Wednesday, March 30, 2011

News and Issues Roundup

Greater Greater Washington explores the pro's and con's of diagonal parking in Washington D.C. ["Diagonal parking: Does this quick fix get us what we want?", Greater Greater Washington, 3/28]

What happens to a commercial district after an earthquake and tsunami? Retailers in the Ginza shopping district in Japan find out. ["Less Appetite for Luxury", NY Times, 3/25]

What does it take to survive in downtown St. Louis? Downtown retailers struggling with storefront sales seem to find opportunity by selling on-line. ["Tough 2 or 3 years for downtown retail", St. Louis Dispatch, 3/13]

How many downtown residents does it take to start attracting retail? Harrisonburg, VA is finding out the hard way... ["What's the Downtown Retail 'Tipping Point?"', Harrisonburg News, 2/1]

Who is on "City" Target's radar for a smaller box store? One community explores what it takes to make Target's short list for it's urban format stores. ["Retail envy: Louisville needs downtown retail, but does Target need a new urban market?", Insider Louisville, 2/1]

Monday, March 28, 2011

Census Challenges Begin.

As I predicted here a few months ago [The Census is Here! Is it Too Early to Worry about an Undercount? ], we would begin seeing challenges to the 2010 U.S. Census count sooner rather than later. Right on cue, Mayor Bloomberg announced the City of New York's intention to file a formal challenge right here in my own backyard of Jackson Heights, Queens. Serendipity? For sure.

According to the Mayor, “Jackson Heights is a good example of the problems we’ve discovered. According to the Census Bureau, the population of Jackson Heights decreased – that’s right, I said decreased – by nearly 5,200 people, or by about five percent, between the years 2000 and 2010." He goes on to note,“Everything we know about these neighborhoods tells a very different story. These are vibrant, vital communities. People who have tried to find apartments in these neighborhoods can confirm that there just isn’t an abundance of vacancies."

The Mayor focused on the fact that an undercount results in fewer federal dollars for the City. While important, that is only part of the reason why an undercount is a problem. For commercial district managers, a census undercount, or findings that suggests a population decrease, means more hours logged overcoming the misconception that there is decreased discretionary demand in your neighborhood. It means more time spend finding other, more credible, sources that tell the true story, that your neighborhood is  teeming with people who have money to spend, but few places to spend it. A Census undercount means that retailers are more likely to forego urban opportunities, because when they pull market data, they may not like what they see at first glance.

We already know that getting retailers to urban areas is a challenge, which is why Census accuracy is so critical. In 2004, the International Council of Shopping Centers (ICSC) completed a survey of retailers in partnership with Business for Social Responsibility. When asked why they didn't invest in urban areas, the second most cited obstacle to investment was an "insufficient concentration of the retailer’s target customer". Too bad a Census undercount only serves to reaffirm these misconceptions.

Wednesday, March 23, 2011

Retail Insights: Spring 2011

This quarter, Retail Insights looks at two interesting trends that seem to be converging. The first is an increase in small business lending, with a focus on how lenders are rethinking their lending criteria. In the long run, this will make it easier for many small businesses to secure loans to relocate and expand within our districts. The other is a growing interest from big box retailers looking to test 'small boxes' as a way to make a dent in urban markets. Both spell opportunity for commercial district managers seeking to attract and expand businesses within their districts.

Small Business Lenders Revisit Character
One of the things that prevented small business expansio
n over the past few years has been the inability to finance growth during the recession. This is because fe

wer banks were making loans as underwriting criteria got much more stringent. As a result, small business often suffered the most - their loans are notoriously among the most difficult to make and underwrite.

