Commercial District News - 1/31/12

Old Downtown Pontiac, MI Sears To Become Lofts, Shopping [CBS News, 1/29]
Developers in Pontiac, MI develop a mixed-use proposal for an old Sears. The $19.8 million project is funded by a variety of public and private sector funding sources, including the State of Michigan Neighborhood Stabilization Program 2, federal New Markets and Historic Tax Credits, state historic tax credits, and brownfield tax credits.

Is high turnover for downtown Ann Arbor restaurants concerning? [AnnArbor.com, 1/29]
Is a high churn rate among restaurants in downtown Ann Arbor, MI due to current economic conditions or a long term trend by consumers away from downtown? In this article, one restauranteur attributes "the decline in traffic downtown and the struggling business at his restaurant to several things: parking rate increases, competition in the restaurant business, the delivery business, economic factors, construction projects and Borders’ closing."

From serious to silly, Corona del Mar Business Improvement District discussed at meeting [Corona del Mar Today, 1/27]
At a recent downtown event, the Improvement District solicited feedback from visitors on ideas for downtown improvements by placing a giant map with red Sharpies out for comments. Ideas included reccomendations to turn some streets one-way, landscaping in medians, bike lanes and more...

Jack Gosnell: The Urgency for Urban Retail [D Magazine, 1/30]
A commercial broker reflects on the urgency of attracting young future urban dwellers to downtowns after hearing a talk by Carol Coletta president and CEO of CEOs for Cities.

Traditional Downtown Anchors Die - What Will ReplaceThem?




Original Downtown Sears

 The verdict is in. Sears plans to close 100 to 120 of its Sears and Kmart stores, 81 of which are in small towns. [As Sears Plans Closings, Cities Fight to Keep Stores, Huffington Post]. The traditional downtown anchor is going the way of the dinosaur. So what will take its place?

What we do know is this. Sears is going to force some serious introspection on the part of downtown advocates. This is creative destruction in action. For those unwilling to think outside the box, we will see knee jerk reactions as communities jump into action quickly, expending scarce resources trying to attract similar downtown retail anchors. My prediction is that most of these efforts will end in failure. The communities that succeed will be those that think outside of the box. Downtown anchors are changing rapidly. And we need to recognize that the "new" downtown anchors are the cultural facilities, restaurants, theatres, hospitals, libraries, universities and educational institutions that draw visitors for more than just shopping... 

Reference: Here is another piece I wrote on this..."Redefining the Downtown Anchor": http://tinyurl.com/dwntownanchor

Small Business Series, Part 3: Bar Marco is Open For Business!

After all the trials and tribulations…Bar Marco is finally open for businesses!This week I caught up again with Bobby for an update on how things are going now that Bar Marco has started serving guests. We focused our discussion on marketing – and what he is doing to get customers in the door. He also offers some good advice for District Managers on how they can support start-up businesses like his. In the case of Bar Marco, Neighbors in the Strip, the local non-profit whose mission is to promote and improve the Strip District, has been a great resource and advocate for the business.

The strategy for Bar Marco right now is to build a loyal following in an organic fashion. “We are in it for the long haul” says Bobby. He and his partners are resisting the urge to position themselves as the next best thing in the market. Growing too fast is a concern, as it might hurt them in the long run by testing their ability to maintain the quality of the customer experience. As many of us know, the most successful restaurants are characterized not by sexy advertising campaigns, but by their repeat customers and word-of-mouth advertising. This slow build to success is what Bar Marco is aiming for – and what Bobby believes will allow the restaurant to maintain focus on the little details that make or break the experience for diners.

What that means is that the beginning can sometimes be slow going. A few nights here or there have been quiet, particularly before the service industry folks starts walking in the door. Yet when coupled with the private parties, Bobby says they are already covering all of their expenses with revenue earned. Quite a feat for newbies!

Here are some elements from the Bar Marco marketing playbook…

• Building relationships and creating genuine connections. For Bobby this means many things, and is really at the core of his belief system. Early on, even before opening their doors, the partners connected with local artists and gave them the space to show their work. This is a win-win for all involved. The walls of Bar Marco are covered with original art work, giving local artists a place to show and sell their work, it also give Bar Marco a nice genuine local ambience, while giving artists a reason to promote Bar Marco to their own networks.
• Serve the service industry. The Bar Marco kitchen is open until 2:00. Now, this is unheard of in ‘dem parts! Yet Bobby thinks their effort to reach this group is an important piece of their success strategy because these are the folks who are the real influence peddlers in the Pittsburgh market. Not only that, but it seems to me that as trust relationships are built, this clientele's experience and input into what is working and what isn't at Bar Marco will come in handy!
• Start slow. In this case with private parties. These provide steady revenue and provide a strong foundation for word-of-mouth marketing. They also give the back of house opportunity maintain the quality of the service and food and ramp up to more ambitious dishes and robust menu.
• Finally, they have gone the route of tried and true sales marketing. In this case, they provided free ‘small plate’ tickets distributed locally. Since food is relatively inexpensive give away, it provides folks with a reason to spend more on higher ticket items like wine and drinks.

