Video: Small business owners share the impact of Business Improvement Districts

It can sometimes be a challenge to sell small business owners on Business Improvement Districts. In this short clip, Commissioner Rob Walsh of the New York City Department of Small Businesses, Fulton Area Business Alliance Executive Director (and Coro Neighborhood Leadership alum) Phillip Kellog and various small business owners talk about how BIDs are helping small businesses with their bottom line.

Commercial districts take their retail attraction efforts to ICSC

Retailers, brokers and developers set up booths at ICSC for
the purpose of making deals. Commercial districts can benefit
from ICSC's tradeshow too.

EXHAUSTED! Yes…that’s what I am right now after having spent the past two days walking the floor of ICSC with five different non-profit organizations and Business Improvement Districts. For those of you unfamiliar with ICSC, the International Council of Shopping Centers hosts the grand-daddy of all trade shows where members of the commercial real estate industry (mostly all retail and restaurant focused) come together to make deals. The largest ICSC trade show is in Las Vegas every May, but the New York show is the second largest with over 6,000 participants and 300+ booths. If you have vacant sites and are looking for national or regional chains this is a place where, over the course of two days, you apply good ole’ fashion shoe leather to meeting people and making connections. Instead of spending days and weeks of staff time researching retail websites in search of site selection criteria and contact information, you spend two days walking the floor and accomplish work that would otherwise take you much, much longer. Not only that, but face time with retailers, brokers who represent retailers, developers, service providers, etc. can also make the difference between an email/phone call that gets returned and one that doesn’t. In at least two cases, our sites walked the floor with their local property owners...even better!

So how do you prepare for ICSC? Planning starts early…
Our team has spent the past year preparing these sites to attend ICSC. The process began with market analysis, but certainly did not end there. We helped these groups develop a retail vision for their districts while simultaneously identifying opportunity sites by working with landlords and local brokers. We also developed district-wide leasing plans that pin-pointed retail categories that reflected three basic criteria – 1) retail categories could be supported by the market, 2) retail categories that matched the space available in the district, and finally 3) retail categories that complemented local community needs and wants. Finally, we prepared marketing material that conveyed the message of these leasing plans for distribution and use in retail prospecting.

Once all those elements were in place, preparing for ICSC included scouring the exhibitor and attendee lists to develop a hit-list of retailers (and brokers who represent those retailers) who reflected our priority retail categories. With district marketing material and sell-sheets for the available spaces in hand, we worked the floor methodically, approaching booths, grabbing business cards and site selection information. In some cases, we made appointments with the right people in advance. In others, we simply walked up to the booth and asked to speak with the rep for the region we were in. If we couldn’t talk to the representative at that moment, we grabbed a card and moved on.

...and doesn't end once the trade show is over!
As you can imagine, a lot of work happens after the trade show ends. Follow up is critical. The contacts made at ICSC are invaluable, not just in the short-term, but in the long-term. We will recommend that each district send regular e-mail blasts detailing their vacancies to their now growing list of brokers and retailers. These retailers may not need space right now, but you never know what their expansion plans will be in 6 months or even two years. It’s a slow-tedious process….but it works!

Special “Small Business” Series Part 2: Bar Marco, two weeks until opening...

In Part 2 of this series, we follow the story of Bar Marco in the Strip District in Pittsburgh and how their epic struggles to secure a $40k loan could make or break their business - before they've served their first customer. Follow their story on Facebook...and expect to drool over the wonderful pictures of authentic tapas that they have been cooking, enjoying and plan (hopefully!) to serve for customers very soon!

Partners from l to r. Michael Kreha, Justin Steel,
Bobby Fry and Kevin Cox

Partners Bobby Fry, Justin Steel, Kevin Cox, and Michael Kreha are working furiously, staying up nights drilling steel and getting the kitchen ready to open their wine and tapas bar in Pittsburgh's Strip District. Yet Bobby's frustration is palpable. In about two weeks, Bar Marco will open its doors. To date, these guys have personally financed $169k in renovations and it shows. Michael is an architect designing custom fixtures (take a peek at the lovely chandelier, below) and taking great care to uncover and preserve the features that make this firehouse so unique and beautiful.

Yet their investment, and essentially their life savings, is at risk. Why? Because what they need right now is a $40k loan to open - and stay open. None of the partners have debt, all have good credit scores, and the nominal $400/month debt payment on the loan is more than doable, particularly given the fact that at least one of the partners has retained his well-paid full time job. Yet they still can't get a loan.  

What is the problem here?

Initially, Bobby admits they overreached by trying to finance a much larger loan. But they quickly scaled back those plans and decided to phase the project instead, allowing them to self-finance much of it (with help from friends and family). With the focus squarely on opening the ground floor of the firehouse as a Phase I, the need for financing was significantly reduced.

A custom-designed chandelier
graces the restored tin ceilings

At that point, Bobby and his partners pursued loans from traditional and non-traditional lenders...all to the same end. Loans were rejected, after promising starts. In the beginning, Bobby noted that his first meetings with loan officers were always enthusiastic, but by the time the project moved up the ladder to more senior loan officers, somehow the excitement and opportunitity, and what made their project compelling and irresistable, got lost in translation.

What's interesting is Bobby's take on the challenges. Bobby comes from a finance background, having spent a few years on Wall Street working in the financial industry. So his insight is particularly relavent. He believes the challenges that he and his partners face point to systematic problems with the entire financial system. For someone like myself with limited knowledge about the inner workings of the financial system, his commentary was really eye opening...

The loss of relationship lending has hurt "Main Street" businesses

Gone are the days when the decision to provide financing was made by the guy in the front office. In the days of "relationship lending", decisions were made in part on the "soft" information that loans officers collected. In the case of Bar Marco, every loan officer who walked through their space and saw first hand what they have done was enthusiastic. But for some reason that enthusiasm didn't translate to the lending application. This in part because small banks no longer exist. These smaller banks have been gobbled up by larger banks and lending institutions and now have multiple managerial layers. The wiggle room on decision making got narrower, and as loan applications moved up the totem pole, something, clearly gets lost in translation.

