Carrboro incentive helps Fleet Feet plan for more growth

Jul. 07, 2013 @ 05:04 PM

Fleet Feet Inc., the Carrboro-based franchisor of running shoe and accessory stores with 106 locations around the country, is looking to consolidate its corporate headquarters into a single location as its staff and business have grown.

At the end of June, the Carrboro Board of Aldermen approved an incentive deal to help the company consolidate its headquarters from two offices into one in the town. The town is planning to buy one of the company’s office spaces, kicking off a domino-effect series of moves by Fleet Feet and another business.

The deal would allow Fleet Feet to move its office and its existing Carrboro retail store into the planned second phase of a new mixed-use development proposed on East Main Street in the town’s existing Seagrove Pottery store.

“Without the assistance of the town helping pull all the pieces of this deal together, setting up all these dominos, the reality is, we would have been forced to move, and none of us wanted to do that,” said Jeff Phillips, Fleet Feet’s 51-year-old president and CEO. “When you really look at the long-term upside of keeping a growing company in Carrboro and keeping a national flagship retail store in downtown Carrboro, long-term, that’s going to be good for all citizens and revenue and tax base generation,” he added.

Fleet Feet’s corporate headquarters moved to Carrboro in the early 2000s from Sacramento, Calif., Phillips said. Two women opened the first store in California’s capital city in 1976.

One founder started the franchise company in 1980, and sold it in 1993. Last year, it sold again to a partnership between existing company managers and the Raleigh-based company Investors Management Corp., which is also the parent company for Golden Corral.

Phillips said that when he joined the company in 2001, the corporate office had five and a half employees, and now has about 25. There were 35 stores in the chain, doing about $25 million in retail revenues. At the end of last year, he said the company had 98 stores with retail revenues of about $130 million.

“The company needed to invest in people and (infrastructure) to grow, and that’s what we’ve done over the last 10 years,” Phillips said.

The market for running products has been healthy, Phillips said, resulting in an influx of new products as well as of new distributors -- from online shoe vendors, to big box stores and family footwear stores.

“Everyone’s in the running business,” he said.

While there are a lot of retail channels, he said Fleet Feet competes on service and education. He said the company’s stores have training programs such as a couch-to-walk-to-run program or one for aspiring marathoners.

In Carrboro, Fleet Feet’s corporate offices are split between two locations in a second-floor office condo on Main and a building at 406 E. Main St. Having two locations is “not ideal,” Phillips said. The company is looking to consolidate those operations, as well as to be able to accommodate growth.

“We have people doubled up in offices,” he said. “We just reached a point where two things had to happen: One, we had to get the two buildings consolidated, back into one building, and we had to have additional space for continued growth.”

In exchange for an agreement to lease space in the planned second phase of the new development 300 East Main, the town is planning to buy the office condo from Fleet Feet. The first phase of 300 East Main – a Hampton Inn & Suites hotel and retail and restaurant space – is nearing completion.

The town plans to reimburse another company, Carrboro-based Kalisher, a creator and provider of art primarily for hotels, for parking. Kalisher, in turn, plans to buy the other Main Street building from Fleet Feet.

Annette Stone, Carrboro’s community and economic development director, said both companies are big revenue producers in the town and add to its tax base. The deal also helps get the new 300 East Main building out of the ground.

She said in a recent interview that town officials were still working to get the final documents signed.  Town officials expected purchasing Fleet Feet’s office condo to cost $563,000 -- provided for in a transfer from the town’s general fund to its capital projects fund. There’s another $5,000 expected in closing costs, for a total appropriation of $568,000. Stone said the town plans to lease the building back to Fleet Feet until the company’s new office and store are built.

The agreement also calls for the town to reimburse Kalisher for parking for 10 years at a cost of $50,000. In the next 10 years, if parking isn’t available in the parking garage of 300 East Main, the town would either help the company find additional spaces, or pay a lump sum of $80,000.

“We’ll get that building started; there will be tax revenues from that…there’s lots of benefits, and when we ran the numbers in the long run, it was a big economic benefit to the town,” Stone said.

Laura Van Sant, a partner in Main Street Properties, the company that’s behind the 300 East Main development, said the hotel in the first phase is planned to open in August, with restaurants opening later. Construction on the second phase is slated to begin in the fall.

“We’re obviously happy it got approved because it sets a bunch of … things in motion, one of which is letting us build the phase two building at 300 East Main to house Fleet Feet,” she said.

Jesse Kalisher, president of Carrboro-based Kalisher, spoke in support of the deal. He said it helps get the second phase of 300 East Main Street project up and running, and helps the town retain Fleet Feet.

“And it keeps us here – we’re employing a bunch of artists and selling a bunch of local Carrboro art around the United States and around the world, and we’re proud of that,” he said. He said Kalisher started selling art to hotels about eight years ago with about four employees. He said they now have 16 and are looking to hire.

Carrboro business owner Mike Benson, who owns the bar and restaurant Southern Rail, the bar and music venue The Station and the Tiger Room, was also supportive.

“I think overall people are  very supportive of these things because it’s bringing people to Carrboro and it helps the tax base in Carrboro,” he said. “We love to see people be successful.”