Special ESP Report
Ethnic Markets, American Money
by: Judi Biederman
Growing percentages of foreign-born United States residents are
creating opportunities in the real estate arena where savvy entrepreneurs as well as
established developers are capitalizing on expanding U.S. ethnic markets. In particular,
increasing numbers of Hispanic and Asian-American residents are bringing more than new
faces to the economic complexion of the country. These people may speak a language other
than English, and they may think in terms of pesos, yuan, rupees or won, but the retail
audience they represent can translate into real American dollars.
According to the U.S. Census Bureau’s latest population update, released in March
1997, the U.S. population included 29.7 million residents of Hispanic origin. This
constituted close to 11 percent of the total U.S. population. A major shift in the social,
political and economic dynamics of the country is expected to occur as the Hispanic
population sector grows to 25 percent of total U.S. residents over the next 40 years. It
is estimated that today’s Hispanic community spends nearly $500 billion annually.
Within 10 years, Hispanic spending is projected to reach $1 trillion.
Census Bureau statistics show that California is the state with the highest number of
Hispanics. Following California, which had an estimated Hispanic population of 9.9 million
in 1997, the states with the largest Hispanic populations were: Texas (5.7 million); New
York (2.6 million); Florida (2.1 million); and Illinois (1.2 million). These were the same
states that led the nation in Hispanic population totals in 1990. California was also the
state with the highest increase in the number of Hispanics between 1990 and 1997; close to
2.2 million Hispanics made California their new home in that seven-year period. Texas was
second with 1.4 million.
In designing the Koreatown Center in Los Angeles, MCG Architecture worked
closely with the developer, H.K. Partners, to come up with ideas that would make the
center a contemporary shopping environment while recognizing the influence of Korean
culture in the area. Rendering courtesy of MCG Architecture.
With these kinds of figures, it is little wonder that ethnic-oriented shopping
destinations have moved from small, independently owned retailers in ethnic neighborhoods
to growing chains. Developers are recognizing the opportunities in ethnic markets and
existing shopping centers are beefing up retail offerings accordingly.
In Twin Falls, Idaho, the Magic Valley Mall markets to the large Spanish-speaking audience
in the area by making all mall literature available in bilingual versions and by
sponsoring special Spanish ethnic days. Magic Valley management research found that Sunday
traffic at the mall sees the percentage of Hispanic shoppers jump from the normal nine
percent to more than 30 percent because many Hispanic families eat out and shop together
on that day. The mall began capitalizing on this Hispanic social phenomenon by offering
special monthly Sundays geared to the Hispanic culture. When it became difficult to obtain
entertainment on a regular basis, mall officials decided to drop back to four large
celebrations per year. For 2000, Magic Valley Mall will offer special events for Easter
and Christmas, with Spanish-speaking Easter Bunny and Santa characters, a Cinco de Mayo
celebration in May, and a day in November to recognize Dia de los Muertos (Day of the
Dead), the time when Mexican families honor deceased loved ones.
The Cherry Creek Shopping Center in Denver, Colorado is one of six Taubman malls across
the country that is promoting shopping to Mexican travelers. Passengers flying on Mexicana
Airlines from Mexico City to Denver, Chicago, Los Angeles, Miami, San Francisco or Newark
receive shopping passports offering discounts and gifts at Taubman malls in those cities.
Cherry Creek management notes that 20 to 30 percent of the mall’s business is due to
tourism and that it has been marketing in Mexico for more than eight years.
In San Jose, California, San Pablo International Marketplace developed El Mercado Real de
San Jose, a retail and entertainment destination that recognizes and embraces the economic
strength and cultural richness of the San Jose area, with a strong focus on the Hispanic
and Asian markets. The center is anchored by Walgreens, a 40,000-sq.ft. Sunset
Supermarket, and a 20,000-sq.ft. Jewelry Center with more than 100 retail, wholesale,
repair and custom vendors. Mercado Real also features a “Restaurant Row,” with
indoor and outdoor eateries offering international cuisine, and the “Fashion
Emporium,” with a variety of retailers.
Following the Hispanic market, Asian-American residents are also changing the make-up of
the U.S. population. The Asian-American sector was estimated at 8.8 million in 1997 and
projected to reach 12 million by 2000. The Asian growth rate is seven times the national
average, resulting both from population growth and an ongoing flow of immigration from
Asian countries. On average, Asian-Americans earned about $38,000 annually in 1997,
approximately 15 percent higher than their Anglo counterparts. Annual Asian-American
expenditures totaled an estimated $100 billion in 1990.
H.K. Market, a Korean grocery chain known for its value-priced Korean foods and specialty
vendors including a Korean butcher, bakery, and delicatessen, will anchor Koreatown Center
in Los Angeles. The 100,000-sq.ft. project, developed by H.K. Partners LLC and designed by
MCG Architecture, broke ground this spring at Olympic Boulevard and Western Avenue and is
planned for completion in spring 2001.