Willing to pay a higher interest rate, but not offered the option

Bobby also squarley points the finger at national monetary policy. In his customarily frank way, he expressed frustration at the fact that he and his partners would have gladly paid for a higher interest loan - but instead found loan officers who were "trying to cram 3% loans down our throats" and then rejecting them because they were too risky, young and 'inexperienced'. Bobby believes there is a huge disconnect in how lenders approach projects and how they assess risk. If a loan is riskier, raise the interest rate to reflect the higher level of risk, right? Sounds reasonable...

Love the fixtures...

What is even crazier is that the partners were willing to use their liqour license as collateral, but have found that while the license itself is of greater value than the loan they seek, it is an untraditional form of collateral that lenders are not willing to use.

Alternative Financing

One option is crowd-source financing or "crowd funding". It essentially involves going directly to the community to finance a project. For a business as engaged with the local community as this one, it seems like a promising idea. According to Wikipedia crowd funding describes the "collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations." Although it may be late in the game for Bar Marco to do this (two weeks and counting!), Bobby is still exploring one crowd funding option - kickstarter.com - which helped a brewery in Pittsburgh raise almost $200k.

At this point, they also plan to continue pressing lenders, finding any way possible to get them into the space to show them what they've done in efforts to revisit lending opportunities.

In the meantime, the countdown clock continues. Will Bar Marco sit beautifully restored and ready for business, yet empty but for a relatively small gap in financing? I sure hope not, but the story is still unfolding. Stay tuned...

The Commercial District Advisor heads to Mexico to speak about Latin American BID Formation

Enjoying a cup of coffee...

A few months ago, my colleague David Feehan and I were asked by the Interamerican Development Bank to present our experience as part of a team that played a role in establishing the first Business Improvement District in Latin America. The conference, entitled PPPAmericas, concluded yesterday.

Our work in El Salvador was funded by the IDB, and as we came to understand over the course of the two day conference, BIDs are an entirely new concept for most in the world of public-private partnerships. While most panels discussed the construction of jails and infrastructure, we stood out like a sore thumb, with an interest in...gulp, shopping districts?! But our session was well attended by over 200 practitioners from all over Latin America, and many seemed quite intrigued by what has been accomplished in El Salvador. Jorge Iraheta represented the Corporation Zona Rosa, our client, and described in great detail how they executed the BID concept (known in Spanish as "Distritos de Mejora Comercial") with some creative thinking outside the box...but more about that in a follow up blog entry.

The conference was held in the central Mexican pueblo of Guanajuato. What an amazing city. I recommend ever urban planner (or urban planner wanna be!) visit this place. It is one of ten Mexican pueblos to sport the coveted UNESCO World Heritage Site distinction. I first visited Guanajuato almost 15 years ago. From 1997-98 and then again from 1999-2000, I traveled and lived in over 13 Spanish speaking countries on a Watson fellowship, and then later as a Fulbright scholar, looking at how historic Latin American cities were remaking themselves. At the time, I would sometimes pinch myself as I wandered the streets of an old colonial city exploring hidden nooks and crevices. That was my "job" for almost two years of my life. And to find myself again wandering the same beautiful streets of Guanajuato taking pictures (I do tend to get funny looks when people see me taking pictures of trash cans!) was a real pleasure.
 
Guanajuato is a little piece of heaven that is unlike any other place on earth. There are barely any cars on the few passageways (I hesitate to call them roads) wide enough to accommodate them. That's because the town has an intricate system of underground tunnels that accommodates most automobile traffic. This leaves the town a true pedestrian domain. The streets are also packed with students from the university - which is in the heart of the historic district - lending a vibrancy that always accompanies young people. Street musicians serenade diners at the dozens of outdoor eateries. The Plaza Union, one of the main plazas in town, is filled with neatly trimmed trees that have grown into an imposing and massive green canopy, made even more imposing by the fact that the trees are carved into a neatly shaped box. When you enter the Plaza, you feel as if you are walking into a lush living room with leaves for a ceiling. As you walk the streets, every turn uncovers a surprising vista, a hidden plaza or building to discover. I spent half the day walking around exploring before making my way to the city museum and local market for a few small gifts. I did refresh myself with a stop at a little cafe, where I enjoyed the view of the bright yellow cathedral.
 
If you get lost, there are helpful directional signs to guide you. Although I did find the standard downtown map unnecessarily confusing. When a self - professed map geek has problems reading your maps, there is a problem. But getting lost was, frankly, half the fun. I also realized what an incredible disconnect there is between the world of BIDs and the world of tourism districts. All of the directional signs seemed sponsored by the state or city run tourism council. In the US, this kind of signage can be sponsored and maintained by BID's, freeing critical public resources for other needs. I couldn't help but wonder what kind of resources were committed to upkeep, particularly as I stumbled upon more than a few signs marred by graffiti. But those sights did not affect the overall experience, and the cleanliness of the streets was more a rule than an exception. See for yourself...

Plaza Union's perfectly trimmed trees

 

An intersection in the underground street system

Signage in need of maintenance



The outdoor living room...

Surprising elements at every turn

Directional signage

Outdoor cafe along a typical 'street'

Car traffic is tucked behind the buildings
as it emerges from the underground street network

A downtown map marred by graffiti

 

Award-Winning BID Leadership Training Program Accepting Applications for Second Round



2011 Coro Neighborhood Leadership Participants at
Inaugural Retreat

 I am so pleased to announce that applications for the award-winning 2012 Coro Neighborhood Leadership program are now available on-line.

As the Program Director, I am proud to have had a strong hand in shaping the inaugural curriculum and in leading a truly accomplished cohort of 20 seasoned professionals through the five-month program. What these BID and CDC practitioners discovered was that professional and personal networks can be improved at any stage of professional development, and that key leadership skills (even the best of us need this!) are bred, not born. Becuase this is a field that attracts professionals from a variety of backgrounds - the process of bringing them together to share in dialogue and best practices is valuable not only for what they learned from the program, but perhaps even more so for what they learned from one another. The program also recieved a 2011 Downtown Merit Award by the International Downtown Association (IDA) for excellence in downtown leadership and management.

