Upcoming Trends: 2016

Outlets, Fast-Casual, & Mixed-Use...Oh My

2016 should see continued growth in outlet centers, fast-casual dining, and mixed-use developments. Outlets centers will take a turn toward urban areas forgoing the traditional city outskirts. Fast-casual dining -  Chipotle, Culvers, Panera Bread, Shake Shack etc - emerged as a blazing hot trend and will remain hot next year. Mixed-use developments are not anything new but they will continue on in 2016 with adjustment for small-scale retail.

The 18-Hour City

The emergence of the 18-hour city will continue to grow and be preference of those seeking urban affordability.  The 18-hour city is not a round the clock 24/7 city like New York or New Orleans but one that clocks out at night and is now a preferable live, work, play zone for millennials and others that are now desiring an urban life style.

Value Will Remain Center of Retail But Wellness Continues Growth

Traditional value shopping centers such as TJMaxx, Ross, Marshalls will continue to perform well but 2016 will see the gradual expansion of other players with off shoots of their brand name. For example, best known Nordstrom Rack will grow but new players like Saks Off 5th, Macy’s Backstage, and the recently announced Find @ Lord & Taylor will develop.

Wellness will remain a focus to watch. Many gyms chains are expanding as well as fitness apparel stores but health food centric grocers - Whole Foods, Trader Joes, Sprouts Farmers Market - are going to continue to grow in response to customer demand.

The Brick and Mortar Plan

Online and mobile consumer shopping and spending continues to grow with no foreseeable end in sight, so in 2016, brick and mortar stores will need to continue to revamp their offerings to make the in-person experience better than the alternative.  Retailers will need to engage shoppers with sensory experiences, hybrid services and lifestyle spaces designed to educate and inspire.

And in other news...
Ordering by Emojis

Aloft Hotel in downtown Manhattan started taking room service orders via Emojis. This emerging form of digital only communication might have a lot of nah-sayers but who wouldn't want a hangover cure just with the ease of sending three emojis — water, a pill and a banana? The "Hangover bundle" of Vitamin Water, Advil and bananas is delivered in minutes. Notoriety should be given to Domino's who pioneered this trend by allowing customers to order a pizza with a single emoticon. We'll see where this goes in 2016.

Also, check out our older post regarding "...the Age of Nouveau Food Courts".

Retail Attraction: One Small Business at a Time

Cutting the Ribbon at Grand Street, Brooklyn

Recently, one of our NYC clients, the Grand Street BID, shared with us the news about their first successfully attracted business: “Save On Grand” and we would like to congratulate them and share their experience with you.

First, the BID identified a community need for a general merchandise store through data provided by our Retail Market Study and also through a subsequent community retail needs survey that was distributed at local community meetings and events. The results indicated an overwhelming need for a general merchandise store that could fill the void from the recent loss of two anchor tenant general merchandise stores that had closed (GEM and Liberty).

The actual process of bringing Save on Grand, a discount household items store, to the street involved establishing a relationship with a local broker who represents two vacant spaces in their district. Through meetings and phone calls with the broker they were able to explain their retail needs and pair him and his client with a landlord acquainted with the BID and that knew the district’s need for general merchandise and affordable clothing. 

According to Homer Hill, the Director of Communications and Special Programs of the Grand Street BID, residents are supporting the store and Save on Grand’s presence is bringing positive benefits to other stores along the street. “This also supports current retailers,” he said. “As long as Grand Street can be a destination for neighborhood convenience-type goods, that’s better for all the businesses.”

For more info read:Greenpoint Star - Save on Grand celebrates grand opening in Williamsburg

@CDAdvisors Top Ten 2015 Posts!

This year went by quickly right, anybody else feeling that way? December is already here and that means Top 10 lists! We'd like to share with you the 2015 top 10 most viewed blog posts on Commercial District Advisors.

1. Six basic principles for building thriving commercial districts in low-income communities

   

2. Gil Penalosa inspires a discussion about communities that meet the needs of everyone from age 8 to age 80.

3. Strategies for Retail Niche Building

4. The Downtown Project and Zappos CEO Tony Hsieh lean on entrepreneurs to make old Las Vegas a go-to destination

5. Top 10's Do and Don't when designing a retail attraction website

6. Why is gentrification a bad word?

7. NoHo BID leads the pack with a .BID Domain

8. "Edge Cities" Grow Up

9. Is upstairs retail the new normal?

10. Small Business Economic Sentiment Survey: A Potential Tool for Commercial District Practitioners

What the re-branding of Deals by Dollar Tree will mean for commercial corridors

 

We recently heard the news that Dollar Tree, the parent company of Family Dollar, will re-brand hundreds of its Deals stores into Dollar Trees or Family Dollar by next summer. At ICSC Deal Making early December, I spent a few minutes chatting with one Dollar Tree’s Real Estate Coordinators who confirmed the news: by the end of July 2016, Dollar Tree will convert 217 Deals stores into Dollar Tree Stores and five others into Family Dollar stores.

