Retail: New Developments Must Consider Growth of Asian, Hispanic Populations
The rapid growth of the Hispanic and Asian population in California is changing the way commercial real estate companies need to plan future shopping center projects.
Government officials, commercial lenders, real estate brokers and others who met July 24 at the San Diego Idea Exchange warned that ignoring the state’s changing cultural influences could spell disaster for some retail developers.
The forum, sponsored by the International Council of Shopping Centers, showcased recently released data from the 2000 census and discussed what the figures mean to retail.
Rick Domanski, vice president of Dublin, Calif.-based real estate analyst group Thompson Associates, said retail real estate companies that ignore Mexican businesses do so at their own peril. They’re here, and they have a growing customer base.
“Hispanics have surpassed African Americans (in population) five years ahead of when the U.S. expected it to happen,” he said.
In Los Angeles, there are already supermarket chains catering to Hispanics , Superior Foods Warehouse, Vallarta Foods, El Super, El Tigre and more. Domanski guessed there are more small, Mexican-operated chains in Southern California than the total number of conventional supermarket chains in the entire state.
Domanski cited a former Lucky supermarket in one Anaheim neighborhood. The store did less than $10 million worth of business a year until it was sold to a Hispanic operator, who now boasts sales of $30 million on 27,000 square feet.
Hispanic, Asian Markets
Other examples abound, such as San Jose-based chain Supermercado Mexico. One store does $100,000 in business a week with only 10 parking spaces, or another which has $200,000 in weekly sales on 12,000 square feet and only 15 parking spaces, he said.
Meanwhile, Asian shopping centers such as 99 Ranch and Seafood City , both of which have stores in San Diego County , are blossoming along with the Asian population, he said.
“Seafood City certainly gets its share of the Filipino community; 99 Ranch Market certainly gets its share of the Chinese community. Not to mention a lot of the stores in Westminster that get their fair share from Southeast Asians,” Domanski said.
Many of these supermarkets do well because they’re savvy enough to offer loss-leaders to get even non-Asians into their stores. Or they offer Asian-language CDs, books, and other amenities which conventional supermarkets can’t compete against, he added.
Still, commercial real estate companies are reluctant to embrace the smaller chains, Domanski said.
‘Die And Decay’
“What I hear a lot from my clients is, ‘Well, they’re not credit tenants, I’d rather have Kroger on my lease.’ Which is great. But don’t underestimate the pocketbooks of a lot of these Hispanic chains (and) these Asian chains,” he said.
Shopping centers must change as the neighborhoods change. Otherwise, the centers may “die and decay,” he said.
Jerry Wong, spokesman for the U.S. Census Bureau, agreed that much of the population growth , throughout the state and locally , was fueled by Hispanics and Asians. Since 1990, California’s total population increased by 13.8 percent, to 33.8 million people, while San Diego County’s population increased by 12.6 percent, to 2.8 million people.
During this time, the number of Hispanics burgeoned. In California, Hispanics made up 19.2 percent of the population in 1980, 25.8 percent in 1990 and 32.4 percent for the 2000 census. For San Diego County, the figures are 14.8 percent, 20.4 percent and 26.7 percent, Wong said.
Significantly, the San Diego region added more than 300,000 people between 1990 and the 2000 census , and more than three-quarters of that growth came from Hispanics, said Marney Cox, director of regional economic planning and analysis for the San Diego Association of Governments.
There is also a greater concentration of Asians in California than in the rest of the nation. Nationally, Asians make up 3.6 percent of the population; in California and in San Diego, the figures are 10.9 percent and 8.9 percent, respectively, Wong said.
Other minorities are less of a factor here. For example, African-Americans make up 12.3 percent of the population nationally, but in California and San Diego County, the figures are 6.7 percent and 5.7 percent, respectively, he said.
