Northeast Ohio Regional Retail Analysis

ABSTRACT: This study analyzes retail development patterns in the Cleveland metropolitan area. The explosive growth of the retail industry in this seven-county region throughout the 1990's has had profound implications on consumer shopping patterns, traffic generation and land use. The study documents these patterns, assesses the impact of new retail development on older shopping districts, examines the impacts of commercial development on tax generation and the environment, and recommends strategies to manage retail growth more effectively.

The project involved the participation of six county planing commissions, the City of Cleveland Planning Commission, the regional transportation planning agency, and two private retail consulting firms.

OVERVIEW

The retail sector is a major focal point of any community. First, it is the most visible land use; its physical configuration and condition are critical in projecting a city’s image. Second, the economic health of a city is often associated with the ability of its business districts to thrive and remain prosperous. Finally, retail stores provide an important part of maintaining the social character of a community by creating a sense of place where residents can satisfy their consumer needs and encounter other neighborhood residents. This so called "marketplace" function is critically important to community vitality.

The dynamic nature of retailing in Northeast Ohio is evidenced by frequent announcements of store closings, new retail construction, and concerns about the impact of both. Although retail development projects are generated by the private sector, public officials are often requested to provide assistance in the form of rezonings, transportation and infrastructure enhancements or financial assistance such as tax abatement.

The changing nature of the retail industry is having profound implications on the land use patterns of Northeast Ohio. Older communities are experiencing under-utilization and vacancies in storefronts along major retail corridors, resulting in loss of local retail services, decreasing tax revenues and urban blight. At the same time, newer suburban and outlying areas continue to encounter retail development which has often led to substantial traffic congestion, the need for costly infrastructure improvements, and degradation of land, air and water quality.

As a result of these concerns, the Cuyahoga County Planning Commission, in conjunction with the Planning Commissions of Geauga, Lake, Lorain, Medina and Portage Counties and the City of Cleveland, has prepared this assessment of Northeast Ohio retail patterns for the region’s metropolitan transportation planning organization, the Northeast Ohio Areawide Coordinating Agency. The study provides the information, analysis and strategies that public officials, private citizens and retail developers can use to enhance the viability of older retail districts, mitigate the effects of new retail development, intelligently manage land development, protect environmental values and maximize the limited public resources available for infrastructure investment.

Specifically, the study examines:

Land Use

Inventories retail establishments, by type and size, in the entire region;
Assesses national retail trends which may impact local communities;
Determines the supply and demand for retail uses by trade area;
Analyzes the impact of new and proposed retail projects with respect to demand; and
Recommends guidelines for municipalities to use for managing retail development issues.

Transportation

Provides information regarding transportation improvements often required for retail development;
Analyzes accessibility to major retail nodes;
Assesses traffic generation and parking demand as a result of retail development; and
Addresses adequacy of public transit routes with respect to existing and proposed retail development.

Tax Base

Examines the economic importance of retail to the tax base of various levels of government;
Compares the economic impacts of retail development to other land uses;
Compares employment generation of retail centers; and
Determines the amount of city services and personnel required as a result of new retail development.

Environment

Projects the amount of build-out if vacant land already zoned for retail was developed;
Quantifies the impacts of auto-dependent retail development on air and water quality;
Examines the amount of stormwater runoff generated by retail development, by watershed; and
Analyzes the impact of retail homogenization trends on community character and appearance.

The study area is comprised of Cuyahoga, Geauga, Lake, Lorain, Medina and Portage Counties. Although Summit County initially indicated an interest in the project, officials ultimately declined to participate. Nevertheless, the northern portion of Summit County was included due to its relevance to the Greater Cleveland retail market.

The major findings of this analysis of the retail sector in Northeast Ohio are:

Retail Inventory

The seven-county region has more than 27,000 stores and 135 million square feet of retail floor space. (Figure 1 )

Figure 1. Total Retail (Square Feet)

More than 200,000 persons, or 20% of the region’s work force, are employed in the retail sector. These employees generate more than $67 million annually in local income tax revenue.
Convenience and shopping goods and services, which exclude car dealerships, hotels, commercial amusements and office space, total 79.2 million square feet.
There are more than 37 square feet of convenience and shopping floor space per capita in the region. While there are no national figures available for an exact comparison, the amount of floor space per capita for shopping centers typically is in the 20 to 30 square feet range in other metropolitan areas.
There are more than 10 million square feet of vacant retail space in the Northeast Ohio region. The vacancy rate of 7.4% is slightly more than might be expected for a region of its size.
A total of 10.1 million square feet of new retail has been recently constructed or proposed for the region.
The region is saturated in the convenience and shopping goods categories by more than 6 million square feet.
There is an overwhelming amount of vacant land, 77 square miles, zoned for more retail in the region. If all 49,500 acres zoned for retail were developed, more than three times the amount of existing retail development could be built in an already saturated market. Such flexibility in choices for retail developers could prove to be a serious threat to existing retail centers throughout the region.
There are 14 communities in the region which have at least 2 million square feet of retail space; 9 are in Cuyahoga County, 2 each in Lake and Lorain Counties and 1 in northern Summit County. (Figure 2)

