive.
The manner in which these differentiating factors are considered is more
subjective, and, to a degree, can be used to overcome the limitations of
formula -based decisions. They are also more effective in trying to attract
individual retail operators and smaller regional chains that do not have
the national stores restrictive formula requirements. In ERA's view,
Georgetown has several of these differentiating factors (charm and
character on the square, unique specialty shops and restaurants, the re-
opened Palace Theater, Southwestern University), but they have not yet
been combined into an easily comprehensible marketing package.
ERA recommends that these differentiating factors serve as the basis for
an ongoing publicity/PR campaign to constantly remind both the
consumers and retailers that Georgetown is worth a visit, and potentially
a location. An outline of publicity/PR approaches follows (it should be
noted that Georgetown is doing/has done many of these approaches in the
past — sustained efforts will pay off in the future):
ERA has outlined two types of approaches — marketing tools and
activities that require financial costs, and activities that can be part of
larger promotional efforts without adding extra costs.
Paid Marketing Tools:
• Downtown Retail Directory Brochures including an attractive map
and descriptions of local businesses that will attract people to visit;
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these should be placed at the Visitor Center (see below), mailed to
potential visitors who contact the town, at highway -oriented
restaurants (to encourage people to venture into town), and be posted
on a downtown website. Simple brochures can cost from $.05 to $.30
apiece, depending upon the design, number of colors (more colors =
more expensive), number printed (more printed = less cost per
brochure), and can be subsidized by advertisements and sponsorships.
• Seasonal events brochures, distributed in the same locations, but
promoting performance events, festivals (such as Georgetown's
Poppy Festival), etc. These brochures require a carefully planned
annual/seasonal schedule of dates and should be published enough in
advance to allow visitors and residents to plan ahead, book hotel
rooms, etc.
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• Creation of new or enhancement of existing events — the Christmas
Stroll, a Food Festival, Palace Theater series of events on the square,
etc. Residents and visitors will want both continuity and something
new, so some events may be eliminated/replaced by new ones to
encourage repeat visitation. Costs may include performance talent,
free food and beverage, free parking subsidies, publicity, rentals for
events facilities (stages and lighting, tents, etc.). Creation of a new
performance-based festival would require multi-year funding
commitments by the public and.private sectors, but could bring large
'
numbers of visitors/spenders to Georgetown. An example is
Charleston, South Carolina's annual Spoleto Festival, which is
heavily sponsored by the City and State, as well as local hoteliers,
restaurants, corporations, etc.
• As mentioned earlier in this report, commercial Highway billboards
a
and brown `Visitor Attraction " TxDOT signs along 13 5 can also be
used to market downtown Georgetown as a destination stop.
• Development of an interactive website on the Internet about
downtown Georgetown with current and future events, images of
Georgetown and its buildings around the square, and scenes from the
,7
town to entice visitors to want to come and stay. The costs for this
recommendation include design of the website and staff time to
maintain and update it, as well as responding to online inquiries.
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• Travel Writer Events — Travel writers look for new destinations, new
travel experiences, or new events in established locations. Over the
years, Georgetown has received substantial publicity in local;
regional and national publications, but travel writers can be
encouraged to visit (or re -visit) a location if it is part of a special tour
and there is a new angle or slant to the story. Story lines could
include showcasing the town's efforts to manage its growth and
maintain small town atmosphere, continuing efforts to preserve and
protect the historic district, special shopping interests for antiques and
decorative items, Georgetown's Bed and Breakfast lodging facilities,
a memorable day trip from within a hundred mile drive, or other
subjects can be tested with writers to gauge their interests. Costs for
these events can include travel costs, meals and lodging. The
objective is to entertain them and show them the best aspects of
Georgetown's hospitality so that they will convey the town's
attractions to potential visitors.
• Finally, the most important paid marketing/PR tool will be to pay to
produce a retail marketing brochure package for use in attracting new
retailers and restaurants downtown. The components and format of
the brochure are described elsewhere in this report, but the key
characteristics are that it should be: attractively designed to catch the
attention of prospects; simple and flexible (to allow customized
packages) including data about the general market, the future vision
for downtown as a historic retail center, information about available
buildings you wish to market, and contact information for follow up
and response.
Free Marketing Approaches
As mentioned elsewhere, it may be possible to involve a University -
level business or tourism marketing class to work with Georgetown
as a project to develop a media identity and public relations strategy
for the town. ERA sees this type of effort as critical in attracting
more visitors and tourists, since positive media exposure will
influence decisions about trip planning and whether to stop in
Georgetown, either as an overnight/weekend destination or on the
way to other places. However, until the campaign is in place and has
generated additional tourist volume, the PR strategy should be
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marketed to retail prospects as one of many activities underway to
strengthen downtown.
• News and Human Interest stories about Georgetown buildings,
merchants, and residents are also part of the effort to remind people
that Georgetown is open for business. Publications like Texas
Monthly and Southern Living often write positive stories or items
about interesting towns. The readership of each of these magazines
match the upper income, traveling visitor markets that Georgetown
can target for its tourist/visitor programs. These stories can often be
generated simply by inviting the magazine to come to Georgetown to
see it. Similar stories can be placed in television and radio news
outlets in the Austin, Dallas and Houston markets, but will need a
newsworthy angle (perhaps featuring Georgetown as a case study in
evolution of small town Texas).
• Downtown Georgetown representatives should meet with the Texas
Restaurant Association in Austin to ask for three types of assistance —
contact names among Texas restaurant owners and operators who are
looking to expand in growing markets; opportunities to promote
Georgetown in state restaurant newsletters and other publications,
such as the National Restaurant Association; and possible
connections to a culinary school or training program that might
consider opening a `teaching restaurant' in downtown Georgetown.
The New England Culinary Institute (NECI) is a private, Vermont -
based culinary school that has a restaurant on the Church Street
Pedestrian Mall in downtown Burlington, Vermont. NECI operates
the restaurant and bar as a commercial enterprise, but the kitchen is
operated by student chefs working under master chef instructors.
This restaurant operates comfortably with other restaurants and cafes
in the area, but has the extra advantage of creating skilled workers for
other restaurants, and providing a special dining experience for its
patrons. These types of contacts cost only the time required by
knowledgeable downtown volunteers or staff, and can yield
unconventional solutions to market needs.
Finally, it should be acknowledged that public relations and marketing
are important, ongoing efforts. Although the direct benefits are
sometimes intangible, without pursuing a better image, fresh exposure to
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new and existing markets and making the town apparent to the news
media for positive stories, Georgetown's efforts to bring in new
businesses and customers will not move ahead as quickly. Marketing
and PR should be recognized as part of the job responsibilities of the
DDC or other entity responsible for coordination of downtown
Georgetown's continuing renewal, and should be part of the required
experience of key staff and/or volunteers.
Responsibility for These Actions
Who should organize, seek funds for and coordinate these leasing and
marketing activities? ERA's experience in Georgetown suggests that
none of the current organizations active in the downtown area have the
time or funding to fully take on these steps. There is talent and
experience in each, but we believe the effort will be best served by
creating a new entity that can bring together the interests and knowledge
of individuals and organizations committed to downtown.
Tourism development is part of the overall economic development
strategy for Georgetown (and tourism should be considered a `clean'
industry that creates and supports jobs). The most appropriate solution is
to address tourist -shopping needs as well as resident -shopping needs, and
to use revenues generated by tourists in Georgetown to sustain a whole
series of activities, projects and approaches that will sustain tourism in
the future. This is best accomplished by protecting the quality of life that
makes the town special for everyone.
The proposed structure and purpose of the organization is described in
the first recommendation of the following Section VII,
Implementation/Action Plan.
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VII. Implementation/Action Plan
This final section summarizes approaches to implementation for the
downtown retail strategy and other specific steps to undertake. The first
part of the Implementation section recommends actions that should be
undertaken by the City of Georgetown, Williamson County, downtown
property owners and retailers, downtown advocates and local brokers.
The second section outlines our recommended priorities for development
activities based on priority sites, options for structuring public/private
partnerships and retail recruitment.
The next part of this section is a suggested Action Plan Schedule arrayed
over the next eighteen to twenty-four months. The final section, entitled
`Longer Term Implementation Strategies and Approaches' explains two
approaches to components of the strategic retail plan that are directed at
real estate financing for specific projects requiring private funding; these
include the potential for a local Real Estate Investment Trust and creation
of a Staggered Return Equity -Based Corporation, a new model of public-
private partnership currently under development to implement a
downtown mixed-use project in Albuquerque, NM. The latter example
could be adapted for the Downtown Development Corporation,
depending on the DDC's capacity and implementation powers in
Georgetown.
Recommendations
1
1 Implementation strategies for downtown Georgetown will require a
mixture of public and private initiatives. Neither the City of Georgetown
alone nor the private sector alone should have to shoulder the complete
1 responsibility.for revitalization. Williamson County government should
be participating more fully, as well. The County has both a role and a
stake in the future of downtown Georgetown, and in ERA's view, can
/ initiate several immediate actions to stabilize the downtown retail base.
The following summarizes a series of recommendations that will support
the downtown retail strategy.
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Recommendation 1. Establish a new Georgetown Downtown
Development Corporation
One of the problems identified in our analysis of the best strategy for
Georgetown's retail development is that there is no central point of
contact or responsibility for the downtown district. In the past, this has
resulted in confusion about who decides what should happen, duplication
(or absence) of effort addressing complex problems, conflicting actions
or fragmentation of responsibility. In our view, this issue can best be
addressed by creating anew entity that consolidates and centralizes all
the others.
From initiation of the project through the longer term (beyond 2004),
ERA recommends that a new Downtown Development Corporation
(DDC) be established by the City of Georgetown through the Economic
Development Department to focus on key downtown development
properties. As a public, non-profit development entity, part of the DDC's
function should be to foster policies and partnerships affecting land use,
creation/retention of available space for retail users and future retail
expansion, requirements for parking and parking management, and
creation of mixed-use sites with complementary uses such as professional
offices on upper floors. These activities would be conducted in
cooperation with the Mayor and City Council, City Manager, County
Judge and Commissioners, the City's Economic Development
Commission, the City's Planning and Development Services divisions,
and other public agencies, but central responsibility and accountability
would rest with the DDC. All downtown revitalization programs,
initiatives and incentives would be centralized into one point of contact
and responsibility, as well. The DDC should function with a separately
appointed Board of Directors (depending on how the DDC is organized),
including representatives from a range of downtown action and advocacy
groups including the Main Street office, the Downtown Georgetown
Association, the Georgetown Heritage Society, property owners and
brokers, retailers and restaurant owners, City and County government,
and other groups. In ERA's view, this action should be undertaken as
soon as administratively possible, and the DDC should act as the
implementation resource for coordination and operation of the remaining
actions and recommendations.
