Monday, April 24, 2017

Driving Visitor Demand

In our retail market analysis work, we always consider three main drivers of demand for downtowns and commercial districts: Residents, Employees/ Workers and Visitors. In our latest work with Stantec in Morganton, NC we were faced with a challenge of a vibrant downtown with no in-town lodging or accommodation options. LOA and the team at Stantec stayed overnight in Morganton for three days of focus group discussions in the closest possible lodging we could find about 2.5 miles outside of downtown Morganton – a 6 minute drive away or a 51 minute walk!

Morganton, like many other downtowns in semi rural locations, is situated close to a network of state parks, natural trails, outdoor recreation facilities, wineries and heritage sites that attract hoards of seasonal visitors. These attractions located within downtown or close to downtown are bringing in visitor demand in the form of families, young Millennials and professionals, and even empty nesters. Without a downtown lodging option, many of these visitors, like our team, would have to make reservations outside of town. Furthermore, right around the corner from available lodging options, there are often banks, restaurants and drive-thru fast food in typical strip mall formats that might pull spending away from downtown.

Having hotels downtown are critical in driving visitor demand. They extend the stays of not only leisure visitors but also business representatives who are in town for conferences or meetings, and therefore increase the chance of generating sales for local businesses. In Center City, Philadelphia, for example, the presence of over 43 hotels enabled a record 3.11 million occupied hotel room nights in 2015, augmenting retail spending in the downtown by an estimated $411,790,849.

In downtowns with large institutions such as hospitals and colleges, business travelers and group travelers are already common visitors for conferences and work exchange programs. In fact, in Morganton NC, institutions such as the NC School for the Deaf and the Carolinas Blue Ridge Healthcare Center already bring in a number of patients and professional visitors throughout the year. These groups come through downtown normally between Monday and Thursday and shop or look for things to do at later hours of the day, after whatever consultations, conference or sessions they’ve been attending. Hotels, with their myriad of leasable venues, can also facilitate year-round conventions and trade shows that are often attended by out-of-towners.

In order to effectively maximize the potential visitor demand, downtowns not only need to offer lodging and accommodation options for overnight stays but stores also need to stay open later, or past 6pm. After all, 70% of all consumer spending (both locals and visitors) takes place after 6:00 pm, according to Roger Brooks International. In order for later opening hours to really work, a critical mass of businesses must be open after 6:00, not just a few. 

On the other hand, leisure tourists often visit and occupy hotels on weekends thru Monday. In Center City, the 88.7% Saturday hotel occupancy rate is indicative of the strength of leisure tourism there and is only second to New York City (89.6%) among major northeast cities. According to Center City District, overnight leisure tourists are likely to spend more at restaurants and retailers and help account for the strong retail demand created by tourists in Center City.

If you've already bought into all of these benefits of downtown lodging, the first step you should be taking is to conduct a feasibility study.Using projections of occupancy and average room rate, a downtown can estimate whether a new lodging facility would make financial sense. After all, downtown hotels should be assets that attract 'new' customer to businesses nearly every day and in addition should generate significant tax revenues and create jobs for local residents.

Tuesday, April 18, 2017

Retail Health Expansion

Until the age of 18 I was seeing same old Doctor Lee from my home town for all of my primary care needs. Once I left for college, I have not seen the same primary care doctor more than twice because I’ve moved to a different neighborhood or city every year and have not been able to commit to a clinic, much less a doctor. Many other young professionals like myself that are moving to new towns and cities for college or work are increasingly becoming reliant on urgent care clinics or retail clinics that provide quick, convenient medical services right in our neighborhoods. A high proportion of twenty- and thirty- somethings do not have a primary care provider as they are transitioning into new environments and places all the time and as consumers of healthcare, they are driving the demand for more “convenient care” that is accessible and affordable.

According to a national online survey of 2,019 individuals spanning all demographic and health segments conducted by Oliver Wymann, consumers today want health providers that combine the best aspects of traditional retail (convenience, access, cost transparency) with the best aspects of traditional care models (quality of care, high trust in the provider).

Innovative health providers are indeed responding to this market demand and are introducing more and more urgent care centers and retail clinics in shopping malls, downtown commercial districts, or wherever consumers are already shopping. This shift in retail health is quickly changing the character of traditional commercial streets as they become more lifestyle-oriented, making health check-ups and doctor visits a part of the day-to-day routine.

What is convenient care?
Convenient care often refers to both urgent care centers and retail clinics. In fact, some of you shoppers may have already come across retail clinics – these are often located within pharmacies like CVS or big box retailers like Walmart and Target. They generally offer limited services for “minor acute conditions with clear clinical guidelines”. Although urgent care centers are slightly more comprehensive in being able to treat patients with higher-acuity conditions and provide simple lab tests and basic x-ray services, both urgent care centers and retail clinics offer walk-in services with extended evening and weekend hours making it convenient for urban dwellers working long hours to still take care of their health after work or on days off.