We have worked with a number of communities who have in recent years attracted a Deals store to their corridors, and they were all very happy with it. In many instances, the opening came through a lot of hard work to convince a national retailer to invest in low-income communities. In fact, the opening of a Deals store in many inner-city corridors signaled the retail potential that these communities have to offer and usually have had a catalytic effect by attracting other retailers to the area.

Deals stores sell a variety of discount items including toys, party supplies, seasonal items and home products at multi-price points. Dollar Tree sells everything for $1 or less, and Family Dollar sells a variety of items and national brands for $10 and under. Despite being a discount store, Deals has developed an image associated with affordable but quality products.  On the other hand, Dollar Tree and Family Dollar are usually perceived as downscale stores. I asked a commercial district manager here in New York what she thought about the change and she said: “No more 99 cents stores please!”

However, a recent look at Dollar Tree and Family Dollar stores reveals that both brands are working to improve their image and product selection, especially in their new and/or rebranded stores, which may surprise many shoppers coming in for the first time. The change from Deals to Dollar Tree or Family Dollar might also help older Deals stores (stores built 10 or more years ago) and that would benefit from the renovation and retrofitting that re-branding will bring.

So the change from Deals to Dollar Tree or Family Dollar might not be such bad news after all: its implications to commercial corridors, especially traditionally disinvested inner-city corridors, will depend on how the parent company does the retrofitting of stores (the attention to the façade and interiors) and whether the quality of products offered in the retrofitted stores match previous offerings from former Deals stores.

Elephants with money falling from the sky?

 

Passersby being greeted by toy elephants

Yes, it’s true. This Christmas, shoppers in DUMBO Brooklyn have been greeted with toy elephants in parachutes falling form the sky. Each elephant comes with a $20 DUMBO Dollars voucher that can be used at 26 stores throughout the neighborhood. The initiative is part of the DUMBO Dollars program created by the DUMBO Business Improvement District to promote DUMBO as a fun shopping destination and boost retail sales of local businesses.

Elephants falling during the neighborhood Tree Lighting  event

We had the pleasure to work with the DUMBO BID this year, and thought many of our readers would be inspired by their initiative.What a creative way to jump-start the holiday shopping season and promote the district! 

What have we learned from the urban big box parking boondoggles of the past?

I realize that two examples don't suggest a trend, but these two examples of underutilized urban parking lots suggest a real problem - that hopefully we are on a path to overcome - in the world of urban retail.

In Columbia Heights, DC, the 1,000 space parking lot adjacent to DC USA, whose anchors include Target and Bed Bath & Beyond, remained empty enough upon opening in 2008 that "the operator typically blocks off one of its two sprawling levels" ["At Columbia Heights Mall, So Much Parking, So Little Needed", Washington Post, 10/09]. The $40 million dollar parking lot was financed with public monies. In 2010, the developer, likely with approval from their tenants, started renting spaces out for daily and monthly use.

Fortunately, we have come a long way since the days when suburban style big box retailers were squeamish about urban locations that violated their parking requirements. At the time that both of these projects were conceived, there were very few examples of big box stores in urban setting, so offering parking was a way for the public sector to mitigate the perceived risk of an untested product for retailers. But the truth is we can't put all the blame on the retailer or developer. It wasn't just the retailers who wanted parking. In many communities development stokes fear that shoppers will troll the neighborhood for parking, creating a residential parking shortage. To make matters worse, antiquated zoning based on suburban parking requirements sometimes require far more parking than might be truly necessary.

In New York, there was a similar situation with East River Plaza ["East River Plaza Parking Still Really, Really Empty, New Research Shows", Streetsblog NYC, 4/12]. The mall, like DC USA, is anchored by Target, as well as Manhattan's first Costco, and opened for business in 2010. According to the New York Times, the parking garage cost $62.4 million to build.

I did a quick analysis of parking ratios for both sites and found that they both come in, on average 2.10 spots per 1,000 SF of retail.