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Recommendation 2: Fund and Implement a Downtown
Master Plan
ERA recommends that Williamson County's administration cooperate
with the City to jointly fund a downtown Master Plan. Because of the
proximity of the Courthouse to the square's retail concentration and the
pending expansion of County Judicial Center facilities west of downtown
Georgetown, resolution of overall downtown development will neither be
the sole responsibility of the City or the County. As part of the Master
Plan, ERA also recommends that a network of available and planned
parking be incorporated within the downtown planning context. The
most practical way to plan for additional downtown parking facilities,
whether surface lots or (eventually) structured parking near prime/higher
density sites, will be for the City and County to commit to a jointly -
funded cooperative implementation program. These types of facilities
(and investments) will best be achieved as a result of a Master Plan that
can balance a range of issues — tax base enhancement, opportunities for
mixed use development with retail on the ground floor and office or
housing on upper floors, provision of public and dedicated parking,
streetscape enhancements, planning and development incentives, and
other strategies.
Recommendation 3: Change County Employee Parking
Practices on the Square
ERA strongly recommends that the County change its practice of
allowing (not discouraging) all day employee parking around the
square by establishing a `no employee parking on the square' policy.
This does not mean that Williamson County should not have some
dedicated spaces on the square for county business. Because of the
importance of the Courthouse to downtown activity, ERA suggests that
some spaces along the inside of the square be reserved for Short -Term
parking by County customers. The solution for all day employees will
require a system of enforcement by the City, cooperation by the County
and a change in habit by some County employees. All day employee
parking by County employees has been a point of contention for some
time between County administration and downtown merchants, and
should be corrected as soon as a parking assessment and designated
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County employee parking locations can be identified under the
recommended Parking Master Plan.
As a major property owner downtown, and as consumers of retail goods,
food and beverage and parking, Williamson County has a primary role to
play in sustaining downtown Georgetown's stability. But the County's
reluctance to mandate employee parking off the square does not reflect a
clear commitment to the downtown retail program.
Recommendation 4 Extend Downtown's Identity By Building
Gateway Elements at Key Entries to
Georgetown's Historic Core Area
As sprawl and I-35 corridor continue to alter the edges of Georgetown's
historic identity, it will be increasingly necessary to establish a stronger
sense of where the traditional character begins and the newer suburban
model ends. The Downtown Design Guidelines should be adopted and
carried out as a planning framework for future development within the
historic core area of the town. To reinforce that character as a marketing
strategy for the downtown shopping and dining area, ERA encourages
that gateway elements be constructed at key entries to the historic core.
As described earlier, the entry elements should be designed to reflect the
scale, materials and detail of Georgetown's historic context. Although
final locations should be determined as part of a larger planning effort, in
ERA's opinion, potential ikely locations for gateway/portal elements on
major entry routes include:
• North Austin Avenue at 2nd or Yd Street, just south of the historic
bridges
• South Austin Avenue, at a location somewhere between the
intersection with Highway 2243 and Austin and 18th Street and
Austin
• West University, somewhere east of the San Gabriel River Bridge,
perhaps at MLK
• East University, at Southwestern University or another eastside
location
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Recommendation 5 Explore, Establish and Implement Funding
Sources for Downtown/Retail Development
Both Williamson County and the City of Georgetown can anticipate
increased public revenues from local and regional growth, as well as
increased budget pressures for infrastructure expansion and increased
community services. The decision to keep the Library downtown is an
appropriately civic one to maintain a community -wide resource as a
downtown asset and activity generator, and past investments in
streetscape enhancement have improved the appearance of the square. It
is now time to expand the base and package/offer other types of planning,
zoning and financial incentives to protect downtown as part of the city's
tax base. Several of these tools are described below:
Funding Optionslincentives to consider in conjunction with
implementing projects on priority sites
There are two philosophical approaches to encouraging redevelopment in
downtown commercial districts that are potentially applicable to
Georgetown. The first is grounded in the public sector, and includes a
series of steps that can be undertaken by City government, County
government or a non-profit organization focussing on redevelopment
efforts in the public realm. These strategies tend to either provide
financial incentives taken as losses by the public sponsor to encourage
private investment, or are regulatory in nature (property tax abatements,
zoning bonuses in exchange for public amenities contributions,. etc.). For
this approach to succeed requires a commitment of both staff and funding
by the public sector (usually local government), which can apply its
creditworthiness as a backstop for municipal bonds (such as those used to
construct parking structures by. public parking authorities) or direct
revenue subsidies. In our discussions with City government and
Williamson County government about the potential to establish formal
programs, neither has been in the position to offer substantial direct
funding for commercial development projects in downtown Georgetown.
It should be noted, however that both the City Council and the County's
senior administrators are receptive to options which would not cost
much, but could leverage private investment that will result in jobs,
property tax enhancements or other benefits to the public sector. It is
apparent that the public sector is willing to participate in a relatively low
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risk partnership role, but that primary leadership and risk should be borne
by the private sector, assisted by the public sector in appropriate but
limited ways.
The second approach focuses on private sector initiatives (sometimes
with more narrowly defined public participation) that can address
development opportunities, but on a schedule and internal rate of return
on private investment below the 15% to 20% Internal Rates of Return
(IRR's) typically required by commercial developers to justify a project.
The programs and incentives described below are mote closely
associated with public sector initiatives.
Historic Rehabilitation Tax Credits: The rehabilitation tax credit
program provides for a 10 percent tax credit for substantial rehabilitation
of income-producing buildings over 40 years old and a 20 percent tax
credit for substantial rehabilitation of income-producing buildings which
are over 50 years old and eligible for, or listed on, the National Register
of Historic Buildings. These credits have been used in the past to restore
and rehabilitate several historic buildings in downtown Georgetown. The
program is administered by the Texas Historical Commission, and
involves a two-step approval process. The first approval certifies that the
building meets the standards established by the U.S. Department of the
Interior for eligibility for the National Register of Historic Places. As a
locally certified historic district, a portion of downtown Georgetown
already is qualified for the first part of the certification. The second part
of the process certifies that the modifications proposed for the
rehabilitation will meet the Secretary of Interior's Standards for Certified
Rehabilitation of Certified Historic Structures. These guidelines were
established as national standards by the U.S. Department of Interior, and
the review of rehabilitation proposals is also conducted by the Texas
Historical Commission. The objective of the program is to provide tax
incentives for investors to consider renovation of older commercial (rent
producing) buildings on an equal basis with new construction. In ERA's
experience, for most investors the tax credits can be an effective tool in
rewarding the project developer for completing a renovation that is a
sound real estate project first and foremost. In other words, the project
must work in conventional terms first (i.e., rents for the rehabilitated
project are in line with appropriate levels of investment and investment
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returns); the rehabilitation tax credits provide the extra benefit of dollar
for dollar income tax credits against future income taxation after project
completion.
TEA -21: TEA -21 (the Transportation Enhancement Act for the 21"
Century) builds on the initiatives provided in the Intermodal Surface
Transportation Efficiency Act of 1991 (ISTEA). Guaranteed levels of
transportation funds are authorized through the U.S. Government's Fiscal
Year 2003. It is expected that TEA -21 will be proposed for re-
authorization in 2002, as the programs have been widely used for a range
of transportation -related enhancements. While most of the funds are
committed to planning and construction costs for roadways, mass transit
system enhancements and other direct transportation projects, both
ISTEA and its successor TEA -21 also have provisions for broadly
defined transportation enhancements such as:
• Directional signs for visitor attractions and historic sites
• Restoration of transit related buildings such as older train stations
• Creation of heritage trails linking thematically related sites
• Hike and bike trails as alternatives to automobiles
• Local shuttle systems that will reduce traffic and parking demands
Streetscape enhancements for pedestrians
• Parking facilities
ERA recommends that Georgetown consider pursuing TEA -21 funds for
several suggested projects. These include:
• Wayfinding signs directing visitors from I-35 into the downtown
historic district
• Funds to pay for gateway signs and design elements at the edges of
the downtown historic district
• Funding to establish and operate a shuttle service from Southwestern
University, from Sun City or other locations into the downtown area
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to reduce parking demand and encourage foot traffic downtown
without necessarily adding new cars.
• Funds to cover part of the costs of maps and visitor center operations
to direct people through Georgetown's sites in an efficient and
focused manner (this type of project has been funded elsewhere as a
means of `intelligent transportation' management)
• Possible funding for structured parking as part of new development
on sites such as the Hewlett Property.
TEA -21 funds are typically distributed through each state's Department
of Transportation. Requests are submitted annually according to specific
deadlines, and funding is competitively distributed. Innovative projects
and demonstrations with broader applicability are usually considered
competitive, and geographic distribution is an advantage. The Capital
Region Transportation District should be able to work with the City of
Georgetown, with the County and with the Main Street Program or other
special program to structure an application to TxDOT. ERA suggests
that the funds are relevant to Georgetown since dollars are available for
such a broad range of project types to improve directional signs, for
transportation -related facilities and to enhance safety for bicycles and
pedestrians, including pedestrian walkways.
Special Tax Assessment District: Many mature downtown
revitalization programs have evolved into Special Tax Assessment
Districts, in which property owners (and sometimes tenants) agree to a
`self -tax' in addition to standard property taxes paid to the City. These
special tax assessments are controlled by the property owners and can be
used for capital improvements, streetscape enhancements, marketing and
promotional programs, loan funds for fa.gade improvements or other
assistance. This type of program would require building a consensus
among downtown Georgetown's property owners and cooperation by the
City in collecting and distributing such a surtax. ERA is not yet certain
that the economic or public consensus exists today to organize such a
program, but as development downtown increases, it may be worth
considering in the future; this could also be a potential operating cost
resource for the Downtown Development Corporation. In fact, the DDC
could evolve as a special tax assessment district, potentially as a Business
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Improvement District (a BID) or, as described under Texas law, a Public
Improvement District (a PID).
Offer Incentives to Building Owners to Ensure Retail Tenants are
Retained at Street Level:
Property tax abatements in exchange for subsidized rents — this
approach has been used in Boston and selected other large cities as a
public incentive to encourage property owners to maintain affordable
rents for retail tenants. Specific screening criteria apply to the
selection process for eligible tenants and properties
• Assistance with Tenant Recruitment — Recruiting new retailers for
downtown districts is best achieved by a combined effort between
local commercial brokers (who are generally best informed about
available properties) and a team of "volunteer recruiters", including a
downtown merchant or restaurateur (to verify that there is a market
and that new retailers are welcome), a representative of local
government or a City -sponsored Main Street program (to represent an
organized approach and to discuss needs for expedited permitting and
approvals), a representative from the financial community (to offer
available financing), and a broker (to package lease offers). This
effort frequently results in both new tenant recruits as well as a
heightened sense of partnership by downtown advocates. ERA
believes that Georgetown could benefit from both of these results of a
recruitment team effort.