Overall Trend and Site Selection
The health-care industry has, for awhile, been moving away from centralized campuses to bring services closer to two key patient demographics that are growing in numbers today – the elderly (baby boomers) and the children (offspring of young Millennial families). Convenient care is helping the industry do exactly that and in New York, urgent care centers are exploding in numbers, reportedly growing 26% between 2011 and 2014.
Urgent care is a volume-driven business that requires customer visibility in order to allow customers to familiarize and become comfortable with the business.  Consumers need to know where the urgent care clinic is, so that if and when they need you, they are able to immediately direct themselves there. Therefore, there are very specific criteria to be met in the site selection process of such convenient care centers:

Site Selection Criteria
  •        High population density must be present for the urgent care clinic to capture sufficient volume to breakeven

a.       In particular, populations with predominantly younger families and high household incomes. (This is in part due to the high numbers of pediatric patients seen by primary and urgent care practices).
b.      Also, hip areas with newer young professionals who haven't yet found their own local medical practitioners
  • High traffic areas (in cities, close to transit stations)
  • Co-located with family-friendly retail such as pharmacies, banks, grocery stores, day-care centers and restaurants. (Nearby retail and restaurants can increase traffic flow to convenient care centers by being on the same path/ route of day-to-day activities).
  •  Medium-sized spaces ranging from 2,000- 5,000 SF
  • Ground floor (According  to Neil Kugelman, co-founder of Urgent-MD family urgent care centers "Being on the ground floor allows the community to know we're there if they need us, 365 days a year, seven days a week.")
  • Parking preferably directly in front of stores so that elderly or handicapable patients don’t need to walk far distances from their vehicles
Benefits of retail health on our commercial corridors
If your commercial district is facing high vacancies, convenient care might be your next space filler. Urgent care clinics are proving to be attractive tenants for developers who want to draw people to declining retail facilities because these centers are often financially- sound enterprises, according to Bloomberg.

In addition, convenience care centers are typically open late, seven days a week – which means they’ll be keeping their lights on later and encouraging constant foot traffic throughout the week, leading to more eyes on the street.

Not forgetting least of course the added health benefits to your neighborhood residents. The growth of convenient care on commercial corridors can reduce unnecessary emergency department utilization, expand access to preventive services such as immunizations, supplement primary care through extended evening and weekend hours, and connect patients who lack primary care physicians with permanent sources of care.

Sure, in the past health care providers have not been particularly brand-savvy storefronts, however the industry is quickly learning to use retail spaces to build stronger relationships with their customers and they need your active and vibrant commercial districts and streets to do just that!

Thursday, April 13, 2017

Restaurants: A Key Ingredient

Last year, the U.S. Census Bureau reported that the restaurant industry sales had surpassed grocery sales for the first time in history. Accounting for approximately 15% of all retail spending in Q1 2016, restaurants are making a strong return in both shopping centers and downtowns. A lot of this growth can be attributed to fundamental, cross-generational consumer shifts and also macro-economic changes. About 80% of consumers today find that dining out with family and friends is a better use of their leisure time than cooking and cleaning up, according to an NRA Restaurant Industry survey, and about 9 in 10 consumers say they enjoy going to restaurants.

These consumers eating out at restaurants are not just Millennials like you’d think. In fact, although Millennials dine out more frequently than older generations, it is the baby boomers that are contributing most to restaurant sales. Given their higher disposable incomes, they are spending 14% more than those Millennials aged between 25 and 34 years old, as reported by CBRE.

The growth of restaurant sales is being felt all around the world and in the US, across all markets – urban and otherwise. Downtowns – small and big – can clearly stand to gain from this growing cultural shift towards eating out by integrating food services with retail and entertainment to round off the holistic downtown experience.

It seems that restaurants may be the key ingredient to getting even more people downtown – from young, hipster Millennials to the families and empty nesters.

What are the possible impacts of adding restaurants to your retail environment?
  •        Increased retail sales
  •        Increased property values
  •        Increased customer dwell time

If you’re still not convinced about adding restaurants to your retail mix, a recent ULI study of a sample of eight shopping centers found an uptick in retail sales/SF of 1.2% following food service extensions. In the U.K., a food court extension in a shopping center in Southampton generated a four minute increase in shopper dwell time leading to an extra $55 million of sales per annum. In another British shopping center, a cinema and restaurant extension of over 75,000 SF increased dwell time by more than 20%. This last finding further illustrates the benefits to downtown of integrating entertainment and dining options. All of these benefits to retail sales, property sales, and dwell time are now being referred to collectively as the “halo effect” of restaurants, according to JLL.

The New Categorization of Food Services
However, before increasing the restaurant and food service offerings in your downtowns, it is important to understand the popular types of food service categories that are already available today, what their requirements are in terms of space and who they may be serving in your downtown. By diversifying your food service offerings to meet the various customer segments in your commercial districts, you will be better able to attract a larger crowd to spend more time and money downtown.

ICSC and JLL recently put together an extensive report on the food and beverage industry that clearly outlines some of the food service categories popular today. The table below aggregates some of the information presented in the report to help you understand the various types of restaurants and food service operators, their customer bases, trading periods and dwell times, so that you are better equipped to assess your current food service offerings and can make informed decisions on retaining and attracting new food operators to your downtown. 
(Zoom in here)

With a more articulate understanding of what food services are out there –
  • Which of these categories are best suited to your customer base downtown?
  • Which ones are currently underrepresented?
  • Do you have the appropriate spaces downtown to attract these operators?

How to integrate the right food services within downtown
Even if your downtown currently faces space constraints and low vacancies (congratulations), many food service operators are getting innovative and adapting to whatever space is available. “Pop-up” restaurants and street food vendors are appearing all over cities and small towns in alleys, abandoned warehouses or underused buildings. These oddly-placed or temporary food service operations are especially appealing to consumers who are increasingly becoming more knowledgeable about food and are driving trends towards more concept-based and experience-based restaurants focused on design, branding and community-relationships, rather than just ingredients.