For those familiar with parking ratios, 2 spaces per 1,000 SF of retail might sound insufficient. These days, major suburban shopping centers offer 4 or more parking spaces per 1,000 SF of retail. But to be fair, it is light years from where we have come.  In 1954, the American Society of Planning Officials, the predecessor to today's American Planning Association (APA) published a report on "Site Design, Parking and Zoning for Shopping Centers" that looked at parking ratios for 49 of the nations shopping centers and on average, the parking ratio was 9.2/1,000 sf.

So while we are still learning about what makes sense in urban areas, what we can say is that transit rich communities like Columbia Heights and East Harlem can support retail with much less parking than they currently have. And the public sector could have gotten away with contributing much less in public funds to underutilized parking. Of course, hind sight is 20/20 and we may not have known that at the time, but it's certainly helpful to know for the future.

Five highlights and lessons learned from another successful ICSC Deal Making trade show...

This year's New York ICSC Deal Making just finished, and it was a jam packed two days with lots of great conversations and new relationships forged for both us and our clients.The real work of follow up begins now! I learn something new everytime I attend (nearly seven years and counting!) and this year was no different. So here is my run down of what I took away from the show...

A rebranded P3 Retail Program! As the ICSC Eastern Division Co-Chair for the now rebranded P3 Retail Program (P3 stands for "Public Private Partnerships"), it was a thrill to see the launch in action. The ICSC team, including Cynthia Stewart, Michael Cowden and Jazmen Johnson had videographers ready to go. They had some of their members conduct interviews with ICSC members about their experiences and insight. I'll be very excited to see the final results when it is all done. I was interviewed, and also had the chance to interview Keith Sellars of the Washington D.C. Economic Partnership as well as Mary Reda and Jim Diego of Greater Jamaica Development Corporation. I really enjoyed hearing their insights and learning from their experiences.

Prep work is what it takes to have a great outcome. This year, we we thrilled to work closely on ICSC prep for a large community development corporation here in one of New York's largest outer Borough downtown districts. While the team has been attending ICSC for over five years, they were looking to refocus and refine their efforts and asked us to help. We began by defining their merchandising strategy based on consumer market data and existing business mix. We used this data-driven approach to identify "like districts" that shared similar demographics and retailers. We then combed those districts to identify retailers who were already located in similar markets and with similar co-tenants, but not yet in the district. We also had to make sure that these prospects could be accommodated in available spaces within the district, based an opportunity site list we developed with the client, and that they were the right price points and "lifestyle" fit for the area.  Finally, we did research into whether those prospects were growing in the region. Once we drilled down on prospects that made the final cut, we worked with our client to identify contacts for each - that included who they already knew, who we knew through our industry relationships, and who we could find through our access to the ICSC database and Deal Making attendance list. Once that happened, the client was ready to make calls and set up appointments at the show. 

Getting a booth or kiosk can make a difference. 

This year ICSC made a concerted effort to enlist more non-profit and public municipalities with a discount entry option. I was proud to have been a part of that as Chair of the Municipalities subcommittee that helped plan this part of the show. Our client had never taken a kiosk before and this year they did, and I am happy to say that they raved about the experience. Being able to have a home base, conduct meetings in the shared P3 Pavilion retail space, and chat with drop ins made a real difference for them, and they plan to do it again next year. It is important to note that they made sure to man the booth at all times - and also had staff walking around attending meetings. Another thing to keep in mind is that this strategy needs to be part of a comprehensive approach to the show. Don't think that you can get a booth and people will automatically come to you. The location of the P3 pavilion at the New York show was pretty good. In Vegas however, the Cities of the World pavilion, as it is branded, is in a much more out of the way location. Some cities and non-profit orgs decide to take booths closer to the action, but at greater expense. Everything is a trade off.

On that note I enjoyed my conversation with Keith Sellers of the Washington DC Economic Partnership. They have been attending ICSC for over a decade, and graduated from a shared booth with a utility company to a 5,000+ sf booth in underwritten in part by the local developers. Their approach is so incredibly strategic and thoughtful, and I enjoyed hearing Keith talk about how far they had come.



Social media DURING the show is important. You have to treat your booth or kiosk as a might a retail store. If you don't market it, you are missing opportunities to connect with potential customers. Same goes for a trade show. The good news is that ICSC helps with this. They had a hashtag (#NYnDM) and twitter handle (@ICSC) and would retweet things that were tweeted their way. We made sure to utilize this marketing support and it was a great way to drive traffic to the P3 pavilion and to individual booths.