Figure 2. Total Retail Space in the Top Five Communities in Each County in the Retail Study Area

While the population of suburban Cuyahoga County decreased by 9.2% between 1968 and 1998, the amount of retail floor space increased by 90.9%.

SPATIAL SUPPLY/DEMAND CONDITIONS

There is a spatial mismatch between the location of proposed developments and the areas which are underserved. Many of the underserved areas have the traffic access, infrastructure and population densities to support additional retail but are bypassed in favor of more easily developable locations.
There is sales leakage from the central cities and many denser, older communities in the region, resulting in consumers having to travel significant distances out of their communities to purchase goods and services. There are substantial opportunities for balanced retail development in many areas of the region.
Overbuilding results in new retail space which competes with existing commercial districts for market share, often leading to lower rents, more marginal businesses, increased vacancies in older retail areas, and reduced property revenues for school districts and communities.
Without the benefit of public subsidies in proportion to the subsidies which go to new developments, older retail districts will find it more difficult to compete for market share and may experience private disinvestment.
The proliferation of national retailers in many retail categories threatens locally owned businesses which provide uniqueness and character to retail districts.

LOCAL GOVERNMENT REVENUES AND COSTS

The retail sector of the study area generates more than $345 million annually in property tax, income tax and sales tax revenue.
Cuyahoga County and the Greater Cleveland Regional Transit Authority could each lose $26 to $39 million dollars annually beginning in 2002 as a result of lost sales taxes due to electronic commerce.
Most of the proposed large-scale retail projects are planned in the outlying communities of Cuyahoga County or in surrounding counties. Considerable public subsidies in the form of transportation enhancements, infrastructure improvements and city services will likely be required. Funding for these public improvements is often limited and competes with other priorities.
Community tax revenue that is generated by new retail development is often offset by the local government costs of providing additional infrastructure and public safety services, the softening of the revenue from existing businesses, and the costs of environmental

ENVIRONMENTAL IMPACTS

Retail land use is the source of a number of impacts on the environment. These include airborne pollutants from vehicular trips for shopping purposes, stormwater runoff quality and quantity, as well as noise, light pollution and community aesthetics.
Retail projects can have significant environmental impacts which extend well beyond the local jurisdiction in which they are located.
Excess parking capacity, common throughout many areas of Northeast Ohio, unnecessarily increases the amount of stormwater that washes directly into urban streams. This runoff carries with it significant levels of petroleum, nitrogen, heavy metals, and sediment, which contributes to the degradation of streams, rivers, and lakes.
Land area developed for retail use in the study area increases surface runoff by 874 million cubic feet annually.
If all vacant land in the region currently zoned for retail use was developed, surface runoff could increase by an additional three billion (3,000,000,000) cubic feet per year.
It is estimated that vehicular shopping trips in the region annually generate 19,100 tons of hydrocarbons, 10,250 tons of nitrogen oxides, 153,000 tons of carbon monoxide, and 2,691,500 tons of carbon dioxide.
The traffic associated with a typical large super-regional shopping center (such as each of the eight largest shopping centers in the study area) generates quantities of air emissions causing the centers to rank among the top sources of carbon monoxide and hydrocarbons within the seven-county study area.

TRANSPORTATION

Retail establishments are significant generators of traffic, accounting for as much as four times the volume generated by office uses, eight times the volume of light industrial uses, and twenty-four times the volume of residential uses, using an equal area of developed land. It is estimated that shopping trips in the study area currently generate 5.6 billion vehicle miles annually in the study area.