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Cooperative Marketing Initiatives — The property book listing all
downtown retail properties in Georgetown can serve as a tool for
cooperative marketing initiatives between property owners and
tenants, in integrated efforts to draw tourists and visitors, and in
addressing downtown development as an economic development/jobs
creation strategy.
Matching Fund Program: In order to facilitate various fagade
.
improvements, a matching fund or low interest loan program could be
established whereby a public agency or local development corporation
could provide a dollar -for -dollar match for approved fagade
improvements or interior improvements, up to a specified maximum
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amount. Improvements should be subject to review and consistency
with Georgetown's pending Downtown Design Guidelines. Eligible
activities might include repair to exterior facades, masonry repair,
cleaning of the exterior of the building, and exterior painting, sign
removal or replacement, conversion of underutilized spaces to productive
uses, or replacement of roofs and HVAC equipment. These types of
loans are often combined with rehabilitation tax credits to maximize the
tax benefits of renovation.
State Loan Program for Small Businesses: The Texas Capital Access
Fund was established to increase the availability of financing for small
businesses that have difficulty in accessing capital (start-ups sometimes
fall outside the guidelines of conventional financing). The loans may be
used for working capital or the purchase, construction or lease of capital
assets, including buildings and equipment. Loans are made and
administered through local banks, and are generally available at reduced
interest rates. Loan amounts are capped annually, but qualified
borrowers can take out up to two additional loans after proving
creditworthiness. ERA suggests that this program could be coordinated
and administered through the City's Economic Development Office.
Recommendation 6 Encourage and Protect Commercial
Development Opportunities on Priority
Development Sites
For the near term, ERA considers the greatest opportunity for action by
the City (and eventually the DDC) to be a very important redevelopment
site in downtown Georgetown -- the Hewlett site.
The Hewlett site is currently for sale and includes approximately 23,000
square feet of showroom and service area space. The site also includes
head -in parking for 28 spaces. This portion of the site includes .54 acres
of land.
Just east of the above site is the vehicle sales lot, which is also for sale.
The site includes 1.32 acres and the existing 12,000 square foot building
will be taken down as a condition of the sale. The asking price for both
sites is $1.79 million, or about $22 per surface foot. Clearly, at this time,
the Hewlett site could be the most significant property in downtown
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available for redevelopment. However, if it is not a candidate, there are
others. Over the past fifteen years across the United States, auto
dealerships have relocated from their former locations to less valuable
sites, typically located along major highways. Development of the Auto
Dealership park south of Georgetown on I-35 typifies this pattern. The
issue of how to redevelop former dealership sites is more market specific.
As a redevelopment opportunity, the Hewlett site offers a number of
advantages:
• The property is well located, 1 1/z blocks off the square, with a
prominent. half block of frontage along Austin Avenue and
approximately one and a half square city blocks of developable area
on two adjacent blocks.
• The site is already assembled, makinglarger projects possible
without the economic burden of assembly. The fact that the site is
already assembled makes it potentially more valuable than a series of
multiple owner parcels on the same block.
The structures on the property are not historic, and could be
1
• demolished to make room for appropriately designed, more intensive
1 land use development. ERA would suggest that an urban mixed-use
project (office or residential on upper floors with retail and parking at
1 street level), designed to be consistent with the Downtown Design
1 Guidelines parameters for building heights, materials, etc., should be
the target use for the Hewlett site.
1
• As the Hewlett properties are located on two different blocks, the
1 developable parcels lend themselves to either one single project or a
multiple phase project.
The largest Hewlett parcel (between 9t and 10`h along Main Street)
has sufficient space for an optimally sized parking structure
(approximately 130 feet by 200 feet), as well as for two to three
floors of commercial development space.
At $22 per square foot, the land costs are relatively modest compared
® to more urban examples. If a three story development is assumed, the
land cost per Floor Area Ratio (FAR) foot is about $7.
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It is reported that the Hewlett site has also been considered as a potential
parking lot and recreation services site for the adjacent Baptist Church.
While ERA applauds retention of churches in downtown areas for the
stability and weekend traffic they provide, we would not encourage
transfer of the Hewlett site to a church -related use (whether for parking,
recreation buildings or other activities). Since downtown and its
economic future are primarily commercial, transfer of the site to the
church would not represent the "highest and best" economic use for the
property. For the long term, acquisition and use by the Baptist Church
would preclude the opportunity to encourage development of commercial
uses that could activate downtown all week long, and provide new
expansion areas for retail/office (and potentially upper floor housing) in a
location that would expand and reinforce the square as a retail
destination. In ERA's view, the Hewlett site should remain in
commercial use as part of downtown's property tax base, and should be
used at a higher level of intensity than either an automobile sales location
or a Sunday -oriented church facility would provide. However, if the
purchase by the church should take place, ERA recommends that any
current and future development should be designed to blend the project
with architecture of the downtown commercial district, according to the
Downtown Design Guidelines, so that the overall character of downtown
will be reinforced appropriately.
ERA would suggest that a combination of retail on the ground floor (at
about $18-20 per square foot in rent) with two floors of housing above
could work if some financial incentives (such as property tax abatement
or financing cost write-downs by the City) could be structured into the
deal. At that land cost, residential rentals would require about $1.35 per
square foot in rent, or about $1,000 for an 800 square foot apartment.
This is above current rental rates in Georgetown, but over time and if
suitably designed and appointed, we believe that a limited number of
units would be supportable in this configuration. Class A Commercial
office space would also be a possibility for upper floor use (instead of
rental housing), but would likely require a build -to -suit tenant looking to
achieve rents below Austin rates. Achieved rents of $15 to 18 per square
foot for office space are slightly higher than those currently reported in
downtown Georgetown, although street level storefront office space is
reportedly achieving rents at approximately $3 over retail rents (or about
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$15 per square foot). Based on this information, it appears that over time
the project should prove viable. It will take a visionary developer,
interested tenants and assistance by the public sector to make the project
work, but the economic and design benefits for downtown Georgetown
would be substantial.
1
The economics that determine decisions for conventional real estate
projects are relatively straightforward — if the amount of rent generated
by the project will not cover the costs of development (land, site
preparation, building construction, project financing, tenant incentives
and required profits for the developer), the project will not be viable
s
financially. Another way to describe the issue is that, if all the costs
generated to develop and construct a project require rents higher than the
local tenant market can reach, the project would not be considered a
reasonable investment.
During ERA's research in Georgetown, it was asked whether housing or
S
office development was a greater contributor to downtown retail.
Assuming that market demand is available for both uses, the answer is
complex. On a social level; housing provides 24 hour animation to
downtown areas, but is more costly to construct and manage than office
space. Office development typically requires more parking than
residential uses, but costs less to construct and generates higher rents per
square foot. Based on what we learned about current property values and
market trends, it appears that, assuming that office tenants are interested
in downtown Georgetown, the basic economics of developing a multi -use
office project of some scale are workable on a downtown site, preferably
the Hewlett site.
1
It will be increasingly important that retail continuity be maintained
around the square and on the adjoining blocks to offer potential for new
growth over time. ERA's recommended mixture of uses for key
redevelopment sites offers an example of a solution by which
Georgetown can both sustain retail animation along the streetscapes
s
while also accommodating office expansion demand in alternative/upper
floor configurations.
ERA recommends that the scale of any project constructed on the
Hewlett properties should be designed for two to three floors. The ability
S
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to access high speed internet service on this site (either through hard
wired capacity or broadband) would increase its marketability for office
use; and the lower rent levels in downtown Georgetown would be a
marketing advantage for north Austin tenants, once the technology
economy stabilizes.
Other Priority Sites
As described earlier, ERA does not consider the Hewlett site to be the
only priority development opportunity in downtown Georgetown. Over
the longer term, other sites downtown should be considered for
redevelopment. Generally, these sites include underutilized land (such as
surface parking lots) whose values should appreciate to levels higher than
parking would justify, properties whose current uses may be better
located in other parts of Georgetown due to proximity to markets or
transportation, or less valuable real estate (light industrial, warehousing
and auto sales), or single story non -historic buildings whose uses might
be better served in other locations or in higher density development.
These sites include:
City -owned properties on the square —
ERA suggests that the current City Hall building may need to expand
into a larger space at some point in the future, or may consolidate certain
City offices into one downtown location. If so, the single story building
and its adjacent surface parking lots could provide a development site for
a multi -floor building, potentially including office uses on upper floors
and retail or food service at street level. Reuse of the City Hall (either
consolidation within the existing building or potential to add a second
floor) is currently under consideration.
• Underutilized parcels west of the square currently used as surface
parking —
These lots could offer future development sites for structured parking
and/or commercial development, as the market grows over time. For the
immediate future (likely the next three to five years), they can continue to
I rovide accessible parking for the County staff and for downtown
shoppers and workers. Future uses, densities and development
parameters should be addressed in a new comprehensive Plan (The
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Century Plan) to accommodate parking requirements (which will
eventually be provided in parking structures), consistency with the
Downtown Design Guidelines, and appropriate transitions to the
surrounding residential neighborhoods.
• Gold's Department Store -
Gold's has been a presence "On the Square in Georgetown" for decades,
and it is hoped that it will continue to function as such into the
foreseeable future. If however, the current use as a department store
should ever change, ERA recommends that these three buildings be a
focal site for retail re -development. If a single retail user is not available,
the buildings can be subdivided into multiple retail or food service
locations.
• Draeger Motors
If Draeger Motors should ever elect to relocate outside of the current
downtown location, the site offers redevelopment potential similar (size,
proximity and visibility to Austin Avenue, proximity to the square) to the
Hewlett site for retail/mixed-use as three story office or housing on upper
floors with street -related retail below. The dealership's location flanking
Austin Avenue north of the square is a key gateway location that should
provide a transition from the residential/County Government areas to the
north and west into the downtown commercial district.
Recommendation 7 Protect Key Retailers already in Place
The retail strategy should offer some degree of protection for existing
key retailers, such as the local bookstore, women's apparel, household
products and unusual gifts by not recruiting future retailers that will
duplicate current inventory. This does not mean that there is not room
for other specialty stores selling compatible items; the critical mass effect
of having several apparel stores, for example, would increase the drawing
power downtown, since more shopping options would exist.