In announcing year two of the program as part of a comprehensive set of neighborhood retail initiatives, Mayor Bloomberg stated “small businesses are the backbone of our City’s economy and our neighborhood retail corridors are the driving force behind job creation and economic growth". The City's efforts will "provide local neighborhood retail districts with the tools they need to jump-start local economic activity, attract new retailers and reach a whole new range of consumers.” [See Oct. 27, 2011 Press Release]

And for those of you who like video...NY1 did a nice news piece, click here to take a peek:  "Officials Work to Revitalize Lower East Side Businesses"

For all these wonderful accolades, the most significant feedback comes from participants. Blaise Backer, Executive Director of the Myrtle Avenue Brooklyn Partnership, and no stranger to accolades for his work turning Myrtle Avenue around ("Pratt Institute Takes an Interest in Making a Neighborhood Nicer", NYTimes, 2/11/11) offers this testimonial:

"Neighborhood Leadership was a huge benefit to my professional development and has helped me both on and off the job. As the director of a small non-profit, my busy workday rarely provides me the time to reflect on my leadership skills and work habits. This program provided me with a much needed opportunity to pause from work in order to develop my skills, assess my current challenges and develop strategies to overcome them, and to learn from my peers and Coro's excellent facilitators. I highly recommend the program for those working in the field of neighborhood and commercial revitalization."

The Coro Neighborhood Leadership Program is made possible by generous funding from the NYC Department of Small Business Services. Eligible participants include staff at nonprofit organizations that serve commercial districts in New York City and whose work focuses on commercial revitalization activities. A majority of participants selected will serve low to moderate income neighborhoods with a limited number of slots open for participants who do not fall within this category.

Click here for more information on eligibility and to download an application.

Special “Small Business” Series: The story of Bar Marco, Part 1

Bar Marco will open shortly in this
wonderful old firehouse, constructed
in the 1860's.

On a recent trip to Pittsburgh for a client, I was fortunate to connect with a group of four business partners opening up an exciting new bar/restaurant called Bar Marco in the up and coming Strip District, a gritty area northeast of downtown Pittsburgh historically known as a produce wholesale district.
Bobby Fry, along with his partners Justin Steel, Kevin Cox, and Michael Kreha, all share an infectious energy combined with a strong commitment to their vision. Bobby in particular also has a deep interest in community and economic development. Having left New York and spent a few years on Wall Street, he returned to Pittsburgh for a variety of reasons, and ended up teaming up with old friends from high school to pursue the dream – a European-style wine and tapas bar.

Why is Bobby’s story important? Because these are exactly the kinds of businesses and business owners that make commercial districts tick. They not only give back to the community, but their businesses become the kind of places that drive repeat visitation. They also set a tone for other business owners and elevate the overall perception of retail and restaurant offerings overall - which ultimately helps all district businesses.

In less than a year, Bobby has found a seat at the table, becoming a board member at Neighbors in the Strip, a small non-profit dedicated to promoting economic development in the district. He and his partners are also committed to sourcing their products from Pittsburgh area vendors. The economic impact of these decisions is a small drop in the bucket, but if replicated by other business owners in a district, is precisely what keeps the local economic engine going…and growing.

So how do we make sure our districts are positioned to attract the Bar Marco’s of the world? This series will help us unpack that question, as we follow the story of Bar Marco and use it to explore the various ways commercial district entities can support and facilitate the growth of similar neighborhood businesses.

PART 1: LOCATION, LOCATION, LOCATION 
I started by asking Bobby what made him choose the Strip over other neighborhoods in Pittsburgh. He replied that initially the area wasn’t on his radar. They were looking at another neighborhood, but one night one of the his partners was chatting with someone who mentioned that the Firehouse, a well known restaurant in an old 1860’s firehouse, was closing and that space was soon going to be on the market.

How important is data, really?
The Strip District wasn’t on their radar – but once they knew the space available they took a closer look at the area as a location. They needed to move quickly – and what they knew about The Strip was enough to help them decide to forge ahead. According to Bobby, two key metrics played a role.

• Transit access was excellent. Penn Avenue is a busy street that leads to downtown. Not only that, but they are five blocks from downtown and have a small dedicated parking lot to boot. “It doesn’t get better than that” says Bobby.
• New high-income development completed or in the pipeline. A quick drive through  The Strip District confirms what locals already know, the jump in residential housing means a growing, and captive, market...just the kind of folks who might patronize a European-style wine bar.

So with some basic information about the market, some familiarity with the District, and a strong gut instinct, they were off…signing leases, getting financing (more on that later!), starting construction, and basically turning their concept into a concrete reality.

What are the take-aways here? While there is not much you can do in the short-run about your district’s transportation access, Bobby’s feedback makes a strong case for keeping track of and mapping new development and construction in the pipeline. If a retailer wanted to locate in your district, would they be able to find this information on your website?

What can a district management entity do to help?


Bar Marco Owner and Architect
Michael Kreha hard at work



While small business owners can go it alone, it always helps to have help. And that is where the local commercial district management entity comes into play. Becky Rodgers, Executive Director of Neighbors in the Strip has been a tremendous asset, says Bobby. “She is a champion for local business. When we got here, we were introduced to her by our landlord, and she immediately worked on making e-introductions for us to people who own lofts and residential buildings in the neighborhood”. Working with Becky, Bar Marco recently held a charity event that resulted in a packed house – even before they had officially opened. This kind of word-of-mouth marketing is a tremendous asset, it helps build buzz and is setting up Bar Marco for success down the road.

Bar Marco is set to open in a few weeks, in the meantime, the construction dust continues to fly as Bobby and his partners work furiously towards their official opening. The determined look on partner Michael Kreha’s face says it all…

Bar Marco is on Facebook. Be sure to "Friend" them to keep up with their story....

Round-Up: Long Island City, Queens, NY

Long Island City, a former waterfront industrial area on the East River, facing Manhattan, has seen an incredible amount of development recently. With those new residents have come a more diverse retail mix.

Some great examples of signage, seasonal decorations, and creative storefront facades. These are the hallmarks of a up and coming business district....

I also LOVE this facade treatment for a local bakery....look closely. Those are rolling pins!



Now here's the kicker. This appealing outdoor space is next to.....a GAS STATION. Amazing what some smart design can do to mitigate a not so pleasant circumstance.

