s, New York [Resurrecting a Village by Buying Up Main Street], a rural town in upstate New York. In the case of Mount Morris, O’Connell is following in the well tread footsteps of urban visionaries such as Dana Crawford, who started buying property in downtown Denver in the 1960's and created Larimer Square. Or Rosyln Hill (pictured right), who is credited with turning Northeast Alberta Street, in Portland, Oregon, around starting in the 1990's.
This approach is not for the faint of heart. It requires significant vision, not to mention a healthy amount of capital for investment. Besides that, when does this approach work and why?
- An undervalued district with good bones. These visionaries often begin by surreptitiously buying undervalued assets - primarily attractive historic buildings in pedestrian-friendly commercial districts. The trick here is to buy the properties very cheaply. The only way to off set the expenses associated with renovating historic buildings is the low cost of purchase.
- Great care crafting a distinct tenant mix. A visionary owner who takes great care attracting and retaining a unique set of businesses. In Larimer Square, Crawford started by leasing spaces to antique stores. In Portland, Hill focused on galleries and designers. This often means offering attractive rents and renting to non-credit tenants - i.e. mom-and-pops that offer distinctive goods and services.
- Requiring tenants to adhere to a set of rules and regulations. In Mount Morris, O'Connell requires his tenants to remain open one evening a week, leave their lights on at night, and change their window displays at least four times a year. In Portland, Hill did not allow her tenants to use metal bars on their windows or lock their doors during business hours. These rules are often similar, in spirit at least, to the rules that tenants must abide by in local malls, where open and closing hours are often written into leases and fines can be levied if tenants do not comply.
The single-owner approach is also not one that can easily be replicated in high-value urban environments. When property is expensive and overvalued, it can be difficult for a single owner to purchase the critical mass of properties necessary to make a difference in crafting tenant mix or managing district identity. It can also be difficult for developers, who may have paid dearly for these assets, to invest and improve the properties as they require. The need to produce cash flow through rent begins to trump the ability to keep rents low to encourage interesting and creative retail in the spaces.
While the single-owner approach is not for everyone, there is alot to learn from those visionary urban pioneers who are able to pull it off.