Shop-While-You-Wait Strategy : Centers Mix Car Repair, Retailing
Auto owners’ days of sitting in coffee-stained waiting rooms at repair shops may be sputtering to an end.
In a move being closely watched by a number of retailers, Commerce Centers of America is placing auto service shops and retail stores side by side at neighborhood centers. In the process, the Newport Beach developer is steering customers out of auto shop waiting rooms and into the doors of nearby merchants.
The result is a retail niche that is suddenly on the grow: shop while you wait.
For the past five years, a few national developers have been so impressed with the retail potential of the $100-billion-a-year auto after-market that they have begun building auto service centers, primarily in the West and Southwest. The centers typically house five to 15 car-care specialists in a single complex.
First Center in Huntington Beach
But developers of the Commerce Centers figured that customers could be spending money in nearby stores instead of twiddling their thumbs in auto shop waiting rooms. When the company built its first center in Huntington Beach in 1979, it innovatively began to place the likes of restaurants and florists in the same center with muffler and tire shops.
The developers have high expectations for these auto-retail combination centers because the most sought-after shoppers--women--bring more cars to repair shops then men.
At Commerce Centers’ newest complex in Fountain Valley, customers will soon be able to buy a home computer, get a haircut or even dine on sushi while mechanics work on their cars.
“You’re seeing an evolution of shopping centers all over again,” said Taylor B. Grant, a partner in Commerce Centers. “The only physical difference between us and other shopping centers is that half our stores have roll-up doors.”
The auto-retail centers give an air of credibility to auto repair shops “that they won’t get if they’re located in a back alley,” Grant said. The centers are attractive in design and highly visible from the road.
Demise of Corner Gas Station
But tenants must pay the price for prestige. At 85 cents to $1 per square foot per month, rents for the service shops are typically double those of less visible locations in industrial areas. At the same time, however, many of them experience twice the business volume, Grant said.
The need for this kind of specialty center has been rising with the demise of the corner gas station. Just 15 years ago, there were nearly 220,000 service stations coast to coast--many of which performed car repairs. Today, there are fewer than 110,000 gas stations nationwide, less than half of which have mechanics, according to industry estimates.
The service center concept may prove especially catchy in California, Grant said, where car care often seems nearly as important as health care. Commerce Centers has built eight centers--six in California and two in Arizona. Near-term expansion plans call for up to 10 more of the $7-million centers this year, primarily in California.
When Commerce Centers was formed seven years ago, it went knocking on the doors of the giants in the auto after-market industry. But Ray Olmscheid, co-partner in the company, said, “The tenants--the Midases, the Firestones, the Goodyears and so on--generally bring properties to us now and ask us to develop them.”
The bottom line is that “being in a center like this improves my image,” said Bob Gauntner, owner of Gibraltar Transmissions in Fountain Valley.
Bob Peterson, vice president and retailing specialist at the Anaheim office of the real estate firm Coldwell Banker, said he believes that the concept is sound but warned that only a small number of retailers could survive in the environment of an auto center.
“Maybe a doughnut shop or a car stereo store would make it, but most people probably won’t walk in out of the cold and get a haircut at one of these centers,” he said.
Well aware of that fact is Karima Nazarzai, who opened a hair parlor, Karima’s Hair Depot, at the Fountain Valley center three months ago. Business has been slow, she said.
On the other hand, Ralph Bracero, owner of Ralph’s Woodworks, says the location has brought him new business. Bracero makes wooden toys, primarily for preschool children. He said one woman recently walked into the shop while a smog check was being done on her car next door.
“She ordered $250 worth of toys, and now she’s bringing in her dining room set to have me refinish it,” he said.
But developers still face a skeptical public. Many potential retail merchants refuse to look at a space when told it is in an auto service center, Grant said. And most city planners--envisioning noisy and smelly auto shops--initially frown on such projects. But body and paint shops are not permitted in the centers, and noise and foul odors are kept to a minimum, Grant said.
One interested observer of all this is Gary Martin, president of Commercial Site Selectors, an Altamonte Springs, Fla., developer that has built 10 auto service malls in the Florida and Georgia. He likes the idea of putting non-auto retailers at his centers, but he’s in no hurry. “If it works for these guys, I might be next,” Martin said, “but I’ll let them prove it works before I copy it.”
