The Roanoke Times

Development projects in the Roanoke Valley

ERIC BRADY The Roanoke Times

Construction crews are raising new concrete walls for the third phase of Southwest Roanoke County's West Village on Virginia 419. Owner Lew Jamison says there are several retail prospects for the expansion.

ERIC BRADY The Roanoke Times

Daleville Town Center is under construction by general contractors J.M. Turner & Co. Millie Moore, broker for Retail Real Estate, who is leasing the new site, is spending more money on advertising to attract potential tenants.

The face of retail looks different from a year ago. It's revealed in a swelling number of empty big-box spaces and commercial developments stalled in midconstruction nationwide.

In the Roanoke Valley, some retail projects seem to be riding the recession with ease and no apparent setbacks. Others are taking a back seat until the economy shows some signs of recovery.

There's no magic formula that explains why some retail centers, from the tiered roofs of West Village to the streets of Downtown Moneta, are filling up more swiftly than others. Some real estate brokers point to the lure of new centers versus aged properties and the attraction of shopping developments with anchor retailers compared with those without a large store, such as a grocer.

But the formula for attracting retailers to this region is changing for local real estate brokers.

Lately, landing retail tenants is a challenge, because many companies are halting expansions and new openings in the wake of economic uncertainty. The slowdown has forced Millie Moore, broker for Retail Real Estate in Roanoke, to spend more money on advertising. She's preparing mass mailings to lure potential tenants to shopping centers where she leases space, such as the Daleville Town Center, which is under construction.

"I haven't done that in years," Moore said.

She described her list of retail prospects as "dwindled down."

Smaller retailers looking for 1,200- to 1,400-square-feet spaces are more likely to make a move, rather than large national chains, except for possibly franchises, she said. And believe it or not, some small, startup businesses are finding opportunities despite a poor climate for consumer spending, Moore said.

The leasing pace could be slow for much of the year, though April and May generally are the busy months for retailers to land new spots in the region, said Roger Elkin, an executive vice president at Hall Associates in Roanoke.

The National Association of Realtors predicts that the nation's retail vacancy rate will rise to 13.4 percent in the third quarter of this year, compared with 9.8 percent last year, which is a result of the economy's impact on retailers.

In the Roanoke Valley, Moore estimated the occupancy rate at 86 percent for large centers with anchor stores. Still, it's the first time that occupancy has dropped below 90 percent in many years, she said. Her calculations do not include some recent big box store closings.

It could be a while until the environment for retail leasing and expansion picks up locally and with the same gusto as in years past.

"We know there are tenants who want to be here," Moore said. "I've been watching them for some time, but we are in kind of a waiting game."

Here's a look at how selected Roanoke Valley commercial real estate developments, where construction preceded the recession, are faring:

Keagy Village developer still in search of anchor

Four green-roofed, yellow-and-red buildings are up, but there's nothing to fill them. Dunkin' Donuts and Firehouse Subs are slated to open in April at this retail center in Southwest Roanoke County. NTelos debuted in December, and Scottrade, an investment brokerage, is part of the future lineup.

Carved from 16 acres of forested property, Keagy Village's coming first was announced in 2004, but it's barely inching forward. Starbucks and Bonefish Grill have pulled out of plans to locate there. And still, no anchor retailer has been named, though South Carolina developer Kahn Development Co. has said it's trying to land an upscale grocer.

Last fall, Bobby Temple, a Kahn spokesman, blamed struggles to gain additional tenants at Keagy Village on the poor nation's economic conditions. Kahn Development has said that it expects this outdoor retail center to house 105,000 square feet of retail and 25,000 square feet of office space.

During a recent conversation, Darlene McKinnon, a new leasing agent for Keagy Village who works for Kahn Development, dismissed the slow progress at Keagy Village. There are no new retailers to name for this property yet, she said.

"We have very positive calls and inquiries regarding the property and Roanoke in general," she said.

Ivy Market's second store is under construction

The future of Ukrop's Super Market in Roanoke is on the rocks, and so is the rest of the retail center surrounding this grocer that opened in 2007 with much fanfare. Developer Bland Painter, whose company, IMD Investment Group, built the Ivy Market retail center on Franklin Road, said late last year that poor economic conditions will keep away additional retailers for now.

When Painter announced his visions for the Ivy Market project in 2004, the center was slated to house a variety of small retailers, alongside the 58,000-square-foot Ukrop's store. In December, Ukrop's officials said a lack of progress on Ivy Market's additional retail options are a reason for the grocer's difficulty meeting its financial goals in Roanoke.