Georgetown will compete more effectively against nearby big box and
discount store developments by reinforcing the range and assortment of
specialty stores that offer a distinct retail `point of view', or
merchandising concept of the owner. Large discount stores do not have a
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particular concept other than volume sales and lower prices.
Georgetown's downtown merchants offer the alternative to
undifferentiated suburban discount stores, but the mix (supported by both
resident -based and an increase in capture of visitor -based sales) needs
more offerings. The downtown revitalization effort can contribute to the
success of these retailers through some of the initiatives mentioned
above, such as cooperative marketing efforts. The City government
and/or the DDC could offer financial incentives if certain key retailers
are considering /being forced to relocate to another site as an inducement
for them to remain in downtown locations. If politically tenable, the City
could consider allowing abatement of property taxes (or some percentage
of them) to allow investors to recoup their property investments during
the first years after completion. Finally, simply organizing a system of
expedited public review and approvals for downtown locations (as part of
the public/private retail development strategy) would ease the transition
for existing and new retailers to consider downtown as an option.
Recommendation 8 Seek Downtown Partnership
Opportunities with Southwestern
University
ERA suggests that Southwestern University is potentially a much
stronger asset for downtown retail and redevelopment than is currently in
practice. At the most fundamental level, only a few stores appear to
target Southwestern students and family visitors as customers, either with
student -oriented merchandise or with University -oriented marketing
efforts. As described in the Market Demand Analysis in Section III,
Southwestern Students can provide significantly greater market support if
retailers provide the merchandise and food service options they want.
Improving access to downtown through a transportation shuttle system
(even if originally tested as an experiment) would increase opportunities
to connect Southwestern students with the goods and services available
downtown. Some stores offer student discount coupons or special
promotions at back to school time and during Parents' Weekends.
Increasing collective marketing efforts for downtown businesses,
extending store hours at times or seasons suitable for students, hiring
students (since they will attract other students as shoppers) or other sales -
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oriented strategies can be employed to build and reinforce student traffic
downtown.
On a longer-term level, ERA also recommends that Southwestern be
approached by the DDC or other downtown activists about becoming a
downtown property owner or investor in real estate. Dartmouth College
has an extensive series of local real estate holdings as part of its program
related investments from the College's endowment funds. The College
has established a real estate division to develop student and faculty rental
housing, retail/commercial space, and consumer service projects to
provide services to its students and staff. Other Universities have
committed student or faculty housing allocations to off -campus locations,
effectively guaranteeing that conventional financing will be available by -
providing a `built-in' tenant base. Non -campus location sensitive
University offices can also be located on upper floors in downtown
buildings (such as administrative back -of -house facilities) as another
`guaranteed' tenant approach that will both fill space and offer long term
revenue for private developers.
A number of smaller colleges and universities are now investing in local
real estate projects (particularly if they serve their students, staff and
visitors) as part of their endowment programs. This is occurring not only
because their commitment builds closer ties to their home communities,
but also because they sometimes require lower levels of investment
return (Universities average between about 8% and 12% return on equity
from their endowments; charitable foundations earn less, on average) and
can foster joint venture investments in real estate with local developers or
alumni groups. Whether viewed strictly as consumers, or potentially as
investment partners, Southwestern University can be better integrated
into the economic life of the downtown area in Georgetown. ERA
suggests that"a meeting with the University President, senior
administrators and alumni involved in real estate development and
investment should be explored within the first few months of the
downtown retail project.
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Recommendation 9 Maintain Downtown Access through
Coordination with TxDOT
The Texas Department of Transportation (TxDOT) has undertaken
several massive capital projects that have had, or will have a significant
impact on downtown Georgetown. ERA participated in public hearings
on replacement or repair of the Austin Avenue Bridge north of
downtown, and the widening of I-35 has caused disruption of access to
interchanges, largely without any signs routing travelers to downtown
Georgetown. In Texas as in many other states, transportation planning
has not often been based upon, nor has it adequately addressed the impact
on traditional downtown areas of major increases in road capacity, traffic
volume or placement of by-pass roads. Due to their potential negative
impacts on downtown Georgetown, ERA recommends the following:
That the City and citizens oppose widening of Austin Avenue through
the downtown area and along the square;
That replacement of the North Austin Avenue bridges with larger, higher
capacity/speed bridges, or replacement of the bridges with a design that
is inconsistent with the character of the historic core should not be
considered acceptable, and a more design -responsive solution be found;
and
That TxDOT reconsider Georgetown as a prototype for TEA -21 Heritage
Area funding to pay for a series of signs, markers and other urban design
elements to reinforce the downtown's historic character.
Recommendation 10 Develop a Leasing Brochure for
Downtown Retail Properties
Just as shopping malls create leasing brochures to market properties and
attract retail tenants, ERA recommends that Georgetown develop an
effective leasing brochure for downtown retail properties. The purpose
of the brochure is to `sell' downtown as a potential retail location, most
likely to prospective tenants who may not be familiar with the specifics
of the market. As mentioned earlier, ERA recommends that the brochure
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package should include a summary of information extracted from this
report, including general data on Georgetown's demographics, the
regional trade area characteristics, income information on the resident
population, visitor and tourist volume, highway traffic statistics, and
property taxes and values.
The brochure package should be flexible enough in format to
accommodate individual property sheets on specific sites or locations that
are available/are being marketed. Property sheets should include photo
of the site or building, information on its size, age and condition, rent
levels or asking sales price, current income (if the property is for sale),
available incentives (such as availability of tax credits, tenant allowances
or other owner contributions), and contact information for the broker or
building owner. The leasing brochure can be a powerful tool in
presenting opportunities in downtown Georgetown, and should be
formatted for easy updating or customized packaging (for example,
including retail buildings for those interested in storefront space, historic
structures for those interested in older properties, light industrial or
warehousing properties for those interested in redevelopment, etc.
The leasing brochure can also become part of a larger, ongoing
advertising campaign for downtown Georgetown to promote shopping
and tourism to targeted markets such as urban dwellers in Dallas and
Houston as well as signs along I-35 to draw pass-through traffic to
downtown attractions.
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Recommended Action Plan Schedule
The following recommendations are based on the Needs and Possibilities
described in Section II, as well as ERA's assessment of potential local
resources, commitment to the downtown retail development program,
and market opportunities
Months 9-6
• Establish a non-profit Georgetown Downtown Development
Corporation
• Use the Property Book to identify and target priority and second tier
retail locations downtown for recruitment of new retailers and to plan
for relocation/retention of current tenants needing new locations
• Seek and establish special funding incentives to assist retailers in
locating/relocating to downtown properties — TEA 21 with TxDOT,
Texas Small Business Loan Programs, etc.
• Fund and complete a Downtown Master Plan
• After locating alternative locations for County employee parking,
enforce a no -all -day -parking on the square policy
• Design the gateway elements and investigate specific site locations,
costs, sponsorship opportunities, etc.
• Revisit Liquor By the Drink as a public referendum to encourage
downtown restaurant development
• As the Century Plan update evolves, make revitalization/stabilization
of downtown a top planning and development priority
• Structure and conduct telephone and visitor surveys, and save into a
database for future review and updates
• Meet with TxDOT to coordinate I-35 construction, proposed bridge
repairs and replacements and other projects which will have an
impact on downtown to minimise negative effects
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• Develop the Leasing/Recruitment brochure and begin the recruitment
program; structure the retail recruitment team and complete at least
one visit to another community seeking retailers
• Initiate discussions with Southwestern University to explore needs,
opportunities and structure of one or more potential University
investments in downtown Georgetown
s
Make the Hewlett site a priority for downtown mixed-use commercial
'
development
Months 7-18 and Beyond
Seek a developer or development team to create the Hewlett site
retail/mixed use project
Pursue retail development/redevelopment of other priority sites, as
they are available
Purchase or redevelop additional parking in the downtown area for
retail customers
• Construct gateway elements at key entry points
• Program events and performances at the Palace Theater to bring new
audiences and customers downtown and market these events along
with other activities to attract overnight visitors to Georgetown
Recruit two to three new restaurants downtown to complement
Wildfire, catered events at Geaux Fish, and others and create a dining
district that can be promoted along I-35 as an alternative to fast food
along the access roads
36
• Continue media outreach (Williamson County Sun; Austin
American -Statesman and other major city newspapers, Texas
36
Monthly, Southern Living, etc.) to keep Georgetown visible, both to
'
retailers and shoppers
• Establish coordinated opening hours for downtown stores to create
some level of consistency and predictability for customers
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Focus marketing, events and special activities on Sun City residents,
visitors traveling along I-35 and Southwestern University students; to
differing degrees, they each represent a large (and largely untapped,
at least by the downtown area) potential market that can fuel
expansion of downtown retail offerings
If the capacity and authority of the DDC is limited (rather than
expansive), explore and modify/create alternative public/private
development entities to encourage retail and revitalization in
downtown Georgetown.
Without a plan and serious commitment to these and other
recommended actions, ERA suggests that downtown will continue to
decline as a retail destination and a significant overall contributor to
the local tax base.
The following concluding section describes two approaches to downtown
development implementation structures that could work for
Georgetown's downtown retail redevelopment strategy.
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Longer Term Implementation Strategies and
Approaches
The following two development scenarios are more oriented toward
private initiatives, and would require substantial commitment by
private interests to be' created. Both approaches are intended to focus
on the gap between conventional financing requirements and the
available cash flow from rents that often make downtown/mixed-use
projects more complicated to fund than single -use strip development.
Each approach is based on established implementation practices
(such as Real Estate Investment Trusts, which have been used for
over four decades), but the particular combinations of components
with a specific downtown focus -are relatively new and untested.
However, ERA also believes that either approach could offer promise
for Georgetown if the right investors and investment priorities can be
organized to address opportunities in the downtown's retail district.
Establishment of a Local Real Estate Investment Trust (RE17):
One option would be to establish a locally organized Real Estate
Investment Trust or REIT. It should be noted that creating a REIT
requires specific legal and financial expertise, and should be pursued
with the involvement of specialists.
