Wednesday, May 27, 2015

The Downtown Project and Zappos CEO Tony Hsieh lean on entrepreneurs to make old Las Vegas a go-to destination

A trip to ICSC Dealmaking is an annual rite of passage for many of us who work in the retail environment - and this year was no different. Usually the trip involves lots of walking in a variety of air conditioned environments, so I was pleasantly surprised when an old friend and former BID Director - who now works for a large mall developer - suggested we visit Downtown Las Vegas for lunch. I was thrilled to accept the invitation, especially after he reached out to Resort Gaming Group, the development company that executes the revitalization effort. They served up John Curran for a fantastic tour (thank you John!).  We were also joined by David Downey, Executive Director of the IDA (and whose Board I sit on). With cab fare in hand, the three of us flagged a taxi to take us the two miles from the convention center to the old downtown.

For those who don't know, Downtown Vegas is the home of Zappo's CEO Tony Hsieh's efforts to create an entirely new kind of "office park".  Instead of a staid office park surrounding by not much (which is how you might describe Zappo's previous home in a suburban area outside Las Vegas), Hsieh flipped the script and took over the old Las Vegas City Hall after the City left, bringing in nearly 2,000 employees to the area. Not only  that, but he also backed an effort, known as "The Downtown Project" with $350 million of his own dollars. What has been done so far is still in its nascent stages, but the outcomes are many. The difference with this effort and other downtown revitalization efforts with which I am familiar is that it is less focused on physical improvements. Instead, the effort is starting with entrepreneurs - they have sought out multiple business owners with the passion, energy and creative drive to make a go of something interesting and unique. The three efforts that I was most impressed with were Container Park (a shopping/civic center for start up bus, the Market (a small specialty grocery store) and the Oasis, a hip motel that cashes in on the Las Vegas retro vibe. See pics below. For more on Hsieh's efforts and the Downtown Project, check out this Freakonomics Podcast ("Could the next Brooklyn be Las Vegas?"). Well worth the listen.

 Container Park: One of the more interesting efforts is the Container Park - a block of small business spaces located in custom made shipping containers.
The entrance to the Container Park - a shopping/civic/entertainment
space that aims to offer budding entrepreneurs a place to test their business concepts. 

The interior of the block includes a great play space for kids

More kids...

Shipping containers = spaces for small businesses
Restaurants have also set up shop
The Market, a small grocery store to serve a growing population: To make up for a lack of a grocery store (and still too little residential or employee demand to support a traditional grocery store) RGG helped establish one themselves.

Local residents no longer have to travel far for the basics. The Market is a Downtown Project
supported effort that provides an important amenity for a growing residential population. 
The Market is heavy on prepared foods for the busy Zappo's employee

The Oasis, a retro boutique motel (formerly a Travel Inn Motel) was completed rehabbed by the Downtown Project and now serves as a cool spot for visitors. 

The Oasis at Gold Spike offers high class, but low priced, accommodations. 
The swimming pool is a welcome reprieve from the Las Vegas sun. 

Wednesday, May 13, 2015

What does a burned out and looted CVS have to do with upward mobility?

The Baltimore riots came to be exemplified by a looted CVS 
I have been fascinated by the recent coverage of upward mobility in the New York Times ["In Climbing Income Ladder, Location Matters"]. This topic is of interest to me because our firm is often engaged in improving retail environments in under served urban communities. Consider the CVS that was looted during the recent Baltimore riots. Did you ever stop to wonder how long it took to attract a CVS pharmacy to that neighborhood? And do you think that CVS or any other retailer will be eager to return as things settle down, regardless of how much demand and need there might be? In the end, the politics of place matters quite a bit when it comes to improving the retail environment for local residents.

Neighborhood Environments Impact Outcomes
This is why I found the research that the NYTimes covered quite riveting. Two Harvard economists conducted a time series analysis on the impact of neighborhood environment on the outcomes of poor children. In short, they found that the neighborhood environment in which a child is raised is one of the most important determinants of income (by age 26). From the standpoint of a low-income family living in a low-income community and looking to meet the needs of their children TODAY, not tomorrow, the news is not good. Basically, the research suggests that mobility is the answer. Get the hell out, basically. But the authors acknowledge that this solution is not scalable, and I agree. Moving every family out of poverty stricken neighborhoods is not a long term solution. It’s a band aid fix for an intractable problem. The real problem is the quality of the neighborhood in which they live. Addressing that problem is where the future of public policy SHOULD be if we are truly interested in improving the outcomes of poor children over time.

