Monday, June 27, 2011

When Good (Food) Events Go Bad

Having spent a few years planning and executing a local 'taste of' event  in my own neighborhood, I know how challenging these things are to get right. Small restaurants often don't have the capacity to staff the event and keep their doors open at the same time. Successful restaurants don't need you - and can quick to show you the door if you haven't developed long-standing relationships over time. Add to that the challenges of keeping volunteers from burning out over time (that one I know from personal experience!), and you can easily see why these events start with a bang, but can fizzle quickly.

In New York, we have the 'Vendy Awards', a non-profit event that aims to recognize New York's best street vendors. As Amy Kantrowitz, two-time managing director of the Vendy's notes in an interview on American Express' Open Forum, three things can go wrong: failing to deliver on your promise; making people wait on long lines; and not having enough food. This article talks about the basics of getting a food event right, starting with setting expectations and setting prices that reflect those expectations. She also talks about the details of event planning and volunteer recruitment. Given the fact that restaurants often form a vital niche for so many urban commercial districts, getting a food event right is even more critical!

How will the "Mature Market" Affect Downtown?

As baby boomers mature, retailers are getting smart to their changing needs. [Read Derek Dunam's post: On The Retail Level: For The Aging Boomer, Smaller Can Sometimes Be Better]. What this means is that all the hype around small format stores isn't just good news for city folks, it is also good news for seniors. Simply put, smaller stores mean less need for walking - something that maturing market will increasingly come to appreciate. In fact, one German retailer has gone so far as to add "non-slip floors, extra-wide aisles and checkouts, bright overhead lighting, shelves fitted with steps and magnifying glasses, talking produce scales, and light, easy-to-maneuver carts fitted with adult-size seats."

So, will urban commercial districts also benefit from the growing mature market? Will the compact nature of these districts, including smaller store size and walkability help build stronger markets for traditional downtowns?

How important is pedestrian traffic to a business?

Southhampton, NY

A recent New York Times article [Hamptons Hope for an End to the Seasonal Store] speaks to the challenges facing businesses in the wealthy communities known as 'The Hamptons' on Long Island - a place overrun in the summers with wealthy visitors renting or visiting their vacation homes. While not every community compares to the Hamptons, the article discusses the factors that affect where people walk and how late they stroll, and ultimately underscores the importance of foot traffic in meeting sales figures and setting leasehold rates. Any reader familiar with urban planning theory will also note that none of this is new, just new examples that are playing themselves out in real time.
  • District's benefit from an entertainment anchor that drives retail traffic: In East Hampton, "stores benefit from having a movie theatre in the center of Main Street's business district". On the other hand, in Southhampton, "the movie theater is on the edge of town". The difference in what landlords can charge in rent is ultimately based on what retailers can expect to sell, and higher foot traffic means higher sales. So in East Hampton, rents range from $110 - 140 per square foot, but in South Hampton, they are closer to $70-75 per square foot. A significant difference for any retailer, but of course the assumption is that more foot traffic brings higher sales - so the business can support a higher rental rate. 
  • Sidewalk dining activates the street and attracts more people. Another point made was the fact that Southhampton rejuvenated "its commercial strip by allowing restaurant owners to put tables on the sidewalks, keeping the town lively even after sunset." Activity breeds activity, and the act of enlivening the sidewalk draws even more foot traffic. A colleague of mine runs a small Business Improvement District in one of New York's highest density tourist districts - but he has found that visitors do not often walk through his district, despite the fact that they walk past it. Why aren't they turning the corner to walk down his street? Part of the problem is that when they look down the street, they don't get a sense that it is worth their while. They can't see signs for many of the businesses - the signs lay flat against the building rather than protruding out (these vertical signs are known as "blade signs"). He is also working with City Planning to allow for sidewalk cafes that will activate the street, much as Southhampton has done successfully.
  • Is 100 yards is too far to walk? One business owner in the article mentions that they moved their store location 100 yards, and noticed a considerable drop in foot traffic. He says "it's only 100 yards, but it's literately night and day for us." Take a micro-look at your district. Does your retail change from block to block? Is there a significant drop in pedestrian traffic from one street to the next? As you think through your retail environment, keep in mind that the micro-dynamics of your district will play a major role in the success or failure of your neighborhood businesses.
  • Helping businesses buy their properties helps buffer smaller businesses from rent increases, particularly in 'hot' neighborhoods. As an owner in Bridgehampton notes, he would have been unable to afford the rents if he had not bought his building when he opened the business in 1982. Helping businesses buy their properties is an excellent way to ensure they are able to withstand the real estate pressures associates with neighborhood improvement. An in the event that they choose to close their stores, they have built equity overtime - a win-win for all.

Wednesday, June 15, 2011

Do you know your 'district orientation'? If not, here's why it matters...

I am often called upon to help communities develop revitalization strategies for their downtowns - and the most common question I get asked is "how do we know what to do first?" What may have been the right set of first steps for one community, may not work in another, so it's sometimes hard to figure out how to prioritize your efforts and resources.

A professor from my days at MIT, Karl Seidman, is an author of a number of publications on urban commercial district revitalization strategies that offers a framework I find useful in my work. Karl starts by helping to unpack the question of “what kinds of intervention makes sense and when?” His field research on seven “urban” Main Street programs in three cities (Revitalizing Commerce for America's Cities) found that districts often fall into four ‘orientations’ depending on where each district is in its implementation efforts. If you can figure out your district orientation, you have a better chance of figuring out what kinds of activities you should take on first, second and third.

