Borders Pulls Out of Austin Development

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On April 23, Borders Books & Music announced that it was pulling out of a proposed Austin, Texas, development situated across the street from two independent retailers, BookPeople and Waterloo Records. The bookstore chain's plans to open a store at Sixth and Lamar in downtown Austin had stirred up strong opposition. Liveable City, a local, nonprofit community organization, commissioned an economic study indicating that local merchants contribute significantly more money to the local economy than do retail chains. Both BookPeople and Waterloo helped fund the study and provided research support.

Borders's decision was welcome news to the owner of BookPeople, Steve Bercu. "I think the [Liveable City] study had a profound impact on our community and developer," he told BTW, and added: "We think this is great [news] for many reasons. It's good for BookPeople and Waterloo not to have [a chain] right across the street. And it's good for Austin and this part of town, where I live. This will encourage the developer to bring in a better mix to Sixth and Lamar."

Ann Binkley, a spokesperson for Borders Group, Inc., told BTW, "We had been in negotiations [with the developer] for a couple of years, and the dynamics of the site location have changed. At first, it was supposed to be a big open mall covering two blocks, and now it's two separate ones. So, due to the changes and the economy … it was determined to be no longer feasible."

The Austin developer, Schlosser Development Corporation, has been planning to develop the area between Sixth Street and Lamar in downtown Austin for almost a decade. Initially, plans had called for a pedestrian plaza, but when one of the key tenants backed out, Schlosser brought in Borders as a tenant. Both Bercu and Waterloo Records were concerned that Schlosser would receive public funding from the city for a retail center anchored by national chains. The city of Austin allocated $2.1 million in incentives, of which Schlosser has already spent about $700,000, as previously reported in BTW ( However, because the developer's original plans for Sixth and Lamar have changed, Schlosser must reapply for the remaining incentives.

In December, Liveable City released an economic study, "Economic Impact Analysis: A Case Study, Local Merchants vs. Chain Retailers." Among many things, the study showed that local retailers return more than three times as much economic value back to the community than do chain retailers such as Borders. The estimated annual economic impact per store was $2.8 million for BookPeople, $4.1 million for Waterloo, but just $800,000 for Borders. Moreover, for every $100 consumers spend at Borders, only $13 has a local economic impact. Conversely, $100 spent at BookPeople or Waterloo returns $45, the study showed. "[Independents] are good for the local economy, that's the message from the economic impact study," Bercu said.

Now with Borders gone, the developer is looking to bring in businesses that will complement one another, Bercu reported. "It's to his advantage … for the long-term vitality of the area," he said. --David Grogan