Strategically locating a range of restaurants and food services within your downtown is also important to consider. If we follow rules applied in many successful shopping centers, about 20% of food services can generally be dispersed across downtown but should primarily include to-go offerings such as coffee or juice bars and sweet treats, with the remaining 80% of food services clustered together and focused on “fast-casual”, “casual dining” or a combination of each.

In particular, the core of your downtown where retailers and entertainment anchors are already located may be a key intersection or junction to locate an accompanying cluster of restaurants, especially if evening foot traffic is a problem that the downtown faces. Day and night time entertainment offerings such as cinemas, bowling alleys or performance venues are opportune locations for food service expansion.

Another approach to take in locating food services and restaurants downtown is to align price points of food offerings with that of entertainment offerings. As the JLL report states, “Foodservice price points should not be much more expensive or cheaper than the other leisure and retail brands; price synergy is clearly a prerequisite across the various use categories.”

The importance of food service downtown
Overall, the market indicates that the future of gastronomy – whether downtown or in shopping centers – is certainly looking up. More and more retail experts are pointing their fingers at restaurants and food service as the savior of commercial districts with the rise of e-tailing.  It is therefore important that downtown organizations acknowledge the rise of the eating out culture amongst consumers so that they can actively stay on top of gourmet trends. Keeping informed of these trends however is not all of it! The right balance of restaurants and food service offerings must be informed by the needs of customers within the trade area and also by regional competition. Hopefully the table of food service categories above allows you to easily match your district’s food services needs to your customers and their habits. 

For more information, read "The Successful Integration of Food & Beverage Within Retail Real Estate" by ICSC and JLL here and "Now Serving Retail Growth" by CBRE here.

Tuesday, April 11, 2017

The Revival of the Book Store

Amazon Books in Seattle, Washington. Photo: Getty Images
Last week, Amazon announced it was opening its second bookstore location in New York City across from the Empire State Building on West 34th Street. Since 2015, Amazon has been growing its brick and mortar presence in the world of books, beginning with its first Amazon Books in Seattle, followed by another in San Diego and then Portland.

The stores are a prime example of omni-channel retailing as customers walking through the aisles and browsing physical books are required to also use their mobile phones to check prices through the Amazon App. Just by simply scanning a book’s bar code with their phones, customers are automatically directed to the product page on the Amazon App where they can check product prices, read reviews of the book, and see other suggested similar books. Furthermore, if something happens to be listed for sale on the Amazon app, then it’s also on sale in store.
Scan the bar code and use the Amazon App to find out the price of a book in store. Photo: Business Insider
Once at the cashier, payment is made through an Amazon account, speeding up the payment process by using pre-entered payment details on the Amazon app and directly emailing receipts to connected accounts. Overall, it seems the process of buying a book at an Amazon bookstore is QUICK, EFFICIENT, but apparently impersonal.
A local independent bookstore in Fort Greene (Brooklyn, NY). Photo: Greenlight Bookstore
The intimacy of bookstores, however, appears to be a growing desire amongst customers that are still visiting brick-and-mortar stores. According to a growing number of independent bookstore owners, readers who are still purchasing books in stores want to “embrace books in all three dimensions and to select them in a tactile, less anonymous marketplace” – the antithesis of Amazon Books. To meet these wishes, many local neighborhood independent bookstores are doing the opposite of Amazon Books and offering customers personalized services, specially- curated selections of books, and community events that bring readers together to share ideas and collaborate. Many independent bookstores in fact become physical community spaces that offer readers, young and old, the opportunity to hang out and engage in social activities relating to literature.

Writopia Event for youth on the Upper West Side. Photo: Book Culture
At Greenlight bookstore here in Brooklyn, NY, poetry salons are organized every month to entice adults to the bookstore in the evenings after work to enjoy a glass of wine while enjoying the performances of novice and expert poets from the community and beyond. In the day, puppet shows and story times lure families in to enjoy a more kid-friendly activity while still being able to engage with others from the neighborhood.

The localism movement spreading through the world of bookstores has proven in recent years to be quite successful with the number of independent bookstores in the US growing by 27% since 2009 and sales increasing around 10% from 2015 to 2016, according to data from the American Booksellers Association (ABA). The ABA today boasts more than 2,200 stores as members while national chain retailers such as Borders and Barnes & Noble dwindle in numbers, closing down all throughout the country.

Here in New York especially, independent bookstores like Book Culture, WORD, Mc Nally Jackson and Greenlight are expanding and opening second and even third locations in neighborhoods lacking bookstores and popular community spaces. Some of these stores are doing so through innovative financing, giving local communities the added stake in the businesses. Greenlight Bookstore, for example, raised $242,600 for their second location in the neighborhood of Prospect-Lefferts Garden with the help of 95 people – some friends and some family but mostly folks from the neighborhood. The same financing model has also been replicated by other independent bookstores across the country like Avid Bookshop in Athens, GA and Print in Portland, ME. Community lending programs and crowdfunding campaigns have proven useful to these bookstores to not only raise funds but also spread awareness of their store, garner the support of locals, build momentum toward the opening of the store, and finally create a new place for the community.

Although Amazon Books may be opening brick-and-mortar stores all across the country, it is still miles away from offering the experience and intimacy of local independent bookstores. In fact, its latest choice of location in NYC by the Empire State Building and Time Warner Center indicates that the retailer recognizes it serves the tourist and visitor customer more than it does the local residents. Small independent bookstores continue to best meet the demand of locals with its specialized selection of products and localized knowledge of its customers. The small and intimate community events that are held in stores enable bookstore employees to engage with and really get to know local customers before being able to build such a smart, specialized service that cannot be met by other larger retailers. 