A marketing brochure may not be the right approach for your district. To support our client's outreach, part of our task included developing new marketing material for them. In the past, their typical marketing strategy was a multi-page brochure with lots of words and tables of data. We knew from our work in the industry that marketing strategies are changing quickly, and that the multi-page brochure, while still making the rounds, can be hard to share digitally and doesn't always come across the same way when viewed on a computer. So we made a suggestion to do something a little different but much more in line with where the industry is going when it comes to marketing retail and site opportunities. Increasingly, developers and brokers are creating marketing decks - basically short slide shows that can be printed and distributed, but are more likely to be viewed  and distributed digitally. They rely less on verbage (that very few read anyway) and more on great info graphics to make a case. They are more straightforward to understand, can be used to tell a story, easier to refine, and easier mix and match on demand. Our client carried these around in bound booklets for reference, and then told the contacts they made that they would forward them the material after the conference. This strategy is a great way to continue contact and an excuse to follow up afterwards - which is the key to success. What I also found was that the decks were a good aide in keeping the presenter on message. And after the pitch, but during the meeting, they were easier to use. You could quickly go back to any slide that communicates the point you want to reinforce.

Overall I was so happy with the outcomes for the ICSC P3 effort as well as for our clients. We live tweeted quite a bit, so follow us @cdavisor if you want to keep up.

Here are some more pics for fun. 

I felt like Oprah interviewing Mary Reda and Jim Diego at the #P3retail booth!

Baltimore Downtown Partnership has a great location. 

Being interviewed by Cindy Stewart of ICSC, together with Jason Claunch of Catalyst Commercial 

News Roundup: The Importance of Commercial Density, Combating Crime Proactively, Reinventing MLK, Bank Local, The Misappropriation of ED Incentives

Commercial or Residential Density: Which is Most Important?
Urban Kchoze presents a detailed analysis of the relationship between commercial density and residential density to uncover which promotes walkability more. Spoiler alert: commercial density. They also incorporate an interesting new metric, "farthest commercial use."

Urban Planning Practice Shows How Design Can Combat Crime

This design guide's prescription is to be proactive not reactive to crime. Good design and maintenance of the public space prevents crime from even happening. The alternative - NOT suggested - is to react to crime by adding more measures that further label the area as a target of crime.  

The Remaking of Martin Luther King Streets

City Lab looks at the reinvention of the more than 900 street and thoroughfares named after the late Martin Luther King Jr.

How to Find a Bank That Invests in Your Local Economy

Eat Local...Buy Local...Now there is Bank Local. According to the article, banks with more than $100B in assets accounted for 27% of small business lending while those with $10B or fewer assets accounted for 54% - demonstrating that small and ostensibly local banks support and finance local and small businesses.

Website capture of local banks near Jackson Heights.

How Economic Development Incentives Hurt Small Businesses

This piece discusses incentive programs and how many states wanted to help small businesses, but the majority of incentives went to large corporations. According to their research, large companies captured between 80 and 96 percent of these small business incentives.

LISC Chicago's Business District Leadership Program wins first place award

I could not be more thrilled to announce that the LISC Chicago Business District Leadership program just took home top honors at this years Chicago Business Development Center Awards! The awards are a recognition of LISC's efforts to train business district practitioners in the leadership skills and strategies necessary to make tremendous impact in their communities.

Larisa Ortiz Associates is proud to have played a supporting role, along with Coro New York Leadership Program, in developing the framework for the program. The Chicago program is based on the Coro Neighborhood Leadership program, now going on its fifth year. To date, over 100 New York based practitioners have participated in the program and it is still going strong. Both programs are funded in part by their respective cities.

The 2014 BDL cohort, including Dionne Baux (LISC),
Kristen Illes (Coro) and myself to the far left. 

I must say, being involved with this program has been one of the most fulfilling experiences of my career. It is truly an honor to see so many practitioners - now over 120 an counting! - gain tremendous insight into their lives, and then turn those insights into tools that make them so much more effective in their work. Being a leader in the field of commercial revitalization and community development is often about working with those over whom one has limited to no authority, about pushing those in positions of power, and about connecting with stakeholders and community partners to advance mutual interests and leverage shared resources. These are the skills that ultimately lead to real and sustainable neighborhood change over time.

For more information on the Chicago LISC BDL program, click here. The deadline to apply for next year's program is Dec. 11! There is still time!

For more information on Coro Neighborhood Leadership, click here. 

The opening retreat sets the stage for deep friendships and trust between
peers, who later serve as critical springboards for advice and feedback. 