So what kinds of neighborhoods produce better outcomes? If we can answer that question, we can begin to craft policy solutions that will support these conditions in low-income communities. The study found the following, places that had higher rates of upward mobility demonstrated five key characteristics:

- less segregation by income and race
- lower levels of income inequality
- better schools
- lower rates of violent crime, and
- a larger share of two-parent households

Policy Solutions?
According to the authors, “our findings provide support for policies that reduce segregation and concentrated poverty in cities (e.g., affordable housing subsidies or changes in zoning laws) as well as efforts to improve public schools.”

In the short term, we must, must, must find ways to do the following:
  • REDUCE the concentration of poverty and INCREASE racial diversity. This means encouraging economically integrated neighborhoods by combining efforts to attract higher-income families WITHOUT involuntarily displacing existing residents. That means building – yes, building – NEW housing. This in turn means that some communities will need to be rezoned for density. But while that happens, we must ensure that existing families have the opportunity to remain as a neighborhood improves. Some potential policies include strengthening landlord-tenant laws that prevent harassment of tenants, helping tenants with the right of first refusal and provide financing to enable them to buy their properties and stay in place, and providing incentives or loans to landlords that allow them to rehab their buildings in return for maintaining affordability. These are just some interesting ideas advanced by The Center for Community Progress.
  • Make these neighborhoods “communities of choice” by addressing the quality of schools, the quality of the physical environment, access and transportation to jobs, and the retail offerings and cultural amenities that make a neighborhood a compelling place to live. By doing that, we create an environment that is not only better for the people who live there, but is also attractive to people of all incomes and races who are necessary to ensure diversity.
  • Reduce violent crime. The impact of crime over time on the lives of children living in a community is significant. The study found that 20 years of exposure to high violent crime rates causes a reduction in average income. Not only that, but children get caught up in crime, paying a steep price through incarceration and shortened life span. Addressing crime is critical not just for people living in a community, but its common sense that crime has a strong negative impact on people’s residential decision making. Residential sorting – where people CHOOSE to live – is directly impacted by the crime rates in a particular neighborhood. So if we are trying to reduce poverty and encourage economic integration, we have to address crime too, otherwise those with a choice to move somewhere else will do so. 
While this is only the beginning of a conversation, I am extremely hopeful that this research will drive fact-based decision making and help change the dialogue public policy dialogue. 

Tuesday, May 5, 2015

Why is gentrification a bad word?

We hear alot about gentrification - but what does that term really mean? Not even the New York Times has a firm definition, sometimes wielding the term recklessly and inflaming passions in the process. Over the years, I have come to define it as residential and commercial displacement as a result of an increase in prices that eventually make a community less affordable for the people who were there "first". Like most people, I agree that displacement is a problem that we would like to avoid.

By that definition, however, new, higher-income residents in a community don't always result in gentrification. In fact, if new, wealthier residents do NOT displace existing residents and instead reside in newly constructed residential units, then is there really a problem? If existing residents benefit from the new services and offerings that result from the influx of new residents, and their quality of life improves as a result, isn't this a good thing? If we could find a way to keep poorer residents in these improving neighborhoods, by guaranteeing affordable housing so they can remain as the environment improves, wouldn't we want that? And in communities dotted by abandoned lots and vacant retail space, isn't new development a welcome thing that results in less trash strewn vacant lots and a safer environment for children? Pockets of concentrated poverty are no good for people who live in them, so why are we demonizing efforts to create a healthier balance? What we are left with if you take this argument to its logical conclusion is the suggestion that the urban poor should live in communities marked by disinvestment and physical decay, because the moment you start improving things, you are setting the stage for their eventual displacement. It is a sad commentary for those of us who have dedicated our lives to improving urban neighborhoods.

I recently came across the Dynamic Neighborhood Taxonomy (DNT) project, a research project funded by Living Cities - a partnership of financial institutions, national foundations and the federal government in an effort to advance urban communities. The analysis, led by Bob Weissbourd of RW Ventures, considered four cities in an effort to understand what makes neighborhoods change over time and how to use this information to guide improvements and neighborhood stabilization in the most effective way possible. So, what does the DNT project have to do with gentrification? Well, if we can identify the kinds of neighborhoods most prone to displacement, we can design targeted interventions that maintain neighborhood stability and prevent displacement overtime.

In reviewing the research, the piece of information that I found most interesting was the finding that regional economic trends account for 35% of neighborhood change. That means a little over 1/3 of neighborhood change has nothing, absolutely nothing to do with anything that any of us do to improve neighborhoods. This is a powerful thing to absorb (and a bit depressing, honestly). But it also suggests that one of the most significant things we can do to improve the lives of people living in lower income communities is to connect them to the local economy, rather than maintain their isolation.