We’ll keep an eye on Bar Marco to see how these strategies work over the long haul.

So what can a district manager do to help small business owners like those at Bar Marco? I posed this question to Bobby and he was quick to say that Neighbors in the Strip has been great, and offered some additional ideas for my readers.

• Talk it up! By promoting and talking up local businesses, helping drive early success and consistent traffic through the front door.
• Keep tabs on the business. A district manager should visit new businesses regularly, keep on top of ways you can support the new business.
• Use your district networks to promote the business. Bobby suggested posting updates about new businesses in the form of a blog on your district web page. I would add that District Management Entitites should celebrate business openings with great fanfare, including a ribbon cutting with local officials and a press release…buzz begets more buzz and interest in the district.
• Build a brand. Help by building a district brand. This will differentiate the district from others, and in turn help attract visitors to the district without the business having to spend marketing dollars.

Here are some fun pics of the great food, the dining room, and our good friend Bobby behind the bar!
Don't forget to join Bar Marco’s Facebook Page. And be sure to visit when you are in Pittsburgh.

Why is it so important to resist the leap to action?

I am a planner by nature, so I often council clients to 'go slow to go fast'. But why is it so critical to take time to plan, to accurately diagnose a problem before leaping into action? This morning, my friend over at Bar Marco in Pittsburgh, co-owner Bobby Fry, wrote in a "Morning Meeting" email he sends to friends and colleagues about the important of taking the time to plan as he negotiates the trials and tribulations of opening a business. His email was a bit of an inspiration for this post....

Coincidentally, I also happen to be reading a book entitled "The Practice of Adaptive Leadership" co-authored by Alexander Grashow, a friend from college who is now head of Cambridge Leadership Associates. In it he describes the pressure that leaders feel to "Do something!" We have all felt it and seen it...communities so tired of planning they simply want to "Do something!"  But what happens if you don't take the time to think about your priorities? To actually step back and take a moment to DIAGNOSE a problem? Can you imagine if doctors treated patients before taking time to accurately diagnose the sickness? Would you trust a doctor who said "that lump is probably cancer, we don't need any tests or anything, let's just try chemo and see how it goes" Perhaps a morbid comparison, but an important one none the less.

As a consultant whose job it is to diagnose sick commercial districts, I often have clients who wonder why we can't just leap to action. In fact, one client I'm working with now (who shall remain nameless!) wants to leap ahead and bring in architects and transportation consultants to prepare a streetscape plan. This without having any discussions with the key downtown stakeholders and players, including local merchants, whose input is critical to ensuring this is the right direction for the downtown. Perhaps a streetscape plan IS a good idea, but the question needs to be asked, how does it fit into the bigger picture of the district vision? How might streetscape improvements address the underlying economic conditions that are making it difficult for businesses to survive and thrive? In fact, leaping ahead to streetscape improvements might be the nail in the coffin for businesses struggling to keep their doors open. Can you imagine what a street closure or sidewalk construction would do to struggling downtown businesses? The answer to that question is as horrible as a cancer diagnosis....the loss of a business owner's life savings, the loss of local jobs, the loss of businesses downtown....

Yet, I often find that my job is to council the client to resist the tendency to take action without first understanding the problem. I understand that sometimes it can be frustrating to wait - but the alternative can be a series of false starts that results in the loss of community interest and energy. Being able to gather all of the facts, conduct focus groups, interviews, surveys, market studies...all of that boring PLANNING...is so critical to making the RIGHT decisions that keep people from wasting vital energy and resources. At the end of the day, it's not planning that slows things down, it's the LACK of planning that derails efforts to move forward. People take action, see failed results, and then lack the energy to take action again. It's a perenial problem improperly attributed to the failure to planning.

Today in the News...

"More Pittsburgh neighborhoods consider setting up special districts" [1/10, Pittsburgh Tribute]
A number of Pittsburgh neighborhoods are moving ahead with the formation of Neighborhood Improvement Districts (NIDs) but facing challenges along the way.

"A Vision for Urban Parks" [1/10, New York Times]
Daniel Biederman, co-founder and current president of the 34th Street Partnership, the Bryant Park Corporation and the Chelsea Improvement Company, muses about his career and provides some insight on why he doesn't believe commercial districts should use public funds.