These orientations are useful because they help us avoid a far too common mistake made by practitioners: the tendency to apply known, familiar solutions to new challenges that require adaptive solutions. (For district managers in the Coro Neighborhood Leadership Program, this will sound very familiar!). What I mean is this - what typically happens is that a BID hires someone with a background in say, marketing, and all of a sudden all of the BID's activities are oriented towards marketing, whether or not these are right solutions to the problems at hand. Or the BID hires someone who really know real estate development, and lo and behold, all of the 'right' solutions for the district become about real estate. It is important to first take a step back and figure out what kind of district you are so that you can apply the right set of solutions to the challenges you face, rather than simply apply the only set of solutions you may be familiar with.

So with that, I offer Siedman’s framework below, with one exception - the addition of a ‘clean-and-safe-oriented district’. This additional category recognizes the critical contribution that neighborhood safety plays in neighborhood commercial district stabilization.

  • Development-oriented districts are areas in need of significant investment in physical improvements. There are often numerous vacant buildings and sites in need of development. Buildings and infrastructure have deteriorated overtime, and private investment is unlikely because few see opportunity for return without some form of public subsidy. Marketing and promotion cannot occur until the market is more stable and there is something of substance to market and promote.
  • Organization-oriented districts need help getting started. There is limited administrative capacity to take on any initiatives – and no established consensus around where to start or who will lead the initiative. These areas may have cultural or language barriers that make achieving consensus a challenge or they may suffer from ‘planning malaise’ or lack of leadership.
  • Promotion-oriented districts start from a position of relative strength. They may have clusters of strong existing businesses that are struggling to remain relevant in the face of neighborhood change. These districts need help growing the customer base, which may have changed or diminished over time. Retention-oriented districts often share many of the same attributes.
  • Retention-oriented districts typically have occupied buildings and few vacant sites. In these districts, the challenge is ensuring that the existing businesses benefit from development and escalating rents that often mark neighborhood change. These districts focus on providing resources and services to existing businesses. Promotion-oriented districts often share many of the same attributes.
  • Clean-and-safe-oriented districts struggle to manage the perception and/or reality of crime, which hurts local businesses in their efforts to attract customers. This challenge undermines nearly every effort to improve the district. Reducing crime and improving perceived safety is critical to neighborhood can often serves as the primary catalyst for change and engagement from residents and businesses alike.
So which district orientation are you??

Five Reasons Why Business Improvement Districts are Good Public Policy

These days, it seems that Business Improvement Districts (BIDs) are increasingly under attack. While I can only speak anecdotally, I continue to come across communities facing challenges to BID formation, challenges that would have seemed unlikely just a few years ago.

It stands to reason that in the current economic climate, BID formation inevitably slows down as property and business owners express justifiable concern about their bottom line. Yet a wholesale rejection of BIDs is a short-sighted effort to staunch losses that only results in a deeper hole by reducing the resources available to stabilize and enhance downtown communities. Like any asset, downtown requires on-going improvements and investments to compete against newer, shinier shopping environments. Moreover, consumers continue to keep close track of discretionary spending, which means more competition for fewer dollars. It is precisely this cut-throat competitive environment that makes BIDs an extremely valuable tool for downtown in their efforts to attract shoppers.

Here are five reasons why BIDs remain a good option for downtown revitalization.

1. BIDs leverage additional monies for commercial district revitalization. BID staff become advocates for their districts, able to make compelling arguments on behalf of business and property owners for additional investment. They often set the stage for investment by doing the planning and consensus building often needed to attract public funding. 'Shovel-ready' projects that have public support are in the best position to attract limited public dollars. BIDs can also submit grant proposals, and the BID structure allows for the receipt and distribution of grant dollars that otherwise might go to other communities.

2. BIDs provide a mechanism for collaboration by local merchants. BIDs provide a valuable forum for merchants and property owners to discuss ways to work together more closely for their mutual benefit. Collaborative marketing and district-wide events are mainstays of many  BID programs - and good marketing can only happen with the input of local business owners.

3. BIDs help stabilize and can help increase property values. And don't just take my word for it. In 2006, Philadelphia LISC and the William Penn foundation funded an econometric study of 265 commercial corridors in Philadelphia. The goal was to provide a quantifiable measure of the impact of various activities on the commercial district environment. The findings provide hard data to support the conclusion that BIDs are good for property values. What they found was that there was a consistent and strong relationship between real estate values and the formation of BIDs. In fact, a well managed corridor is a positive amenity, resulting in up to a 30% price premium for properties located within the district.

4. BIDs help drive overall retail sales for the district and retail sales growth for individual businesses. Another finding from the 2006 LISC/Penn study was the "strong relationship" between BIDs and retail sales for both the district and individual businesses as compared to districts without BIDs.

5. BIDs prevent the the free-rider syndrome. Downtowns are unlike single-owner shopping centers. In shopping centers, businesses pay Common Area Maintenance (CAM) charges for things like security, maintenance and upgrades overtime. This mandatory charge ensures that every beneficiary contributes contributes. As we know, many property owners, acting independently and in their own self-interest, often choose to forgo common contributions anticipating that their neighborhoods will pick up their slack - this is the quintessential 'free-rider' problem which can be avoided under the BID structure.

While BIDs are certainly not the panacea for all downtown ills, they provide a structure that is critical to both on-going management and accountability from all sectors. Even when times are bad - and perhaps particularly when times are bad - we cannot ignore the need for management and investment in our downtowns.