A Walgreens drugstore that's under construction adjacent to Ukrop's is the only other retailer at Ivy Market. It's supposed to open by April 30, as stated in an incentives agreement with the city of Roanoke and IMD.

West Village thrives along busy highway

While other area retail centers are in limbo, West Village is riding the tide. Construction already has begun for this outdoor center's third phase, which fronts Virginia 419 in Southwest Roanoke County and houses Fink's Jewelers, Annie Moore's Irish Pub, the Daily Grind and other retailers. It houses 43,000 square feet of retail space, though once the entire project is complete, it will total 80,000 square feet.

The foundation for a new 15,000-square-foot building is peeking out of the hillside, and owner Lew Jamison said there are several retail prospects for the structure. At the most, this new phase of West Village could house 10 small shops, but the spaces can be customized to fit various-sized retailers.

Jamison wouldn't disclose the names of potential stores set for the third phase, though "we look for retail, retail clothing or service organizations, like cellular phones," he said.

Asked why he's confident in West Village's ability to support a new phase, Jamison said "location, location, location."

The center's exposure to a busy Virginia 419 corridor has helped it to draw new business.

Also, "we're more tailored to local businesses," Jamison added. "We're not dealing that much with national" stores.

Even so, locally owned shops aren't immune to economic woes.

Leases, then construction for Downtown Moneta

Downtown Moneta awakened the sleepy village of Moneta, east of Hales Ford Bridge. Construction is complete on the first three buildings in the mixed-use development on Virginia 122, and several restaurants and other small businesses have opened their doors.

Developer George Aznavorian transformed an oddly shaped piece of property into a hub of activity without feeling the sting of the recession. He said the two commercial buildings he owns in Downtown Moneta are about 80 percent occupied, and he has submitted plans for a third structure to county officials.

"We are just going to be responsible and grow into what we have," he said. "Where I have seen developers make mistakes is they build a large strip mall and have two tenants. What we have tried to do is get our leases ahead of construction."

Gil Smith, developer of Downtown Moneta's anchor property, Celebration Square, said about 50 percent of his commercial space is leased. Condominiums make up the second and third floors of the building, but those units are not selling as quickly, he said.

George Nester, Bedford County's director of community development, said commercial and retail building permits are on track for the current fiscal year. Bedford County has issued about 80 retail and commercial building permits each fiscal year since 2003.

"We are just getting into the construction season and hoping to see more permits in March, April and May," Nester said.

Shoppes at Sunset Cay nearing completion

Work is at a standstill at The Shoppes at Sunset Cay on Hendricks Store Road in Moneta until electricity is connected. Developer Jim Fields said it will take about 30 days to complete interior work to prepare the space slated for three restaurants and an interior design center.

But Carrie Conard, co-owner of the design service Envisions, said she and business partner Janice Thurman no longer plan to move from their current space at Burnt Chimney to The Shoppes at Sunset Cay. Instead Envisions will move by April 1 to Westlake Plaza on Scruggs Road in Franklin County. Conard declined to elaborate on the reason for the change other than to say: "Scruggs Road is the best location for us."

Smith Mountain Lake Partners, the company developing the residential portion of Sunset Cay, filed for Chapter 11 bankruptcy protection last month, but Fields said the filing will not affect the commercial structure on Hendricks Store Road or the former Campers Paradise site near Hales Ford Bridge.

Two projects take root along U.S. 220 in Daleville

Along U.S. 220 in Daleville, two commercial projects have sprouted where apple orchards used to be.

Construction is under way on the first building -- a 28,000-square-foot two-story commercial structure -- in Fralin & Waldron Inc.'s Daleville Town Center, a 117-acre mixed-use development. The Roanoke County development firm intends to move its offices from Penn Forest Boulevard in Southwest Roanoke County to the property about August. The developer will use about half the building's upper level and is looking for a complementary tenant, such as an architect or engineering firm, to lease the other half. The lower level can be divided into smaller storefronts to house anything from a florist to a restaurant.

Andy Kelderhouse, president of Fralin & Waldron, said there are no "firm" commitments on leases in the building given the state of the economy but that he has received several letters of intent.

"What we hope is things get on track and we have that building [completely] occupied by the end of the year," he said.

Across U.S. 220 in Orchard Marketplace, a Food Lion grocery store is slated to open later this year. A Carilion Clinic medical facility and a dental practice also are planned.

"Commercial [development] right now is holding its own," said Chuck Supan, Botetourt County's director of planning.