Thursday, March 30, 2017

The Future of Retail Panel – LOA Takeaways

This morning I had the pleasure to attend a panel of retail and real estate experts organized by the Commercial Observer here in New York City on the future of retail.  Panelists included Gene Spiegelman, Vice Chairman of Retail Services for Cushman and Wakefield, Isaac Chera, Principal of Crown Acquisitions, Susan Fine, Principal of Oases RE and Ryan Engel, Director of Business Development and Real Estate for Peloton. Below are our main takeaways:

How much is e-commerce affecting retail?
  • E-commerce has continued to capture a growing share to total retail sales (it has expanded from less than 5% in 2009 to over 10% last year).
  • The continuous growth of e-commerce has affected real demand for retail space. Thus, as retail rents were rising in past few years, demand for retail space was decreasing due in part to increasing online sales. Supply and demand for space are not following the typical curve due to new technological disruptions on how people shop.
  • Retailers that are in trouble now were already in trouble before; e-commerce is just accelerating that process (e.g. Macys, Sears)
  • In this context, an increasing number of retailers are seeing retail space (bricks and mortar) as a showroom and marketing platform where customers can try and interact with the products and brand and then order online.  Strong concepts like Apple Store, Bonobos, Warby Parker and Peloton illustrate the trend.
  • Also, in this current retail landscape we tend to see the number of service businesses go up (personal care, food and dining) and leases for retail businesses tend to get shorter

Will retail rents go down?
  • There is a lot of space in the market now and since demand for space is not following the typical supply and demand curve, rents will likely go down in a few areas; in NYC this will happen in SoHo, the Meatpacking District and some sections of Madison Avenue. Overall, according to panelists, rents will remain flat for a few years.
  • Despite higher vacancy rates panelists are “cautiously optimist”.  According to them, the online trend is not sustainable: “there’s only so much UPS and delivery traffic the City can accommodate”… “Stores are still the best way to distribute to the customer”.

What’s next for retailers? What are the next trends?

  • Despite growing of e-commerce, a number of existing retailers are quickly adapting and many interesting retail concepts emerging (as mentioned above, Apple, Bonobos, Warby Parker and Peloton).
  • Panelists expect to see more online companies (large and small) opening bricks and mortar locations, especially in short term leases, pop-ups, etc.
  • The stores that are (and will continue to) succeed have a strong focus on providing not only strong products, but an incredible service. For example, Starbucks has over 700 stores in Manhattan alone and their service accounts for a large portion of that success.
  • Retail experience will be increasingly curated to each individual customer. For example, the new Amazon bookstores resemble a traditional bookstore, but uses online data to suggest additional books based on customers shopping and browsing histories.
  • Big data is the next ‘thing’; increasingly retailers are using it to connect to consumers and personalize offerings. Panelists observed the retail industry is doing a better job at capturing and using big data than real estate: “there’s so much data out there and we haven’t figured out how to put it together yet”.

Tuesday, March 28, 2017

Retailer Spotlight Features New Experiential Concept: KidZania

At a time when malls and downtowns across the country are facing hundreds of store closings, property owners are looking to fill their spaces with more diverse tenants, everything from urgent-care centers to climbing gyms. Increasingly, experiential retail or entertainment concepts are filling up square footage vacated by department stores and have the added bonus of being immune to e-commerce.

One example of this approach is KidZania, an experiential learning center that teaches children ages 4 to 14 through role-playing. With the  first 
US location set to open in Dallas next year and Chicago in 2019, the company is seeking to expand in across the country.

Each KidZania is a highly detailed world of let's pretend set in a mini-city (complete with buildings, paved roads, and even vehicles) that allows children to role-play in more than 100 occupations and professions, such as doctor, reporter or truck driver. While performing tasks children earn KidZos (KidZania's currency) and the money is kept in the KidZania bank for children to spend at the gift shop and on KidZania's activities. To make the experience as authentic as possible, companies sponsor local landmarks and businesses. Kids may fly a British Airways plane, for example, or operate an H&M store.

Price Point: A session typically costs from $30 to $50 per child, depending on the location. Parents can drop off their children for a session, which lasts about four to five hours, or they can stay to watch from a deck that looks over the scene.

Target Market: Families with children ages 4 to 14 years old

History and Expansion Plans: KidZania was founded in 1999 in Santa Fe, a suburb of Mexico City. The company now operates in 24 locations around the world, including London, Dubai, Tokyo and Bangkok, with each location receiving about a half million visitors a year.

In the US, KidZania USA is owned and operated by a partnership led by E2W. The first locations in the country will go into Dallas’s Stonebriar Centre in 2018 and Chicago’s Oakbrook Center in 2019. The Dallas location will be built from the ground up, while the one in Chicago will occupy the upper level of an existing Sears store. The company expects to roll out 20 more U.S. locations over the next decade.

Site Requirements: As with any indoor theme park, each KidZania requires a lot of space to operate: 60,000 square feet and 30-foot-high ceilings. According to company representatives, the activity centers also are best suited to suburban areas with families and schools.

Contact Info:

Thursday, March 23, 2017

Client Case Study: Neighborhood 360 Commercial District Needs Assessment (CDNA)

Authored by Larisa Ortiz

About two years ago, LOA was engaged to lead the development of a commercial district needs assessment methodology (now known as the CDNA) that is used by the City of New York's Department of Small Business Services (SBS). The project was was funded by Citibank and helped support a budding partnership between the New York office of the Local Initiative Support Corporation (LISC), a long standing client of ours, and SBS. 

