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HomeMy WebLinkAboutAgenda Packet - 2010-01-12 Special €art S-"E°S CITY CMEETING1"Illik-4 itil A dio, Tuesday, 12, 2010 630pm. oRFco� Council Chambers Lake Oswego City Council City Hall Jack Hoffman, Mayor 380 A Avenue Kristin Johnson, Council President Donna Jordan Also published on the Internet at: ci.oswego.or.us Roger Hennagin Contact: Robyn Christie, City Recorder Mary Olson E-Mail: rchristie a[�7ci.oswego.or.us Sally Moncrieff Phone: 503-675-3984 Bill Tierney .....�.......F........:!:I'.+.....-�.............................�.......�.. ..........::i.i�=�...-..- ..........i.� .............. .. ..�........ ..�..�... t fit.-.,._....� .. .... [� .t"r:�.,..r. ............r r....,.....-.....�..�,.........._....5 ..a/ ��.. ....�. nn'1^.- •.��.......... The meeting location is accessible to persons with disabilities. To request accommodations, please contact Public Affairs at 503-635-0236, 48 hours before the meeting. 1. CALL TO ORDER 2. ROLL CALL 3. STUDY SESSION 3.1 Lake Oswego Retail Market Analysis (1 hour) 3.2 Public Art Master Plan —Arts Council (1 hour) 4. ADJOURNMENT LNKE arpi CITY OF LAKE OSWEGO COUNCIL REPORT OR Elio$ TO: Jack D. Hoffman, Mayor Members of the City Council Alex D. McIntyre, City Manager FROM: Jane Blackstone Economic Development Manager SUBJECT: Lake Oswego Retail Market Analysis DATE: January 4, 2010 ACTION This report is provided for the City Council's information. INTRODUCTION/BACKGROUND At the request of Council, at the January 12, 2010 Council Study Session Mary Bosch (Marketek) will report on the Lake Oswego Retail Market Analysis finalized in October 2009. The City and business community commissioned and jointly funded the $19,750 analysis in order to better understand retail business opportunities and potential business development strategies. A separate analysis funded by the Clackamas Main Street program was prepared by Marketek for Lake Grove, and is an appendix to the Lake Oswego study. Findings from both analyses will guide ongoing preparation of an economic development strategy for presentation to Council in March 2010. On January 12, staff will also report on the status of other economic development initiatives taken in response to the Council's 2009 goal to "promote prosperity and vibrancy in Lake Oswego's business community." DISCUSSION Retail Market Analysis The Lake Oswego Retail Market Analysis quantifies retail supply and demand in Lake Oswego and recommends a retail strategy and business development plan to retain 1 Council Report January 4, 2010 Page 2 and recruit retail businesses and attract additional customers. The Executive Summary of the report is attached. Key conclusions include: • Lake Oswego has significant retail demand that is not currently met by Lake Oswego businesses. The downtown Lake Oswego trade area currently has estimated retail sales leakage of $537 million to businesses outside the trade area. This translates into 2.2 million square feet of space. Marketek projects that 10% of this current potential, or 220,000 square feet could be captured by downtown. The overlapping Lake Grove trade area currently has unmet retail demand for 273,000 square feet, 10% of which could be met in Lake Grove. Growth in population is expected to fuel increased demand and associated square footage over time. • A business development strategy for Lake Oswego should focus on: o Product readiness: understanding, promoting and improving retail properties o Retention of existing businesses: helping businesses succeed and grow o Recruitment of new businesses: actively seeking businesses to match retail demand o Customer attraction: marketing and promotion Economic Development Program Update Marketek's Lake Oswego Retail Market Analysis and Business Development Plan is one element of the City's developing Economic Development Program. Other program elements, including preparation of an Economic Development Strategy for Council consideration, are outlined below: 1. Economic development partnerships. The City's Economic ❑evelopment Program is working to build effective strategic partnerships with public and private sector entities, leveraging resources to better support the business community near- term and into the future. a. Clackamas County, the State, and Regional Partners provide economic development programs to support and attract businesses and provide assistance to cities; e.g., the Main Street program, economic gardening (nurturing business expansion), incentive programs, small