Cities and the Wealth of Regions

In April, 2014, I was sitting at the bar in a packed Duke's Chowder House -- located on Puget Sound in Tacoma, WA -- enjoying a Manny's Pale Ale (Seattle) and, well, an exceptional bowl of chowder.  This was the opener to the local Washington mussels sautéed in a roasted tomato and creamy garlic sauce, another Manny's, and followed by the Dungeness crabs.  A fantastic introduction to Tacoma, WA!

View of Downtown Tacoma and Puget Sound taken from 9th floor of Market Street building.

View of Downtown Tacoma and Puget Sound taken from 9th floor of Market Street building.

I made it here by way of Portland, OR.  The trip began in Portland because I wanted to observe the mixed-use development in the Pearl District, along Hawthorne Street, and the River District Urban Renewal Area.  That experience, along with visits to mixed-use and retail developments in Centralia and Olympia, WA, was preparation for my work with Ricardo Noguera, Community and Economic Development Director, and Patricia Beard, Economic Development Project Manager, for the City of Tacoma.

Tacoma, WA, is an attractive port city on Puget Sound, 60 miles from Mt. Rainer National Park, and 25 miles south of Seattle, WA.  This is a global gateway region that is rich in history, culture, natural resources, and commerce.  The City of Tacoma has taken the reins of an urban renaissance movement in downtown mixed use and retail development.  For example, the city is actively brokering deals with private developers to build office buildings with ground-level retail, restaurants, and entertainment venues on city-owned property in dense areas such as downtown parking lots.  And, identifying opportunities to leverage the regional attractions such as the Chihuly glass collection and the Tacoma Convention Center to boost the development of destination/entertainment themed retail and restaurants around the Tacoma Dome and LeMay-America's Car Museum.

When I say "cities and the wealth of regions", it is more than wordplay from Jane Jacob's landmark book Cities and the Wealth of Nations.  The City of Tacoma attracts more than $1.5 billion in retail sales from shoppers who live in other zip codes.  Of course, having two super regional malls -- Tacoma Mall and South Mall in nearby Puyallup -- help draw people from the region to shop at Nordstrom's, Macy's, Forever 21, and Old Navy, to name a few.  But, that accounts for twenty percent of the retail sales surplus.  Automotive dealers, electronics, home appliances, specialty food stores, and boutique clothing and accessories stores account for the other eighty percent.

So what?  Total retail sales in the Tacoma region -- a 70-mile corridor along I-5 starting roughly in Federal Way in the north to Olympia in the south -- are estimated at $19.6 billion (Census of Retail Trade, 2014).  The expenditures attributed to residents are $18.1 billion.  That difference represents an export trade of retail goods from Tacoma in the amount of $1.5 billion.  For the City of Tacoma to convert public property into mixed use and retail assets means two things:

  1. The City will earn more income on densely developed property through tenant leases.
  2. The City will earn more in retail sales tax revenues for reinvestment in public infrastructure. 

The new retail, including restaurants, that will be developed in Downtown Tacoma and around the Tacoma Dome will have to be different from existing stores.  That market differentiation will enhance an already attractive city.  And, Tacoma, as a city intra-dependent with Seattle, will be well-positioned to be a wealth-creating engine for the Pacific Northwest region.

Jerry L. Hoffman

Hoffman Strategy Group LLC, 4424 Hallcliffe Road, Lincoln, NE, 68516, United States

Jerry L. Hoffman is owner of Hoffman Strategy Group LLC, a firm nationally known for strategic development, economic analysis, and market location consultancy.