The Seeds of Trendy Districts

A colleague just sent me this must read piece in Crain's New York called "Musty Streets Now Hot Strips". These great images tell the story of once seedy districts that have all turned the corner towards 'cool'. Here are some of the elements that helped seed the beginning of these great commercial district turnaround stories...

Food First:
"Fashion follows food,” says Faith Hope Consolo, chairman of Prudential Douglas Elliman's retail leasing and sales division. “These are the [two] that add the sparkle that creates the buzz and excitement.”


Cheap Rent: 
In almost every case, these districts saw a confluence of low rents and landlords willing to make deals. Low rents allow small business owners to take risks they otherwise would be unable to take in other locations. The challenge is often how to maintain affordable rents once the area has become a hot destination.

Proximity to a Cultural Draw:
In more than one case, the proximity to cultural institutions and events helped ensure steady traffic among potential patrons. When entrepreneurs see growing demand for complimentary goods and services, low rent allows them to pounce.

A Growing Residential Population:
A growing residential population is not only a source of customers, but in some cases a source of local entrepreneurs as well.

Merchants Giving Back and Building Loyalty:
A local merchant community that is connected to the local residential community is also a good sign (in one case, local merchants helped put together a fundraiser for a local school). This helps to reinforce customer loyalty and suggests that excellent customer service is an expectation, not an afterthought.


Resources: The CDA Facebook page is a great resource for images of commercial districts from around the nation. Check out the album for Fort Greene, Brooklyn, one of the districts covered in the Crain's article. Consider sharing pics of your own district!

Tenant Mix Can Make or Break Your District

Today I share with you the cautionary tale of Atlas Park in Queens, New York, a promising outdoor mall that is now in bankruptcy proceedings. Although a mall, the lessons here are important to commercial district managers, who often overlook the importance of tenant mix to the overall success of their districts. They focus instead on marketing, promotional events and improving the public realm – all important elements of a commercial revitalization strategy - but at the end of the day, even when all of those elements are in place, the wrong tenant mix can make or break a district.

What Happened to Atlas Park?
The Shops at Atlas Park was built in 2006 as a high-end, open-air mall located in a decidedly middle-income neighborhood in Queens, NY. In the beginning, management likely targeted high-end stores in the hopes of differentiating the mall from nearby malls with a more workaday appeal.

When it opened, expectations were high. The mix included an eight-screen Regal movie theater, and high-end retailers Jos. A. Bank, Florsheim and J. Jill, as well as a gourmet specialty food store. As a resident of nearby Jackson Heights, I was excited to discover Atlas Park. The landscaping and aesthetics, including a beautiful outdoor plaza with lush landscaping, were like something out of a movie set. On our few excursions, my husband and I were pleased to see live outdoor music performances and a small carousel for the kids. We looked forward to visiting again and enjoying outdoor dining during the warm months. But our excitement quickly soured when we realized that besides food, there was nothing else there for us. The shops missed the mark – they seemed to be targeting a crowd that didn’t reflect the reality of who their shoppers really were. Every time we visited Atlas Park, we saw more and more vacancies. As attractive as the shopping center was, there wasn’t enough interesting retail to keep us window shopping, much less buying, for more than 20-minutes. Not good.

Today, the shops are in bankruptcy proceedings. The vacancies meant that the owner couldn’t keep up with his debt service payments, and according to recent news articles, the new owners are desperate to reposition the property with a whole new tenant mix more in keeping with the local resident demographic. A recent article in Crain’s Business [Queens mall is getting re-stored: Shops at Atlas Park, far too upscale for workaday Glendale, will start over again] quotes a local community leader Gary Giordano as saying “some of the thought process was that these would be high-end stores”…”but they're in a middle-income, working-class neighborhood. I'm not sure there's much of a demand for those types of stores there.”

Although it’s not quite possible to ‘start over’ when you don’t own or control properties in your district, the message here is that you can’t underestimated power of tenant mix to make or break your efforts to improve your commercial district. And while more challenging, it is in fact possible to influence tenant mix through a variety of strategies. For example, my firm is currently working with a Business Improvement District to execute a leasing and retail plan we helped devise. We took a good look at what the district was already known for, identified the market dynamics and likely shopper profile, and defined a strategy to position the district as a destination for great ethnic food and, interestingly enough, a good selection of home goods stores. Today we are working together with a few key property owners who have bought into the concept, and have begun to identify and reach out to a set of qualified prospects that will help round out and improve the retail categories and tenant mix we have already identified. This level of proactive tenant recruitment for private properties is sophisticated and a bit unusual – but is a critical component of driving retail sales and increasing shopper visits to the district – something that will help all district businesses in the long run.