"DC Riverfront group says new study shows Green Line corridor leading regional development" [1/10, Washington Post]
The Capitol Riverfront Business Improvement District will release a study this Thursday that looks at how the neighborhood has changed as a result of it's programs.
"Department stores past their prime as retail anchors" [1/9, Minneapolis Star Tribute]
Is the traditional mall anchor dying? This article speaks to the impact of this trend on malls - but the implications for downtown could be significant.

To hire or not to hire...consultants for Business Improvement District formation

Approximately 2/3 of BID formation efforts used consultants to help with planning. Typically, consultants are hired to ensure that the effort is led or advised by individuals with expertise in BID formation...and to ensure that the local partners do not need to reinvent the wheel. Depending on the level of local capacity, consultants can be hired to lead the effort (effectively playing a role similar to paid staff) or they can simply provide guidance depending on the staffing and capacity of the local organization leading the effort.

Some typical consultant engagements include:

• Formulating a District Plan or BID Business Plan
• Defining, and helping to refine the proposed BID area
• Running mock assessments
• Facilitating focus groups and surveys with local stakeholders in an attempt to inform BID programmatic activity
• Marketing, communication and public relations

Jumping into a consultant engagement is a significant commitment. A British study found that BID planning can take 1-3 years, and depending on the effort, ended up costing as little as $6,500 or as much as $500,000 for a full blown, multi-year planning effort. The media expenditure for BID formation was about $78,000 US Dollars.Note

 In the United States, funding for BID formation efforts have typically come from public sector sources, usually CDBG (which as we know are drying up). In other places, sources include private sector contributions. In El Salvador, San Salvador, where I was part of a team that just completed a BID formation effort, seven highly capitalized local property owners and developers came together to fund the effort entirely on their own.

So what you should know before starting a BID Planning Effort?

• Look at your state enabling legislation. Take the time to find it and ready it. What are the obstacles to BID formation? Depending on the political environment at the time of passage, enabling legislation was sometimes designed to prevent BID formation, rather than encourage it. In Rhode Island, for instance, the BID law specifies that only municipalities with populations of 500,000 or more can form BIDs. Well guess what, only the capital, Providence, falls in that category!
• Be prepared for the long haul. These things take time, on average 1-3 years. And inf fact, it is not uncommon for BID formation to fail the first time around. So take a moment to consider whether your organization has the capacity (read STAMINA) to launch a formation effort. Winning over property owners and business owners is a hands-on task - and no short cuts are allowed! This means one-on-one meetings with key players, lots of public meetings, and outreach, outreach and more outreach.
• Successful BID formation often follows smaller efforts that have taken hold in the community. Are you building off of some small, successful project that has helped to garner goodwill? If not, consider starting there. Successful BID formation is often built on the message that the BID will continue to build upon existing successful efforts. The difference is that now, these efforts will have the staff and resources to make them even more successful than they already are. This helps reinforce the sense that the BID assessment will be well utilized and won’t result in waste.
• Don’t just engage the public sector, partner with them. The early, active and engaged public sector is typically a critical component of BID formation efforts. BID formation is more likely in places where a local public agency is supporting BID development, through funding for planning and/or on-going technical assistance.
• Keep your footprint tight, if you can. Is your business district well defined – both geographically and from the perspective of your typical customer? If your business district is spread out geographically, it may be more challenging to offer cost effective services like sanitation and maintenance. It can also be more difficult to establish a unique, unifying identity for visitors.

If you think you are ready to take the plunge, there are lots of resources out there to help you take the next step.

Turning Students into Customers

Do you have a college or university in or near your district? Do your local businesses benefit from student spending? My friend and colleague Anthony Capese, Executive Director of the Albany Central Avenue BID, is taking proactive steps to ensure that students become loyal customers. After holding "nearly 20 focus groups with students", Capese noted that "they simply didn't know, and rarely found a reason to venture off of campus." The challenge of attracting student customers is certainly not unique to his district.

His efforts, however, are a great best practice for BID's. For a few years now, the Central Avenue BID has spearheaded a "SUNY SHOWCASE" event (SUNY = State University of New York) during student orientation that offered RA's (resident advisors) information about downtown retail and service offerings. The idea is that RA's are in the best position to pass this information along to their students. Nearly 200 RA's and student staff participated this past August, taking Aqua Duck Trolley Tours through the District, ending at a afternoon-long party at a local hotel, replete with Foosball tournaments, video games, artists, and giveaways.

For more information on the program, click here for an article written on the CABID blog.

Now is a great time to start putting out feelers to your local schools to see how you can leverage student orientation to your district's benefit.