business assistance, workforce development, energy efficiency programs and Brownfield grants. b. The Lake Oswego Chamber of Commerce, Downtown Business District Association, Lake Grove Business District Association, and Kruse Way 2 Council Report January 4, 2010 Page 3 representatives provide local business networking, communication links, and organized input to strategic planning. c. Arts organizations such as the Arts Council and Lakewood Center provide programming and events that contribute to Lake Oswego's brand identity, quality of life, and customer attraction. d. Educational partners, such as Portland State University and Marylhurst University, offer a range of partnership opportunities, including technical assistance, workforce development, potential internship resources, and programming that contribute to a successful business climate. 2. Research and analysis to support development of an Economic Development Strategy (summarized in Attachment 2). a. Lake Oswego Retail Market Strategy, Marketek, October 2009 b. Shopper Survey conducted by Moore Information in July 2009 c. Economic Opportunities Analysis — draft prepared by ECONorthwest in July 2009 for Planning Department as input to upcoming Comprehensive Plan Update d. Portland State University MBA Project, December 2009 -- opinion research from interviews with business and community leaders, with focus on business organization performance and structure 3. Preparation of an Economic Development Strategy. To build on research, analysis, and discussion conducted over the summer and fall of 2009, two workshops are scheduled for January 12 and February 9 to gather additional input from the business community. Staff will present a draft economic development strategy for Council consideration in March. 4. New initiatives. On a parallel track to strategic planning, staff has implemented several new economic development initiatives. a. City Business Solutions: a program to improve and better communicate City policies and processes that impact business. i. Interdepartmental Business Solutions Team ii. Planning Business Liaison iii. Analysis of code issues iv. Customer service training 3 Council Report January 4, 2010 Page 4 v. Communication: website in development; new flyers on business resources, planning and permitting information; Public Affairs coordination vi. Troubleshooting — permits and code enforcement vii. New business outreach b. Bank Local: City investment of up to $lmillion in federally-insured deposits in local banks c. Business Retention i. Top 50 Outreach — Interviews with Lake Oswego's largest employers to learn more about how the City can support business ii. Visits with retailers to offer support and learn more about needs d. Business Recruitment - initial steps: i. Inventory of downtown businesses and vacancies ii. Informational flyer for recruitment efforts e. Marketing Strategy —A request for proposals is drafted for issuance in January after input from a small business advisory committee. Products will include a brand identity and marketing plan. f. Promotion — The City granted $3750 to match downtown business investment in the Home for the Holidays promotion. g. Economic Gardening — Lake Oswego has been selected by Regional Partners to participate in a new program to grow small businesses. h. Strategic Investment Zone — Staff is working with Clackamas County Economic Development staff to analyze potential inclusion of Lake Oswego in an urban Strategic Investment Zone, an incentive program offering property tax rebates to businesses making capital investments in excess of$100 million. This program will require City Council approval. In addition to economic development strategic planning and new initiatives, work is ongoing on other City projects and programs that support economic development, such as Streetcar, Foothills, North Anchor and Boones Ferry Road planning, Millennium Park and Lakefront Park construction projects, downtown façade grants, parks events (e.g., Farmers' Market, Holiday Market), sustainability programs, arts program support, and beautification programs, including holiday lights. 4 Council Report January 4, 2010 Page 5 ALTERNATIVES & FISCAL IMPACT Not applicable. RECOMMENDATION Not applicable. ATTACHMENTS 1. Lake Oswego Retail Market Analysis & Business Development Plan, Executive Summary, October 2009 2. Economic Development Strategy Background Information, December 2009 Depa r t Di ,,ctor J • ( J Alex L. cintyrz;, City Manager 5 6 [ .tn•...�W, " , t , t x r • olii f fF C.