Friday, January 25, 2013

Changing the World, One Step at a Time

What does it take to create community change?

People are threatened by change and will often resist new ideas, even good ones, if they are unsure of the outcome. Leading change means taking risks - but those risks don't need to be done all in one shot, in fact, it can sometimes be helpful to run experiments and test new concepts to start getting folks more comfortable with your new ideas. But keep in mind that testing means that sometimes things succeed...other times they fail. So one thing is for sure, you can't be afraid of can happen.

An aerial view of Putnam Triangle, in Brooklyn, NY
What does testing a concept look like in practice? A wonderful example of community change is the story of Putnam Plaza, a segment of street in Clinton Hill, Brooklyn that I've written about before. (see: "BID's efforts pay off for residents, businesses with street closure and block party"). Closing a street is no easy task, as Phil Kellog, Executive Director of the Fulton Area Business Alliance, and a Coro Neighborhood Leadership Alum, came to find out. Business owners are often concerned that a street closure will hurt business. The answer? A temporary closure that would allow the BID to test the concept. The street closure was coupled with programming, led by the BID, that drew pedestrian traffic to the area. Local business owners were pleasantly surprised by the increase in sales they experienced, and surprise, surprise they eventually came on board. Just this month the Department of Transportation approved the permanent closure of the Plaza. (see: DOT Approves a Permanent Putnam Triangle Plaza). Success!

Tuesday, January 15, 2013

How can downtown remain competitive in the face of online shopping?

It should come as no surprise that we continue to see the rapid growth of on-line shopping. Virtual and mobile sales now account for 10% of all sales, and experts suggest that number will grow to 20% before long. So how do downtown and neighborhood commercial districts compete? Rest assured, the retail industry is not taking the threat of on-line shopping lightly. There are a few things that we can learn from how the retail industry is responding to the changing nature of consumer shopping habits...

Multichannel retailing – not just for the big guys
Many retailers reported a lackluster holiday season, but Macy’s was not among them [“Macy’s shows it can make big bucks online”, Crain’s New York, 1/13]. Admittedly, Macy’s is closing downtown department stores in under performing markets. On the flip side, the storied department store has figured out a way to turn the threat of online shopping into an opportunity. This year alone the department store has seen a 52% increase in online sales.

Being able to search and buy on-line – even when in the store – effectively allows Macy's to offer more inventory with less space, and move overflow items out of some stores and into shoppers hands before the need to discount. While the future of the downtown department store remains unknown, the ability to turn on-line shopping into an opportunity to grow market share is still a critical play in the downtown revitalization playbook.

For downtown merchants, here are a few options for selling on-line:
  • Create a "downtown" website. Some downtown organizations are helping small businesses by creating destination shopping websites. When retailers combine forces, they can build an on-line identity that plays on people’s desires to buy local. In Oakland, California, the City of Oakland has spearheaded a “Shop Oakland” website that focuses on listing local businesses and highlights their on-line offerings.
  • Creating new venues for on-line's not just about a website. The term F-Commerce is not yet widely known, but will be soon. Some small businesses are gaining traction selling via Facebook using services like Payvment that provide support for Facebook transactions.
  • Use existing, well known channels for selling. Etsy is another way to build an on-line presence, especially for specialty retailers. 

Offer an Experience, Not Just a Place to Shop
A ropes course at the Palisades Mall in
New City, NY keeps
kids busy while parents shop. 
On-line shopping has also changed the way shopping centers and districts think about their overall tenant mix and offerings. Many shopping centers now try to offer an experience that cannot be rivaled by the comfort of one’s home. On a recent trip to Palisades Mall, a super-regional mall outside of New York City, I noted a new ropes course in the middle of the atrium. Shopping is clearly not the only thing that drives visitors to this mall. According to a recent WSJ article, this trend is growing. Mall owners are adding more “restaurants, upscale movie theatres, supermarkets and other tenants that offer goods and experiences that can’t be found on-line.” Downtowns can and should be thinking about doing the same. 

Make it Convenient
Malls are not stopping at creating experiences either. In an attempt to capture the shopper on the other end of the spectrum, some malls are “reconfiguring more stores to have direct access to parking lots, so shoppers can dash in and out for quick service rather than having to traverse the entire shopping center.”  