In the past, local banks had personal relationships with businesses owners and made lending decisions based on a number of factors – but most important was often the customer relationship. As the banking industry grew and those relationships eroded, small business loans were more frequently made based on the business owner’s personal credit score, with real estate used as collateral for the loan. In the past few years, real estate values have collapsed, which meant that so too did a small business owner’s ability to borrow against their asset. The good news is that there are some indications that banks are beginning to open their purses a bit and loan to small businesses. The Wall Street Journal recently covered the issue [“Banks Get Back to the People Business”, WSJ, 3/7/11] and found that more and more banks are looking beyond a small business owner’s personal credit score during the underwriting process. The American Bankers Association has begun creating educational programs for bankers on how to analyze a borrower’s character and use that analysis in their loan applications. For example, banks have begun to look at how businesses have survived the recession as an indicator of credit worthiness. This is great news because as businesses look to relocate, grow, or expand within your districts, they will have more access to the capital necessary to do so. Another implication of this trend is that district managers can begin thinking about how to helping establish and deepen relationships between local banks and local businesses through networking events and partnerships.

On-Line Spending: Opportunity for Business Districts?
We tend to think of on-line shopping as a threat to most retailers, both big and small. But if we view this challenge through another lens, there are clearly potential opportunities for commercial districts in this trend as well. As more and more customers get comfortable shopping on-line, retailers, in particularly big box retailers, are finding that they have much more real estate than they need. In some cases, they are seeking spaces that are more in-line with the real estate offerings along traditional
 commercial districts (see big box to small box below). But perhaps more significant is the fact that shoppers will begin seeking more from their shopping experience than simply the desire to purchase. Going 'out' shopping is becoming more about the service and the experience - it is both an event and a leisure activity. Successful shopping districts are able to capitalize on this trend by creating an attractive ambience, what we sometimes call the 'third place', those informal gathering spaces that meets our very human desire to socialize and interact with our fellow human beings. Whether that third place is a public gathering space, or the local coffee shop, good district managers can sieze the opportunity to create an attractive alternative to the purely functional shopping experience offered by big box stores and strip shopping centers.

Big Box to Small Box
Increased on-line spending also means that big box retailers are looking at scale down to smaller format stores. Big box retailers are going on diets and shedding square footage they no longer need. As they explore smaller format stores, they are also realizing that these smaller stores allow them to more effectively penetrate urban markets. Traditional big box retailers like Staples and Best Buy, for example, now have store designs that range in size from 1,500 – 4,000 sf, sizes that are much more compatible with traditional business districts. And how could we forget the mother of all big box retailers, Walmart, who is rolling out a 15,000 sf small format store. Walmart executives admit that they have been losing market share to dollar store chains and a maller format store allows them access to markets that were off limits before.

Related Blog Posts:
[Big Box Retailers Test Small Spaces]
[Walmart Seeks Aggressive growth of smaller stores in urban markets]

Growing Resistance to BID Formation?
Business Improvement Districts (BIDs) are the holy grail of the commercial district management profession because they ensure a regular and sustainable source of funding for district services and improvements. When every property owner and/or merchant within a BID district contributes, the costs and benefits are equally shared among all beneficiaries. However, starting a new BID during difficult economic times is not always easy. Community resistance often forms when the BID assessment is perceived as a tax, rather than a fee for much needed services to maintain an area’s overall competitiveness as a shopping destination. While I’m not quite sure if this resistance has risen to the level of a trend, I have noticed more and more articles about BID opposition popping up in the news. What is ironic is that marketing and district improvements are needed now more than ever. As government services are reduced, business districts will have to meet the challenges of sanitation, graffiti removal, and security with fewer public resources.  Keeping a district competitive under these challenging financial circumstances will become increasingly challenging if BID’s are not part of the solution.

Monday, March 21, 2011

Take the CDA 2010 Professional Development Survey!

As a profession, the field of commercial district management is growing very quickly. Every month there are more Business Improvement District's created to add to the estimated 1,500+ that already exist. This doesn't even count the approximately 2,000 Main Street programs and hundreds of community development organizations that manage commercial revitalization activities. Between the staff, board members and volunteers at these organizations, there are thousands of individuals who require basic knowledge about commercial revitalization, yet often arrive at their first job without practical skills in the field.

Unfortunately, there are pitifully few places where folks can get practical training, and even less national consensus around what kind of skills are critical to success in the field. With untold billions of dollars being dedicated to improving downtown and neighborhood commercial districts throughout the country, ensuring that the professionals who are making strategic decisions about commercial revitalization are property trained is critical to ensuring that these funds are well spent.