} `r fiti S;FC�,t".....�; i ,�, n€� t t C ,-.,',,I ;` . „ ;';�,;r.•x ;Lm:. r 1€[; N14,, , ,.. s , t ." • . 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'`.k,��;':�a, a �,,5` � ,t •, .z,.F'�,".zt's�,«•..":t„c23�a�+;`•,"�:•-�••.• •E�'T�sz>r•'c\•�:c�„�3r`�•":'x:�,,4:-`h.K:•ti.•s'�?t�"w•,r•� �i;�.f�.�;';:�:�;,•,zrn�"t,...,� —��:a�h He a>•••a's«'�"r.;•it�w-,��•��t�..�.,h�.xaY�keF','CCh ��r�,>�-0"•<a r�,:''�-",�' '3•;3�?.i"'�,-^ ��L � #�i�. �i �t�������n,>•a�ls�ssaY�^.-•7 8 The goals of the Lake Oswego Retail Market Analysis and Business Development Plan are to identify business opportunities and develop marketing strategies to support and attract more small businesses and bring customers in the doors of local retailers. The city of Lake Oswego contracted with Marketek, Inc. to complete the project in summer and fall 2009. The initiative included business outreach, a commercial assessment, a retail market analysis, business mix recommendations and a business development strategy. This executive summary outlines the major findings from the research and analysis. It highlights the recommended business mix and outlines next steps for business success in Lake Oswego's retail centers overall and downtown specifically. A Lake Grove-specific market study was conducted separately. a- s rs r 1 a: ".iS'• uiih ,a. es Si SS tr rc..E E..E Z.Ei1.E Ei::.<<E\ ,G^.Er.!....-..•-.x.:.:.,:,.::?,:Cb::?n:"risr;:c:"L-":rinyl::.::::Y":;::..:}.::.!.::::::;:•::.'.:::i.'r:`:':;",..:.-;r.:-:c•:'_";'.:-:h:::::i::^::::?:i3i::::::i7'::;'::: f:::::. ..11 .1. a.1 H Marketek conducted 60 in-store visits to retailers and restaurants throughout Lake Oswego and held two business owner focus groups during July and August, in-Store Visits l retailbase ism � W o s apparel • The existing small,l with t h C�1 n e the dominant merchandise type, Restaurants vary =tt- z f ::' ... ..widely in cuisine and rice although Mountain Park and1,4 Y p gvr-eakkA,:-'1W Palisades have more limited choices. ces. o.. • Downtown Lake Oswego retail and restaurants are : \:;:tatzwr-r,7::— pp oriented to middle and upper income markets. a,. sC✓ d1Se and Strengths include customer service, merchan ,. :ft food quality and cleanliness Some businesses could ..,,.w � v benefit from exterior rior upgrades (i.e„ signs an d window .,. d:? . .w displays). Focus Groups • Business owners regard Lake Oswego, especially the downtown, as a unique community, perhaps the most beautiful in the state. However, they feel that businesses are not fully supported or appreciated by the City. • Business owners noted that Lake Oswego needs a larger retail base and stronger business mix with more kid-friendly choices. • In terms of marketing, participants agreed a consistent marketing plan was needed to make Lake Oswego a destination for Portlanders. Lake Oswego is often perceived as elitist, in part because of high price points and lack of lake access. r�:-s.,.,t-e`"' �G. r�: ASS ;�W-yam ';M'� �''y��^f'�:^"�.° t ^� �;R°€;a ��„;3�'€ivu�awrysI;,,��"m;z'.�zi�`�E$���, sry„ -F_ m:-.YE�.IT,wac isr-.^a snsasss.,xisA:sm i��s issssl3F n 'r• i 41::i stems..- •..;;;..Y Marketek assessed downtown Lake Oswego on a variety of retail market factors to portray downtown from the perspective of both shoppers and businesses. Strengths and weaknesses are summarized here. Strengths • High household incomes in the city and market area. Strong visitor and employee markets. Ample retail market opportunity in the market area over the next ten years. • High occupancy rate (>95%) and several business and civic anchors in downtown. martietem Executive Summary Lake Oswego Retail Market Analysis&Business Development Plan 1 9 • Attractive shopping environment with appealing streetscape, wed-designed buildings and a variety of unique, locally-owned businesses. • Multiple high quality events, including Arts Festival, Lake Run and Farmer's Market. Weaknesses • Lack of real estate preparedness - no inventory of available properties and no retail incubation space. • City's development process is not perceived as business-friendly. Financial assistance to downtown businesses is limited to a façade improvement grant program. • Multiple business-related organizations exist but do not appear unified to serve local businesses. No ongoing business recognition program specific to downtown. • No webpage focused on downtown, • Business attraction efforts are not well-organized and no target businesses/merchandise types have been identified. il; .... .. _.-.. _.............. ......a. .. �3. .o. E �h.'ti`. .E�t r�a u�..r.Er.E a•.ni'.