Transforming a District by Supporting Small Businesses

Kerry McLean is figuring it out. But it isn't easy.

Kerry is Director of Community Development for WHEDco, the Women's Housing and Economic Development Coporation, a non-profit looking to revitalize a mile-long stretch of Southern Blvd. in the Bronx. Attracting businesses to her district hasn't been simple. Property owners are hard to get a hold of. Vacant spaces are in disrepair and show poorly in a market where retailers have other options. And financing for the one's who do come her way is hard to come by. Yet despite these challenges, her district has seen a net gain of seven new business and reduction in the vacancy rate from 24% to 16%. Quite an accomplishment.

Yet her experience has yielded good insight. In a low-income market that struggles to show it's best face, the businesses interested in the district are often the small, inexperienced kind. She has found that not only do current businesses struggle to grow, but new businesses can't get a toehold in the market for lack of financing and technical assistance. To address these needs, WHEDco is sponsoring the 2nd Annual "Grow your Business: Financing and Business Resources Event" tonight at their offices off Southern Blvd.

There are three main ways that organizations can help small businesses, these include:

1. Training and Technical Assistance (in-house or through partnership). This can include anything from facilitating permitting and licesning, to providing design assistance, to doing general business planning and problem solving.
2. Providing Access to Capital by facilitating access to for/non-profit lenders and public sector resources and incentives. Think facade improvement grants or low-interest loans..
3. Foster peer-based assistance and advocacy, including seminars and trainings.

WHEDco is well on it's way to working on all of these issues. So congrat to Kerry and her team!

 

Click here for a local tv newstory on WHEDco's efforts.

BID's efforts pay off for residents, businesses with street closure and block party

The energy and excitement captured by this video tell the story of Putnam Plaza, a segment of street in Clinton Hill, Brooklyn that was recently closed to traffic. Its new life as a public plaza was celebrated with a block party that had people, literally, dancing in the streets. Local cafes and convenience stores did a brisk business as well.

This event was a true community affair, led by the the Fulton Area Business Alliance (a Business Improvement District), which sponsored the plaza. Phil Kellog, a Coro Neighborhood Leadership alum, shared his project with us at our final session where every participant shared the story of a project that they had worked on throughout the course of the program. Phil managed all coordination with city agencies necessary to make this project a reality. The plaza is yet another reason why BID's are an excellent community investment. 

Here's a great feel good video by a local filmmaker that captures the excitement and makes ya wanna dance!

Putnam Block Party from adele pham on Vimeo.

Inside Retail Attraction: Going after the Regional Independents

Most of the communities I work with recoil slightly when I say "chain store" and "retail attraction" in the same sentence. In fact, after CDA's inaugural 'Best Chain on Main' contest was over last year and the winners were announced, I heard from a number of organizations who mentioned that they were reticent to submit a business for consideration because they didn't think it fit the profile of a chain. The idea that chain stores are bad because they drive out mom-and-pop businesses is unfortunate - and also doesn't reflect the spectrum of retail as it exists in the marketplace. In fact, many of retail and restaurants that people think of as mom-and-pop stores are in fact defined as "chains". A "chain" is a business with multiple locations that share a formula for management, merchandise, format and branding that is applied all stores. This definition of chain holds whether you have 3 sites or 3,000 sites. We all know examples of these regional indepedents. In Pittsburgh, Crazy Mocha, owned by Ken Zeff, with more than two dozen locations in the region is a good example. In New York, Gothic Cabinet Craft (a winner from last year's Best Chain on Main' contest), has 29 locations in the New York tri-state area.

So perhaps we need to use a new term to describe those in-between retailers, business with 2+ locations that are still under independent ownership. On the Chain Retail Spectrum, these "regional independents" or as my colleague Mike Berne calls them "chain-lets", are a valuable sweetspot for local retail attraction efforts. Regional indepedents are ideal for district retail attraction because the businesses are typically locally-owned and retain the character of mom-and-pops, yet also carry the experience and management skillset necessary to maintain multiple successful locations. These business owners are savvy, yet don't have the resources to undertake a formal site selection when they consider expansion. So getting in front of them to make a successful pitch can be critical - because their expansion is often unplanned and done only as opportunities present themselves in great locations. These owners make new location decisions based mostly on 'gut' and a deep insider knowledge of the local marketplace. The fact that regional independents are usually locally owned also means that you can find ways to connect with the owner or ultimate decision maker - often by shopping or eating at the restaurant and asking to speak with the owner. Connecting with the right representative from a national chain, on the other hand, can be an inside game. It can be challenging to find the right person to talk to - and sometimes they want you to go through their leasing agent or broker rather than connect directly. Attracting regional independents to your district is not only easier, but it helps your district retain the local character that differentiates itself from other districts as well. So the next time someone says "chain" and "retail attraction" in the same sentence, don't discount the opportunity!

Going "Store by Store" to Help Local Business Owners Improve their Displays

Finding ways to help local business owners improve their window displays is a perenial issue. The small convenience stores typically found in urban areas are notorious for their cluttered displays, boxes and merchandise in the window blocking views into the store (which has the added "benefit" of turning store into a target for thieves), and posters and stickers haphazardly placed over all the windows. Many of us are very familiar with this challenge. But a creative partnership between a local Visual Arts school and a local development corporation in Staten Island hopes to change all that. As a consultant to the Coro Neighborhood Leadership Program, the first commercial district leadership training program of it's kind in the nation, I had the benefit of hearing Michelle Sledge, Economic Development Coordinator for the Northfield Community Local Development Corporation share the impact of her "Community Change Project" with her NL colleagues as part of our final program day.

The results of her efforts, a program dubbed ¡Revive!, brings together graduate students from the Manhattan School of Visual Arts (SVA) to provide volunteer service that helped make the display windows of Monte Alban, a Mexican market, more appealing. According to Michele, the owner couldn't be more pleased with the outcome and believes it is helping business. Her story is one of many that I heard yesterday that continue to inspire me - and I hope they inspire you too! I'll be sure to share a few others with you in the coming weeks.

Here is a great video documenting the day....