Background History
Real Estate Investment Trusts (REIT's) were established by law in
1960 under the Eisenhower administration as a means to encourage
investment in real estate properties and project development by a
diverse range of investors. Over the past 40 years, REIT's have
grown to a $120 Billion industry. While a number of changes and
refinements of the initial enabling legislation have occurred since
REIT's were established, the basic structure and purpose has
remained in place since 1960. Some of the most relevant changes
since REIT's were established include the following:
• the shift from real estate investment motivated by the potential for tax
shelter (particularly under the Tax Reform Acts of 1976 and 1986) to
real estate investments motivated by more traditional fundamentals of
income and appreciation strengthened the credibility of REIT's as an
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investment and development vehicle in the capital markets and
among smaller investors.
the Tax Reform Act of 1986 changed the operating structure of
REIT's to allow them to manage their investment properties directly,
placing greater control in the hands of the trustees or directors as well
as a greater responsibility to shareholders to invest and manage for
profitability
• a tax policy change in 1993 removed a significant barrier to pension
plan investment in REIT's, opening a significant new capital source
to REIT projects and resulting in expansion of both the number and
size of REIT's in the U.S.
• provisions enacted in 1997 simplified aspects of REIT operations
What is a REIT?
A REIT is a corporation or business trust that receives and uses
investment capital from many sources and investor types to acquire,
develop, manage or provide financing for all forms of real estate. REIT's
function much like mutual funds for real estate, in that investors can
participate in a diverse portfolio of buildings or real estate product types
under professional management. Shares in REIT's are freely traded;
many REIT's are available on the major stock exchanges.
Corporations or trusts that qualify as REIT's generally do not pay
corporate income tax to the IRS, a unique investment feature shared only
with mutual funds; this is one of the most attractive aspects of REIT's.
Most state tax policies follow the Federal exclusion, and also do not
require REIT's to pay state income taxes. This means that nearly all of a
REIT's income can be distributed to shareholders, and there is no double
taxation of income to the shareholders (e.g., while REIT dividends are
taxable as personal income, a greater portion of net revenue is available,
and not taxed at the corporate level prior to investor distributions).
Unlike a partnership (another structure frequently used for small scale
real estate development projects), REIT's cannot pass its tax losses to
investors. This difference results in a simpler tax reporting system for
REIT's. .
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To qualify as a REIT, a corporation or trust must comply with certain
provisions within the Internal Revenue Code. As required by the Code, a
REIT must:
• be a corporation, business trust or similar association
• be managed by a board of directors or trustees
• have shares that are fully transferable
• have a minimum of 100 shareholders
• have no more than 50 percent of the shares held by five or fewer
individuals during the last half of each taxable year
• invest at least 75 percent of the total assets in real estate assets
• derive at least 75 percent of gross income from rents from real
property or interest from mortgages on real property
• pay dividends of at least 90 percent of REIT taxable income each
year
The number and types of investors in REIT's are varied and diverse.
Shares in REIT's are held by private investors (U.S. residents as well as
overseas investors), pension funds, endowment funds, insurance
companies, bank trust departments and mutual funds. Private individuals
who invest in REIT's are usually attracted by three characteristics:
• REIT's pay annual income distributions, so (assuming that the
investment property portfolio is generating net income) investors
receive income each year
• Because real estate tends to retain its value more effectively than
other types of depreciable assets (inventory or machinery, for
example), well -selected properties in the portfolio can offer
appreciation in value, increasing the value of the shares
Unlike other types of real estate investment, REIT's offer liquidity to
investors, as they can be traded or sold like other public equities, and
with no minimum purchase required
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How Are REITs Differentfrom Limited Partnerships?
REIT's are organized and operate differently than limited
partnerships. As a publicly traded financial instrument, the general
oversight and governance of REIT's is more open to public scrutiny
and review than are limited partnerships. For individual investors,
the annual tax information from REIT's is reported as an IRS form
1099. For limited partnerships, the reporting format is a K-1 form,
more complex than 1099's.
• Limited partnerships may include any number of limited and general
partners, with the general partner having the greatest controlling
interest. REIT's require at least 100 shareholders, and the investors
elect the Board of Directors for the REIT.
Limited partnerships can pass along losses to investors, while REIT's
do not.
REIT's can be used for 401(k)'s and Individual Retirement Account
(IIIA) investments, while limited partnerships cannot.
There are hundreds of REIT's operating in the U.S.; over 90% of these
are Equity REIT's,. which are organized to own real estate. Revenues of
Equity REIT's come principally from rental income, and therefore
require that owned properties be purchased at reasonable prices, and that
tenants are able to pay market rents. This accounts for the significant
level of investment by Equity REIT's in shopping malls occupied by
credit worthy tenants, as opposed to downtown retail/commercial
buildings in small towns. It is possible, however that a locally owned
REIT could be structured to provide a lower rate of return to investors,
should they agree to accept a less than maximized IRR (internal rate of
return). While this may seem counter intuitive, it is possible that some
investors would consider an acceptable level of return (say 6%-8%
return, somewhat over conventional savings rates) but below a maximum
return required by many real estate investors (which generally yield a 15-
20% return). This approach might also be described as a `public interest'
REIT.
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Staggered Return Equity Based Development Corporation
The second potential development structure which might be created in
Georgetown addresses the requirements of real estate investors from a
different perspective. Many real estate investments are made based on
the basis of a short term, high yield requirement, often with the goal of
selling or flipping the project within seven to nine years. The real value
return on quality real estate, however, comes after many years, often
when the financing is paid off. With the exception of reinvestment for
maintenance and repairs, all other rental revenues are profit. Given the
short-term requirements of the financial markets, it is often difficult to
find what is sometimes called "patient money", or investors who can wait
for twenty or more years to receive a strong return on investment.
A new model for this type of project is currently under development in
Albuquerque, New Mexico. The project combines historic structures and
' new infill development adjacent to a historic train station and includes
retail, entertainment, residential and office components.
The structure of the project's financing is innovative in that it addresses
the different priorities of different types of investors at different times in
the development schedule. Initial equity for the project came from three
sources:
Conventional financial sources (banks and institutional investors)
provided short term financing with the understanding that they would be
taken out after 7-9 years at pre -agreed rates and returns. In exchange, the
short term investors also agreed to take a predetermined equity buy-out at
a rate acceptable and meeting their loan criteria. In other words, the
short-term money can get in and get out of the project under terms they
find acceptable, but they relinquish long-term equity appreciation.
The mid-term financing was provided by a charitable foundation as an
investment of its capital endowment — an investment that does not require
maximum returns but does require a stabilized return of 6-8%. The
foundation's equity contribution reduces overall financing costs to the
project's long-term investors, but does guarantee a share of cash flow
after the project has stabilized its revenues at a level acceptable to the
foundation's requirements. Revenues from the endowment investment
will then be used for the foundation's charitable purposes. The financing
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for the mid term will carry the project through its middle stages, from
years eight through sixteen. At the end of the mid-term investment
phase, the Foundation can review its equity performance, appreciation of
the project and other market factors to determine how its investment will
be modified (outright purchase of the project, reduction of its share of
equity for increased cash flow or buy-out by other partners).
The final (and smallest) part of the project's equity was contributed by
members of the project's development team that are willing to accept low
returns during the early stages of the development cycle, and to wait for
far higher returns on their investments over fifteen years or more. Their
belief is that the project is a long-term investment, and their relative share
will be worth far more over time than the short-term returns would yield
to investors with shorter -term priorities. This part of the investment
group is the most "patient" of the three, but has the largest stake in the
long-term success of the project.
Of course, for this structure to work in Georgetown, several important
elements will be required. First, there must be a viable project of
sufficient scale to warrant such a.complex financing structure and
schedule. A forty to fifty year investment building constructed on the
Hewlett site, for example, could meet this standard. The project would
need to meet conventional financing requirements for the first part of the
cycle (a viable balance between construction costs and achievable rental
rates, for example, and a belief that property values and owner
confidence will remain strong in downtown Georgetown), and be able to
attract funding from short-term investors who will want to get out of the
project after seven or more years.
The second critical element is a charitable foundation or other entity with
the resources and willingness to commit part of its endowment to the
project as a long-term equity investor. While ERA has not identified
such a source, we believe that there are potential charitable organizations
that could provide such funds.
Finally, the project would require a developer or development team that
can contribute both time and funds committed over the long run, but
whose confidence in the project's potential over one or two decades will
warrant this degree of patience in exchange for a far higher return on
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investment in the outlying years. The complexity and coordination
required to carry out this approach are unusually well suited to downtown
mixed use projects, as they tend to take a longer time to organize,
finance, get approved, construct and lease. But this model is being
carried out today, and ERA suggests that it could work in Georgetown, as
well, should the right mix of public and private entities come together.
Not all investors see projects as the maximum amount of money that can
be generated in immediate returns alone.
ERA considers the future potential for downtown Georgetown to be
significant enough to warrant exploration of this type of structure as a
basis for new commitments to the stability of the town over. time. It is a
deal structure that acknowledges the requirements of immediate
investors, but looks beyond conventional investment horizons as well.
This approach offers a private incentive and a public benefit to its
charitable partners, and (assuming a quality project and good
construction) profitability at each step in the cycle. In Georgetown's
case, it is possible that Southwestern University could fulfill the role of
the `patient money' funding source, either as a program related
investment from the University's endowment funds (an approach
undertaken by Harvard University, Dartmouth, the University of
Cincinnati and others), or could be a focus of investment by
Southwestern alumni who would consider investing in downtown
Georgetown's future as a long-term return gesture toward maintaining an
attractive environment for the University and its students.
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VIII. Addendum
This Addendum has been added subsequent to the terrorist
attacks in New York and Washington, and is offered with two
purposes. The first is to suggest near-term tactical steps for
downtown Georgetown in response to short-term changes in the
national and regional economies, temporary shifts in the
spending behaviors of residents, and significant (although not
permanent) changes in the tourism and visitor attraction
industries as they might affect allocations of time, money and
effort to bring new businesses downtown.
ERA suggests that each of these will affect both the tactics and
the timing of certain activities to support continuing downtown
renewal, but they do not mean that the downtown renewal
effort should stop or be substantially redirected — rather we
see several opportunities for Georgetown that the first part of
this section describes. It should be remembered that tactics are
specific actions, but they can fit within a larger strategy. For
Georgetown, we suggest that in all activities, recruitment efforts
and programs, emphasis on the "memory of the market", which
often favors familiar downtown settings over malls. and strip
shopping centers, should be emphasized. -
The second part of the Addendum reviews the David Love
Building as a case study in how the vacant structure should be
analyzed and marketed to recruit new tenants for its retail, office
and residential components.
Tactical Steps for Near Term Action
The immediate effects of the terrorist attacks on Washington
and New York on September 11, 2001 have rippled through a
number of industry sectors affecting Texas and the nation.
Perhaps the most seriously affected is the travel and hospitality
industry, which, although it sounds less significant than finance
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or manufacturing, is in fact, the third largest industry in the U.S.