Using our own consulting approach as a starting point, we developed a formal methodology for collecting and interpreting both qualitative and quantitative data that could be taught and replicated internally by SBS staff. The results of these efforts are now coming into high-relief. In Staten Island alone, the tool informed the allocation of $1.5 million dollars in spending along the Bay Street corridor ("$1.5M grant to fuel business on Bay Street", SILive, 3/20/17).  And we have recently been engaged again by LISC and Citi to develop it into a national tool utilizing the lessons learned in New York. In its newest iteration it will be called the "Commercial DNA" toolkit, because in truth, the ability to understand and diagnose commercial districts is all about understanding their "DNA" and utilizing that information to make more informed investment decisions. 

To date the methodology has 
been used in six neighborhoods, with more to come. In each case, the data has been collected and turned into sophisticated overviews of each district, highlighting district challenges and needs. The reports can be download here

While not every City has the resources nor the capacity to complete these assessments in-house (nor should they!), we look forward to sharing the learning and the approach more broadly in its next iteration. Stay tuned!

Friday, March 17, 2017

The Importance of Assessing Public Spaces Downtown

LOA has worked with many clients to analyze their retail markets and develop retail retention and business attraction strategies. Our approach, developed over nearly twenty years of field work, has always acknowledged that communities - particularly underserved urban communities - cannot and should not be understood by market data alone. The syndicated data that is available is often inaccurate and misleads retailers or investors who use it to believe there is limited opportunity for new business. To combat that perception we developed a more holistic approach to inquiry covering four main areas of:
  1. Physical Environment
  2. Business Environment
  3. Administrative Capacity
  4. Market and Demographic Data (Residents, Workers and Visitors)

We call this the “Commercial DNA” approach because it helps us understand the fundamental and distinctive qualities and characteristics of each commercial district - much like our DNA is what makes each of us unique.

Each time we start a project, the first step we often take in our analysis is to conduct a thorough site visit of the commercial district. Rain or shine, snow or sleet, we head out to do an assessment of the physical environment. There are a number of things that we take note of on our site visits. This includes the accessibility of the commercial corridor to residents and visitors, and the conditions of streets, sidewalks, storefronts, buildings and finally, public spaces.

Public spaces in commercial districts can be some of the greatest assets in terms of driving and retaining foot traffic downtown. When it’s warm and nice outside, people are automatically drawn to being outdoors and if a public space offers them the opportunity to sit and enjoy the beautiful weather and atmosphere downtown, then they’re likely to stay outdoors a little longer.

In addition, when these spaces are located adjacent to or across from businesses, then a spillover effect might result in increased foot traffic and visibility for these neighboring businesses. A preliminary economic impact study of small, local businesses surrounding Sunset Triangle in Silverlake, Los Angeles, showed that “In general, responses indicated high levels of business confidence” following the installation of the public space. This was based on responses to a longitudinal survey that asked merchants about anticipated changes to revenue, debt, profit, number of employees and number of customers for the year subsequent to the public space installation. In fact, the majority of businesses within the two-block catchment area anticipated an increase of the size of their customer base; an increase in revenue; and an increase in profits.

Sunset Triangle Plaza Economic Impact Study (Source: People St)

In another example, the non-profit organization Great Streets SF conducted a study in 2010 of the Divisadero Street Parklet, located in front of the Mojo Bicycle Café in San Francisco, and found that the number of pedestrians increased by 13 percent, particularly on weekday evenings. The study also found that many businesses adjacent to the parklet experienced revenue increases after the installation of the public space, and in a few cases, created jobs as a result of increased demand. Great Streets SF however used a different method to come to the same conclusions as Sunset Triangle Plaza. Instead, direct observations were used to count pedestrians and stationary activities before combining the findings with pedestrian and business perception survey results.

Divisadero Street Parklet (Source: Flicker, Photo: Great Streets SF)

Urban designers and planners all over the country have increasingly been using William H Whyte’s revered method of direct observation to understand human behaviors in different urban settings. This methodology was made popular by his work titled “The Social Life of Small Urban Spaces” and continues to be adapted by organizations around the world. While it was originally created to study social behaviors, Great Streets SF and plenty of other organizations concerned with economic development are using this method to understand the relationships between public space activities and downtown business vitality.

So how do you start assessing public spaces in your commercial districts?
The process of direct observation often starts with a simple matrix like the one below created by Los Angeles Department of Transportation (LA DOT) for its People St program. The matrix allows observers to systematically note down each type of public space user (male or female, young or old), the activities they partake in (eating, drinking, shopping, vending, sleeping, sitting, using a mobile phone), and group sizes. These variables of course can be adjusted depending on the priorities of the study.

Interpreting the observations
The tricky part of this analysis is showing how public space impacts local businesses. The pedestrian counts and business perception survey data can point to overall visitation rates to the public space and its adjacent businesses. But what happens when you start visualizing this data on a map to show even more detail of where people are sitting and standing within the public space and for how long. This analysis then starts to become interesting for adjacent businesses fronting a public plaza or parklet as they are able to capitalize on signage placements, product placements and even outdoor seating for food and drinking services to capitalize on existing behavioral patterns in their districts.

On top of filling in the matrix shown above, I’ve also found it useful to print a simple base map of your public space and its immediate surroundings so that each observer is also able to spontaneously sketch patterns of movements and static positions observed within the public space. When everyone’s sketches are compiled and overlaid, these maps might bring to light common findings on areas conducive to various types of activities including vending, movement, rest, or even performance.