Landlord acknowledges that leasing decision can transform a neighborhood, but let's space lie fallow

An older image of Tony Malkin's building,
once occupied by Conway

Tony Malkin is the owner of a long vacant retail space along the Broadway corridor near Macy's in New York City. He's not wanting for interested retail tenants, yet the retail space, located across the street from the beautifully renovated Herald Square, sits hulking and vacant.

Malkin acknowledges the impact of his leasing decisions on the neighboring district, saying in a Wall Street Journal article that selecting the right retail tenant doesn't just change a building, it can also transform a neighborhood. Yet despite interest from tenants over the past few years, ranging from Nordstrom Rack to Best Buy to Nike, he hasn't even begun formally marketing the space. Landlords like this are frustrating, on one hand they acknowledge that their leasing decisions play a significant role in neighborhood transformation, yet they conveniently ignore the negative impact that a vacant space can have on the district. Malkin goes on to say "With the right tenant," Mr. Malkin says, "I see no reason for us not to be a logical extension off of 34th Street and Macy's." Yet because his cash flow needs are likely met by the office space above the ground floor, he's in no rush to lease his space. Not many owners are in a position to forgo millions of dollars in yearly cash flow, but clearly Malkin thinks the right tenant is worth the wait. What do you think?

Shame on Cisneros! Don’t use the term “village” if you don't mean it



 Really now. Is this a village?
Brandford Village, a gated community in Pacoima, CA.

This week, former HUD Secretary Henry Cisnero and Executive Chairman of CityView, an institutional investment firm focused on “urban real estate” (their terminology, not mine), will lead a media tour of Brandford Village, a for-sale new home community in Pacoima, CA. Here is the problem. The 62 single-family homes that comprise Brandford Village are in fact the furthest thing from “urban” or “village” humanly possible. A village is a place that both businesses and residents call home. A real village is someplace where a child can walk to a corner store and buy a pack of gum or an ice cream cone. Where Main Street (aka the commercial district) is integral to “Elm Street” (the residential district). I mean, c’mon, this “village” doesn’t even have sidewalks! And it only gets worse. It’s a GATED community. Wow.
Frankly, I’m surprised that the Honorable Henry Cisneros, whose track record supporting urban communities is unrivaled, is letting his name and organization be used to promote a development that violates so many basic principles of urbanity. So I ask only this: Cisnero’s, please...use your influence and position to instead invest in communities that truly honor the term village, the traditional mixed-use downtown and neighborhood commercial districts, often surrounded by residential housing, that dot the American landscape. There is no shortage of these communities in need of your investment.

Managing Mix: Redefining the Downtown Anchor

In the retail industry, the word anchor is often narrowly defined. For many, an anchor store is a big box tacked on to a mall, filled with general merchandise and the words "Macy's" on the side. Downtown anchors, on the other hand, are much more diverse and eclectic, and include a slew of uses and activities that may be nontraditional in a typical shopping center, but are just right for the traditional downtown and neighborhood commercial districts.

As you consider ways to drive retail traffic to your downtown - anchors are a critical piece of the puzzle. Like a mall developer, downtown anchors define the downtown brand, so attracting an anchor, or helping to grow an anchor, inevitably becomes part of your district's strategic positioning.  But I encourage you to take a moment to define anchor more broadly. If you do, you'll begin to understand the variety of ways in which other uses play a role in driving pedestrian traffic to all of the businesses in your district.

I have found that the Urban Land Institute offers a categorization of anchors for retail entertainment destinations that is also applicable to the downtown context:

Activity generators - Traditional theatres, movie theatres, cultural and educational facilities and institutions - these are all anchors that generate activity. Visitors come to your neighborhood specifically to visit these locales. The more unique and interesting the offerings, the further people will travel to experience what your community has to offer. A great library can be a wonderful activity generator. I worked in one community where the library held daily events that drew thousands of visitors a week, both during the day and in the evening. These visitors often left the library looking for a quick bite to eat, and local coffee shops and delis were more than happy to oblige. Under the best of circumstances, activity generators support the growth of complimentary retail in the immediate vicinity (i.e. walking distance) of the activity generator that cater to the same customer. As you think about retail mix in your district, identify these activity generators and think about the kind of retail and services that would compliment the use. Engage your anchor institutions in a conversation about what goods and services they would like to see around them and use this to inform your retail leasing strategies.

Activity extenders - These activities are typically complimentary goods and services that give visitors more of a reason to stay in your district, beyond their original destination. These uses typically include restaurants and eating establishments. Nothing keeps people an extra hour than a tempting place to eat or grab a cup of coffee. I also like to make the argument that public restrooms are an important and sometimes overlooked activity extender as well. If there are no restrooms available when nature calls, a trip or visit to a store will be cut short, perhaps indefinitely. When I was pregnant I distinctly remember being pleasantly surprised that the apparel store Motherhood Maternity had a ladies room on site. "Of course!", I remember thinking, they want to keep you here as long as possible! Bookstores always have restrooms for the same reason. They know that the second you leave the store, they have lost you as a customer.

Activity inducers - These are those niche and speciality retailers that are destinations in their own right. In New York, these include unique apparel of speciality food stores (Trader Joe's comes to mind). FAO Schwartz on 5th Avenue. In my Queens neighborhood, the well-known Indian grocery store Patel Brothers serves this function as well. Great commercial districts have at least a few of these activity inducers that in some cases have become synonyms with the district. If you have one of these retailers - be sure to support their efforts to market and promote themselves.

These are but a few examples of nontraditional anchors...

News Roundup: September 23, 2011

Ardmore Initiatives's 'Downtown Dollars' effort honored [Mainline Media News, 9/23]
The Pennsylvania Downtown Center presented the Ardmore Initiative, downtown Ardmore, PA's business authority, with an award recognizing the impact that the program has had on small businesses. Four Armore banks contributed $10,000, which allowed for the printing of $20,000 dollars worth of Downtown Dollars during the winter holiday shopping period. Shoppers were able tp purchase Downtowns Dollars at a 50% discount for use in local sotres. The Dollars sold out in four minutes.

City Centre video walls an 'interactive, entertaining' first [Vancouver Sun, 9/23]
One digital media company explores marketing downtown businesses to shoppers via giant indoor digital video walls.

City to launch program to bring in retail shops downtown [Montgomery Advisor, 9/22]
A 576-square foot incubator will become home to small businesses 'testing the waters to see if there is a market for their product downtown.'

