Feb 12, 2024

🎙 Hays constantly recruiting retail but faces challenges

Posted Feb 12, 2024 3:26 PM

Hays Post

Many factors play into a national retailer deciding to open a location in a new community.

In a recent interview on the Morning Blend, Doug Williams, executive director of Grow Hays, discussed some of the challenges of recruiting national retailers to Hays.

"Everybody would like to see more retail — more choices," Williams said. "We are in a very challenging environment for retail recruitment, but it is something we are working on all of the time."

Both Ellis County and the city of Hays rely on sales tax collection for a significant portion of their budgets, which means retail recruitment is even more important, Williams said.

The general thinking in the past has been if a community recruits manufacturing and reaches a certain population threshold, then retail development will naturally follow. Williams said this is not necessarily the case.

"It's a difficult time to recruit retail like big box stores to a community our size just based on all of the online things that are going on and the challenges that retailers have right now," he said.

Other challenges are land and building costs, which have consistently been high in Hays.

If a big box retailer were to locate in Hays and need a 20,000-square-foot building, they could expect to spend about $5 million or $250 per foot to construct that building. They would pay $10 per square foot for a lease. That's $200,000 per year, Williams said.

Most of the large retailers don't own their buildings, they lease them from investors.

That represents a 4 percent return for someone who owns that building, he said.

"Four percent does not work," Williams said. "No one in today's environment is going to make an investment in a commercial building and get a 4 percent annual return."

In cities the size of Hays, retailers often move into second or third-generation buildings. Williams gave the example of Hobby Lobby, which moved into a former Wal-Mart location.

Williams said Hays does not have a lot of this existing building space.

Demographics play a significant role in retailers' decisions to locate in a new city.

"They'll not only look at the demographics in our area of Ellis County but a 60-mile radius and the population that lives in that kind of geography," he said.

Product distribution can also be a factor in retail development.

Williams said Grow Hays has spoken to Aldi about locating in Hays. The community has the demographics to support a store, but Hays is outside of the company's distribution system.

Logistically, for them, it's a challenge, he said.

Workforce also continues to be a challenge. Ellis County had a 1.3 percent unemployment rate in December.

Ellis County does not have enough regional population to attract a Target, but if they were to locate here they would need 200 to 300 employees, which would not be available in Ellis County at this time.

Williams said Grow Hays is consistently working on recruiting new retailers. That could include another clothing or department store such as Kohl's, Marshalls or T.J. Maxx. 

Chick-fil-A has had a huge response to its recent food truck visits to Hays.

However, the chain has very specific requirements for locations. They want to be located close to the interstate and would need easy ingress and egress, Williams said.

That kind of property is hard to find right now in Hays, he said.

"If you drive up and down Vine, it's not like we have a lot of space," he said.

Williams said he thinks enough people live on the east side of Hays to support an additional grocery store. 

"Competition helps keep prices in line and gives people variety," Williams said.

On March 5, Grow Hays will have its quarterly luncheon. The topic will be housing. You can call Brief Space at 785-628-3102 for reservations.

Grow Hays has tentatively set March 13 as the grand opening for the microfactory. More details will be announced at a later date.