The opening retreat quote board...things that
resonated with participants made it to this board. 

The Abandoned Bike Dilemma

Are those pesky abandoned bikes causing an eyesore to your district and taking up valuable space?

We've all seen them. These abandoned bikes obviously have not seen their owner in a very long time and each time you see one its sad bike carcass has become more derelict. Lately, CDA came across the issue with a recent project so we thought we'd look into it.

We discovered that, especially in NYC, it is very difficult to get a bike removed and that both the process and the requirements are rigorous and inflexible.

In New York City for example, the bike must be affixed to public property and must meet 3 out of 5 of the following criteria:

• The appearance is crushed or not usable;
• Have parts missing from bicycle other than seat and front wheel;
• Have flat tires or missing both tires;
• Handlebars and pedals are damaged, or the fork, frame or rims are bent;
• 75 percent of bicycle is rusted.

But as WNYC noted the process to report abandoned bikes is solely by phone so there is no official online or digital submissions process and calling in a complaint "takes about 14 minutes and involves speaking with two operators." LA, on the other hand, has an online submission and appears to make the process more user friendly.

Most college campuses are very liberal with mass removals of abandoned bikes each summer. Bicycles are first tagged as abandoned and given two weeks to be moved before being impounded and then finally given away or salvaged 90 days later. The policy is similar in Toronto where even bikes that look operable but reported are tagged with a two week notice and removed if not relocated. According to Chicago's city code, an abandoned bike can be removed after being tagged for just a week.

Questioning how your city handles abandoned bikes?  It can be as simple as Google'ing "city of ____" + "bike removal." A little investigation, either by internet or 311, can get you on the way to clearing your commercial district of a long overdue abandoned bike.

Sometimes in the end you have to look at the problem and see it from a different angle. Adel Souto of New York has made this topic into an art form, check out his blog.

The Return of Small Business Saturday

In between Black Friday and Cyber Monday sits Small Business Saturday (SBS), which makes its annual return Nov 28. The special shopping Saturday continues to grow and this year will mark its fifth year. It is an initiative to encourage and remind shoppers to shop small and to shop local. One very large business, American Express, helped create and launch Small Business Saturday along with then NYC Mayor Michael Bloomberg in 2010.

Participating in SBS
The organizers suggest three ways for small businesses to "make the most" of the day: host special events, offer small business Saturday-only promotion, and band together with other businesses.  A district could use these tips to make this year the most successful SBS or encourage small businesses themselves to submit their stories online. 

SBS by the Numbers:

Here's a look at Small Business Saturday 2014 by the numbers:

• 88 million consumers “shopped small,” up 14.9 percent from 2013
• $14.3 billion spent – an increase of 2.1 percent
• 446 official support companies
• 386 advocacy organizations
• 126,000 tweets were sent, many using the hashtags #SmallBizSat and #ShopSmall
• 3.3 million Facebook users “liked” the Small Business Saturday “Shop Small” official page
• nearly 3,000 Neighborhood Champions – groups, organizations and communities – rallied local businesses, creating events and activities to celebrate
• $5.9 billion was spent on Small Business Saturday

Broad Based Political Support (with some local detractors mixed in)
Political support continues to grow as well. In 2013, 41 governors gave proclamations supporting Small Business Saturday and 43 U.S. Senators pledged their support. Even President Obama participated, taking his daughters to a local bookstore on Small Business Saturday a few years ago. 

While some businesses have used SBS to drive sales during the busy holiday season, other communities have taken the idea and turned it back into something local. Cindy Baxter, a retail consultant and a prominent voice among independent business owners, was initially tapped to help launch Small Business Saturday in her community but instead defected to develop her own local retail initiative, the 3/50 Project, which "promotes stronger local economies through support of independent retailers" (Markowitz, Inc.com, 2012).

Regardless of whether your district participates in the Am Ex program or develops its own "Shop Local" effort, the success of the initiative demonstrates the value in coordinated public relations and marketing as a valuable tool for local business districts. 

Check out these interesting links:

• HOW DOES A BUSINESS OR DISTRICT GET INVOLVED?
• 4 IDEAS TO PROMOTE SHOPPING IN YOUR DISTRICT

Can libraries drive neighborhood improvement efforts?

The idea that libraries can serve as anchors for neighborhood commercial corridors and downtown districts is not a new one. In our work, we often come across examples of libraries that are a critical piece of overall tenant mix. They serve as corridor destination drivers, spurring revitalization through activities and offerings that bring people to an area. 