The good news is that the flip side of that data point means that 65% of neighborhood change is related to other factors. The DNT project found that additional drivers of change include neighborhood characteristics that include access to transit and the ability to more easily get to and from jobs easily, the presence of existing services and offerings, including police stations, supermarkets, and cultural amenities like art galleries. Communities that offer these amenities are next in line for rapid neighborhood change. If we can identify these places, we can design policy that creates a win-win - a great neighborhood for new and old residents alike.

In the end, I think we have to stop making judgement calls about "gentrification". Neighborhoods thrive when they have a mix of incomes, and those at the bottom rung of the ladder benefit substantially too.

Friday, May 1, 2015

Commercial District News Round Up

Your 'One New York' Cheat Sheet
Last week, New York City Mayor Bill DeBlasio released 'One New York' which is a plan to "preserve and enhance New York City’s role as a leading global city."  If you don't have the time to read this 332 page behemoth, this link gives you the quick run down.  What we personally found very exciting was the consideration given to the role that neighborhood business districts play in the health of the city and the quality of life of local residents.
Photo credit: Demetrius Freeman
Companies Trade Suburbs for City Life
Trend watch: a reversal from decades of company exodus to the suburbs, some companies are now looking at urban downtowns as the next frontier to growing their companies, as well as attracting and retaining a younger workforce that is renting more and drawn to more walkable communities. Expedia plans to move to downtown Seattle and likewise Motorola Mobility plans to head downtown Chicago.
Image source: Wall Street Journal | Image credit: Expedia
Asheville Just 'Happened' to Develop a Nice Downtown - Or Did It?
A long and slow process to rebuild downtown Asheville has produced great results, taking community involvement and optimism.  Its downtown was once barren in the 60's and 70's after the effects of a one-two punch - a highway through downtown and Asheville Mall. Check out the before and after pictures and process recounted by a long-term local.
Photo credit: Romantic Asheville
Heart of the Community program selects six new cities to receive placemaking grants
Non-profit organizations in six U.S. cities will receive Placemaking grants from Southwest Airlines to assist in renewing "underutilized public spaces."  The cities and spaces are:
  • Albuquerque, New Mexico: Civic Plaza
  • Ft. Myers, Florida: Lee County Regional Library
  • Jacksonville, Florida: Hemming Park
  • Milwaukee, Wisconsin: 4th & Wisconsin Area
  • Portland, Maine: Congress Square Park
  • St. Louis, Missouri: Strauss Park 

Image source:
Urban Blight Isn't Just Bad To Look At, It's Bad For Your Health
Not an extensive study but points to connection between urban blight and health, of note heart rate. Heart monitors were strapped to volunteers and monitored when they were in blighted areas versus greener open areas. The study coordinator is confident this study will lead to a larger study.

Small Projects, Big Impact

The idea that small projects can have a big impact on commercial corridor revitalization is not new. The concept in real estate is well established ("Small Renovations, Big Payoff", NYT 4/24/15). It is pretty widely known that small upgrades like a new kitchen counter top and new cabinet fronts, offer a greater rate of return than a wholesale kitchen replacement. In fact, Remodeling magazine found that a minor kitchen remodel recoups 84% for the owner, but a major renovation with top of the line appliances recoups 69%.  

At the Local Initiative Support Corporation (LISC), the idea manifested itself in the Corridors of Retail Excellence Program (CORE), funded by PNC Bank. The program, a three year pilot, yielded tremendous success, from new businesses and development in communities as varied as Mount Washington in Pittsburgh and Fishtown in Philadelphia. In Philadelphia, LOA served as the lead consultant and worked closely with a local CDC to define an intervention that reflects community interest, existing resources and potential opportunities. Our effort took the form of a "Model Block" program, and involved the sprucing up of the 300 Block of East Girard. What started out as one isolated retail business became, after some creative placemaking efforts (including fresh coats of paint, new lighting and signage, and a great interactive fence) and consistent PR/communications effort, a node of three new retail businesses, two new restaurants and a new development on a vacant lot. 
300 Block of East Girard: would zoom
by without noticing the one occupied storefront. 
After, new signage, catchy colors, and
new storefronts create a vibrant node of business activity.

An "interactive fence" serves as temporary exhibit space for
businesses - and has even served as the backdrop for concerts!

But really, none of this is new. These incremental improvements are how cities evolve and improve. What I do find interesting are the organized and increasingly branded efforts to help people professionalize these kinds of things. LISC CORE was one program, but others include Tactical Urbanism by The Street Plans Collaborative and The Better Block project. 

So the next time you are thinking about improvements to your corridor, keep in mind that less is often more. 

