Tuesday, December 29, 2015

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.”

Tuesday, December 22, 2015

@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.
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 fa├žade and interiors) and whether the quality of products offered in the retrofitted stores match previous offerings from former Deals stores.

Monday, December 14, 2015

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! 

Thursday, December 10, 2015

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.

Wednesday, December 9, 2015

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.

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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. 
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I felt like Oprah interviewing Mary Reda and Jim Diego at the #P3retail booth!
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Baltimore Downtown Partnership has a great location. 
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Being interviewed by Cindy Stewart of ICSC, together with Jason Claunch of Catalyst Commercial 

Tuesday, December 1, 2015

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."

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.  

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

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.
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.