In order to meet this growing need for professional development training, we have got to better understand the need. That starts with you. If you are a practitioner, volunteer or board member of an organization involved in commercial revitalization efforts in a downtown or neighborhood, please take this survey and help us understand what the training needs are.

Help us turn downtown and neighborhood revitalization into a discipline! CLICK HERE to take the survey now!

Wednesday, March 16, 2011

News Roundup: March 16, 2011

"Retail vacancy rate stable, and that's a good sign, survey says." (3/14)
The retail vacancy rate for northern and central New Jersey's prime shopping highways remains stuck at recession levels, although recent leasing activity indicates better numbers are ahead.
Could better numbers be ahead for other commercial areas?

"Pop-up retail gains favor in D.C. with Garment District, Mount Pleasant Temporium", The Washington Post (3/6)
Temporary 'retail boutiques' are an outgrowth of the D.C. Office of Planning's Temporary Urbanism initiative to transform vacant commercial space into lively destinations that highlight the retail potential in emerging neighborhoods.
Retail pop-up fills vacancies, creates buzz and gives local entrepreneurs a place to test their retail concepts.

"Dollar stores offer bigger bang for buck", San Diego Union-Tribune, (3/14)
John Sanchez had never stepped foot inside a dollar store until last April. That’s when he was laid off from his job and was forced to make some drastic budget cuts, including getting back to basics for a buck. Now, even though he’s returned to work, it’s hard to get him to shop anywhere else.
Dollar stores are frequently the scourge of neighborhood commercial district revitalization professionals. Are we overreacting?

"City’s Bicycle-Friendly Momentum On Path To Success", Long Beach Gazette, (3/14)
In its quest to achieve the coveted designation of “Most Bicycle-Friendly City in America,” Long Beach has kept the forward momentum of improvement and innovation cruising into 2011 — but not without a derailleur or two getting caught in the spokes along the path.
From East to West Coast, bike paths are increasingly controversial. Do they help or hurt neighborhoods and local businesses?

AOL's new site, Patch, covering topics of interest to commercial district managers

I have begun to notice a trend. As I search for news for this blog, I have noticed that Patch, a 'community-specific news and information platform' has been the source of more and more articles related to commercial districts. AOL sponsors Patch, and has invested heavily in content by hiring 800 local writers and thousands more freelancers to cover hyper-local news stories. Each Patch site, there are 100+ so far, is branded by the community it serves, and allows locals to keep up with local news, local business listings, and community events via a populated calender. Patch is yet another resource for promoting your businesses and your district. It can be used to find volunteers as well. Each site is run by professional editors and writers who live in or near the communities covered. Local businesses can request to be listed as well. You can also sign up for a newsletter that sends news, events, and business promotions directly to your email in-box. As the site grows, it will be an increasingly powerful platform for commercial district managers to get the word out about promotions and events.

The verdict is still out about Patch, but it is an intriguing effort that seems to be getting some traction, particularly given all the coverage I have seen on smaller community revitalization efforts - efforts that don't often get media coverage.

Monday, March 7, 2011

The marketing playbook as practiced by shopping center managers

I've always argued that commercial district managers should consider their jobs similar in scope and outcome to shopping center managers. Business Improvement Districts in particular share similar objectives, including the goal of driving retail sales for existing businesses and helping to maintain and enhance property values within the BID boundaries.

During the economic downturn, our jobs as district managers were more vital than ever. Promotion and marketing are critical to attracting the shrinking number of household discretionary dollars out there. A recent piece in the Denver Post [Retail center "mechanics" do whatever it takes to maintain tenants, 3/1/2011] follows Allen Ginsborg, a principal at NewMark Merrill Cos, a California-based commercial real-estate firm, in his sometimes zany efforts to do whatever it takes to drive pedestrian traffic to the shopping centers that he managers. Some of those efforts include:
  • Dressing up a man in a Santa suit and dropping him from a plane
  • Putting on shows (dog shows, car shows, etc)
  • Setting up seasonal events (i.e. Haunted House for Halloween)
  • Sending out coupon mailers
  • Using social networking sites 
His efforts don't stop at marketing and promotion - he also looks at ways to address vacancies (Bingo hall anyone?) and take on much needed physical improvements aimed at making the shopping center more convenenient and visible to passers-by. Whether that includes new highway entrances, additional signage or taking down trees that are obstructing storefronts. These are kinds of efforts that can really have made a difference to your businesses bottom line. In the case of Ginsborg, his efforts seems to be paying off - 36% revenue growth and a 95% occupancy rate.