Downtown Los Angeles Looking for Unique Stores [California ApparelNews.net, 9/23]
The Downtown Center Business Improvement District is 'scouring the area's successful retail streets trying to recruit boutique owners who might want to open a second outlet in the downtown area'.

Five District-Wide Strategies to Help Small Business Owners Succeed

Helping your existing businesses succeed can be a challenging task. Small business owners are a notoriously challenging bunch. They went into business for themselves for a reason, right? They also don't want to be told how to run their businesses, least of all by someone without small business experience. If you have not built a trusting relationship with your business owners, don't start by telling them to improve their window display or change their store hours (as tempting as that might be!). That said, there are ways to help your existing businesses without seemingly lecturing them. There is a subtle difference between telling them what to do and sharing valueble information with them that can help with critical decision making. Here ar a few strategies for offering help in a way that is consistent with your role as a district manager....

1. Know where they can find free or low-bono technical assistance. Many cities have organizations that offer these services, either through a local university, the City or State. In Pittsburgh, the University of Pittsburgh's Institute for Entrepreneurial Excellence offers business owners access to expert consulting and mentorship. In New York City, the City's Business Solutions Centers in each of the five boroughs are a one-stop shop for small business services. If you don't know much about these resources, take the time to set up a meeting with the Director of these programs to introduce yourself and see how you make help your businesses make better use of their services. Once you realize what resources are out there, share this information when you visit your businesses, as well as in your newsletter and on your website.

2. Conduct market data - and then share it! Small businesses often go on gut when deciding business strategy. The next time you commission a market analysis to define your district strategy, be sure to share this valuable market data with your businesses. But don't turn it into a data dump. Take the time to interpret the data with them. Better yet, invite the firm that collected the market data to present this information. Sometimes information is better recieved when delivered by a percieved outside expert. In Pittsburgh, LISC MetroEdge provided a local Community Development Corporation with market data that indicated significant neighborhood change that was under most local business owners' radar. The organization took the time to communicate their findings with local businesses. Most significantly, they found that younger professionals were moving into the traditionally older Italian enclave. A local business owner who had been serving the older market, siezed upon this information and began growing offerings that were more reflective of a younger crowd, which meant changing her offerings to include more kitchen and houseware goods as well as cooking classes for the younger set.

3. Offer opportunities to network with other businesses. Host breakfasts and invite speakers to present on issues that businesses have told you they care about. Be sure to also leave ample time for networking over coffee. When booking speakers, take care to ensure that the topics they cover directly reflect concerns or issues that business owners have raised with you, otherwise, these busy entrepreneurs will be no-shows.

4. Engage an expert and offer direct technical assistance to your priority niche businesses. One BID director in an upstate community where I work took a very strategic approach to technical assistance. After commissioning a market study from my firm that recommended strategic positioning as a restauraunt district, the BID identified a local restaurant consultant to conduct audits of participating businesses. The audits included an in-depth analysis of the restaurants strengths and weaknesses, from front-of-the-house to back-of-the-house management issues. The consultants efforts were part of a comprehensive effort to help improve service and quality at existing restaurants in an effort to strengthen the restaurant niche overall.

5. When all else fails, know when to walk away. Sometimes, despite our best efforts, a business owner remains uninterested in our help. In these cases, you have to know when to walk away. Remember, your time, and the resources of your organization, are valuable. When this happens, demonstrate your value by helping other business owners. If your efforts are successful elsewhere, you may find a business owner who had previously rejected your help is increasingly willing to listen. Walking away, however, does not mean abandoning the relationship. But be sure to continue to visit the business owner - the chilly reception you initailly recieve may just need time to thaw.

An easy way to generate buzz and attract businesses to your district

One often overlooked business recruitment strategy is also one of the most rewarding - celebrating your retail recruitment success stories by announcing the opening of a new businesses with great fanfare. Issuing a press release, holding a ribbon cutting, inviting key local stakeholders, these are all part of the process of building buzz for your district, buzz that can ultimately raise your profile as a great destination for retail. It is also a fantastic form of marketing for your district. You never know who will read the local newspaper coverage - be it a potential business owner or a broker with just the right retailer for your district. The idea that an objective third party (i.e. the media) is touting the district is one of the best forms of free advertising you can ask for. So don't forget to celebrate the opening! And don't forget to take great pictures and post them on your website afterwards!

Here is a link to a press release announcing two recent business openings along F and 10th in DC's East End. The release was prepared and issued by the project's developers, but it's a good model for district managers as well.

Roundup: Ideas for Downtown Marketing

There is never a shortage of creative ideas for downtown marketing and events...

Franklin Tennessee's "Downtown Tour of the Arts" is a monthly "open house" where art lovers are invited to check out interesting art and enjoy a free glass of wine and modest appetizer. For more information on the program:
["Franklin offers first Friday art crawl", The Tennessean, 8/30/11]

"Wine Walk & Shop" along Miracle Mile in Miami
Select shops on Miracle Mile serve guests a variety of light summer wines and offer special pricing on merchandise.The first 100 guests to purchase tickets receive exclusive event gift bags and complimentary valet parking, sponsored by the BID. For more information on the program:
["Wine Walk & Shop on The Mile set for September", The Miami Herald, 8/31/11]

 Bergenfield, New Jersey's "Bergenfield Bucks" Program sponsored by the Bergenfield Special Improvement District (BSID) awards  “Bergenfield Bucks” Gift Certificates, good at participating businesses located in the district as a strategy to drive visitors to downtown. For more information on the program:
["SID says Big Bucks promotion went well", NorthJersey.com, 9/1/11]
["Bergenfield Bucks", gobergenfield.com, 7/11/09]

Do bikes and businesses go together? In L.A. they do!

A $72,000 investment by the L.A. County Public Healthy Department along three corridors is reaping rewards for local businesses, according to an article on Streetsblog Los Angelos, "Long Beach: Good for Bikes, Good for Business". In addition to the creation of bike infrastructure like bike lanes and bike parking, the Bike Friendly Business District (BFBD) program includes the following:

• a cargo bike shared by businesses in the District for deliveries and errands
• bicycle valets
• "Bike Saturday" events that include bike repair and maintenance workshops and where local businesses provide discounts to patrons

While bike shops and related businesses are benefitting, other businesses owners believe that the bike friendly atmosphere has "opened up a new market for all of us". The success of the program is leading organizers to consider expansion to other communities.