A recently released study by the Local Initiative Support Corporation (LISC), in partnership with the Institute of Museum and Library Services, explores this concept further. The report considers library (and museum) efforts that have become catalysts for neighborhood revitalization, particularly in poor communities. Entitled "Museums, Libraries and Comprehensive Initiatives: A First Look at Emerging Experiences", the report identifies 50 examples of library and museum efforts aimed at improving the overall conditions of distressed communities. 

Although not a low-income community, one such example we have come across in our work is the New Rochelle Public Library in Westchester County, NY. Located in the heart of the traditional downtown district, the library is an anchor for the business district, as well as the large public park that abuts it to the rear (not unlike Bryant Park in New York which abuts the New York Public Library. A self described "community resource", the library is well loved, and well patronized by the City's 72,000 residents. One five-star review on Yelp sums up the library perfectly: "What a great community center! I teach there, I research there, go to great music and cultural events at Ossie Davis theatre. It's so much more than a place to get books and videos. I observe it as a vital resource for people of all ages. And it is well run. Altogether a great neighborhood venue."

The economic impact of anchors like libraries should not be underestimated. In New Rochelle, the popular children's storytime has become a place where parents and day care providers can gather with their children, which in turn spurs demand for lunch at the local coffee shop. It is a virtuous cycle that reinforces downtown as something much more than just a shopping destination. It reinforces the traditional role of downtown as a civic and cultural destination, which in turn drives patronage to local businesses. 

The New Rochelle Public Library, which can be seen in the
background on the right side of the street, is a major cultural
anchor in downtown New Rochelle, NY. 

In low-income communities, the library becomes even more important. It becomes a place to do more than borrow books. It is a place to overcome the digital divide, provide job training and workforce placement services, and to close the gap between information and resources that is so prevalent in lower income communities. In 2014, the Aspen Institute produced a report entitled "Rising to the Challenge: Re-Envisioning Public Libraries" that looked at the new role that libraries are playing in providing a social safety net for people in search of educational opportunities, jobs, health and government resources. And as people increasingly gather their information from the internet, providing internet access in communities where that access is limited is even more crucial to ensuring an even and equitable playing field for people of all incomes and backgrounds.

Can your local libraries become an anchor for commercial revitalization efforts?

Yes, but as the LISC reports notes, library efforts need to be tied explicitly tied to community revitalization efforts. Library leadership needs to be at the table participating in community planning efforts. In New Rochelle, the library is an active participant in the activities and programs sponsored by the Business Improvement District. "BID Family Days" take place on the Library Green from September to June and feature music, crafts, performances, films, entertainments and educational activities. 

Libraries as "leading" investments

The idea here is that libraries can serve as "leading" investments when private sector investment is not yet forthcoming. Improvements in physical infrastructure by public entities can help catalyze investment and change perceptions in a way that has a two fold impact. First, the community benefits tangibly from the availability of new resources, and second, the perception of the community can begin to shift in a way that signals opportunities for much needed investment. Eliminating blight, driving pedestrian traffic, supporting small business opportunities - these are all fundamental to corridor improvement efforts and are a tangible demonstration of the impact of community facilities on local business districts. 

ULI, HUD, ICSC Publication on Retail in Underserved Communities

In 2014, the Urban Land Institute, in partnership with the U.S. Department of Housing and Urban Development and the International Council of Shopping Centers (ICSC) published "Retail in Underserved Communities". The publication was the result of a convening of over 30 national urban markets experts (including our own Principal Larisa Ortiz) over the course of two days. Participants offered insight into the challenges facing underserved communities and the opportunities to advance both practical and policy solutions at the local, regional and national levels.   

The basic challenges facing underserved markets are outlined nicely in the report. In addition to the lack of grocery options, underserved markets also often lack retail for convenient health care, dry cleaners, beauty salons, banking, and other neighborhood conveniences. This publication points out what we know first hand, the challenges are not simply "economic market conditions", they often reflect site specific factors such as:

• Site availability and assembly
• Local approval processes
• Matching the retailer to the market
• Inaccurate or insufficient market information

We particularly like the case studies that provide detail on the examples shared over the course of the retreat. With that, enjoy!

It's not about the retail, stupid

In my work I often talk about the need for communities to "get retail ready", but the truth is, it's all a ruse. What I'm often really saying is "please don't use your limited resources for retail attraction  just yet, because frankly you've got lots of other things to worry about!" The truth is, great retail streets are a manifestation of the communities that surround them, not the other way around. There is a maxim in retail that most can recite and that holds true here: "retail follows rooftops."

