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Shopping in the Tri-cities

August 20th, 2012 5:08 pm by Sharon Caskey Hayes

Shopping in the Tri-cities

When Steb Hipple moved to the Tri-Cities in 1982, Kingsport was the region’s retail leader, with two indoor shopping malls and stores unique to the city such as Service Merchandise, Brendle’s and Montgomery Ward.
A decade later, Hipple — an economist at East Tennessee State University who’s tracked the region’s retail market for years — was seeing the tide turn.
“By the 1990s, through a combination of population growth and increased income levels linked to healthcare, Johnson City was becoming the larger retail center,” Hipple said.
Since 1999, Johnson City has led retail sales in this region, followed by Kingsport and Bristol.
But with last week’s announcement that Bass Pro Shops will locate in Bristol and anchor the new Pinnacle shopping complex off Highway 11W, can the region expect yet another shift in the retail makeup of the region?
In 2005, city officials in Bossier City, La., forked over a whopping $38 million to land a Bass Pro Shop there, and other communities across the country have spent millions of dollars to get the popular outdoor store.
It’s unclear just what developer Steve Johnson has promised Bass Pro to locate in Bristol. But last week, Kingsport Mayor Dennis Phillips said Bass Pro was asking for $25 million to locate in the Model City.
Hipple said it shows that big retailers are not willing to risk their money to move into mid-size markets.
“They want to share the risk by reducing the amount of money they have to put into the operation,” Hipple said.
But is a Bass Pro Shop worth spending millions to get?
Hipple said he’s not so sure.
“Bass Pro Shop is a destination, and people drop a bunch of money in the store. But the affect that they will have in terms of generating other retail development? That’s hard to say,” Hipple said.
He pointed to the Bass Pro Shop on the east side of Knoxville near the intersection of Interstate 81 and the road leading to Pigeon Forge and Gatlinburg. There, Bass Pro is the main show in a retail complex, but few stores have followed it to the site.
“The complex is composed primarily of empty storefronts, and they have been empty for years,” Hipple said. “Every time you go by there, all you see are the for-lease signs.”
And while the Bristol developer said his was the best site for a big shopping complex — it’s located off Interstate 81 along Highway 11W at Exit 74 — others disagree.
Kingsport is hoping to develop a shopping complex at the intersection of Interstates 81 and 26 — and Kingsport City Manager John Campbell said this site is far better than the Bristol location.
“I don’t think there’s any question, demographically and otherwise, you still have the better location, because you’re between the two biggest cities and you’ve got the most movement of traffic. Plus you’ve got (Interstate) 81 that’s a major corridor, and you’ve got the local traffic traveling back and forth between the two biggest job-creating cities. It’s just a more natural flow,” Campbell said.
He questioned whether other major retailers will follow Bass Pro Shop to the Bristol site.
“The developer wants you to believe that everything is going to follow that store. But what’s going to happen — the major chains will look and evaluate two or three sites (in the region) so they know they’re getting the best location. And the numbers just won’t stack up for that site,” he said.
One of the biggest shifts in the market makeup came in the early 1980s, when Johnson City voters passed liquor by the drink. The vote was close and contested in court, but after about a year, restaurants were given the go-ahead to serve liquor.
The move attracted national restaurants, which were followed by national retailers.
Campbell — who served as city manager in Johnson City from 1984 to 2001 — said the expansion of the mall and the addition of a food court helped turn Johnson City into a shopping destination.
The development of State of Franklin Road, which opened up land for major shopping centers, was also key.
“We knew when that was being created, it was creating some very big spots for retail. And it was at the time when the major power centers were coming into vogue,” Campbell said.
He said that within a three-year period in the late 1990s, Johnson City added 1 million square feet of retail space on the north side of town. “And that was the difference maker at that time, because for three or four years, that was all the major retail that was developed in the Tri-Cities,” he said.
Meanwhile, Bristol, Va., was working to develop shopping centers around Exit 7 off Interstate 81.
And in Kingsport, community leaders were working to develop Meadowview Pointe, a proposed 1-million-square-foot upscale shopping complex near the MeadowView Conference Resort & Convention Center.
But Johnson City had the momentum, Campbell said.
“You get that momentum going and people say — ‘Hey this is the place to go,’” he said.
