McKinney’s lack of retail and dining options is causing the city to lose out on a substantial amount of sales tax revenue each year, according to a study by The Retail Coach, a company hired by the city to help bring in more retail and dining options.

In 2014, the city of McKinney brought in $258 million in restaurant sales out of a potential $619 million the city could have brought in based on its retail trade area, or the area from which shoppers will travel to a specific shopping destination

That means 58 percent of the city’s potential restaurant sales and its accompanying sales tax revenue went to surrounding cities, including Plano, Frisco and Allen.

The lack of retail and restaurants is also causing the city to lose out on another segment of growth and development—the opportunity to draw major corporations, Mayor Pro Tem Randy Pogue said.

Pogue said he is hoping to take the first step in drawing more sales tax revenue and corporations by creating a destination-style restaurant row in McKinney.

“I am tired of losing corporations who do not select McKinney as a location for business for the reason of not having local entertainment, local shopping and local restaurants for their employees,” he said. “Whenever we get an exit interview from corporations that didn’t pick us, they tell us they didn’t pick us because we don’t have certain retail or restaurants for their employees at lunch. If we can solve that issue, we can potentially land these larger corporations.”

McKinney Mayor Brian Loughmiller said City Council has been focused on economic development, including restaurants and retail, as a priority for several years, but the city has been hampered by the long-term construction on US 75 and a lack of other infrastructure needed to make these types of developments viable.

“Now that US 75 is complete, the SH 121 corridor is established, and with the initiation of consultant support from The Retail Coach, we are placing a heightened emphasis on [these developments],” he said. “We have found that while we have competed well in trying to attract corporate users, we have also realized that corporate development requires ancillary projects that include places to eat within close proximity and hotels and conference space for meetings that will accommodate those national or international companies seeking to locate their main headquarters in North Texas.”

Targeted development

According to city documents, restaurant rows are expected to consist of three or more fine-dining and casual restaurants along with a retail element.

The development would be constructed as a unit with a courtyard or common area featuring a public art display, fountain or focal point. Pogue said the development could also include a residential element, making it similar to mixed-use destinations such as Watters Creek in Allen, but he said the exact development elements would be determined later in the process.

As the first step to establishing such developments, the city is planning to send letters to area developers and landowners of both developed and undeveloped properties along McKinney’s major transportation corridors, including US 380, US 75 and SH 121, where Pogue said more corporate development is likely to take place.

The city will then issue a request for proposal, or RFP, which is a bidding solicitation that announces funding is available for a particular project. The city then allows companies to bid to construct the project.[totalpoll id="178460"]

“I want the RFP specific to the areas that would be paramount today, and as we mature through this, we may set a policy in the future that we can then apply to the rest of the city or to specific locations that make sense,” Pogue said. “We get one shot at this and I don’t want to ruin it by picking the wrong location, and those commercial corridors are crucial.”

Pogue said the RFP will be an inclusive process that will level the playing field for developers and potentially get more properties to the table for consideration.

“With the RFP process, we hope to be able to help remove some obstacles that prevented development in the past,” he said. “With all of the vacant tracts being part of larger greenfield­ tracts—or large portions of undeveloped land—it is very difficult for a single pad or even sometimes multiple pads to be developed if the infrastructure is not readily accessible. Removal of some of those obstacles may be as simple as partnering with the landowner to extend public utilities to underserved areas.”

Capitalizing on McKinney

According to The Retail Coach, the city of McKinney is missing out on 880,000 square feet of retail and restaurant space that could be supported by the city’s current population.

Loughmiller said he thinks the city needs to promote the market it already has—a market he said is not as visible as the city would like it to be.

“In recent meetings with [retail] site selectors, it was apparent that a more concerted effort was needed to inform the development community outside of North Texas of the growth of our community, the demographics of our residential base, the work force that is available and the opportunities for public-private partnerships,” he said.

By partnering with the city to create this restaurant row, Pogue said restaurant owners, retailers and developers will have the opportunity to take part in a project that would not only allow them to establish a location within the city, but would also help ease some of the infrastructure and development burden.

The current population is something Pogue said could be seen as incentive to developers to build now, rather than wait for a rush from potential corporations looking to relocate.

Site potential

According to Aaron Farmer, The Retail Coach senior vice president, restaurant rows are successful because the individual businesses feed off each other.

“Restaurants and retailers like to develop around other retailers and restaurants,” Farmer said. “That’s one of the benefits of creating this: even though you will have competing restaurants in the area, these restaurants understand that they need some of their competition there to help build that destination-style location.”

From a site standpoint, Farmer said, restaurants typically look for a 1.5-2-acre site, but establishing locations within a restaurant row takes some of the burden off developers since shared parking and land area come into play.

Farmer, who has been working with the city to recruit more retail and restaurant developments for over a year, said restaurants have certain criteria they look for when considering a location. Those criteria include population, median age, household income, education levels, employment, daytime population—as in a lunch crowd—and the population of the retail trade area.

Assistant City Manager Barry Shelton said in previous years McKinney has not necessarily met each specific criterion for higher-end restaurants.

“We have the demographics and the pent-up demand for sit-down restaurants like Mi Cocina, PF Chang’s and Cheesecake Factory that our residents are going out of town for,” Shelton said. “We might not meet all of the restaurants criteria, but we feel that they will be successful because our residents want these restaurants here.”