In 2015, as part of a public space study conducted for an international planning class in Tokyo, Japan, with Professor Jonathan Martin of Pratt Institute, I used a similar matrix to the one produced by LA DOT to conduct my own direct observations of a public space.

The Ookayama Station Roundabout, as I called it, was a public space used by various age groups. This was largely due to its unique location next to Tokyu Hospital, a large chain supermarket, and one of the most respected colleges in the country, Tokyo Institute of Technology. Users were moving quickly through the public space to get from the metro station to the various anchors and retail offerings on adjacent alleys, or roji as it’s known in Japanese. Despite the great number of users, pedestrians and cyclists were able to harmoniously share the sidewalks and station plaza and it appeared to be a thriving public space that interacted well with neighboring businesses.

Other than diverse patterns of movement, a large portion of users were also observed to be static and resting in the plaza under the shade of trees that were furnished with benches.  The comfortable and inclusively-designed benches that were low in height accommodated the elderly and disabled as they sat enjoying long meals purchased from nearby quick marts and limited service restaurants.

As I started sketching these observations on a map, and taking note of how long users were lingering at each spot and what they were doing while lingering, the sketches on the map began to look more and more like a type of density map that very clearly showed some user ‘hot spots’. The bigger circles on the map you see above depict popular locations within the plaza that people stood or sat in for longer periods of time (15minutes or more). These largely correlated with the locations of the trees and benches and although the smaller circles showed less time spent in the specific location, at least it indicated that users of the public space were using the location for about 5 minutes to do other activities like park their bikes or wait for crossing lights.

These visuals of user hot spots within public spaces can be especially useful to neighboring businesses that would like to understand where their customers are coming from or leaving, where store signs should be facing to capture attention of passersby, or whether public space users are already stopping along the periphery to browse storefronts of adjacent businesses. And if not, there are a myriad of actions that businesses can take to increase visibility from certain directions (e.g. blade signs) and also to bring their service and products out further into more populated sections of the public space (e.g. licensed push carts).

Cyclists and customers in private vehicles too are important to observe in this process although they are not immediate users of plazas or sidewalks; they pass through the commercial district on adjacent streets and alleys and should be remembered in the equation!

As the weather starts to warm up, grab a base map and an observation matrix and start assessing the public spaces in your commercial districts. Find out who’s already going there, what they’re doing there and if the surrounding local businesses can further leverage and improve on these existing assets.

Monday, March 6, 2017

The L-Train Shutdown

Bedford Ave L Subway (Photo: Roshan Vyas via Flickr)
In the past year, residents, workers and various stakeholders including business owners have been on edge over the impending 18-month shut down of the L train. The shutdown has been planned to enable repairs of the tunnel running under the East River damaged by Hurricane Sandy and would impair over 400,000 of New York’s commuters every weekday.

The computer-based technology called communication-based train control is a signal system that lets the Metropolitan Transit Authority (MTA) run more L trains by knowing precisely where each train is on the line. This technology has boosted service frequencies and, according to MTA board member Andrew Albert, gave rise to the “economic revival in Williamsburg, Bushwick, and other Brooklyn communities.” Since 1990, ridership has more than doubled at L train stations and quadrupled at the Bedford Avenue stop.

While the MTA and other agencies active in the planning of alternative transit options are full force with re-visioning streets and public transportation options, small businesses are in the sidelines fearing the worst. According to the Regional Planning Association, merchants have experienced up to 50% business drop-off in past L train closures and with the 18-month shutdown, the 1,000 restaurants surrounding L train stations in Brooklyn (855) and Queens (145) – including five Michelin star-rated restaurants – are bound to face similar impacts. In fact, the burgeoning bar scene and nightlife of Williamsburg and Bushwick will also stand to suffer greatly from the L shutdown since both neighborhoods boast more liquor licenses per square mile than any other neighborhood in the outer boroughs.
On-Premise Liquor License Density (Source: Rudin Center for Transportation)

While many visitors will still be willing to make the trip across the East River via other modes of transportation or other subway lines for destination drivers and restaurants like Peter Luger’s Steak house or the original rainbow bagels, other small businesses may not be so lucky. Non- convenience retail such as clothing boutiques and designer home furnishings that have grown in Williamsburg have become dependent on visitors as much as residents.

Minna Elias, the chief of staff for U.S. Congresswoman Carolyn Maloney who was also involved with businesses struggling during the Second Avenue subway construction, worries that little will be done on behalf of the businesses. In January, at a Town Hall meeting, both business owners and commercial real estate brokers came forward to highlight the already visible impacts of the shutdown on storefront vacancies and sales. According to Brooklyn Winery, a popular bar and venue for weddings, the L-train shutdown is already impacting bookings and business that normally get scheduled years in advance.

Although it might seem that the MTA’s needs of discouraging traffic are at odds with businesses’ needs to drive traffic, there are still steps that can be taken to mitigate the impacts of the L-Train shutdown. In a report published by NYU Rudin Center for Transportation last Fall, a useful recommendation was made to actively involve local chambers of commerce and business improvement districts in coordinating evening and weekend service to and from Williamsburg to mitigate impacts of the L-train shutdown. This effort could include designating pick-up and drop-off locations for ridesharing companies and taxis, or kick starting an optional benefit program for local restaurants, bars and shops to partake in that might consist of discount and voucher books for dining and shopping.

Fortunately, the conversation with local businesses is only just beginning with the help of L-Train Coalition, a community group of engaged stakeholders, community organizations, businesses, and concerned citizens. The group is looking to add the thoughts and needs of the business community to the larger conversation through surveys and discussions. Hopefully the findings from the surveys will point to potential programming strategies that business owners are willing to partake in and we'll be keeping a close watch on the results of their efforts. 