REGIONAL RETAIL PATTERNS

Figure 3 illustrates the two most dominant retail development spatial patterns in the region. The first, and most obvious, is the linear pattern of development along major corridors. Arterials such as Pearl Road, Broadway, Detroit Avenue, Center Ridge Road, and Euclid Avenue can be easily identified, even without the roads being shown. (Figure 3)

Figure 3. Northeast Ohio Retail Establishments

The other dominant pattern is the clustering of retail in traditional downtown areas. Examples of this include Elyria, Lorain, Medina, and Painesville. Figure 4 indicates the amount of retail space per person by county for all retail categories and selected convenience and shopping goods. (Figure 4)

Figure 4. Retail Square Feet Per Capita

Figure 5 displays the total amount of shopping area by county. Cuyahoga County has by far the most retail in the region, approximately 74,317,000 square feet equaling the retail square feet of the other counties combined. The communities with more than 2 million retail square feet include Cleveland, Mentor, Elyria, Parma, North Olmsted, Strongsville, Lorain, Euclid, Middleburg Heights, Westlake, North Randall, Fairlawn, Willoughby, and Lakewood. Of these 14 communities, five are outside of Cuyahoga County. (Figure 5)

Figure 5. Total Square Footage, 7-County Area and City of Cleveland

Figure 5 also shows the distribution of the major retail categories. Convenience goods and services and shopping goods and services add up to well over one-half of the region’s total retail.

Automotive sales, parts, and services and other retail are the next largest categories, each with about ten percent of the total. Commercial amusements, vacant retail, and local office each account for less than ten percent of the retail area.

The study report contains detailed retail inventory information for each of the more than 200 communities in the study area.

SUPPLY/DEMAND ANALYSIS

The study contains an analysis of retail space supply and demand. It is based on a comparison of household spending patterns to total sales generated by retail establishments, the results of which help determine whether or not household retail needs are being met by the existing retail supply. Differences between annual household spending patterns and annual retail sales represent either deficiencies or surpluses in the availability of retail goods and services. A separate supply and demand analysis was conducted for each of the counties included in this study as well as for the eight planning regions of Cuyahoga County.

Figure 6 illustrates the sales "capture" or "leakage" by portraying the surplus or deficit of floor space for convenience and shopping goods. (Figure 6 [convgds.gif]) Currently, Lake County and the Chagrin-Southeast Region of Cuyahoga County have the largest surpluses of retail floor space relative to their populations, while the City of Cleveland has the largest overall deficit. Lorain County and the Westshore and Southwest Regions of Cuyahoga County have the next largest surpluses, while Geauga County and the Heights and Cuyahoga Regions have the next largest deficits. Medina and Portage Counties have the best balance of floor space relative to their populations.

Figure 6. Convenience and Shopping Goods and Services

GREATER CLEVELAND RETAIL MARKET CHARACTERISTICS

Due to a combination of factors unique to the Greater Cleveland area including its size, geographic location, and age, the Northeast Ohio retail market is characterized by the following:

Oversaturation

Several sub-areas of the regional market area contain an excess of retail floor space in relation to the population served. The 79 million square feet of space devoted to convenience and shopping goods and services in the region exceeds the demand by more than six million square feet. Although this surplus is not exclusively comprised of "prime space", it neverthless reflects an oversaturated market. In addition, continual overbuilding results in lower rents and encourages marginal uses in established districts.

Experience with Retail Trends Begun Elsewhere

The retail marketplace is in constant flux. Over time, the successes and failures of the various practices are able to be observed by the retail industry as well as local government. While many of these trends are eventually manifested in the Greater Cleveland marketplace, industry members may have worked out some of the initial "kinks". Local government officials have had the opportunity to anticipate the new trends and their impacts.

For example, the "big box" (i.e., Wal-Mart, Target, Super K) retail trend began elsewhere and ran through a life cycle in some of the early store locations, some of which are now defunct. While none of the big box locations in Greater Cleveland have yet been vacated, local government officials are now aware that closure is likely and can plan proactively.

Effectiveness of Freeway Network

The freeway network serving Northeast Ohio is relatively efficient compared to other metropolitan areas. This is due in part to the fact that the Greater Cleveland region’s population has been stable and the freeway system was originally designed for a much larger population level. This allows for tolerable travel times across the study area. Consumers can visit a variety of shopping locations without spending inordinate amounts of time in their vehicles.

Figure 7 illustrates travel time contours for the eight largest shopping centers in the NOACA five county region. The shopping centers include: Midway Mall, Great Northern Mall, Westgate Mall, Southpark Center, Parmatown Mall, Randall Park Mall, Beachwood Place, and Great Lakes Mall. Shaded areas indicate the accessibility of the eight shopping centers within thirty minutes, depending upon the traveler’s point of origin. For example, all of the city of Avon Lake is shaded blue, meaning that a consumer beginning from any portion of Avon Lake could reach three of the eight shopping centers in thirty minutes travel time (Midway Mall, Great Northern Mall, and Westgate Mall). As the map indicates, the majority of the five-county region, covering the vast majority of the population, is accessible within 30 minutes driving time. This illustrates the efficiency of the freeway network of the region. (Figure 7)

Figure 7. Travel Time Contours

Increase in Number of Households

Although the region’s population is declining, the number of households continues to increase. For example, while Cuyahoga County lost almost 20% of its population between 1970 and 1998, it showed a 2% gain in households. As a result, there has been a continuing demand for both convenience and shopping goods in the region.