Even some stores that wanted to move into Kingsport through the years ended up locating first in Johnson City. Campbell cited Target, which located at the site of an old Kmart on Roan Street.
Campbell said that in the mid 1990s, developers looking for a site to build a Target in Kingsport were having a hard time finding just the right spot. And Campbell, as Johnson City city manager at the time, sensed opportunity.
“We just said, ‘Whatever it takes, we’ll make it happen,’” said Campbell, adding Johnson City didn’t provide Target with any up-front money, but made sure the store didn’t confront any roadblocks, either.
“I would never have thought then that it would take over 10 years to get the second or third Target in the marketplace. So what that did was draw a lot of shoppers from Sullivan County into Johnson City,” Campbell said.
Today, Johnson City still has lots of stores that Kingsport doesn’t, including Toys ‘R Us, Barnes & Noble, Talbots, H.H. Gregg, Harbor Freight, Gap, Coldwater Creek, Fresh Market and most recently, MacAuthority.
Johnson City is also home to various restaurants not located in Kingsport, including Red Lobster, Bonefish Grill, Mellow Mushroom and Outback Steakhouse. And just recently, after considering locating in Kingsport and Bristol, Tupelo Honey announced it would locate its first Tri-Cities restaurant in Johnson City.
Kingsport, meanwhile, has attracted a few stores and restaurants not located in Johnson City, including Ulta Beauty, Hobby Lobby and Chop House.
By the late 1990s, Kingsport leaders knew the city was losing retail sales dollars to neighboring communities. But they didn’t know how much.
At the city’s economic summit in November 1999, a consultant from Economic Research Associates in Washington, D.C., painted a grim picture: Kingsport was losing a whopping $850 million in retail sales every year because folks here were driving elsewhere to shop.
The city, once known as the retailing center of the region, had lost its competitive edge.
At the economic summit in November 1999, city leaders decided to make retail development one of the city’s top priorities. That decision couldn’t have come soon enough. A month later, the latest retail report showed Kingsport was indeed falling behind. Johnson City, with its new stores and shopping centers, had surpassed Kingsport in quarterly retail sales for the first time in history.
The Model City had watched its existing retail base erode. Service Merchandise closed its doors in 1999. Montgomery Ward announced in December 2000 it would close its Kingsport Mall location. Other Kingsport Mall anchors, including Ames, Heilig-Myers and Carmike Cinemas, followed suit.
The only major anchor still operating at the Kingsport Mall was Office Depot.
Roger Ball, a Tazewell, Tenn., businessman who had acquired the mall at auction in 1994, remembers those days well.
“The whole business lineup deteriorated. But we had lease contracts on those buildings that extended for another 25, 30 years. We could not do anything,” Ball said in a 2007 interview. “Everybody tried to blame me.”
Across town, Kingsport leaders were pinning their hopes on another retail project — a $75 million, 1 million-square-foot complex called Meadowview Pointe off John B. Dennis Highway. The center was expected to house up to 80 retail tenants in a “shopping village” concept accommodating 5,000 parking spaces. Construction was expected to begin by the end of that year, with phase one opening by November 2001.
Then terrorists attacked the World Trade Center and Pentagon on Sept. 11, 2001, and everything came to a halt.
By the spring of 2003, city leaders conceded that Meadowview Pointe was dead.
Back across town, Ball began demolishing the old Kingsport Mall in March 2003 after clearing up the leases held by Montgomery Ward, Heilig-Myers and Ames. A year earlier, the Kingsport Board of Mayor and Aldermen had declared the mall site as a redevelopment district, eligible for tax increment financing to encourage new development.
In a couple of years, the 275,000-square-foot East Stone Commons was home to various retail stores and restaurants, including Hobby Lobby, T.J. Maxx, Ross Dress for Less, Pier One, PetSmart, Chili’s, Salsarita’s Fresh Cantina, Marble Slab and McAlister’s.
Ball later sold East Stone Commons and reinvested the proceeds to construct Reedy Creek Terrace, a 45,000-square-foot shopping complex that would include Starbucks and Panera Bread on Eastman Road.
The city also developed the Kingsport Pavilion, a $55 million, 500,000-square-foot shopping center along Highway 11W. The complex includes such stores as Target, Kohl’s, Dick’s Sporting Goods, Books-A-Million and Old Navy.
Meanwhile, the Fort Henry Mall became the Kingsport Town Center, and owner Somera Capital Management is hoping to eventually expand and renovate the facility.
As for Kingsport’s plans at the intersection of Interstate 81 and 26, developer Stewart Taylor still hopes to attract tenants to his Heritage Point project, while the city hopes to purchase additional land in the vicinity to attract other retailers.

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