Online Videos for Mom-and-Pops Bring New Customers

Great idea! A promotional video paid for by a grant from the Downtown West Orange (NJ) Alliance is helping to attract new customers to the town's oldest and most storied mom-and-pop hardware store. For more details check out the article [West Orange's Oldest Retail Store Goes Digital, West Orange Patch] or watch the video here:

Designing Retail Space and Getting it Oh So Wrong

Can you imagine the following scenario?

An architect is working on a shopping center and is trying to design the ground floor retail space. There are a few challenges with the site, and the architect doesn’t have a ton of experience designing retail space. The developer says, “do whatever works.” The architect does his job and completes the design, which includes a set of steps to each retail space, a response to the sloping condition of the site.

Fast forward to building completion. A day care center provider is looking at the space, but how do parents get their strollers into or out of the building? A pharmacy looks at the space, but how do their senior citizens in need of prescriptions get up the steps? And did I mention that the small parking lot doesn’t provide direct visibility to the entrance – something the pharmacy requires to improve the sense of safety for female customers? A doctor’s office looks at the space, but what about his patients with disabilities? A Dunkin Donuts looks at the space. The voltage specifications are off, and anyway, the columns are in all the wrong places. A small format grocer looks at the space, but why isn’t there a dedicated loading zone, moreover, the ceiling heights are way too low to meet the grocer's needs.

No surprise, the space lies vacant for months and months. It's hard to believe that any shopping center developer would take such a cavalier attitude with their multi-million dollar investment.

Now let’s replace “shopping center” with “mixed-use affordable housing”, and we have a TRUE story inspired by a recent conversation I had with a successful architect who shared a story about a former client.

So why am I talking about affordable housing, isn't this the Commercial District Advisor? In many communities, mixed-use affordable housing projects are an extremely effective commercial revitalization strategy. Housing creates density and demand for products and services, which in turn creates opportunities for retailers. Housing can also stabilize a district and can serve as the catalyst for private investments. Yet as the example illustrates, there is a problem, and it’s a big one.

In New York City, a recent study by the Department of Housing and Preservation found that the vacancy rate in mixed-use projects was 27%. To see how astonishing this is, let’s put this number in context. In April, the Wall Street Journal wrote “Mall vacancies hit their highest level in at least 11 years. In the top 80 U.S. markets, the average vacancy rate was 9.1%, up from 8.7%.” [“Malls Facing Surging Vacancies", April 7, 2011] So, if the WSJ considers a “surging” vacancy rate to be 9.1%, a 27% vacancy rate is  CATASTROPHIC.

WHAT IS GOING ON HERE??
The problem is complex, and is not only related to poorly designed retail space (although that is a tremendous problem). In many cases, developers have limited familiarity with retail space and actually say “do whatever works” to their architects. They also use public funds in the form of tax credits for the residential portion of the building. With building budgets tight, the pressure is on to make the residential portion of the building as efficient as possible. This sometimes results in oddly placed columns that break up the ground floor space and make it less attractive to retailers. In some cases, it is market related. Developers are creating ground floor retail space because it is the popular policy approach, yet in some areas, the market may yet be too weak to support it.

A few years ago, I took a CDC to the International Council of Shopping Center’s annual conference in Las Vegas. The CDC has created marketing material, had site plans for a mixed-use affordable housing project, and was ready to pitch the ground floor retail space, located on a future transit line, to drugstores. The response was lukewarm. In part because of some of the problems raised above. The columns were in the wrong places, the dimensions did not meet their typical format, and most importantly for the retailer, the parking lot was not visible from the front entrance. The CDC went back to the drawing board and redesigned the building to incorporate the retailers suggestions. Their first design, which reflected a significant investment of time and resources, went down the drain.

So how do we ensure that affordable housing developers make better decisions for their retail space? Here are a few tips:

• Start early: During design, consider the ideal uses and retailers for the space, investigate their site selection requirements and share those with the architect.
• Know the market: Don’t assume “if you build it, they will come”. Know your market. Are small spaces in the neighborhood being snatched up? Or is there pent up demand for larger retail spaces? This will inform how you market and divide the space.
• Talk to commercial brokers: Brokers will have insight into which spaces are moving and which aren’t. They may be able to pinpoint the retail categories that need space, informing your final design. For instance, if there is a need for restaurants, you may want to incorporate venting into the design. Doing it after the fact is often cost-prohibitive.
• Take care with architect selection: Select an architect with a track record of designing commercial spaces that have been successfully leased. They will know how to address things like ceiling heights, loading/unloading zones, signage, and the need for storage and office space, etc.
• If the market can’t support retail, don’t force it: Consider other uses for the space, including services like medical offices, day care, etc.
• Consider pre-leasing: Talk to retailers during the design process, and allow them to help customize the space for their needs if they sign a pre-lease. And better yet, a pre-leased space, or at the very least, strong stated interest from a potential tenant can making financing easier to obtain.

A little advance planning can reap significant rewards. A space that is leased quickly provides cash flow, enhances real estate value, and helps invigorate a street – a win-win for everyone!

News Roundup: August 3, 2011

"SD Council OKs revised payment plan for business districts" [La Jolla Light, 8/1]
The [San Diego] City Council voted to change the way money is distributed to Business Improvement Districts. The city had previosly collected assessments directly, but now the assessments will go straight to each BID, which will have to file reports to the city on their expenditures.

"Mobile market brings fresh produce to to ‘food deserts’" [Kansas City Star, 8/2]
The absence of a grocery store (the nearest is almost 2 miles away) and the lack of public transportation have left seniors in the Argentine neighborhood without easy access to fresh food. The Beans & Greens Mobile Market is filling the gap.

"Project to make area around Performing Arts Center stroll-worthy" [Kansas City Star, 8/1]
A new performing arts center in downtown is the catalyst for a set of downtown improvements aimed at encouraing a pedestrian-friendly atmosphere.