Major reductions in both business and leisure travel have
resulted in mostly empty planes and hotels, and in reduced sales
in traveler -dependent restaurants and businesses. Visitation to
museums, attractions and destination sites is off by up to 75%,
and, in the two weeks since the attacks, retail sales (including
food and beverage) have dropped, indicating reduced consumer
confidence, at least for the near term.
The timing of these factors are of particular concern to retailers,
as the approaching holiday season would normally account for
one-third to one-half of total annual sales for many stores. The
impact of this slowdown on Georgetown could parallel national
trends, with reduced tourist/visitor customer traffic and slower
holiday sales. However, while this is a time for caution and
careful flaming of expectations, ERA believe that a limited
rebound (not to pre -attack levels) is pending, and that there are
opportunities that Georgetown can address over the next six
months while the economic picture stabilizes. We suggest that
the following opportunities be pursued:
First, develop a realistic assessment of what will be
available in human and financial resources. Will the
1 proposed DDC have sufficient funding to hire one or more
' staff, or will its establishment be deferred temporarily and
responsibilities for downtown renewal be allocated among
current staff and volunteers? Determine how hotel
occupancies might affect hotel/motel tax revenues used for
tourism promotion, and how they might be supplemented.
Then, allocate the costs to prepare the downtown retail leasing
® materials, even if the initial number created is small. Without a
professional appearing leasing brochure/package, ERA believes that
Georgetown will have a more difficult time establishing credibility
. with prospective tenants.
.
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• Protect the role of downtown in completing the Comprehensive
Plan Update. A slowdown in the national and regional economy
will likely result in postponement/delay of some pending projects that
would create new competition for downtown Georgetown. In ERA's
opinion, it is both prudent and appropriate to weigh the relative costs
and benefits of extending systems and infrastructure to competitive
retail locations if those locations would diminish downtown's
contribution to Georgetown's tax base. In an ironic way, a
slowdown could be an opportunity to complete sensible growth
planning without the pressure to approve and develop new projects
quickly.
• Focus on the coming Holiday Season as a time to celebrate
`Hometown Values" in downtown Georgetown. Add
special events that will bring more people downtown —
singing, performances, a holiday street fair or other
opportunity for local residents to come together in a familiar
setting. Americans are looking for links to stability, and, at
some level, the presence of the traditional downtown setting
will be comforting to many consumers. Make Georgetown
the scene of an old fashioned Holiday season. Also, until
long-distance leisure travel begins to recover, there is an
opportunity to draw auto -based visitors and tourism for
locations within easy driving distances of large population
centers. Georgetown is well placed geographically to draw
people from Austin, Dallas -Fort Worth and Houston,
assuming that there is. a good two-hour to full-day
experience waiting for them when they arrive or pass
through. As a defense against decreased sales, it will be
important to attract as many different types of shoppers to
the downtown area as possible. The longer-term objective
should be to increase the number of overnight visitors, as the
greater amount of time spend in Georgetown will correlate
to greater amounts of money spent (shopping, events,
lodging, meals, etc.).
• Add extra customer services such as gift wrapping,
shipping for out-of-town shoppers or shopping assistance for
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Southwestern students to reinforce downtown Georgetown's
image and role as a place that takes care of its customers. In
other locations, gift wrapping services can be coordinated on
a downtown -wide basis, and could be used as a fund raising
method for one of the recently established national disaster
charities, a local church or other volunteer organization.
These types of enhanced services can re -build customer
loyalty, a behavior that is consistent with appreciation of the
character of older downtown areas — the emotional
connection to what is viewed as a simpler, better time.
In response to the closure and relocation of the Orient
Square restaurant out of the Masonic Building and the
conversion of Geaux Fish to a catering/events venue, ERA.
recommends that restaurant recruitment should take the
top priority in the coming weeks and months. Despite
economic downturns, we believe that residents and visitors
will still want to eat out. The fact that Orient Square had a
working kitchen in it is a leasing advantage for another
restaurant, as there are already equipment hook-ups,
ventilation and exhaust systems, and perhaps re -usable
kitchen equipment for another operator. Any equipment or
other systems that are already in place will reduce the need
for initial investment and make it easier for an operator to
consider the space. ERA also recommends that the larger
restaurant recruitment strategy include Geaux Fish as a
potential location. While it is positive that the building is
still in use for catering and events, the best solution will be
to increase the assortment of full time restaurants downtown
and market the area as a destination dining district.
If previous national conflicts offer an indication of how
Americans will alter their leisure travel plans, it might be
expected that major long-distance vacations will be
cancelled postponed, but that the number of short, close -to -
home trips will likely increase. Georgetown should use the
"Close to Home/Easy to reach by Car" themes in marketing
events, shopping days or weekends and packages with B &
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B's as an interim tourism recruitment effort (once again,
expanding the limited number of restaurants would help).
• Coordinated, extended store hours should be arranged
between downtown businesses, especially during the coming
holiday season. The potential for slower sales should be
considered a wake-up call to merchants who have resisted
extended evening hours on one or more nights each week.
Unless the stores are open when customers are available, the
sales will go elsewhere. It would be better to have stores
open later and remain open later (on a coordinated basis)
than to have inconsistent hours between businesses on the
same nights. Evening hours (advertised and promoted in the
media) would also allow more on -street parking until the
issue of Courthouse employees parking around the square
during the daytime is resolved.
• The timing for the nation's (and Texas') economic recovery
is unknown; in the interim, downtown Georgetown
advocates may wish to defer some of the initial activities
outlined in Section VI. Implementation. But, in our view,
pursuing establishment of a DDC should not be delayed.
The question of funding it through a BID (Business
Improvement District) or PID (Public Improvement District)
should be explored, based on the amount of money that can
be raised from existing uses. Most big city BID's, such as
the one established in downtown Austin, receive the greater
percentage of their revenues from office space users, which
subsidize the smaller amount collected from retailers.
Because Georgetown does not have a major concentration of
office space downtown (and should remain low -scaled in
future development), ERA suggests that relying on a `self
tax' (through BID or PIDfunding alone) may need
supplemental funding to approach the scale of the downtown
renewal project.
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The David Love Building
This Addendum section provides a methodology and case study
on how the recommended leasing strategy and downtown
development recommendations might be applied to a building in
Georgetown. The purpose of the Addendum is to clarify the
process by which property owners and retail tenants can each
understand the economic priorities faced by the other.
Commercial buildings in downtown Georgetown vary in size,
height and use. Some are one-story structures containing only
retail on the street level, while others are two and three story
buildings which have retail space on the street level and. upper
floors that contain (or could be renovated to contain) office
and/or residential uses. Rents charged for retail spaces also vary
depending on the condition of the building, the suitability of
street -level space for retail uses and the willingness of the
landlord to provide incentive funds for tenant space
improvements, to structure fair leases, or other practices that
will reduce the level of initial financial risk for retail tenants.
Differences in expectations about what retail space is worth
have resulted from (1) a misunderstanding by landlords about
how much rent their retail tenants can afford to pay, (2) inability
of retail tenants to generate sufficient sales to justify higher
rents for strong locations or high quality space, (3) property
owners paying too much for a building, and then expecting retail
space rental revenues to carry all of their investment costs for
debt and operations, or (4) property owners attempting to charge
more rent than their spaces are worth (due to lack of investment,
deferred maintenance, or other deterioration). A single use
retail building therefore places a burden on its tenant, as the
landlord has no other means to generate revenues than the retail
rent. Each of these scenarios was mentioned to ERA in our
interviews, so misunderstandings and unrealistic expectations
about what constitutes a reasonable rent are clearly an issue in
Georgetown.
To illustrate how property economics and trade-offs can vary,
the David Love Building was selected as a -prototype. The
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(
David Love Building is an attractive historic structure on the t
west side of the square that was one of the first historically
renovated buildings in downtown Georgetown during the early
1980's. The David Love Building offers a key advantage over
some other buildings around the square and downtown, as it
includes more than just retail space. The building is an
appropriate example for several reasons; each could also be
considered a leasing characteristic and/or advantage in
marketing the space:
• It is in a key location on Austin Avenue, with superb visibility from
the square for both visitors and resident shoppers.
• The building includes retail space at the street level, as well as office
space and a residential apartment on the upper floor.
• The building is currently vacant, and available for lease.
• The size and configuration of the retail space is appropriate for many
different categories of specialty retail products — furniture,
housewares and decorative items, apparel, specialty gifts, an art
gallery, or other retail or consumer services. It also could be
configured differently if the size is too large (at 1,941 square feet of
retail space) to accommodate a new retail tenant.
The approach to marketing will be shaped by several factors that are real
estate -based:
(1) What is the amount of rental revenue required by the owner?
Can the retail space alone cover its share/more than its share of the
carrying cost of the building? In other words, can the retail rent cover
debt service and most of the utilities, etc., or will rent be required from
office space and the apartment upstairs in order to cover basic costs? The
higher the `sunk costs' carried by the property owner (renovation costs
required to prepare the space for a new tenant, mortgage debt, required
return on equity, insurance and utilities, property taxes, etc.) per square
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foot, the greater the burden on the tenant to produce higher sales. As an
example, if the asking rent on the space is $15 per square foot (per year),
the annual required rent is just over $29,000, plus any pass-through costs
for taxes, insurance and utilities (at this rent level, these extras can add
$4-7 per square foot on top of the base rent). To make a reasonable
profit from the retail business, the retailer would conservatively need to
generate between $ 375,000 and $ 450,000 per year in sales in order to
justify the required rent level. These sales levels (carried over 1,941
square feet of leased retail area) indicate average sales ranges of about
$190 to $230 per square foot would be necessary for the tenant to be able
to survive.
But if the carrying cost on the building could be supported, at least in
part by a small office tenant (for purposes of this analysis, we will
.assume about 800 square feet of office space is available) at an office
rent level of $15 per square foot (discounted from recent asking rents for
street level office spaces, due to more limited access and visibility in this
location), the additional $12,000 per year in income for the property
owner is the equivalent of about $6 per square foot revenue for the 1,941
square foot store. An additional rental income from the apartment (for
purposes of analysis, we will assume $950 per month in rent) would
reduce the required rent burden on the retail space by another $4-5 per
foot, to allow the property owner to stay even against the required
carrying costs. Of course, there would be additional expenses associated
with improvements for the full 2,426 square feet of retail, office and
residential space, but the owner (or a potential investor) could provide
more tenant amenities for all three tenants, assuming that the purchase
price/carrying costs are in line with supportable debt and equity.
The point of this preliminary analysis is to demonstrate that commercial
real estate is an investment, and the financial/friancing realities of
purchase, ownership and maintenance and any required renovation all
factor into both the business plan for the owner and required rents from
tenants. Undercapitalized tenants or those whose merchandise lines
cannot generate sufficient sales to meet required rents cannot be
sustained. On the other hand, by having retail, office and residential uses
in the building, the financial risk for the property owner is spread over
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several uses, and the combined gross rents can support a higher value or
purchase price than the retail rent alone could cover.