�ss 3�i....�.:::.'.r..r..ti .. ... .Y .. -.r-...�...E.....E.............................._....._.-._...a..x.'--- •--n..�.r...... ."E. �I..I :ie::-o«-:o':::`...:.w ww The retail market analysis estimates the amount of potential new retail space that can be supported in downtown Lake Oswego over the next ten years. Key target markets and demand estimates are summarized below. Target Markets . . . .... .:.... ........::.. ::......::.:::.::.....:. ...................... .............. • Local residents livingwithin the downtown Lake Oswego ;... S:f34'.1FnsnybFtt 3 ................:...: y Retail Market Area (shown to the right) will provide r downtown with the greatest opportunity for a ��'��, e`i�,3sty;S$A`%,_ .t.�;='�,'�:M'a:'.'---"riN ->xa..a ray., trc dependable source of year-round sales. The market � �� a�w n ���_.. a:��s}.r:, _E. ti area contains 49,000 households as of 2009 and is n.1„ 'kF 7f:iLY4R17f1{$' --"+.,:-'a"-'•-`."ram-�:'.',:5_.a..Y '_`�SSr. h,'.71 :•..'.S ..51^ projected to grow to 50,236 by 2014,• V:•s!?'.: Ki?r....�i`E <. :: tc`M: "i.d7l4i[di' .:t7.':..... ...51.1...:..si{t •: •x.r' ..If:iiiv`._u,, a.?:a.,..•. Income and education levels are high in the market ::_ .t,s�.'•; �:.� .E��uu:..:., �: �W . ,y,f;n:f'.� `:ass;'r:;�h�;"'�:,^.s:• � ';. 't, '``n�1€y^\Ziy.; zy3B0: w i3sn .:,�:.,,s,�v.._ •'tins r.-: :i3-::?,...ti.,...y E1.h, 3: ... area. The median householdincome is $77,500 and . r��imat � more than half oresidents age25 or older hold college �`� te11•111 .:• 4�v c yti degrees. • Local employees are another key target market. Within two miles of downtown Lake Oswego are an estimated 10,400 employees as of 2009. Retail Demand Analysis • Based on a comparison of existing retail supply and demand, an estimated $537 million in potential retail sales is currently being met outside of the market area. This sales leakage translates to 2.25 million square feet of store space. • There is potential future demand for an additional 535,000 square feet of retail space in the market area through 2019, based on projected household growth. • Downtown Lake Oswego can potentially capture 10% of existing and future market area demand, or 279,328 square feet of new retail space over the next ten years. • Downtown is likely to capture a higher percentage of shopper's goods (apparel, specialty retail, dining) and a lower share of convenience goods (grocery, personal care items), as customers will shop for the latter items as close to home as possible. Executive Summary Lake Oswego Retail Market Analysis&Business Development Plan 2 10 Mh Marketek prepared an inventory of existing businesses in four shopping areas throughout Lake Oswego and of pending new developments in downtown. Marketek identified target business/merchandise opportunities and potential retail prospects for downtown. Existing Business Base • Areas surveyed include downtown Lake Oswego, Lake Grove, Mountain Park and Palisades/McVey. Downtown and Lake Grove are the largest, both with over 700,000 square feet of ground floor retail space. • Ground floor vacancy rates are 3.6% in Mountain Park and 4.8% in downtown. In Lake Grove, the vacancy rate is higher at 8.1%. • Anticipated new developments expected to be initiated in downtown Lake Oswego over the next 3-5 years will accommodate 135,000 square feet of new retail space and I 15,000 square feet of new mixed-use space, some of which would be retail. Selected Target Business & Merchandise Opportunities • Music • Health food restaurants • Garden supplies • Green grocer • Unique children's clothes, books, toys • Breakfast restaurant • Furniture and home decor • Wine and cheese shop • Sporting goods and outdoor gear • Family restaurants • Art co-operative and galleries ® Brewpub • Arts and craft supplies, yarn, fabric • Live music • Boutique bookstore • Health care • Apparel, accessories and shoes • Eye care • Quality consignment apparel • Day spa • Gifts • Photography studio • Computer store Si SS Ieveh. nent Downtown Retail Themes To promote a successful business mix, the following retail development guidelines should be considered. The marketing action plan further develops these principles: • Expand the size and scope of consumer markets (residents, employees, visitors) • Recognize and promote the unique character of Lake Oswego's shopping areas • Take care of existing business and civic anchors • Define the retail core and key nodes • Manage the merchandise mix • Know what you have to offer (marketplace data, available real estate, sales data) • Aggressively market Lake Oswego as a prime choice for businesses martieteK Executive Summary Lake Oswego Retail Market Analysis&Business Development Plan 3 I I Business District Market Position For a business development program to be successful, a clear market position statement must be articulated: • Lake Grove is a small town shopping district serving a significant daytime marketplace with a wide range of convenience shopping choices and commercial services.