LOVELAND, CO – Ten years ago, a young, 26-year old Chad McWhinney went to see Joe Gebhardt, owner of Davidson Chevrolet in Loveland, CO, to convince him to participate in the building of a large auto mall in town.
McWhinney recently had purchased a car for his mother-in-law and was dissatisfied with the process of having to drive several miles from dealership to dealership to find the right car. As a result, McWhinney wanted to include an auto mall in the Centerra master-planned community he was developing in Loveland.
Typically, an auto mall or an auto park is a collection of individually owned dealerships that have relocated next to each other on real estate specifically set up for selling cars. Often, they agree to adhere to certain design requirements and share marketing costs.
However, some auto malls are owned by a single dealer. Roger Burdick recently built an auto mall in Syracuse, NY, consisting of 13 franchises on 92 acres (43.3 ha).
Rogerand the United Auto Group, have several in development, including New Jersey, San Diego and Rhode Island. UAG’s North Scottsdale Automall outside Phoenix, AZ, is considered by many to be the premier dealership site in the country.
The thinking is that auto malls are good for consumers who get to shop for vehicles in one location instead of having to drive from dealership to dealership.
They can be good for dealers because they often are in well-traveled and growing population centers that should generate a lot of traffic.
At the time, Gebhardt says he remembers thinking McWhinney was a young guy with big plans.
“Often, those things are easier said than done,” Gebhardt says. “But I did file it away just in case.”
That “just in case,” happened, and this fall Gebhardt will move his Chevrolet and Subaru dealerships to the Centerra Motorplex being built in Loveland at the intersection of Interstate 25 and U.S. 34, which is the gateway to Rocky Mountain National Park.
“We started looking at the future and how we could grow,” Gebhardt says.
The dealership had acquired all of the available land around it and had nowhere else to expand. It was obvious a move was necessary, Gebhardt says.
He is sitting at a long table that is in part of the showroom outside his office. The wide open area serves as a modified conference room. The temperature outside is a warm 106° (41° C) and the 43-year old facility does not have air conditioning, although loud fans hanging from the ceiling cool the area nicely.
The dealership has outgrown the facility and Gephardt has had to be creative in making room for various departments. That creativity, though, makes it hard to discern whether one is in the showroom or the parts department.
“Our child play area is ‘find a spot,’” Gebhardt says.
McWhinney, now 36, is a local businessman who moved to Loveland from Southern California 15 years ago after reading a Time magazine cover story that northern Colorado was going to be the next economic boom area.
It just so happened that McWhinney’s family owned land near Loveland dating back to 1866. The original land grants signed by Presidents Andrew Johnson and Grover Cleveland are in the McWhinney Enterprises offices in Loveland.
McWhinney, who lived out of a suitcase in a Best Western hotel his first six months in Loveland, admits he did not know what he was doing when he started buying land by the square foot during the U.S. recession in the early 1990s.
“Often, people like to say ventures like this start on the back of a napkin,” McWhinney says. “The problem is, we didn’t even know what to put on the back of the napkin.”
He began working with Loveland city officials to put together a mixed-use development that includes almost 7,000 houses and condominiums, shops and restaurants, office space, a new hospital and the auto park.
Many of the shops and restaurants already are in place and are bringing thousands of people daily from places as far as Cheyenne, WY.
Getting the auto mall to come together has been difficult. The fledgling group attempted for several years to put together the auto mall but could not execute the vision, McWhinney admits.
Finally, he turned to the Staubach Auto Group, a Dallas-based consulting firm that helps dealers with their real estate and facility needs.
The project started moving forward when Jim Mullen, the president and director of Staubach, got involved, says Gebhardt.
But it took a while for Staubach to buy into McWhinney’s vision. Mullin says he turned down brokers twice who came to him with proposals.
McWhinney’s leadership and the area’s exploding growth won Mullin over.
According to U.S. Census Bureau reports, northern Colorado is the country’s fastest growing region. Recently, Money Magazine named Fort Collins, located just a few miles north of Loveland, as the country’s best place to live.
But the I-25 and U.S. 34 intersection in Loveland quickly is becoming the epicenter of northern Colorado, Gebhardt says.
“The interesting thing about Loveland is the pent up demand that exists now,” Mullin says.
More than 100,000 vehicles pass the intersection daily driving between Denver and Cheyenne while people from 10 zip codes, including areas as far away as Nebraska, visit the Centerra complex to shop.
The auto mall sits on the other side of I-25, from where the shops are. Plans are to provide free shuttle service to the shopping area for dealership customers. Also, the development includes walking and bike trails throughout a picturesque landscape complete with several lakes.
Both Dawkins and Gebhardt say they will have bikes at their dealerships for customers who want to explore the trails while their vehicles are being serviced.
A large sign the size of a tractor trailer sits on the east side of I-25 pointing to the auto park. Each dealership will be allowed to display one vehicle on tastefully designed cement pads alongside the highway. Vehicles also will be displayed throughout the shopping area.
Mullin helps McWhinney craft the sales pitch for the right dealers. As part of the pitch, McWhinney flies prospective dealers to visit the United Auto Group’s Chauncey Ranch auto mall outside Phoenix. He also puts them on a helicopter for an aerial tour of northern Colorado.
Four local dealerships, with a combined nine franchises, have decided to make the move. They include: Co’s; Davidson Chevrolet and Subaru; Ferrero 1-25 Dodge Jeep ; and King Buick Pontiac GMC.
A fifth dealership, probably owned by a public dealer group, is close to signing a deal to be in the auto mall, say dealers familiar with the project.
Typically, it takes seven years for an auto mall to become 100% absorbed, Mullin says. He expects the Loveland location to take 10 years because of its size and McWhinney’s strict environmental designs.
There is a lot of interest, though. Says Gebhardt: “Many of my competitors are looking at it.”
Co’sis the first dealership to open at the new mall, having moved from its Fort Collins location, just a few miles north of Loveland, this year.
In 2004, BMW AG informed owner Christina Dawkins that her tiny 11,000 sq.-ft. (1021.2 sq.-m) dealership would not be compliant with BMW standards in 2007.
“We found some land and began making plans for a new facility,” she says. Just a couple of days away from beginning construction, Dawkins says McWhinney came to see her to convince her to move to the auto mall.
“It was a strong pitch,” she says. “We want to be a regional dealership and being in the mall does help make us that.”
The store averaged 45 sales a month at its previous location, says Dawkins. In July, Co’s sold 112 units. More than 25% of Co’s customers are coming from outside the state, primarily from Wyoming.
The dealership now is now 38,000 sq.-ft. (3,530.2 sq.-m) with a wide-open view of the Rocky Mountains.
According to Mullin, dealers have to work through a couple of mental milestones before agreeing to move to an auto mall.
“First, they ask, ‘Who else is doing it?’” he says. “Then it’s, ‘Let’s see how they do.’”
There are approximately 200 auto malls currently in the U.S. with several more in development. The Staubach Group, alone, has 16 auto malls in different stages of development.
In addition to making the case to dealers, Mullin pitches the concept to auto makers, which in the last year have started paying closer attention to their dealers’ real estate issues, he says.
“Real estate is the dealers’ biggest asset, but it doesn’t always get fair air time,” Mullin says. “OEMs are learning they can’t have their heads in the sand, or they’ll lose out on the tier-one sites.”
Dealers need their OEMs to be involved to help negotiate the legal and political landscape that land development has become, he says. “I don’t care how strong a dealer is, he’s not going to go down to the mayor’s office and say, ‘I want land there.’”