City needs more ‘shovel ready’ sites to attract industry

I recently had the privilege of participating in a forum sponsored by the Mid-Missouri Regional Planning Commission that dealt with the topic of retail development in rural communities. Among the panelists were a representative from the Missouri Department of Economic Development, a commercial property developer and a commercial real estate broker.

Several strong themes emerged from the discussion. The first is the need for every community to have an agreed-upon plan for commercial development based on the assets and aspirations held within that community.

The second is the need for creativity in structuring development deals and filling commercial space.

The third is the need for every community that is serious about economic and commercial development to provide as many “shovel-ready” sites as possible.

Considering our challenging economic times, it’s best to heed the advice within those themes.

Last fall, the results of a survey of 332 commercial real estate professionals conducted by a national law firm indicated that 68 percent of those surveyed were optimistic about the industry’s prospects in 2008. By April 2008, only 22 percent of the respondents held the same position. In addition, 60 percent don’t anticipate any improvements within this calendar year.

During the first quarter of 2008, the vacancy rate in strip malls rose to its highest level since 1996. Big mall vacancies reached the highest level since 2002. And the amount of space occupied by retailers has declined at the highest rate since 1980.

All of this is evidence of the overall strain on the economy. Not only are locally owned businesses dropping by the wayside; national chains are beginning to feel the pinch as well. Many are adjusting expansion plans. In the worst-case scenario, national chains are actually closing locations, leaving even more commercial space on the market.

To help businesses avoid falling victim to these conditions, the MMRPC forum gave a clear message: “Be Prepared.” Know what you want and where you want it, and have it ready for developers and tenants. In other words, have an array of “shovel-ready” sites, well-researched and well-presented locations that are ready to go and relatively risk-free.

Shovel-ready sites are available for sale with established terms and conditions. It’s not enough to “know someone who knows someone who told his brother that the owner might be interested in selling.” If the property has multiple owners, all must be willing to sell.

Long-term, renewable and assignable-option agreements with land owners are a possibility and avoid the scenario in which the owners have indicated their willingness to sell the property to area economic developers only to change their minds at the final hour or price the property out of the buyer’s range.

Shovel-ready sites are fully served, with utilities already at the site and with the capacity to meet the potential demand for the property. Since it is not always economically feasible for a community or utility to extend service to available sites without existing tenants, an option may be to create plans to upgrade services, including appropriate rights-of-way and detailed cost and schedule estimates.

Shovel-ready sites typically are relatively risk-free in terms of environmental impact. Good sites have had environmental assessments and any associated mitigation work completed. The site should be free of any utility easements. If any exist, the community should be prepared to work with the easement owner to address those issues, including all details on cost and schedule.

Some communities, regions and states have formalized criteria against which sites may be evaluated to be designated “certified” shovel-ready sites. If available, this designation makes locations highly desirable for tenants and developers and serves as the basis for solid information gathering and data about the location.

Times are tough for real estate professionals and developers. Ensuring that available locations are as prepared as possible to house commercial development is the easiest way to maintain the viability of our communities. Shovel-ready sites make decisions easier, faster and more beneficial for all parties.

Mary Paulsell is the director of the University Center for Innovation and Entrepreneurship at the University of Missouri. The center houses the Missouri Small Business and Technology Development Centers and the Missouri Procurement Technical Assistance Centers. Reach Mary at [email protected].