Pedestrian-Friendly Amenities

In terms of the form of the retail environment, consumers often indicate that they prefer pedestrian-friendly environments. (Figure 8) This means they like to be able to park close to stores and walk from one store to another. The retail in many communities in Greater Cleveland exhibits this type of layout. The central city has storefront retail clusters and urban malls which consumers can visit and experience on foot. Suburban downtowns, particularly those in older suburbs, have established retail shopping districts. These districts comprise traditional retail layouts in which retail uses are located close to the street, one next to the other, and are served by shared and/or on-street parking. Finally, there are exurban villages, both established and new, that have designs and layouts traditional in nature. These forms of retail add to community character due to their attractive and unique aesthetic qualities.

Figure 8. Pedestrian-friendly commercial districts are an important quality-of-life issue in many communities.

Low Household Income Levels

Much of the population of Northeast Ohio is employed in the service sector, which does not generally generate high household incomes. In comparing Greater Cleveland to other comparably-sized cities, Cleveland ranks the lowest in household income. For example, while Cleveland’s median household income in 1989 (in 1998 dollars) was $23,427, Atlanta’s was $29,281 and Baltimore’s was $31,608. Upscale retail opportunities are therefore largely confined to high income areas within the region. Consequently, much of the remaining retail is focused on value discounting, which does not generate as high a level of sales as upscale retail nor does this type of retailing include aesthetically-desirable construction.

Decreasing Population Base

Many of the communities in Greater Cleveland are losing population. Therefore, as retail development continues to occur, the population base is less able to support every retailer. Vacancies in retail space result and may remain so for indefinite periods of time. These vacancies occur in both older areas in the small retail spaces as well as in areas where recently constructed retail has gone out of business due to market cannibalization. In addition, since the percentage of Greater Cleveland area residents over 60 years of age continues to climb (21% in Cuyahoga County), it is likely that fewer purchases of shopping goods will result, as more money is spent on travel, medicines, and leisure activities.

Urban Core Opportunities

Much of the urban portions of Northeast Ohio is developed. Retailers seeking sites for new locations prefer developing "greenfield" land rather than in the urban core and surrounding communities where redevelopment of land might be necessary. Consumers living in already developed areas are not afforded as much opportunity for retail variety. The population density of the central city and inner ring suburbs provides numerous opportunities for national retailers with respect to new store locations.

Outdated Zoning Practices

There is still a large amount of vacant retail zoned land in the region. While this availability of land has given retailers much choice in the location of new retail locations, it has also resulted in sprawling retail development. Much of the land zoned for retail is located along extensive stretches of arterials, resulting in traffic congestion, visual clutter, and environments unfriendly to pedestrians. Many of the problems endemic to strip development along Cuyahoga County arterials could be recreated in the outlying counties since retail zoning patterns are being replicated in those areas. In addition, the preference for single-purpose retail zoning precludes the use of mixed use development in many areas. (Figure 9)

Figure 9. The diversification of retail formats in evidenced by gasoline stations selling
convenience goods and convenience stores selling gas.

CONCLUSION

The Northeast Ohio Regional Retail Analysis is not intended to serve as a retail development plan for the region. However, the study does characterize the retail sector of Northeast Ohio and identifies important issues for the retail industry and local and regional governmental bodies to address. It also suggests specific strategies and actions to be implemented in order to harmonize the retail sector of the region with its transportation system, environment, economic base, other uses of the land, and the area’s quality of life.

Hopefully, the Northeast Ohio Regional Retail Analysis will serve as a departure point to achieving that harmony.

Author and Copyright Information

James M. Kastelic, Deputy Director of the Cuyahoga County Planning Commission, received his Bachelor of Arts degree from the University of Kansas in 1969, and his Master of Arts degree from Kent State University in 1972, with majors in urban geography.

He has been with the Cuyahoga County Planning Commission and its predecessor, the Regional Planning Commission, for the past twenty-eight years. He is currently Deputy Director of the agency which is responsible for providing planning and zoning services for Cuyahoga County and its 59 jurisdictions. He is also an adjunct faculty member at the Maxine Levin College of Urban Affairs at Cleveland State University and at David N. Myers College.

Mr. Kastelic currently serves on the boards of the Cuyahoga Valley Community Council, the Ohio Coastal Resource Management Project, and Scenic Ohio. He can be reached by e-mail at jmkastelic@aol.com.