• Downtown Lake Oswego is a unique lakefront business district with one-of-a-kind specialty shopping, entertainment and restaurants serving local and metro residents. Business Clustering Guidelines Clustering involves strategically locating businesses within a shopping district to take advantage of relationships with nearby businesses, which may be compatible, complementary or competitive businesses or significant traffic generators. Marketek identified a framework for organizing downtown business development efforts in the short term, which includes two neighborhood convenience retail service clusters, three specialty/boutique retail clusters and a dining and entertainment district. Business/Marketing Strategy Product Readiness • Form a Property Improvement Team responsible for inventorying and assessing vacant and other key properties, contacting property owners, identifying priority sites and marketing these properties to appropriate business targets. Business Retention and Expansion • Share results of the market analysis with existing businesses. • Organize a Business Assistance Team to help businesses diversify products/services. • Improve City's business-friendliness and designate a business ombudsman staff position. • Initiate a business recognition program and expand business-to-business marketing. Business Attraction • Succinctly package Lake Oswego's vision for Lake Oswego go and dow nn=h t_ ooS w`fM n, s business ,fir...... • � F.a aPrsesi staar ecae saetI cs. package withaVailable properties' ma nY=p,=� • Create an economic development webpage and make above s.=" info downloadableY • businessFOR LEATii opportunities es and develop a recruitment campaign n to fil l .�. .. r' these market niches. • w Create a referral network and activelymanage the business . �;�w� � . .� :: .•... development process. a- • Track and regularly update results i.e., new businessesjobs, etc. �� ��� .;•".•..•r Y :. Yr, Customer Attraction • Develop a brand identity for use in all marketing materials. • Work with key collaborators to design af marketing plan and identify roles/responsibilities. Map out specific promotions for downtown and Lake Grove. • Develop a consumer-oriented Lake Oswego website listing businesses and events. • Develop a public relations campaign to promote Lake Oswego activities and events. • Produce a winter season community event focused on the arts. manieteli Executive Summary Lake Oswego Retail Market Analysis& Business Development Plan 4 12 2009 Economic Development Strategy Development Background Information The City of Lake Oswego and Lake Oswego business community completed several surveys and studies during the summer and fall of 2009 to update local economic data, gain a better understanding of consumer opinion and shopping patterns, and inform ongoing strategic planning. The following summary presents highlights of this work most relevant to economic development strategy planning. Economic Development Strengths' • Community Amenities: Amenities include a beautiful setting, recreational opportunities, high-quality housing and schools, dining and shops, Oswego Lake, cultural programs, community events, and proximity to Portland. • Perceived prestige: Lake Oswego is considered a prestigious location for office space, especially the Kruse Way area. • Demographics: Growing, highly educated population; buying power • Higher education: M a ry l h u rst University • Industry Clusters: Finance & Insurance; Real Estate Rental & Leasing; Professional, Scientific & Technical Services; and Information • Home-based businesses: 9.4%of Lake Oswego jobs are in home-based businesses • Location: Access to local and regional residential amenities and business infrastructure. • Transportation: Lake Oswego businesses and residents have access to 1-5, 1-205, Hwy 43; bus transit and potential Streetcar extension; and Portland International Airport. • Labor Market: Commuting patterns indicate that Lake Oswego attracts skilled and unskilled workers from across the metropolitan region. • Business Tax: Unlike adjacent Multnomah