Coworking Spaces, Should Corridors Seek Them Out?

Ranging from large spaces. Coco, Minneapolis/St. Paul. 
Although we generally think of the tech industry when we think of start-ups, a relatively
new start-up has been emerging for years without much noise in the industry. We are talking about co-working operators and spaces.  

It's really a quite simple business model. Operators are providing a service for those that need a space to work and for those that would benefit from co-habitating this space with others in the same or complementary industries. Operators provide varying levels of space to fit the need of their customer and can offer anything from whole offices to single desks but provide shared amenities such as wi-fi, conference rooms and meeting spaces, kitchens, coffee, in-house cafes, mail and package services, etc. Forbes notes, "The operator provides flexible terms allowing renters to move in and out and upgrade or downgrade with short notice periods. Perhaps the most important characteristic, the operator designs community building programs and events to create a strong business network among its renters."

Co-working operators are not however always seeing profit and have to make due with influxes of renters and cash flow. On the other side, co-working patrons may also deal with nuisances within their spaces such as consistent loud noise, hidden fees, a barrage of rules, dirty facilities, and competitors too close for comfort. 

To the more small and intimate. Central Working, UK.
Who's in the game?

WeWork is the largest co-working operator in the industry with spaces spread around the globe. They definitely enjoy more economies of scale while other small operators like Bathaus, a co-working space in Brooklyn, infuses other income sources into their revenue stream through event space rental and they also enjoy a small niche community feel.

Who needs a co-working space?

Typically those that need a co-working space are young entrepreneurs who need and want job control wherein they can work as much or as little as needed. It is for those that seek community and perhaps need a space outside of a home office to meet clients. "Freelancers, remote workers, and other independent professionals" also fit the bill according to Harvard Business Review. This is likely because they need the shared amenities and are not in the market for their own office just yet. The added benefit of increased networking and collaboration opportunities make co-working spaces appealing to entrepreneurs.

Why does it matter to commercial corridors?

Diversifying a corridor with co-working spaces can bring great results to visitation downtown, including daytime workers who are able to spend money on food and convenience items. Given that the average co-worker is a “college-educated professional within their mid-twenties and late-thirties, primarily working within the creative industries, such as web developing, graphic design and programming, or new media” (Foertsch 2015), there appears to be many similarities between them and Richard Florida's ‘creative class’. Retailers downtown who are expecting an influx of co-workers therefore need to recognize the lifestyle preferences and retail expectations of this customer. According to Richard Florida, the creative class enjoys high quality amenities and stimulating environments that will encourage their own creativity. This might take the form of a vibrant downtown cultural scene with late night and weekend events or mixed-use streets that enable co-workers to shop, work and play locally. 

A 2016 study of WeWork Dumbo and TEEM Harlem, co working spaces in NYC, showed that co-workers are indeed more likely to dine out for lunch or grab a meal locally after work even with food pantries and coffee bars provided within the work space. Food and drinking places therefore need to remain cognizant of the varied working hours of co-workers in order to maximize sales and complement the offerings already made available in the co working spaces.

Examples of coworking spaces:
Industry City
QNS Collective
GreenSpaces NYC
Parisian Coworking Space - Deskopolitan
List of others in NYC

From elegant. Crew Collective, Montreal, Canada.

To eclectic. Conde de Casal, Madrid, Spain.
Co-authored by Nur Asri and Scott Landfried.

Wednesday, March 1, 2017

MASNYC Seeking Creative Placemakers for Livable Neighborhoods Program 2017

The Municipal Art Society of New York (MAS) is seeking applications from community-based partners interested in leading creative and cultural asset-based placemaking efforts in neighborhoods.

The goal of the placemaking efforts is to help foster economic development and enhance livability in neighborhoods.

Applications are due by Tuesday, March 7.

Interested applicants click HERE.

Round Up: Transit Hub Resurgence, Alleyway Installations, Color in a Gray City, A Changing Newark, Reducing Traffic in the Built Environment

Full steam ahead: Why transit hub development is seeing a resurgence
Transit hubs in Washington D.C., Philadelphia, and New York City see renewed interest and resurgence of development based on new emphasis of the whole transit experience beyond just the transportation to include the full immersive experience of dining and shopping as well. 

Chattanooga’s forgotten alleyways come back to life with architectural installations
Four alleyways in downtown Chattanooga have been transformed by artist's installations to remind residents of these often forgotten and unused passages. 

Pilsen: An Explosion of Color in a Gray City
Southwest of Chicago's downtown lies Pilsen, a neighborhood that has evolved over the decades to become a current hot spot of culture, color, and community among the gray of the Windy City.

In Shadow of Manhattan, a Troubled City Is Having a Moment
Newark, New Jersey has tried many times in the past to turn the page and put itself back on the map. With many new investments and attention being diverted to its downtown, it might have its strongest chance yet.

A pragmatic six-point plan to cut traffic published by the State Smart Transportation Initiative gives much credit in reduction in traffic to mixed-use and Complete Street development. Vehicle-Miles Traveled, a measurable outcome, is discussed in this piece.

Image source:

Monday, February 13, 2017

LOA selected by City of Cambridge to complete City-Wide Retail Strategy

We are excited to announce that Larisa Ortiz Associates (LOA) was recently selected to complete a City-Wide Retail Strategy for the City of Cambridge, Massachusetts.

The project is designed to assist the City of Cambridge Community Development Department (CDD) analyze the retail environment as it relates to broader city-wide economic development objectives. Our team also includes Mike Byrne of MJB Consulting.