As a community development practitioner - which is truly what I am - I take this maxim very seriously. In urban communities where population decline has left pockets of poverty and what we have come to call "shrinking cities", the lack of rooftops is a major challenge. So often, the first step in building a great retail district begins with building rooftops - and the ensuing density and market demand that is ultimately required to support businesses.

In 2013, the Association for Neighborhood and Housing Development asked our firm to lead an assessment of the economic development activities of community development corporations in New York City. The final report, entitled "Roadmap for Equitable Economic Development" laid out a framework for supporting the natural evolution of the community development industry. More and more, CDCs are building upon their success in housing construction (i.e. those all so important "rooftops") and expanding their role into a wider variety of community development activities, including small business support, commercial corridor improvement efforts, land use advocacy and workforce training, to name a few. This is truly a natural outgrowth that reflects the success they have had in community building efforts - success that has now positioned many of these groups to take on a new role - improving local commercial corridors and ensuring that residents have access to vital goods and services.

The hierarchy of community development, from ANHD's
"Roadmap for Equitable Development"

But let us not forget that getting there took decades - and the work is far from done. We must ensure that this work remains funded through financial tools that have played an instrumental role in helping to build much needed affordable housing.

I share all this because we recently started a project in a challenging urban community in New Jersey. At a forum discussion with local residents it quickly became clear that retail was a concern, but perhaps not a priority. What emerged was a portrait of a deeply troubled community where the complicated issues of poverty, lack of viable job opportunities and rampant crime were first and foremost on people's minds. One participant shared her experience holding a young boy in her arms after he had been shot and going through two towels to keep him from bleeding out. Her struggles are real. The challenges of her community are real. The fact that loitering at the local bodega might result in an assault, robbery or worse are real. In this kind of environment, local businesses struggle just like everybody else. They often cover window openings - or worse remove them entirely - to prevent being cased by thieves. Local business owners struggle to make ends meet, deferring investments and maintenance that might make them more attractive places to shop. It's a deadening cycle that can be difficult to break.

In the end, these efforts are really about improving the market dynamics of community, which may mean spending 15 years on housing development. So in the beginning, it may not really be about the retail, that might have to come later.

'Micro' Leasing Equals Big Opportunity for Local Eateries in the Age of Nouveau Food Courts

By Scott Landfried

I recently came across a small article in the November 2015 issue of Shopping Centers Today, which discusses the trend of micro leasing space to independent food tenants by developers seeking to offer both variety to customers and opportunity to owners. Typically, local small businesses and new restaurants are too small and precarious for developers to court them and sign a lease agreement, but micro leasing allows spaces to be broken down to small (500-1,000 SF) spaces, allowing for lower start-up costs and making expansion less prohibitive.

Fort Worth based, Trademark Property is one of these developers poised to "offer smaller spaces, lower startup costs, shorter term leases, free outdoor seating and generous tenant-improvement packages" (SCT, Center's 'micro' leasing strategy targets local eateries, Nov 2015).

This concept seems similar to Berg'n, a beer hall and food court that I've visited a few times since its 2014 opening in the Brooklyn neighborhood of Crown Heights. Berg'n offers a common eating/drinking area, four small bays of local eateries, plus a full bar and a coffee shop within the same space. This makes for a stress-free one-stop shop.

This is not a one-size-fits all sort of recipe for shopping districts, but there continues to be greater community appreciation for and a desire to have more local small eateries in the mix. I don't see this form of nouveau food court going away any time soon.

The rising popularity of food carts, especially in cities like Portland and Austin as well as micro-restaurants - small, full-time operations with limited seating and a limited menu - raises an interesting question. Can this economic model might be replicated along other commercial districts?


Additional reads:

• Clustering Micro-Restaurants
• A Handful of 'Micro-Restaurants' Will Call Fort Worth's Waterside Development Home
• Slated for Midtown: Collection of Five Micro Restaurants Made of Shipping Containers
• Bethany Village's new micro-restaurants bring food cart experience to the suburbs 

Six basic principles for building thriving commercial districts in low-income communities

Our most recent projects have taken us to Bridgeport and Trenton, two former industrial powerhouses, both now struggling with the impact of industrial displacement, poverty and population decline. Yet there remain residents in these communities for whom improvements are critical to life outcomes. And in our opinion, we really don’t have much time to waste. As Nathaniel Hendren, Harvard Economist and founder of The Equality of Opportunity Project was quoted in a recent New York Times piece, “where you grow up matters.” So simply put - and so true. His research has shown that for “every extra year a child spends in a better environment – as measured by the outcomes of children already living in that area” improvements to childhood outcomes can be demonstrated.

