Sam's Club converts a 140,000-square-foot former HQ store into a new corner entrance prototype.  This Virginia Beach center is also anchored by Harris Teeter.

HAMPTON ROADS, VA:  Hampton Roads is adding to its already healthy retail landscape, especially in the big box arena.  More and more national retailers are discovering Hampton Roads by entering and expanding in the market.

"There has been a tremendous amount of new and projected new shopping center development in the market," says Rob Hicks, vice president of retail for Divaris Real Estate, Inc. (DRE), the company that is spearheading the entrance and growth of many national big box retailers in Hampton Roads.

"The Department of Labor lists Hampton Roads as a supercenter or super sales growth region because of the tremendous amount of activity that has been occurring here."

The attraction for big box retailers is fueled, in part, by the substantial amount of residential growth that's occurred in the area, according to Hicks. 
Hampton Roads currently comprises approximately 1.6 million people, many of whom are young military retirees, with high disposable incomes.  The ongoing growth of a high technology-based community has caused many new and existing retailers are taking notice -- and to take action! 

Increased retail activity is primarily occurring in four submarkets: Virginia Beach, in the Pembroke area; Chesapeake, in the Greenbrier area; Newport News, on the Jefferson Avenue corridor at Interstate 64; and Hampton, in the Mercury Central corridor.  These areas already have a good mix of office, retail, light industry, hotels, housing and interstate access. 

The mixed-use development phenomenon in Hampton Roads, as in many areas of the country, is also attracting many new retailers, and somewhat changing the face of big box retail, according to Gerald Divaris, chairman/CEO of DRE.  "The big box retailer, to some extent, has seen its day," he notes.  "The latest retail trend around the country is town centers or lifestyle centers with an urban, main street, mixed-use framework that attract more specialty retailers.  We are seeing mid-sized boxes, and even big boxes, adapting their formats because the consumers' shopping patterns are changing." 

So, while the big box retailer is still coming into Hampton Roads, Divaris says, "You are beginning to see a slight crossover, to some extent, with a blend between the traditional, enclosed mall and a lifestyle center." 

One example of the town center concept is The Town Center of Virginia Beach, which is being developed by Armada/Hoffler Development Company and the executives of DRE.  The development will comprise 1.8 million square feet of mixed-use space to be constructed at the intersection of Virginia Beach Boulevard and Independence Boulevard.  It will include Class A office space, upscale retail, entertainment facilities, restaurants, hotels and apartments. This urban-style, mixed-use city center will allow many new, upscale retailers to enter the market for the first time.

"Because of all the urban sprawl and associated big box development in Hampton Roads, the region has had to reconsider the demand for development," adds Hicks.  "The result has been an urban town center format that is more pedestrian-friendly, consumer-oriented and resident-friendly. They don't take up as much land, have concentrated urban designs and are more densely developed.  Communities like Hampton Roads are trying to stay away from the large power and strip shopping center developments on every corner." 

But Hicks also notes that while the smaller big box concepts, such as Old Navy, Dick's Sporting Goods, Borders Books & Music, and DSW Shoe Warehouse are considering town center projects, the traditional big box retailers - Lowes, Wal-Mart, Home Depot, Sam's Warehouse Club and Kmart - are not suited to these centers.  "They still have their own format and will continue to do well with what they're doing."

Retail on the Rise

Several big box retailers are planning to enter and/or expand in Hampton Roads, including Off Broadway Shoe Warehouse, Dick's Clothing and Sporting Goods, Garden Ridge, Sam's Club, Wal-Mart Supercenter, Value City Furniture, and DSW Shoe Warehouse. 

"Over the past several years, there has been a large amount of new big box activity with new retailers like Dick's projecting to open multiple units throughout the Hampton Roads market," says Hicks. 

"We're also representing newcomers like Cost Plus World Markets and a couple of yet unnamed department stores that have also made the decision to enter the market," says Divaris.

Some Hampton Roads big box tenants, such as Wal-Mart, Kmart and Target, have all been in a race to out-position each other, including opening additional units throughout the market, according to Hicks.  "Target has expanded in several locations and is looking at more sites.  Kmart is expanding with two more units projected in 2002, and Wal-Mart has multiple new units projected."

Off Broadway Shoe Warehouse is opening its third Hampton Roads location, in the former Just for Feet on Lynnhaven Parkway in Virginia Beach .

Another example of a big box retailer embarking upon expansion is Off Broadway Shoe Warehouse.  Currently with two locations in Hampton Roads, the off-price shoe retailer is planning a third location in the former Just for Feet building on Lynnhaven Parkway in Virginia Beach.  This location was secured for Off Broadway by DRE's Anne Millar.

"From our shopping surveys, we perceived the market to be a good fit for our type of store, and it's proven to be just that," says John Shanon of Off Broadway Shoe Warehouse. 

Success for Off Broadway, like the typical big box retailer, requires lots of space. The stores range from 5,500 square feet to 26,000 square feet, but the 20,000- to 25,000-square-foot range has proven to be the most successful format, according to Shanon.  "We carry anywhere from 30,000 to 40,000 pairs of shoes, and in order to make the appropriate presentation of that much inventory, we have to have a big box." 

Wal-Mart is in the process of not only opening new stores, but also repositioning several existing ones in Hampton Roads.  In addition to constructing a new, 200,000-square-foot Supercenter on Nimmo Parkway, near General Booth Boulevard in Virginia Beach, Wal-Mart is relocating one of its older stores in Chesapeake's Crossroads Shopping Center to a new center on Taylor Road.  This will accommodate both a Wal-Mart Supercenter and a Sam's Warehouse Club.  Other single stores that have been converted into Supercenters are located in Norfolk, Hampton, Newport News and Suffolk.

"Hampton Roads has been a very good market for Wal-Mart, and the company is delighted with this region" says John Knibb, senior vice president of DRE and the exclusive broker for Wal-Mart in the area.  "Customers have responded very well to the Supercenters, and customer demand has overtaken some of the existing stores.  We've had to take some of the pressure off by providing new locations."

Knibb also represents Sam's Wholesale Club, and notes that a second Chesapeake Sam's Club store is going up alongside Wal-Mart in the new shopping center on Taylor Road.  In Virginia Beach, Sam's Club has secured 140,000 square feet of retail space in the Divaris-leased Princess Anne Plaza, on Virginia Beach Boulevard.   Sam's took over the former HQ store at the intersection of Virginia Beach Boulevard and South Plaza Trail, and is in the process of converting the space into a new corner entrance Sam's Club prototype. 

Retail Down the Road 

What's in store for big box retail in Hampton Roads?  Tougher approvals, according to Knibb.  "In this region, multiple jurisdictions have recently passed big box/retail ordinances that have raised the bar in terms of the localities' expectations of big box development," he says.  "This is to ensure that architectural and site planning standards are raised to a much higher level."  Knibb notes that most of the national retailers have responded positively to the ordinances and have enhanced the architectural and aesthetic appeal of their developments, but the approvals are getting tougher.  "I think it's slowed the influx of larger retail, because surviving the approvals in a metro area is becoming very difficult." 

The approval process may be tough, but Hicks sees the big box trend charging on.  "I think big box development will continue in Hampton Roads," he says.  "That's evidenced by the new projects that keep moving farther and farther out.  In addition to moving to new areas, developers are also redeveloping existing projects.  There are some centers that have one or two vacancies, and a developer will come in on cue by a big box retailer, take down the project and redevelop it.  As long as that keeps happening, big boxes will remain strong throughout the market."