Harvard Square, Cambridge, MA

Monday, February 6, 2017

Retail Incubator Models and Downtown Revitalization: Understanding the Options

Many corridors across the country struggle to retain and attract viable retailers. In the same way, establishing a retail business in a downtown corridor is a capital and knowledge intensive endeavor. This post introduces different retail incubator models and explores how they can bridge the gap between empty storefronts and aspiring entrepreneurs.

Retail incubators are a specialized type of business incubator. Just as business incubators nurture the development of new businesses (tech, manufacturing, etc.), retail incubators provide critical assistance to retailers in their early start-up phase. This assistance encompasses multiple aspects of opening and running a business that range from coaching, access to capital and physical space to marketing and networking connections. A key aspect of a retail incubators that many groups excited with the concept fail to grasp is that an incubator is not simply a building with many stores, but it is a program of targeted services. In fact, retail incubators can be of various types and structures, including space-based models and program-based models.

Space-based retail incubators allow retailers to occupy small spaces within a larger facility that shares a number of services (think of the typical flea-market) at reduced rents. In this model vendors benefit from the proximity to other vendors (potential for increased foot traffic) as well as shared cost of typical operating expenses (utilities, etc). Also, the close proximity to other vendors allows the exchange of ideas and lessons among them and thus boosting collective learning and innovation. In this model, however, technical assistance to individual businesses is not the emphasis since space-based incubator facilities tend to house a mix of new and established retailers.

In fact,this type of retail incubator has been often established by property owners and developers to fill vacancies with innovative and creative retailers and generate interest in these properties and even in the neighborhoods they are located. For example, Shops @ MoDiv, a collection of tiny spaces housed in a historical building in downtown Grand Rapids was created Rockford Construction with the intent to incubate businesses that once established in the downtown facility will want to stay in the area and generate additional demand for other retail spaces downtown.

Shops @ MoDiv, a space-based retail incubator in downtown Grand Rapids, MI

Rockford Construction decided to experiment with the retail incubator concept when the developer could not attract tenants to fill the first floor of a historic downtown building during the 2008 recession.  Modeled after successful retail incubators in Ann Arbor and Portland, the developed created Shops @ MoDiv to be an innovative and flexible space mixing both start-ups and established retailers in an open and integrated floor-plan. The incubator contains ten retail spaces ranging from 100 to 1,000 square feet and leases range from six-months to five years. Tenants include boutiques, an apothecary that sells remedies and spices, artists selling their work, a bakery, and even a brewery.

It is important to note that for a real estate developer to build small spaces that require multiple tenants can be risky and not worth their investment, especially when compared to building a typical commercial building for a few tenants. In fact, Shops @ MoDiv were originated due to the lack of traditional larger tenants to lease the space. This is where a developer can potentially partner with a reliable public or nonprofit entity to take the lease and handle the work of filling all the incubator spaces. Such a partnership can mitigate the risks to the developer and help to activate the streetscape in the corridor while helping small businesses to get the exposure and experience needed to get established.

Another type of retail incubator is the program-based model. In this model, businesses are incubated in their permanent location rather than in a smaller space in a shared venue where it will outgrow. Thus, a key component here is that businesses are incubated to be able to stay where they were established. The rationale is that the location of a business is a key component of its success and that incubating a businesses at its permanent location right from the start-up phase will give new entrepreneurs a stronger understanding of the location, its local customer base and neighborhood dynamics and as a consequence enhance the business ties to the community and increase its chances of success.

A well-known example the Downtown Kalamazoo Inc. (DKI) Retail Incubation Program. Established in 2009 when downtown Kalamazoo, MI struggled to attract retailers, DKI spearheaded its creation enabled by a state legislation that allowed local Downtown Development Authorities to create, operate and fund retail businesses incubators. The program is managed by DKI’s Business Recruitment and Retention Committee and provide the following support to retail start-ups willing to open downtown:
  • Eighteen months of subsidized rent, incrementally reduced from a maximum of 50% or up to $830 monthly
  • Training in Merchandise Managements, Marketing, Human Resources, Financial Management and Customer Service
  •  Mentoring from a successful downtown business

In exchange, the program required participants the following:
  •   Attend all the training sessions
  •  Hire a bookkeeper or CPA approved by the program
  • Provide sales, inventory and expense information to allow tracking of success
  •  Keep the business open for 6 days a week or 50 hours a week

In four years the street-level vacancy rate in Kalamzoo’s downtown dropped from 20 to 2 percent. As the program filled key locations with new retail concepts, business attitudes towards downtown changed. In fact, similar programs followed suit throughout the country and are still active today, primarily led by downtown organizations focused improving downtowns’ vibrancy and overall business environment.

Regardless of the model, a retail incubator can never completely eliminate the challenges of operating a business. Many stores open and many will close. There is not a single blueprint for downtown revitalization. But for corridors struggling to attract established retailers like national chains, the retail incubator model might be an option to bring vibrancy and economic activity to the area while providing opportunity for local entrepreneurs who already understand the characteristics and demand of the local market. As with any downtown revitalization initiative, having an organization with the capacity and commitment to lead the effort is a priority.

For further information and resources on business and retail incubators, check out the National Business Incubation Association (NBIA) website.


National Business Incubation Association, Tips for Developers,

University of North Carolina Community and Economic Development Program Blog, Retail Incubators and Main Street Revitalization,, August 2016

Downtown Idea Exchange, First store opens under retail incubation program enabled by state legislation,, 2013