County, with a 1.45% business income tax, Clackamas County does not levy a business income tax, an advantage in attracting firms that want to be near Multnomah County. Economic Development Issues' • Availability of land: Limited raw land and large parcels for industrial uses; high land costs • Refill challenge: Difficulty of redevelopment • Parking: Shopper survey and stakeholder interviews indicate concerns about insufficient parking in downtown Lake Oswego; cost of providing required parking cited as a deterrent to redevelopment • Infrastructure: Condition of existing and cost of new infrastructure • Location: Distance of Downtown from 1-5 • Jobs-Housing Imbalance: Lack of affordable housing is a deterrent to businesses with lower paid employees • City policy and regulation:Community concerns, resistance to rezoning, higher System Development Charges than other communities, overly restrictive sign codes and the complexity and slow speed of the planning and permitting process are issues cited by study interviewees and PSU MBA opinion research' as a barrier to economic development Summarized from Marketek, Inc., Lake Oswego Retail Analysis and Business Development Plan, October 2009; ECONorthwest, Draft Lake Oswego: Economic Opportunities Analysis, October 2009;and 2009 Survey of Lake Oswego Women conducted by Moore Information in July 2009. 2 Jacobs, et.al., Portland State University MBA project, December 2009 http:/1sba.pdx.edulcapstone/ 13 Strategic Opportunities • Growth in commercial office uses on redeveloped sites in the Kruse Way and Lake Grove commercial districts • Targeted industries and employers: Finance and insurance; professional, scientific, technical services and information; real estate; corporate or regional headquarters; green businesses; health care; retail and services; senior services; home-based businesses • Foothills redevelopment for residential, office and retail uses • Streetcar connection to Portland • Redevelopment and increased density on land in the industrial area along I-S • Retail enhancement through redevelopment, infill, retention, customer attraction and targeted recruitment in existing business districts • Improved City business practices: streamlined permitting, code revisions, and customer service improvements • Collaboration and strategy: Improved business support through development and implementation a collaborative Economic Development Strategy and strategic partnerships among the City, arts organizations, higher education, business and civic community, and regional economic development partners. Portland State University MBA opinion research'supports consolidation of business groups into a restructured Chamber. Supporting Data and Analysis De mogra ph ics3 • Growing population: 0.59%/yr. 2009-14; slower growth rate than Portland MSA at 1.46%/yr. • Aging population: Median age of 44 v. 36.3 in Portland MSA • High median household income: median of$84,485 v. $62,166 in Portland MSA • Higher than average educational level: 64.1%with 4-yr degree or more v. 31.5% in Portland MSA Employment4 • Jobs: 21,044 jobs at 2,272 employers in 2006- 9.4%are home-based. • Higher average wage than Clackamas County average • Clusters: Highest concentration of employees in Finance and Insurance (17%), Professional, Scientific and Technical Services (12%), Government (11%), Accommodation and Food Services (9%), Health Care and Social Assistance (8%) and Retail (7%) • Jobs-Housing Balance: Fewer than 1 in 7 Lake Oswego workers live in Lake Oswego Retails • Shopper survey: 55% of city residents shop outside of Lake Oswego for goods other than groceries and gas; shopping and dining are the leading reasons for outsider visits to Lake Oswego • Estimated retail vacancy rate: Lake Grove—8%; Downtown—4.7% • Unmet retail demand: 2.37 million square feet (2009), additional 569,000 square feet by 2019 • Potential capture: o Downtown —One of a kind specialty shopping, entertainment and dining o Lake Grove—Convenience shopping and services • Farmers'Market survey: 58%of 5.5% response sample live in Lake Oswego. In addition to Farmers' Market spending,47% of market attendees spend an average of$25/person on additional shopping or dining while downtown, for a projected annual total of approximately$97,000. Based on survey responses, estimated spending at the Farmers' Market alone totals $2.8 million. Marketek, Inc. ECONorthwest Marketek, Inc., Moore Information Survey,and Farmers' Market survey conducted by Lake Oswego Parks and Recreation on August 22, 2009. 14