A long-awaited, mixed-use development by Heart of America Group could change the landscape of Quad-City retail in much the way the shopping malls did 40 years ago and the Elmore Avenue and John Deere Road corridors did in the late 1990s.
The $35 million Elmore Marketplace project, to be located along Davenport’s Elmore Avenue, will be home to about a dozen national retailers.
First announced in late 2011, the project will feature more than 84,000 square feet of new retail space anchored by a new Holiday Inn & Suites, owned and operated by Heart of America. The six-story hotel will feature the company’s new restaurant brand, J Bar, a spinoff of its Johnny’s Italian Steakhouse brand.
“We have worked hard to get some of these retailers who have not been to the market before,” said Mike Whalen, founder, president and chief executive officer of the Moline-based hotel and restaurant development company. He predicts the lineup of retailers — most of which have previously bypassed the Quad-City market for larger metro areas — will be a drawing card for more retailers in the near future.
The development will accommodate as many as 14 retailers, depending on the square footage each tenant occupies. To date, Heart of America has signed eight retailers, which have committed to leasing 3,700 to 18,000 square feet.
Of the eight, seven are being announced: DSW Shoe Warehouse, which will occupy the largest storefront; Banana Republic Factory Store, Beauty Brands Inc., Carter’s, Charming Charlie, Lane Bryant and Pier 1.
“The area is begging for these retailers,” said Kim Whalen, the company’s vice president of design.
She added that the retailers represent brands that draw Quad-Citians and their money to places such as Chicago, Minneapolis and elsewhere to shop.
She said the previous retail model was to land a Von Maur, Younkers, Macy’s or other department store and it would lure the rest of the retailers. But with today's economy, it is junior tenants — stores that occupy 1,800 to 3,600 square feet — that have become the new draw.
“DSW is the new center that other retailers want to be with,” Kim Whalen said.
The lineup, her husband, Mike Whalen said, is one “that the women will cheer and the men will shrug. The women will get how big of a deal this is.”
The company's 107-room Holiday Inn and adjoining retail complex will be built on 15 acres of prime real estate nestled between Elmore Avenue and Interstate 74. The site is north of Lowe's and just south of the Great Escape store, which is property once owned by Heart of America.
“You literally will walk out the front door and be in the retail,” Mike Whalen said, adding that the project could be the new model for how future hotels are sited.
The company also owns the vacant five acres (3.43 acres buildable) located to the north of Great Escape. In fact, Whalen said he purchased the entire site 14 years ago when retail expansion across the country was hot. But the business climate changed dramatically in the aftermath of the 9/11 terror attacks and, more recently, was stunted by the national recession leading to the delay in the development.
“There just hasn’t been a great deal of new (retail) construction,” he said. What there has been has occurred in the nation’s gateway cities, such as New York, Dallas, Miami and Los Angeles. “Iowa and Illinois isn’t the sexiest market (to retailers). But then they get here, and they do well.”
The Whalens, whose daily commute to their Moline riverfront office passes by the development site, are looking forward to seeing construction emerge in the next six to eight weeks. The company already has invested $1 million into prepping the site, and crews began final grading last weekend.
“It’s fun to have a project to do in our hometown,” Mike Whalen said.
The company, which owns 14 hotels and 17 restaurants, also has projects under construction in East Peoria, Ill.; Olathe, Kan., and Eau Claire, Wis. It also is developing a project in Altoona, Iowa, across from the future site of Facebook’s $300 million data center announced in late April.
Elmore Marketplace will be Heart of America’s largest single development to date as well as its first major retail project.
Damen Trebilcock, the company's senior vice president, said that when the project is built, they will have been in talks back-and-forth for as many as four and five years with some of the signing tenants. Part of that time, he said, has been devoted to educating the national retailers about the Quad-City market.
“They don’t understand this is one market even though we are five cities,” he said.
Trebilcock, who handles leasing, operations and site selection, said negotiations were tied, in large part, to the co-tenants. Certain tenants would not consider the projects if others were not involved, and others would not sign on if others were there. Signing DSW for an 18,000-square-foot store, “that was the bell cow for me. Then the onslaught (of willing retailers) came.”
Pam Miner, the city of Davenport’s community planning and economic development director, compared the negotiation process to a chess match, with tenants waiting for other prospective tenants to make a move.
“They certainly were patient and persistent,” she said of Heart of America.