Thursday, April 16, 2015

Poverty and the Pedal

Three times in the past year alone our firm has completed work in low-income communities and asked questions about alternative transportation options - one of them being - do people bike? In one bike-friendly west coast city, the response, from an African-American community organizer was "most of our folks consider that a hipster thing". And while there were lots of people biking through the historically African-American community, I had to admit that it was true, nearly every cyclist that past us by was Caucasian.

CityLab did some research on this issue last year and found that "while wealthier people increasingly reduce their car dependency, poor people still aspire to car ownership." Or as our West coast community organizer said, "people have the attitude that only losers ride bikes." Fortunately, this mindset is changing, and we should encourage a paradigm shift among minority communities through education, bike infrastructure (i.e. safe places to park your bike so it won't get stolen) and support (free bikes and helmets anyone?)

Would you walk this street with a bag of groceries?
More recently, we have been working in another low-income urban neighborhood on the outskirts of a major downtown in Connecticut. The neighborhood had been labeled a "food dessert" and our original scope was to help them attract a grocery store. But here was the problem. While there wasn't a grocery store within the specific boundaries of that neighborhood, there were multiple food stores within a five to eight minute drive - the trade area that most grocery stores consider when considering site selection.

The good news was that the area was poised to get a grocery store at a new development immediately adjacent to the neighborhood at a major highway interchange. So problem solved, right? Wrong. The street connections to the future grocery-anchored community shopping center could not have been less hospitable to residents coming by alternative transportation means. No sidewalks or bike lanes and desolate streetscapes all made what was only a few minute long walk both unpleasant and in some places dangerous. Yet in a community where 48% of households do not own a car (compared to the state average of 85%) and meager public transportation at best, improving access to the shopping center for residents without cars should be a driving priority. Hey, if you can't bring the supermarket to people you can at least do everything in your power to bring the people to the supermarket. This means bike infrastructure, dedicated bike lanes and safe places to park your bike once you get there. In this community, it also means slowing cars down on a one-way street that should be made two-way. And finally, it means education in the local public schools (bikes are cool, right!) and yes, maybe free bikes and helmets for kids and their parents.

Biking is not a panacea, but it should be a viable option for those who don't have other options. And right now, there is tons of room for improvement on that front.

Tuesday, April 14, 2015

What's the Formula for Staying in Character?

Jersey City, New Jersey's second most populous city, has downtown character that current mayor, Steve Fulop, is trying to protect.

Jersey City now joins a select group of cities, most notably San Francisco, that aim to limit the number of chains in their communities. In Jersey City, the  proposed city regulation would set a limit of 30 percent of commercial space in downtown rented to businesses with 10 or more locations within 300 miles of the city. This kind of regulation is also known as "Formula Business Restrictions", and in general seek to limit chain stores with "multiple locations within the region that exhibit standardized characteristics such as logos, menus, store decor" and more.  In Jersey City, grocery stores will be exempt. Typically, the goal of these restrictions is to support a vibrant retail sector by limiting the number of chain stores competing for space and thereby reducing commercial rents - or at least the rising pressure of rents over time. Whether the facts on the ground bear this result out over time are yet to be seen. To my knowledge, there is no longitudinal study that would allow us to definitively determine whether these restrictive ordinances do what they intend to do - keep rents down in a way that results in a vibrant independent business environment.

What I do know is that San Francisco's Office of Economic Analysis recently completed a study of the impact of the 2008 Formula Restrictions and found that on balance, a significant impact of the regulation has been the higher prices that local residents are forced to pay for goods and services on the whole. They also conclude that formula restrictions "increase vacancy rates". According to the OEA, the conclusion of the study was as follows: "expanding the definition of formula retail in the city will not expand the local economy". Strong words from the very City that has led these efforts nationwide. It should be noted that the study's findings have been criticized by the Institute for Local Self Reliance, a think tank that has long supported such restrictions, for overestimating the price differential between chains and non-chains and not accounting for the higher percentage of expenses that small businesses spend on wages. However, OEA looked at this assumption and found that larger retail establishments employed 4.3 workers per million dollars in sales than smaller retailers, who employed 3.2.  So it seems the verdict is still out on this one.

But back to New Jersey. Not surprisingly, business and real estate groups are opposed. New Jersey Retail Merchant Association  president, John Holub, noted "We totally are obviously supportive of a vibrant, independent retail sector in the city, but to artificially try to control market forces is troubling."

Mayor Fulop wants to see Jersey City as a destination that pulls in visitors from all over and noted that chain stores such as TGI Fridays, Starbucks, Applebees, and Gap don't have that magnetism that draws destination seekers to them. That may be true - and laudable goal overall - but it is not without costs and impact felt by all.

Article link.

Authored by Larisa Ortiz, Principal of Larisa Ortiz Associates
and Scott Landfried, LOA staff