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Shopping centers for cars: Dealers cluster in auto parks

By Dees Stribling

The retail industry is continually reinventing itself, but the retailing of cars has always seemed to resist innovation. Almost since the time Henry Ford made automobiles a mass-market item, the standard for selling them has been big fleets of vehicles parked in big lots located higgledy-piggledy along big streets.

Automobile retail is changing now, though, at least in some places. In fact, in a few instances, formerly conventional retail properties are being redeveloped into complexes for selling cars. And in one particular case, cars are actually being sold inside an operating regional mall.

A more far-reaching aspect of the change is the creation of the auto park. Though the definition of an auto park is not written in stone, a handful of real estate developers are busy with car retail projects that are something more than agglomerations of auto dealerships. Auto parks do involve putting 10, 15 or even more dealerships in proximity to each other, but they are also designed using features in common, such as standard signage and ring roads, to establish the site as a unified whole in the mind of the car-buying public — a place to go find a car, no matter what kind. Auto parks are also being developed as important components of master-planned, mixed-use communities, in the way that a lifestyle center or a big-box retail cluster might be. “Auto parks have been evolving for some time now,” said Jim Mullen, president of Staubach AutoGroup, an affiliate of Staubach Retail that has developed these parks across the country. “Earlier versions tried to put car dealerships together in one place, but that was about it.”

The auto mall concept got its start in the 1980s among developers out West, particularly in California. They laid out land and sought to bring car dealers onto these sites, which were not otherwise being developed in any coordinated way. “Some were successful, some not so successful,” Mullen said.

More recently, developers have been more methodical in the creation of auto parks. No exact count of these parks exists, but the field’s most geographically active developer is Staubach, with about 40 to its credit. More-localized developers have been active as well.

Auto parks are not the easiest projects in terms of site selection because a number of factors need to align. One is land. A single car dealership, never mind 10 or more of them, requires a lot of land. And that means auto parks are impossible in most urban contexts, and even in many long-established suburbs.

On the other hand, these dealerships need population to sell their wares, so an auto mall cannot be set out in the middle of nowhere, either. “Auto malls have to be on the edge of a population center, but not just any edge — they have to be in the path of population and demographic growth,” said Wendy Ellis, a spokeswoman for McWhinney Enterprises, which is developing the Motorplex at Centerra, a 100-acre auto mall in Loveland, Colo. “As long as residential and employment growth continue in a certain direction, there’ll be a propensity to buy cars in that area. And of course, that’s what dealers want.”

Complicating things even more is the fact that dealerships, as franchises, are unable to operate just anywhere they please. Carmakers are loath to allow dealerships to locate near each other and spark competition. Not only that, but many states regulate the locations of new-car dealerships to space them out (though not those of used cars), a legacy of the carmaker lobby.

“Those laws typically force dealerships to be five to 15 miles from each other,” said Mullen. “There are even attorneys who specialize in dealership location law. It means that our locations need to be away from other dealerships or so compelling that established dealers want to move to there. We review maybe 50 potential sites a year, and our preliminary turn-down rate for them is over 90 percent.”

Yet another site-selection consideration is the location of other retail space near a potential auto park, especially if the park is not part of a mixed-use project that includes retail. “It’s good if retail developers are just ahead of us,” said Mullen. “In fact, we watch what major retail developers do very closely. Car dealerships are reluctant to be the first retailers in the area. An infrastructure of existing retail needs to come first, to help drive the traffic necessary to sell cars.”

Ultimately, though, developers do find sites for their auto malls. Motorplex at Centerra is an example of an auto park under development that will be in commercial symbiosis with a surrounding master-planned project. Altogether the Centerra project is some 3,000 acres of commercial, residential and office development, largely on former ranch land owned by the McWhinney family.

Now, that part of northern Colorado, consisting of Larimer and Weld counties, is experiencing rapid population growth. According to the U.S. Census Bureau, Weld County’s population has grown from 180,900 in 2000 to 207,700 last year, while Larimer (which includes Loveland) has grown from 251,400 to 271,900 over the same period. And the projections for both counties anticipate similar growth ahead.

The primary retail component at Centerra is the Promenade Shops, a 700,000-square-foot lifestyle center at the junction of Interstate 25 and U.S. 34, across from the 100-acre Motorplex. When the Motorplex is finished, in about 10 years (auto malls are nothing if not long-term projects), it will contain 16 dealers offering some 30 brands of cars, according to Ellis. Currently, five dealers have moved to the site: BMW, Buick Pontiac GMC, Chevrolet, Dodge Jeep Chrysler and Subaru.

“They represent the first wave of dealerships in the Motorplex,” said Ellis, adding that other dealers are watching them very closely, and so far sales have been strong. “We expect the second wave, especially among dealers whose only Colorado location is currently Denver.”

The Motorplex, like many auto parks, is structured such that each dealership buys its site. As developer, McWhinney prepares the ground, including such elements as a wide ring road with but limited access to area streets, the better to take test drives. An auto park developer also typically establishes an association supported by dealership fees to take care of common-area maintenance and the like. “The Motorplex has always been part of the concept for Centerra,” said Ellis. “There will be a synergy, especially between the retail properties and the Motorplex. People who come shopping will look at cars and vice versa.”

Historically, although auto parks have been developed mainly in the western United States, where land is more plentiful, other parts of the country are also seeing this activity. Florida is one popular place for auto parks, though sites are hard to find, and even parts of the eastern seaboard are under consideration.

In September Staubach bought a 40-acre site in Sterling, Va., for an auto park to serve burgeoning east Loudoun County, near Dulles International Airport. The Dulles 28 Auto Park is at the edge of the growing metro Washington, D.C., market and will be home to multiple dealerships. The ring road and similar elements will facilitate one-stop car shopping.

The park, on which construction begins this coming year, will have a promising retail presence nearby. Work began this summer on the second phase of Dulles 28 Centre, a 300,000-square-foot, Wegman’s-anchored center. A 125,000-square-foot Target will be co-anchoring the center by this coming summer.

“If we can buy across the road from major retail, that’s ideal, and it worked out in this case,” said Mullen. “It’s part of our overall strategy, but not the only component. We use net-growth demand analysis on potential sites, doing interviews with home builders and employers in the primary and secondary trade areas, looking for trend lines in development or redevelopment. It’s a fairly rare occurrence when the stars align to make an auto park possible, and we don’t want to miss any opportunities.”