“It’s like a perfect storm,” she said. “They (Heart of America) sat on it a long time, but everything is picking back up. People are willing to spend a little money again. This is going to be a destination.”
Miner, who joined the city six years ago, said the city historically has not gone after retail.
“This is an area we have left to its own devices. Developers like the Whalens and others are doing this, and they know who is out there. But it’s really up to the companies (whether they want) to come to the market.”
Although Elmore already is a shopping destination, she said this project could widen the net of visitors who travel to the area just for shopping.
“We’re really excited about this,” Miner said, suggesting that the last retail development in Davenport to have the same impact was creation of the Elmore Avenue and 53rd Street corridor.
Heart of America estimates the project will create at least 350 construction jobs as well as 75 retail jobs and another 25 to 50 at the hotel. The jobs are key to Mike Whalen, who serves on the Job Creator’s Alliance, a group of CEOs from across the country dedicated to creating jobs.
He said the arrival of such big-name retailers will get other retailers' attention.
“We’re considered about the 100th largest market ... and sooner or later, retailers are going to ask themselves, ‘Why aren’t we there?’” he said.
For DSW Shoe Warehouse, the store will be among 25 to 30 stores it will open in the coming year in what is a second year of “ramped up store growth,” said Christina Cheng, the company’s investor relations director. It will be the second store in Iowa, joining West Des Moines, and comes after DSW's debut last year in Peoria.
Cheng said the Quad-Cities had been on the shoe retailer’s radar, “but it really is a matter of finding the right real estate. It’s about finding the right box; we don’t like to relocate our boxes.”
In making the decision to enter the market, she added that the company considers income level and the concentration of its loyalty program members as well as location.
Although the development has commitments for half of the available retail space, Whalen predicts the rest of the complex will be leased by year’s end.
“We probably had 10 (current Quad-City) retailers that wanted to relocate here,” he said, adding that the focus was on landing stores new to the market. Among the exceptions was Pier 1, which will introduce a store concept that it rolled out in 2011.
“As part of our ongoing expansion plans, we routinely review new and existing markets and identified Elmore Marketplace as an opportunity to relocate and grow," said Chrissy Madison, public relations coordinator for Pier 1 Imports. "Our new location will offer us a better opportunity to serve the residents of Davenport and the surrounding areas with all of their decorating, entertaining and gifting needs.”
She said the new store will employ 15 to 20 associates. The design includes a new interior finish-out, enhanced store lighting and lit shelving units lining the walls to help customers visualize the products in their own home. The exterior design features bamboo window awnings and a signature bamboo door with rustic metal door handles. The features allow easier navigation all while maintaining the “treasure hunt” feel.
Trebilcock said that in the retailing world, there is a small window for construction and limitations on when a store can be delivered to the retailer, which also has added to the time delay.
“Retail is always working two years ahead so projects right now are looking to fill in the end of 2014 or 2015,” he said.
Elmore Marketplace will be delivered to the tenants in January 2014, with an opening in March of that year. The hotel, which can take 12-14 months to build, is scheduled to open in fourth quarter 2014.
The decision to recruit new-to-the-market stores also was important to Davenport.
“Those companies are not going to come here just for the Iowa-side business,” Miner said, adding the city wanted stores new to the Quad-Cities, not just to Davenport.
She agrees with Heart of America executives’ belief that this is the type of destination that could help limit some of the market’s current retail leakage.
“We looked at this as an opportunity to capture some of the business that we wouldn’t get otherwise,” she said.
Whalen said studies that track the balance of trade in the Quad-Cities show the area has a “very positive balance of trade in virtually every category except one.” He said $100 million of spending on apparel leaks out of the community to areas such as Chicago, Iowa City, Aurora, Ill., and to online merchants.
Trebilcock sees proof of the leakage in his own Bettendorf neighborhood, where many of his neighbors are transplants working for Deere, Kone, Alcoa, Exelon and other major employers, who previously have lived in major metros.
“They’ll make trips into Chicago once a month to do their shopping,” he said, adding that delivery trucks, such as FedEx and UPS, are commonplace on his street delivering purchases from online retailers.
Whalen said his tenants will be a catalyst for others to see the market’s strength.
“There are going to be other tenants that will come to the area that we worked on (but couldn’t get to commit),” he said, adding that by waiting, they may have to find other places to build.