In our work we have found that addressing the corridor challenges of the lowest income communities means thinking more creatively about how to address anemic market conditions. So for practitioners working in these challenging and complicated environments, we share a few principles that we have come to deploy in our work....

1. Support the creation of community retail nodes – rather than dispersed retail. Businesses thrive in clusters, and the convenience of being able to patronize a few businesses at once will enhance the appeal of the district as a whole - benefiting all businesses by driving more traffic than each might on their own. 

This existing node of retail may not look like much,
but it serves the local community and is located at a well trafficked intersection. A district like this is in a better position to benefit from improvements than an area that is less visible and off the beaten path. 

2. Visibility, accessibility and convenience. Retail needs a good location to work. You can’t fabricate these fundamental market conditions if they don’t exist, so don’t try to create a district somewhere where the fundamentals aren’t in place. In some places, whether we like it or not, this means a place that can be easily accessed by car (with adequate parking). In other places, this means access to public transit, or an easy, direct walk by foot or bike. If you ignore this principle you are just setting yourself up for failure. So make sure you are working on retail concentrated in places that are accessible and receive plenty of visibility. Think busy intersections rather than sleepy side streets (even if those side streets once contained vibrant retail in days of yore). 

And sometimes minor, seemingly inconsequential barriers to access will hurt sales. Making your customers walk any further than they have to can result in them hopping right into their cars to find a parking spot somewhere where they won't have to walk. Sad but true. 

Great parking on one side. A great jazz club restaurant on the other. In between? A canal.
So all those folks leaving work in the evening are ten times less likely to do anything but jump in their car and go elsewhere. 

3. Consider businesses that do not depend as heavily on discretionary income, because if you don’t have enough residents with discretionary income right now, it might be awhile before you have enough to support new businesses. So instead think about uses that can be sustained through public funding or other income streams, such as publicly funded day care centers, urgent care clinics, non-profit service providers, educational or workforce training programs, etc. These kinds of businesses not only fill space, but they also generate traffic can result in the added benefit of creating enough demand to support a small amount of auxiliary businesses, from food related businesses – a pizza shop or deli – to a pharmacy or convenience store.

Increasingly urgent care facilities are taking over ground floor retail space.
These facilities can provide an extra level of medical service in communities that desperately need them. 

4. Build density – sometimes there is no way around it. In some communities, population figures are so anemic that the only adequate response is to build housing. This is where Community Development Corporations have excelled over the past few decades, using important financing tools like the Low Income Housing Tax Credit or Section 202. While these resources are unfortunately increasingly limited, they have proved critical in turning neighobrhoods around and in creating the market demand over time that can support small businesses.  

A vacant lot of Southern Boulevard in the South Bronx

The same vacant lot after local CDC WHEDCO developed the project into quality affordable housing.

5. Focus on the physical environment – focus on improvements to the physical environment that will address issues of safety. Think about graffiti clean up, street clean ups, vacant lot clean ups – these kinds of activities can help build neighborhood pride and in fact do have an impact on neighborhoods. Research funded by LISC, one of the nation's largest community development intermediaries, found that the impact of Philadelphia's vacant lot program had a positive impact on the sales of local businesses, real estate values in the district and shopper preference. A win-win all around. 

New Kensington CDC in Philadelphia was one of the early adopters of the vacant lot maintenance program, now called Philadelphia LandCare. At some point these lots may be developed, removing the "missing teeth" from the district. But for now the maintained lots have made a significant improvement along the corridor. 

6. Focus on helping small businesses address public safety and visibility issues. Sometimes small investments in physical improvements, such as lighting or signage, can help existing businesses capture more market share. Moreover, these small investments can make a big difference in the perception of public safety. A transparent window, or well positioned lighting, can make a store that most didn't think twice about visiting more appealing. 

This seafood restaurant in a lower income community in Queens is doing lots of things right.
Transparent windows, outdoor seating, blade signs. 

The main take away is that a commercial district in a lower income community must find ways to ensure that every potential dollar that can be captured is in fact captured. There is little room for error. That means removing all possible hurdles that prevents customers from easily and conveniently patronizing local businesses. And in some cases, that means building the market to create more demand for retail - read new development. While that process can sometimes take a long time, with a strong road map and an understanding of the kind of market conditions necessary for business to thrive, I have seen time and again that neighborhoods can in fact change and improve, benefiting the residents that live there.