Tailoring Merchandise to Meet Local Demand

It should come as no surprise that even a successful department store like Macy's is still learning and implementing what many would consider a lesson from 'Retailing 101'. ["With Stores Nationwide, Macy's Goes Local: The big department store chain lets each store cater to local tastes", Bloomberg Businessweek]

Recently, Macy's announced that it would begin working more closely with its stores to allow managers to more closely tailor store merchandise to individual markets. For those of us working in urban markets - the failure of many national retailers to meet the needs of the local market is legendary, and sometimes humorous. I have heard stories from corporate executives themselves about how their stores are sometimes off the mark when it comes to meeting the demands of local clientele. Take the Payless Shoe store on 125th Street. Payless executives had high hopes for the store when it opened. They thought they had done their research. They hired bilingual staff and had bilingual signage to attract what they believed was the core customer base. When the store was not meeting sales projections, no one could understand why...that is until they visited the store. The local clientele was primarily African-American, and while the store was located close to "Spanish Harlem", in New York, a few blocks can mean skewing towards a completely different type of customer. When Payless took these differences into account and changed their tactics, store sales started meeting expectations. I love this story because it exemplifies the challenges that national chains face, despite their deep pockets, and the opportunties that local retailers have if they pay close attention to their customers. Nothing beats a deep knowledge of the market and the ability to give customers exactly what they want, when they want it, at the right price point.

The Best Chains on Main: Deadline Extended to December 1st!

The Commercial District Advisor, in partnership with LISC MetroEdge, is still accepting nominations for the ‘Best Chains on Main,’ a nationwide competition that seeks to recognize those chain (and chain franchise) businesses that are making their urban business districts better places. Not only do they provide excellent service and maintain clean and attractive stores, storefronts and merchandise displays, the ‘Best Chains on Main’ help other businesses by attracting customers and contributing positively to the overall shopping environment. These quality businesses have a strong positive influence on how their neighborhoods are perceived, how safe people feel, and whether residents choose to spend their dollars locally. In particular, we are seeking chains that do not shy away from investing in more challenged business districts that other retailers typically avoid. These stores have a ‘chain effect’ on the neighborhoods they serve and help form the foundation of healthy and thriving commercial districts nationwide.

Help us Find and Recognize Great Businesses!
Nominated businesses will be judged on the following criteria: Exterior Appearance, Interior Appearance, Customer Service, Willingness to Locate in Low- and Moderate-Income Communities, and Donation to Local Causes. Nominations for both smaller regional chains as well as national chains are welcome. Franchise chains are also eligible. To be nominated, a store must have at least two locations.

To nominate a business, simply click here! For your nomination to be complete, you must also submit two or more pictures of the business that show it at its ‘Best.’ Photos can be sent to us at mrao@larisaortizassociates.com with the subject line, ‘Best Chains Contest Photos.’ Nominations will be accepted until Wednesday, December 1st.

A Top Notch Panel of Judges
Submissions will be judged by an expert panel of retail, real estate, design, and economic development professionals, including:

• Cynthia Stewart, Director of Community and Government Relations at the International Council of Shopping Centers (ICSC), the global trade association for the shopping center industry.
• David Bodamer, Editor-in-Chief of Retail Traffic, the nation’s leading business-to-business publication on retail real estate trends.
• Jeffrey Finkle, President and CEO of the International Economic Development Council, the world’s largest membership organization serving the economic development profession. 
• Ken Nisch, Chairman of JGA, one of the nation’s leading retail design, brand strategy, and architectural firms.
• David Feehan, President & CEO of Civitas Consultants, former President of the International Downtown Association (IDA), and editor of “Making Downtowns Work.”
• Joe Getz, Principal of JGSC Group, downtown retail consultants. 
• Jake Cowan, Business Manager at LISC MetroEdge, the nation’s pioneering urban market research firm located at the Local Initiatives Support Corporation. 

To download the press release for this competition, please click here.

In-Fill is Hot!

Everywhere I turn these days I read about retailers and developers 'discovering' urban markets. ["Developers, Retailers Focusing on Infill Areas," The Arizona Republic]. For those of us working in these communities for over a decade now, the opportunities were always there. We called these placed 'underserved', or in the case of grocery stores, 'food deserts'. So it's exciting to see communities with higher densities now seeing interest from retailers and developers who frequently overlooked these neighborhoods, citing safety concerns, too few customers, lack of purchasing power and high construction costs as impediments to development. What those of us in the field always knew is that density equaled buying power, and while national retailers often eschewed these locations, regional chains were often gobbling up real estate and doing very well - albeit under the radar. Now that the big guys are interested...I wonder how the dust will settle.