"Riders Will Race for Cash at First Birmingham Bike Festival " [Birmingham Patch, 7/26]
The first such event organized by the Principal Downtown Shopping District will award cash prizes to cyclists and downtown. 

A Storefront Signage Program that Works

A recent trip with the Coro Neighborhood Leadership participants (a leadership training program for commercial district management professionals) to Atlantic Avenue in downtown Brooklyn was a wonderful demonstration of what small investments can do. The Atlantic Avenue Betterment Association, a non-profit organization comprised of local merchants, residents and property owners, has been quietly working to improve a busy stretch of Atlantic Avenue, a four-lane thoroughfare, and turn it into a more inviting, pedestrian friendly place. With limited resources (they are forming a Business Improvement District to ensure sustainability of their efforts), and the support of local stakeholders, they have made tremendous inroads. One program is the storefront signage program. Small grants of about $2,500 are given to new businesses who put up vertical blade signs. The new shop signs were made possible by a grant from their local State Senator Velmanette Montgomery. As you can see, this well designed signage is intended for pedestrians. As you walk down the street, the signage helps project the store's brand and functions like a magnet, attracting pedestrians further down the street with promises of more stores and window shopping.

Seven Ways Anchor Institutions Can Support Commercial Revitalization, Courtesy of ICIC

Wesleyan University was a major investor at the Inn at Middletown,
which involved the rehab of an old armory building right on Main St.

Local communities often struggle to find resources to advance their commercial revitalization efforts. Engaging property and business owners is obviously a first step, but it can sometimes be easy to overlook other stakeholders in a community. Universities are often seen as partners in this effort, as we have written about on this blog a number of times before [click here for previous posts], but increasingly, health care and cultural institutions are also playing a role in community building. Yet by and large they remain an untapped resource for revitalization.

Anchors are a good example of “sticky capital”, their looming physical presence and investment in built facilities means they are literally anchored in the community. They may be so focused on their primary mission, that they may not even realize the benefits that accrue to them from improvements to the surrounding neighborhood. In some communities, rather than engage in community efforts, they have done just the opposite. They have instead built fences around their properties, concentrated retail and services on-site, effectively isolating themselves. In communities with high crime rates and public safety challenges, this can be seen as the easy way out. I recall a tour of the Ivy City neighborhood in northeast D.C when I worked for LISC. Ivy City is a community with its fair share of public safety challenges. Looming large over the neighborhood was Galludet Univesity, with its tall fences and closed campus. The distinct 'them vs. us' attitude was mentioned again and again by community residents who were frustrated by the lack of meaningful engagement from the university.

Last week, I had the opportunity to hear Mary Leonard, President and CEO of the Initiative for a Competitive Inner City, speak at the City of New York’s Annual Business Improvement District (BID) Conference. ICIC, founded in 1994 by Harvard Business School Professor Michael Porter, has been analyzing the impact of anchor institutions on urban economic development. They have come up with a framework for the role of anchors in community revitalization. While the most obvious contribution that an anchor can make is money, Mary Kay laid out a framework for the role of anchors that goes much further and suggests seven ways in which anchors can participate in community building. With full credit to ICIC, and peppered with my own examples culled from my own experience, I offer this framework to readers interested in a comprehensive set of options for the ways in which local anchor institutions can have a more significant impact on their commercial revitalization efforts. [For a more detailed look at the ICIC framework click here]

1. Core Products or Services – This refers to the contribution that an anchor makes based on their area of expertise. If the anchor is a university, students might be tapped to do research or service. If the anchor is a health organization, they might provide free health screening to area residents. If the anchor is a cultural institution, they can contribute enhanced programming that draws visitors to the district. Vassar College, for instance, runs a field work program that provides students with academic credit and a stipend to intern with local community organizations and government agencies. 
2. Real Estate Developer – Anchor institutions can use their real estate investments to either turn their back on the local community or to build linkages to the district. Pratt University, in Brooklyn, NY recently unveiled a 120,000-square-foot, $54 million six-story building that houses administrative offices, galleries and classrooms right on Myrtle Avenue – a district that has benefitted significantly from Pratt’s active engagement. [For more on the Myrtle Avenue story, click here]. Another good example is Wesleyan University in Middletown, CT. Wesleyan was a lead participant and investor in the building of the Inn at Middletown. The hotel, located in a restored armory on Main Street, was once a blight on the district. Today the building and its guests are a stabilizing force that helps drive retail sales in the district.
3. Purchaser – The purchasing power of anchors can be directed to local businesses and suppliers. Communities can work closely with the anchor to identify local businesses, set up local purchasing goals, and offer incentives to help them to meet these goals.
4. Employer – I was shocked when Mary Kay mentioned that 2/3 of hospital and 1/3 of university employees only need associate degrees. There are clearly untapped opportunities, particular in lower income communities, to establish connections to residents through screening, training and referral. These jobs help stabilize a neighborhood by building wealth among local residents, building buying power for local businesses in the process.
5. Workforce Developer – Anchors can work closely with other community stakeholders, particularly universities, in identifying gaps and training local residents for jobs in the future.
6. Cluster Anchor – Anchors can collaborate with other organizations to incubate new businesses that simultaneously provide needed services and also fill local retail space. Hospitals are an excellent example of this trend. You often see complimentary retail and services in the vicinity of a hospital – and a hospital can help build demand for these services by encouraging patients and staff to patronize these local businesses.
7. Community Infrastructure Builder – There are many ways in which an anchor can help build local infrastructure. For example, ICIC notes that Yale University provides a subsidy for faculty and staff to buy homes in New Haven. While a student at Wesleyan University, In Middletown, Connecticut, I worked closely with the City planning office to apply for a competitive Connecticut Main Street program grant for technical assistance from the National Main Street Center. Our successful application counted on the support of seven organizations that contributed $10,000/year for three years to fund a Main Street program, one of which was the University. This effort eventually led to the formation of a Business Improvement District.

I could hang dozens of wonderful examples onto this framework, and I'm sure our readers could too. It is an excellent starting point that pushes us to think more creatively about how to engage anchor institutions beyond asking for a blank check. These options inevitably result in deeper, more lasting relationships that simultaneously benefit the district and the anchor over time.