So what does all of this mean for the downtown shopping district? First, it means that we have to recognize the need to compete for shoppers on two fronts – first by offering an unrivaled experience that compels visitors to leaves the confines of their home, and second by ensuring that the shopping experience is convenient and easy. That means convincing shoppers that visiting your district will save them time if they only needs the basics, but should they decide to stay, there is an experience to be had. Urban commercial districts are taking the leap, many are ramping up their entertainment offerings in creative ways - encouraging ambient entertainment offerings like musicians, magicians, artists, etc. as well as impulse entertainment offerings, like Jane's Carousel in the Dumbo neighborhood of Brooklyn. 

Spruce up to Remain Competitive
With so little new inventory and construction underway, some of the most well located shopping centers are taking the opportunity to overhaul and reposition their existing asset. "After decades of retail construction...much of the country is overbuilt, and online shopping has crimped many retailers' store-opening plans. In an attempt to keep shoppers coming...mall owners and retailers are shifting to renovations. ["Malls Get Facelift to Pull in Shoppers", WSJ, 12/18].  If competitive shopping districts are upgrading, you need to make sure that you remain competitive by keeping your district clean, neat and well managed.

Wednesday, January 9, 2013

Getting Big Projects Right: The Seward Park Mixed-Use Development Project

Is it possible to create a seamless connection between big downtown projects and adjacent commercial districts? Can a tenant mix be curated that adequately addresses community concerns while simultaneously allowing a developer to meet his/her investment hurdle? These are just some of the challenges that communities face when a large downtown parcel is poised for redevelopment. Unfortunately it’s easier to get it wrong than to get it right. New development can inadvertently cannibalize existing retail districts. When a big enough project is located in any community, the proximity and convenience of what is offered within the confines of the project boundaries can make it difficult to get visitors to venture into the local community. Moreover, ensuring that an existing area - one that may need some sprucing up anyhow - remains competitive is a huge lift, particularly when existing commercial areas have multiple property and business owners who may not have the financial wherewithal, or the interest, to make the changes necessary to attract new customers.

The Seward Park Mixed-Use Development Project presents just such a challenge. The six+ acres on New York’s Lower East Side has been vacant for nearly 47 years. New development on the site will add 1.65 million square feet of housing, community, retail and commercial space. Because the site is publicly owned, interested developers will not only be competing for the right to develop the property, but will also have to balance community priorities with market realities during the process. This is no easy task in a community that fiercely identifies and defends its small local business owners.
The site of the Seward Park Mixed-Use Development Project

To that end I have collected a few “lessons learned” from other similar projects that have come across my plate in the past few years…

Create meaningful connections between the old and the new. This means taking pains to think about investing in nearby streets and connectors that may not be part of the official development area. Find ways to ensure that there is continuity in public space elements like street lights, benches, bike racks, etc. Consider carrying some of these elements through to the neighborhood so that there is no “us versus them” feeling for the visitor.

Denver Pavilions on 16th Street in
Downtown Denver takes pains
to avoid turning its back on the rest of the retail district
     Make sure that open space connects the project to its surroundings, rather than remains embedded in the middle of the project. If you create a gravitational pull away from edges of the project, the result will be two districts that fail to communicate in any meaningful way. Visitors to the project will probably arrive and have no reason to visit the surrounding community. Warning…there is a natural tension here. The developer will want to pull people into the project but the community will want to make sure the project does not cannibalize local businesses. Managing these objectives and perspectives is always a challenge. One project that I think has done this particularly well is the Denver Pavilions on 16th Street in Downtown Denver. 

The open space in South Side Works,
a large mixed-used development project
on Pittsburgh's South Side is embedded
within the project, giving visitors little reason to
venture into the community.
     Rethink and revisit the typical "mall" tenant mix. Destination mixed-use projects often include a healthy balance of entertainment, restaurants, and retail uses. So what is the ideal mix? Like anything, the answer will differ by project and market. But in most large scale entertainment destinations, 20-50% of gross leasable areas is dedicated to entertainment uses. These include programmable entertainment venues such as ice-skating, live-performance, megaplexes, sports venues, cultural attractions, event facilities, etc that serve to continually renew demand and achieve repeat visitation. Surprisingly retail uses only make up 30-40% of gross leasable area for many of these projects, compared to 60-80% of the average mall.

     Much of this may be easier said than done...but keeping these principles in mind will go a long way towards educating both developer and community on the challenges and possibilities that come with these big projects.