These efforts should sound extremelly familiar to most business improvement district managers. Helping your businesses find ways to collaboratively market their goods and services to residents, employees and visitors;  managing seasonal promotional events; utilizing social networking sites to share happenings in your district; these are all activities that should be part of any district managers everyday playbook.

Temporary stores fill vacancies and serve as an incubator for local entreprenuers

After: A home for budding entreprenuers and an
exciting new addition to to the district
It seems pop-up stores continue to gain momentum in neighborhood districts. Between a recent uptick in consumer spending and rumors of a potential loosing of the credit market [see today's WSJ, "Banks Get Back to People in Business"] , these might be the beginning of better times for neighborhood business districts. I recently stumbled across a program offered by the D.C. Office of Planning called the Temporary Urbanism Initiative that is taking advantage of these trends by aggregating multiple local retailers into temporary pop-up spaces. The City has awarded small grants to local commercial district management entities to fund these spaces. On H Street, the 'Temporium' as they call them, houses 17 local designers. In the Shaw district, the pop-up houses 40 designers and artists in a formerly vacant 10,000 sf space. Finding vendors can be a challenge, which is why partnering with local community and artist groups is critical to ensuring a good tenant mix. At the Mount Pleasant Temporium, they have even added events to help draw retail traffic into the 900 sf space that houses 34 vendors. This is a wonderful way for a local commercial district management entity to accomplish multiple goals: fill a vacancy, support local entreprenuerial efforts, and drive retail traffic to their district.

Before: a vacancy in search of a tenant

For more informaiton, The Washington Post recently cited this initiative in an article: "Pop-up gains favor in D.C. with Garment District, Mount Pleasant Temporium", Washington Post, March 6, 2011

Big Box Retailers Test Small Spaces

A 4,000 sf Staples store in Watertown, MA
located right in heart of the traditional business district.
The buzz towards 'small boxes' continues! A recent Wall Street Journal article ["As Big Boxes Shrink, They Also Rethink", Wall Street Journal] covers the trend among big-box retailers who are shifting to smaller stores, including Best Buy, Staples, and Office Depot, among others. For Commercial District Managers, the implications of this trend are significant. First, the trend towards smaller stores suggests that retailers will be looking for spaces that are more compatible with the kinds of spaces available within traditional commercial districts. For example, Staples is testing a 4,000 sf store in downtown Watertown, MA that carries 1,200 of the typical 8,000 items carried in a larger Staples. For smaller downtown districts with a decent office worker population, this model would be a great fit, allowing businesses and office workers the ability to make convenience purchases for the office. As one reviewer of the Watertown store mentions "I needed an ink cartridge and some paper - and I needed them QUICK" and the Staples store fully met her expectations. A small office supply store is the kind of addition to downtown the tenant mix that make traditional business districts more compelling. The article also mentions that Office Depot is testing a 5,000 sf concept. And the "Best Buy Mobile" concept is even smaller, at 1,420 sf (the average Best Buy is almost 40,000 sf).

There is another long-term trend to take note of here. As we all know, shoppers are choosing to spend more and more of there discretionary income on-line. As a new parent with severe limits on my time, I have to admit I am one of those people. And as I become more comfortable shopping on-line, the more I tend to shop on-line. It's a vicious cycle. As more and more shoppers like myself become comfortable purchasing on-line, it will take alot more to get them to visit a shopping district than it did before. Increasingly, the onus is on us to improve the overall shopping experience. That means ensuring that the district is at the very least clean, safe and attractive and that there are reasons to go to the district besides shopping, including interesting events and activities. These are all things that cannot be easily replicated by an on-line shopping experience - and where traditional business districts will always have an advantage.