(2) What types and mix of tenants would best fit in this space?
In the current market context, ERA suggests that, given the higher rent
levels that can be generated by office space and the fairly large selling
area at the street level, the owner of the building should be willing to
consider reconfiguration of the net selling area to accommodate a tenant
requiring about 1,250 square feet, approximately 65% of the current
leasible retail area. The reconfiguration should not create a permanent
disfiguration of the retail interior, but should be removable to allow for
larger tenants who might want the space in the future. The remaining
space can then be leased to an office tenant, probably a small
professional services firm, such as an accountant or attorney, which
wants to pay at or below market rents but wants a downtown location.
Costs for the reconfiguration will be covered by an initial investment by
the owner, and repaid (as part of the rent) by the tenants over the term of
the leases.. The apartment should be marketable to a professional or
others in the area seeking an interesting location and an unusual dwelling
downtown (as opposed to more conventional apartments in other parts of
Georgetown).
In trying to identify prospective retail tenant categories, it should be
remembered that, unlike shopping malls, there is no standard mix of uses
for downtowns based on a percentage of use types. While enclosed malls
might seek to lease 50 % of the Gross Leasible Area (GLA) to apparel,
50i.o to jewelry, 15% to shoes, 15% to food and 15% to gifts and general
consumer goods (for example), there is no magic mix allocation for
downtowns. Typically, downtowns have higher percentages of consumer
service businesses, lower numbers of apparel stores (since most chains
want to locate in the mall) and a higher percentage of space allocated to
entertainment and food service. As described earlier, the right mix of
uses for downtown Georgetown, in ERA's estimation, should encourage
more food service, at least for the next few years. The David Love
Building is not suggested for conversion to food service because it
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cannot accommodate modifications for the addition of a commercial
kitchen as easily as some other buildings downtown.
(3) How should the building be marketed?
First, the property sheet for the David Love Building should be updated
with current asking rents (assuming they are in line with the price paid
for the building) and balanced against other comparable achieved rents
downtown. This data can then be distributed in several ways:
A. As part of contacts to local commercial brokers and realtors who
know about prospective tenants;
B. As part of a downtown leasing brochure package detailing available
buildings. The package should include property data and
photographs, and the leasing package be sent to brokers in Austin and
beyond who might know of tenants interested in the Georgetown
market, but who have not yet sought space there; a local broker
should be used to cooperatively lease the space and share the
brokerage fee with out-of-town brokers or realtors; or
C. As part of any media publicity about Georgetown distributed locally
and outside the area; potential tenants may become interested when
they see the unique character of the building and its leasable units.
(4) Is the building eligible for any tax incentives?
Although the David Love Building is in generally good condition, and
probably would not qualify for rehabilitation tax credits (which require
that an amount equal to the adjusted basis of the property — value of
improvements, not including land — must be spent on rehabilitation), if
the example had not already been substantially improved, the availability
of tax credits for rehabilitation could also be a marketing tool for
potential investors (tenants cannot receive the credit unless there is a very
long-term lease).
am 110 Final Report
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The building should also be included in recruitment brochure materials
used by retail recruitment teams going from Georgetown to other cities
(see earlier section of report) to meet with prospective retailers. Since
the space is available now, the recruitment team should emphasize a
motivated landlord and that a lease agreement could be expedited.
(S) What type of lease structures make sense?
The approach to the lease structure for the building should be flexible,
with the landlord able to consider a longer-term lease, at a guaranteed
rate, that includes a lower minimum rent plus a percentage of sales after a
break point or average level of sales for that type of retail. Under this
type of lease, the tenant is obligated to share sales information on an
ongoing basis with the landlord in exchange for the landlord granting a
lower base rent level. In this way, if sales do not meet projections
covering a higher rent, the landlord shares in the risk by keeping the base
rent lower. If, however, the retailer is very successful and sales increase
beyond the base rent, the landlord is also able to share in the high
performance levels. The landlord structures the lease to share the risk
with the retail tenant in case of weaker performance, but also to share in
the upside in case of successful performance. Rents for the office and
residential spaces should each be charged on a flat monthly basis. All
three leases should be negotiated to include a requirement for annual
increases based on the Consumer Price Index, or other inflation -related
measures.
(6.) What if it doesn't lease soon?
At this point, prevailing market forces intervene, and it is likely that the
landlord may need to reconsider the asking rents, required profitability or
refinancing the property to reduce fixed financing costs in order to get
required rents down.
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3. Republic Square - 902 Austin Avenue (corner of Austin Ave.,
Williams Dr. and IH -35)
Current Tenants/Owners
Beltone
Blockbuster Video
Budget Optical
Chiropractor
Daylight Donuts
Dentist
Eckerd's
Georgetown Sporting Goods
Goodwill
Lease Town
Mail Fast Forward
Medical Equipment Supply
Merrill Lynch
My First Gym
Optometrist
Physicians Associates
Pizza Hut
Radio Shack
Rick's Cleaners
Style America
Subway
Teacher's Credit Union
Vacant - 9222-D
Vacant (Goodyear)
Total Size: 116,000 sq. ft.
Occupancy: 93% - 6,000 sq. ft. vacant (old Goodyear Store), 2,189 sq. ft.
Rental Rates: 6,000 sq. ft. - $17.00 plus $2.21 C.A.M.
2,189 sq. ft. - $14.00 plus $2.21 C.A.M.
Comments Nice center - direct competition to Downtown
4. Southwestern Plaza - 903 Austin Avenue (directly across from
Republic Square)
Current Tenants/Owners
Quizno's
Catholic Book Store
Fox Auto Parts
Total Size: 10,000 sq. ft.
Occupancy: 100%
Rental Rates: 2,000 sq. ft. - $12.00 plus $2.40 C.A.M. Fees
Comments: Vacant space available through Brashear Properties
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5. Old H.E.B site - 401 University Avenue
Current Tenants/Owners
H&R Block
Divine Desserts
Beautiful Nails
Rent To Own
Family Dollar
Chisholm Trail Pediatrics
Total Size: 40,000 sq. ft.
Occupancy: 85%1- 6,000 sq. ft. vacant
Rental Rates: $11.50 plus $2.00 C.A.M. fees
Comments: Recently renovated
6. Lake Aire Shopping Center - 2415 Williams Drive
Current Tenants/Owners
7-11
David Hennington, D.D.S.
Domino's Pizza
Georgetown Music Assoc.
Jeff Kirby, Chiropractor
Karate
Lone Star Smoothies
Mary's and Ralph's
Pharmacy
New Images
Quimby's Cleaners
Szechuan Chinese Restaurant
The Herbery
The Pit Barbeque
Vacant
Walburg State Bank
Total Size: 80,000 sq. ft.
Occupancy: 44% - 45,000 sq. ft. vacant
Rental Rates: $10.20 - $12.00 plus $2.20 C.A.M. fees
Comments: Being renovated with parking lot lights, outside fagade, etc.
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APPENDICES
Retail Locations - Georgetown, Texas 113
Proposed Retail Locations - Georgetown, Texas 117
Inventory of Commercial Space by Category 118
Trade Area Demographics
125
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Retail Locations - Georgetown, Texas
I. River Oaks -1100 South IH -35 (northeast corner of IH -35 and
Hwy. 29)
Current Tenants/Owners
H.E.B. - 55,000 sq. ft.
Hollywood Video - 8,560 sq. ft.
Taco Bell - 2,500 sq. ft.
Wal-Mart - 76,000 sq. ft.
Tractor Supply Company - 18,750 sq. ft.
Total Size:
161,000 sq. ft.
Occupancy:
100%
Rental Rates:
N/A
Comments:
All sites are owned.
2. San Gabriel Village - 250 South IH -35
Current Tenants/Owners
Applebee's
Chili's
.Luby's
Burger King
Schlotzsky's
Midas
Total Size:
52 acres
Occupancy:
N/A
Comments:
All sites are owned.
Retail and office sites for sale - 4.32 acres under contract
Lots fronting on IH -5 sold for $5-$10 per sq. ft. for 1-4 acre lots.
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7. Williamsburg Village - 3010 Williams Drive (comer of Williams
Drive and Booty's Crossing)
Current Tenants/Owners
Amer. Wholesale
Mattress
Arrange and Contain
Brookshire Brothers
Central TX Safety
School
CPA
Crown Mortgage
D&L Western Wear
David's Barbershop
Dermatology Clinic
DeWitt Jewelers
Farmer's Insurance
Foxy Ladies
Frames and Art
Innovations
Georgetown Vacuum
Center
Hallmark
Java Net
Kelley Moore Paints
Laurie's
Lovoi Travel
Mr. Gatti's
Pittman's Cleaners
Sew and Quilt
Shoe Steps
Take A Break
Team ource
Texas Workforce Center
Total Size: 110,000 sq. ft.
Occupancy: 94%
Vacancies: 1,815 sq. ft. - $11.04 plus $1.80 C.A.M. fees
3,600 sq. ft. - $11.04 plus $1.80 C.A.M. fees
1,800 sq. ft. - $12.00 plus $1.80 C.A.M. fees
Comments: Attractive center - recently sold.
116 Final Report
ls�.wn.lu R�/�K[F AtHH�a��
Strati` Retail Plan
City of Georgetown, Texas
Proposed Retail Locations - Georgetown, Texas
8. The Rivery
• 125 acres of retail, restaurant and multi -family
• 89 acres of retail and restaurant
• 39 acres - multi -family housing
At this time, no rental rates are being quoted. There are three large box spaces
being proposed - 220,000 sq. ft., 142,000 sq. ft. and 40,000 sq. ft. Tenant
interest is strong from Wal-Mart; Lowes, Home Depot, etc.