The 40,000-sq.ft. H.K. Market will be the sixth H.K. store in California and a flagship
store for the chain. Dale Kim, project manager, says the center will have room for 60
retailers in addition to the H.K. Market. The company is looking for small, independent
retailers to create a mix of high-quality and designer goods from all over the world.
“The food court will offer Korean foods and perhaps one or two nationally known
franchises,” he says. “This center is envisioned as a shopping destination for
the Korean community of Southern California as well as for tourists from Korea.”
In Atlanta, Georgia, ACT Investments recently purchased the Chinatown Square Mall at the
intersection of Peachtree and Chamblee-Dunwoody roads in DeKalb County. The property will
be renovated into an Asian-motif specialty center, with planned enhancements including
Asian restaurants, an 18-hole golf course, shopping, sightseeing, and a convention center.
Anchor tenants are expected to include the Oriental Pearl restaurant and the Dinho
Supermarket of Atlanta. The developer as well as members of the DeKalb County Chamber of
Commerce hope that the new center will be the cornerstone of a hoped-for larger initiative
being referred to as “International Village,” which is still in the planning
stage.
In Fremont, California, a closed General Cinema location was reopened in November 1999 as
the Naz 8 Cinemas, believed to be the first multicultural cineplex in the country. The
owner, Shiraz Jivani, plans for the theater to exclusively show movies from India,
Pakistan, China, the Philippines, Korea, Afghanistan, and Iran. General Cinema had closed
the location after several new ultra-amenity megaplexes in the area had taken away much of
the theater’s movie-going audience. But Jivani believes that he can find success by
catering to the large ethnic groups in the Bay area. He has operated another theater in
Fremont, the Naz Cinema Indian Theater catering to Indian audiences, since 1992.
In San Diego, California, the Asia Business Center, a China Town-style retail and
professional mall, is under development. The three-story building will include retail,
office and residential uses; it has been designed to serve as a focal point for Asian
community interaction. Developer and leasing agent Yan Lei comments, “You need to be
where growth is occurring – this Asian area in San Diego has been growing for years.
The Asia Business Center is intended to be an architectural expression of the tremendous
cultural input the Asian community has given to San Diego.”
Amid growing activities to cater to the commercial needs of ethnic cultures is a growing
awareness that, contrary to traditional wisdom, relative property values tend to go up
when more immigrants come into a neighborhood. A study recently released by the Alexis de
Tocqueville Institution, based in Arlington, Virginia, examined census tracts from 1990 to
1998 in the greater District of Columbia area and found that areas with high foreign-born
populations showed a greater positive change in property values than areas with lower
numbers of immigrants or the D.C. average.
One of the study’s authors, Bronwyn Lance, says, “This study refutes arguments
put forth by isolationists that immigrants are bad for the economy. The thriving
neighborhoods and businesses in these areas provide anecdotal evidence that the more
ethnically-oriented neighborhoods are experiencing a boom.” The study results showed
that in the D.C. area from 1990 to 1998, areas with the highest percentages of
foreign-born residents showed a 13.77 percent positive change in property values.
Similarly, areas whose foreign population decreased experienced an 7.6 percent decrease in
property values.
The study, entitled, “There Goes the Neighborhood – Up,” quotes Mike Rubin,
president of Capital Investment Associates, a Chevy Chase, Maryland-based real estate
development company with assets of approximately $400 million. Rubin acquired Riggs Plaza
Shopping Center in Prince Georges County in 1991 “for almost nothing” because it
was in ruins at the time. “Since then,” the study says, “Mike has seen the
entire neighborhood transformed by an influx of predominantly Hispanic and Asian
immigrants who were looking for inexpensive housing.” Small ethnic merchants filled
up the center and an Asian supermarket took the place of a former Acme. The office
building in the center is 100 percent leased, almost entirely to foreign-born
professionals like doctors and dentists. According to Rubin, “These people came in
and stabilized the area, from a commercial and retail perspective, and then it really
began to pick up.”
Rubin is just one of a growing number of real estate professionals who have recognized the
economic opportunities inherent in U.S. ethnic populations and the markets they create. As
those markets grow, both the immigratory and the indigenous can realize their own versions
of the American dream. We’re all seeking a better life, and currency is a universal
language.
For more information:
Magic Valley Mall, 208-733-3000
Cherry Creek Shopping Center, 303-388-3900
San Pablo International Marketplace, 510-237-9898
H.K. Partners LLC, 213-383-8888
DeKalb County Chamber of Com-merce, 404-378-8000
Naz 8 Cinemas, 510-745-9340
Asia Business Center, 619-440-6849
Alexis de Tocqueville Institution, 703-351-4969