KINGSPORT - Kingsport's businesses are capturing 50 percent of the retail demand in the city and outlying area, but only meeting the demand in three of 10 retail categories, according to an economic study released Monday.
Basile Baumann Prost & Associates - a Maryland-based consulting company - recently conducted a three-month analysis of Kingsport's retail sales, housing market and potential redevelopment districts. The analysis came at the request of the Kingsport Housing and Redevelopment Authority to update a similar study performed by Economic Research Associates of Washington, D.C., in 2001. The results of the BBP study were presented to the Board of Mayor and Aldermen on Monday.
The ERA study found Kingsport had an annual retail sales potential of $1.5 billion but that only $650 million (43 percent) was being spent within the city limits - the remainder was going elsewhere.
According to the BBP report, Kingsport had $607 million in retail sales in 2006, thus capturing 50 percent of the $1.18 billion retail demand. The unmet demand, or retail sales leakage - as BBP defines it - is $587.9 million.
In order to determine the amount of retail demand, ERA and BBP set Kingsport's trade area - the region in and around the city from which a retail site draws consumers. ERA's trade area was larger than BBP's, thus the reason why BBP's figures are less than ERA's.
The report states Kingsport retailers are capturing the demand for clothing, sporting goods, books and music, but not for furniture, electronics, appliances, building materials, food and beverage, restaurants and health care products. Brian Dowling, with BBP, said the city should focus its efforts on attracting furniture and general merchandise retailers and restaurants.
Two significant changes on Kingsport's retail market were the opening of the East Stone Commons shopping center and the closing of Sam's Club, according to BBP.
BBP also made projections on Kingsport's retail sales and capture rate for 2009, taking into account the estimated retail sales of Kingsport Pavilion, Reedy Creek Terrace and the new Lowe's on Stone Drive. BBP estimates the city retailers will experience $651.8 million in sales and capture 64 percent of the $1.3 billion retail demand. Here, the retail sales leakage is estimated to be $468.5 million.
CeeGee McCord, deputy executive director of KHRA, said the report gives the city ideas of where it needs to focus - what retail categories the city should try and recruit.
"It gives us a good idea of where we have room to grow, and I think it gives us a good picture of where we are because there's been changes all around us," McCord said.
In addition to the retail analysis, BBP conducted a blight study of four locations in Kingsport - the Lynn Garden Drive corridor, Wilcox Drive corridor, the Quebecor property and the Netherland Inn area.
Kingsport has five redevelopment districts within its boundaries - East Stone Commons, Stonegate shopping center, Borden Mill property, Greenacres/Crown Point/Southland shopping centers, and the downtown area. An advantage of being in a district is property owners who wish to redevelop their property can apply to the KHRA for tax increment financing (TIF) funds to use on the project.
BBP found evidence of slum and blight characteristics in all four study areas, with each having dilapidation, obsolescence and deleterious land use. The Quebecor property also suffers from lack of ventilation and light.
BBP officials believe all four sites should be deemed redevelopment districts, and they suggested some ideas on how to help, such as creating a TIF District rather than use TIF for a specific project.
Ralph Basile, with BBP, said a TIF District would allow the city to freeze the property taxes for the entire district and then use the increase in property values to help the whole district. With site-specific TIF, only one site is helped with TIF rather than the whole district, Basile said.
The third study conducted by BBP dealt with housing, with the goal being to forecast a range of residential sales prices and absorption rates for potential projects in the downtown redevelopment district. BBP examined new households moving to Kingsport, households moving within Kingsport, historical data and the impact of the higher education center.
The study estimates the "for sale" price range of homes and condos in the downtown area to vary from $105,000 to $160,000, with sales from 13 to 18 during 2007. Sales are estimated to increase over the next five years, going from 19 to 48 in 2008 to 74 to 82 by 2012.
"We believe there is enough people in the area with high income to support this absorption rate if there is something downtown," Dowling said.