9. H.E.B. - 21 acres - Williams and Shell Road
• H.E.B. - 83,500 square feet
• 23,450 square feet additional retail
Quoted at $22 per square foot/ year + C.A-M. (estimated at $6 per square foot/
yea')
(Please Note: The HEB Grocery -anchored center opened in November,
2001)
IWMI 117 Final Report
-i -I- M... h -KI-
Strategic Retail Plan
City of Georgetown, Texas
Inventory of Commercial Space by Category
Downtown Business District
Georgetown, Texas
Jewelers
R041426 Quenan's Jewelers (2) 800 Austin Avenue S 650
Subtotal 650
Services
R310501
Rose Hill Design Florist * (3)
1005 Austin Avenue S
1,512
8310501
Jack Brown Cleaners * (3)
1011 Austin Avenue S
2,904
R043182
M&J Hair Fashions * (3)
101 11th Street W
858
R041434
GX Creative Ltd (3)
118 8th Street W
2,550
R041388
Heritage Printing
705 Main Street S
3,804
R042446
Robert's Printing Company, Inc. *
207 8th Street E
4,298
R041443
Custom Frames by Daniel
812 Main Street
680
R041421
Bandy's Barber Shop *
306 8th Street W
320
R041394
City Barber Shop
111 8th Street E
480
R043214
Ideal Hairstyling *
1004 Austin Avenue S
954
R041342
An Occasion to Remember Florist *
405 Austin Avenue S
1,200
R041529
Roy's Barber Shop *
1201 Church Street
300
R042515
U Wash M Coin Laundry *
1103 Main Street S
2,560
R041422
Georgetown Lock & Key *
804 Rock Street S
1,200
R041422
Claudia's Salon *
802 Rock Street S
1,200
R042414
Pete's Barber Shop.*
906 Rock Street S
1,072
R041377
Mecca Hair Salon
115 7th Street E
1,315
R041375
Deb's Dance
612 Main Street S
900
R041375
Floral Expressions
612 Main Street S
900
Subtotal
29,007
118 Final Report
Strategic Retail Plan
City of Georgetown, Texas
Miscellaneous
R310501
Affordable Signs * (3)
1009 Austin Avenue S
2,904
R041397
Berry's Hardware
212 7th Street W
4,508
R041387
Heritage Office Supplies
703 Main Street
2,280
R043445
National Pawn, Inc. *
110 University W
1,912
R041396
P & K True Value
700 Austin Avenue S
2,700
R041399
P & K True Value
704 Austin Avenue S
4,992
R041379
Golf on the Square
111 7th Street E
1,200
R041390
Williamson County Sun
707 Main Street S
4,376
R041429
Hoyt Storage
213 9th Street W
5,600
R041422
Yours for Keeps *
806 Rock Street S
1,200
R041440
Inn on the Square
104-1/2 8th Street W
2,408
R042421
Claiboume House *
912 Forest Street
3,400
Subtotal
37,480
119 Fina! Report
Strategic Retail Plan
City of Georgetown, Texas
Properly 11)
Name
AUdress ii
Auto Related
R042519
Fastway Mobil *
101 University Avenue E
924
R041428
Hoyt's Auto Parts (3)
220 8th Street W
4,314
R043441
Wiley's University Texaco & Wrecker
114 University Avenue E
1,428
Service/Ryder
R042411
Carquest Auto Parts *
909 Austin Avenue S
4,020
R042436
Conway's Transmissions *
208 8th Street E
4,200
R042438
Conway's Transmissions *
806 Myrtle Street S
2,400
R043220
Georgetown Muffler Shop *
1000 Austin Avenue S
1,296
R043239
Exxon *
1202 Austin Avenue S
2,400
R044929
The Oil Exchange *
1121 Austin Avenue S
1,488
R041423
Perry's Garage *
810 Rock Street
1,000
R041365
Classic Interiors *
403 7th Street W
2,000
Subtotal
25,470
Department Store
R041372 Gold's Department Store, Inc. 109 7th Street W 14,424
Subtotal 14,424
120 Final Report
Strategic Retail Plan
City of Georgetown, Texas
Usable (1)
Property ID name Address Square lbotaW
Art GaIIerievSIores1Gijis1Crqfts
R041401
Windberg Gallery
714 Austin Avenue S
2,442
R041440
Handcrafts Unlimited
104/106 8th Street W
3,088
R041434
Hankin's & Company (3)
118 8th Street W
2,550
R041444
The Escape
102 8th Street W
1,470
R043183
Wonderful Things, Inc. *
1003 Austin Avenue S
7,592
R041422
Needlearts of Georgetown *
304 8th Street W
3,600
R041415
The Paintin' Place *
708 Rock Street S
1,330
R041439
David Love Store
110 8th Street W
1,720
R041394
Williamson County Art Guild
109 8th Street E
480
Subtotal
24,272
121 Final Report
Strategic Retail Plan
City of Georgetown, Texas
ii
IWE
Food Service
R041450
Alvin's Sandwich Shop
124 8th Street E
1,700
R041395
Cianfiani Coffee Co
715 Main Street S
1,764
R043182
Rio Bravo Cafe * (3)
107 11th Street W
858
R041455
Courthouse Cafe & Creamery
805 Main Street S
1,540
R044925
Dos Salsas *
1104 1/2 Main Street S
2,880
R041325
El Charrito *
302 Austin Avenue S
760
R041371
Geaux Fish
119 7th Street W
7,666
R041430
Wildfire Cafe
812 Austin Avenue S
4,324
R041375
Laurie's Too (3)
612 Main Street S
1,800
R043219
Golden Chick *
1010 Austin Avenue S
1,304
R041529
Georgetown Restaurant & Catering *
1201 Church Street
2,752
R041366
Sparky's Snack Shop *
600 Forest Street
1,166
R043448
One Stop *
1202 Main Street S
2,420
Subtotal
30,934
Books and Music
R041393 Hill Country Bookstore 717 Main Street 2,975
Subtotal 2,975
122
Fina[ Report
Strategic Retail Plan
City of Georgetown, Texas
Usable (1)
Property IDNamc Address Square footage
Children's
R041438 The Children's Boutique
Subtotal
Home Furnishings/Decor/Antiques
R041426
Annarella (3)
R041436
Elegant Interiors
R041392
Georgetown Antique Mall
R041398
Treasures Antiques
R041428
Johnson Interiors (3)
R041383
Linda McCalla Interiors
R041400
Upstairs/Downstairs
R041410
Our House to Your House
R041375
Rough and Ready Antiques
R041404
Cobblestone
R041408
P & K Furniture
R043214
Eagle Rug & Floor Co.
R041431
Carol Woolf Underground Masterpieces
R041426
Texas Carved Stone
R041405
Whimsey Antiques
Subtotal
112 8th Street W
800 Austin Avenue S
114 8th Street W
713 Main Street S
710 Austin Avenue S
216 8th Street W
604 Church Street S
712 Austin Avenue S
718 Austin Avenue S
602 Main Street S
708 Austin Avenue S
211 8th Street W
1006 Austin Avenue S
820 Austin Avenue S
800 Austin Avenue S
706 Austin Avenue S
1,780
1,780
3,000
2,670
2,610
1,212
3,270
1,000
4,440
3,402
2,900
2,471
1,800
1,908
2,496
1,320
34,499
Clothing
R041437 Brenda's Boutique 108 8th Street W 1,780
Subtotal 1,780
123
Final Report
I
I
I
1
1
1
1
1
Strategic Retail Plan
City of Georgetown, Texas
Property 1
Body/Sealth Care
R041409 The Willow Tree 215 8th Street W 1,720
R041377 Tracy Gilliam Massage Therapist 606 Church Street S 600
R041370 Polanek's Health Market 117 7th Street W 1,600
Subtotal 3,920
Communication/Electronics
R043182
Computing Comfort * (3)
103 11th Street W
858
R043182
Data Plus * (3)
109 11th Street W
858
R041377
Hello Wireless
113 7th Street E
1,000
R041424
Matthew & Co.
215 9th Street W
2,500
R041441
Solex Technologies
810 Main Street S
689
Subtotal
5,905
Totals 213,096
* Outside 9 -block historic district
(1) Improvements according to real estate tax records, less areas specified as asphalt, concrete, porches, canopies,
storage, unused areas, etc.
(2) Building size data provided by WCAD, property owners, or property managers.
(3) Tenant names obtained from real estate tax records, pictures, websites, and site visits. Where number of tenants
or allocation of space was not available, property, building, and improvement areas are divided by the number of
tenants known in order to obtain an estimated commercial space sum.
124
Final Report
Strategic Retail Plan
City of Georgetown, Texas
Trade Area Demographics
Georgetown, Texas
Ponulation (2000):
Population 51,198
Total Employees 15,328
Persons in Group Quarters 1,396
Population (2005):
Population 66,303
Persons in Group Quarters 43,072
Households (2000):
Households 17,852
HouseholdsFamilies 13,276
Average Household Size 2.79
Households (2005):
Households 23,231
HouseholdsFamilies 16,940
Average Household Size 2.79
Race (2000):
White 44,832
Black 2,252
American Indian, Eskimo, or Aleut 211
Asian or Pacific Islander 523
Other 3,380
Hispanic Origin 10,528
Race (2005):
yhite 57,222
Black 3,100
American Indian, Eskimo, or Aleut 288
Asian or Pacific Islander 832
Other 4,861
Hispanic Origin 15,399
Aze & Gender (2000):
Population Age <18
15,042
Population Age 65+
4,836
Population Male
25,058
Population Female
26,140
.. 125 Final Report
Strat c Retail Plan
City of Georgetown, Texas
Age & Gender (2005):
Population Age <18
18,814
Population Age 65+
6,457
Population Male
32,501
Population Female
33,802
Population by Age (2000):
0-4
3,881
5-9
4,113
10-14
4,193
15-19
4,708
20-24
3,917
25-29
2,586
30-34
2,810
35-39
4,193
40-44
4,778
45-49
4,100
50-54
3,205
55-59
2,197
60-64
1,681
65-69
1,271
70-74
1,099
75-79
1,035
80-84
670
85+
761
Population by Age (2005):
0-4
4,863
5-9
4,896
10-14
5,357
15-19
6,133
20-24
5,323
25-29
3,297
30-34
3,292
35-39
4,651
40-44
5,899
45-49
5,657
50-54
4,502
55-59
3,444
■ . 126 Final Report
Sti ategic Retail Plan
City of Georgetown, Texas
60-64
2,532
65-69
1,712
70-74
1,326
75-79
1,316
80-84
965
85+
1,138
Income (2000):
Median Household Income
$58,499
Average Household Income
$74,024
Median Family Income
$66,503
Average Family Income
$81,065
Per Capita Income
$25,993
Median Disposable Income
$45,272
Average Disposable Income
$54,211
Net Worth (2000):
Median Net Worth $75,492
Average Net Worth $148,539
Income (2005):
Median Household Income
$73,289
Average Household Income
$101,030
Median Family Income
$84,944
Average Family Income
$109,964
Per Capita Income
$35,554
Housing Units (2000):
Owner -occupied 11,633
Renter -occupied 6,219
Housing Units (2005):
Owner -occupied 15,197
Renter -occupied 8,034
Source: CACI, Economics Research Associates
■
127 Final Repo)
Downtown Master Plan
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