Tuesday, May 2, 2017

The Rise of Transit Retail

Bugis MRT Station.
Growing up in Singapore, transit stops were never simply places to catch a bus or get on the mass rapid transit. They were often also convenient places to pick up a quick sandwich, ice-cold bubble tea or even groceries. All across Asia, transit stations have been popular retail hubs for decades. Stations often offered a diverse mix of convenience retail and in some cases go so far as becoming shopping destinations in themselves.

The concept of transit retail, or retail at transit stations, is a “new frontier for retailers” in other parts of the world, particularly here in the U.S. Many chain retailers and commercial real estate brokers here are only beginning to view transit stations as viable locations for small format but high volume convenience stores. According to a recent report released by CBRE on retail expansion, one-fifth of brands from the Americas and the Middle East are targeting travel hubs as an emerging format for expansion, whether it be airports, commuter train stops, or railway stations.

Forms of Transit Retail
Transit retail does come in a variety of forms. They can be found:
Turnstyle Food Hall at Columbus Circle. Photo: Cristina U.
a) Before the turnstiles as in the case of Turnstyle at Columbus Circle, or
b) After the turnstiles like the newspaper kiosks on the platform of the West 4th subway station here in New York City

West 4th Subway Newspaper Kiosk. Photo: Jens Schott Knudsen
They can also be found at-grade or below-grade, depending on the design and structure of the transit station. Personally, I have always had the greatest appreciation for the retail options found below-grade located just before the transit turnstiles. Thunderstorms during the monsoon seasons in Singapore were common so thousands of commuters like me would often seek shelter at these subterranean retail outlets, sometimes for up to an hour! This form of transit retail was also particularly useful on the hottest days of the year, and I would imagine will be equally functional during the extremely cold winters we face here.

While below-grade retail has the added benefit of providing shelter from extreme weather conditions, at-grade retail storefronts better serve surrounding neighborhoods and its residents. In London, the Earl’s Court Station served by both the Circle and District Lines best illustrates the opportunity that at-grade retail storefronts have to seamlessly connect transit to the rest of the neighborhood. The retail spaces that front Earls Court Road and that also mask the station from the high street, offer residents of the neighboring garden houses convenient retail and amenity including pharmacies, take-out restaurants, groceries, and financial services. While I was in college, I lived a block away from the transit station and always found myself picking up a couple of oranges or a bouquet of flowers from the local grocer situated by the station exit on my way home.

Designing at- grade and street-fronting retail bays however requires paying attention to local architecture. The retail-cum-station fa├žade at Earl’s Court features buff glazed faience with green trimmings and all of the original windows of the station head house. This architecture allows the station to seamlessly weave itself into the old residential neighborhood with an ‘unbroken [historic] wall for pedestrians.  

Tenant Mix at Transit Stations
In terms of tenant mix, transit retail mostly consists of grab-and-go items such as newspapers, magazines, coffee, packaged food, drugs and cosmetics. In a study by Yeates and Jones (1998), findings corroborated that retail tenants more likely to be located near commuter rail stations include coffee kiosks, quick food stands, and dry cleaners. Other typically observed tenants include banks, convenience stores, and pharmacies.

At more up-scale and new-build transit stations, the retail component is becoming more advanced, and is often transforming the stations themselves into retail and dining attractions or destinations. According to Robert Cervero, professor and chair of city and regional planning at the University of California Berkeley, this is very much like the Scandinavian model of TOD where the “transit station is not just a logistical node but also a place to go, in and of itself.” In some cases, transit retail outlets have also become hosts to special events and celebrations that bring in customers beyond just commuters.

The Oculus in New York City is a popular example of a transit station that has itself become an architectural centerpiece and also a shopping destination operated and managed by Westfield Corporation, the brand name of shopping centers worldwide. Oculus not only features the typical transit retail mix with its Starbucks and take-out restaurants, but also boasts European boutiques, jewelers, full-service restaurants and even an Apple store within its 365,000SF space. Pop-up retail merchandiser units or carts measuring about 48SF allow experiential and transactional retail concepts to change seasonally, encouraging fashion forward and trendy shoppers to visit. Likewise in Chicago, at the Ogilvie Transportation Center in the West Loop, MetraMarket is a 100,000sf street-level restaurant and retail development that offers neighborhood service and retail outlets such as CVS and CityFresh Market but also destination food hall, Chicago French Market.  

Benefits of Transit Retail
The mix of retail enables commuters and also neighboring residents the opportunity to have a one-stop shopping experience on the way home or on the way between places. As more people move from car-dependent locations to transit-served areas, the consolidation of trips—in other words, one-stop shopping—becomes a “sought-afterlifestyle factor” (CBRE, 2016).

Transit retail is also beneficial to transit authorities that are looking for an alternative revenue stream beyond just fares. In Hong Kong, the MTR rail corporation reported that in-station retail generates approximately $270 million annually. And in London, Transport for London, the city’s mass transit system operator, reported over $95 million in gross rental income in 2013 (NAIOP, 2015). As long as transit authorities negotiate leases on a triple-net basis and keep their role to the minimum of receiving checks and overseeing contract compliance, they will stand to gain form diversifying their revenue stream. While transit authorities may be concerned over littering and station cleanliness following transit retail, many testimonies have been given that counter that apprehension. Metropolitan Atlanta Rapid Transit Authority (MARTA) and Chicago’s Metra affirm that customers and tenants have respected the cleanliness standards given by the transit agencies. In fact, according to Denise Whitfield, MARTA’s manager of concessions, “riders respect the cleanliness of the system” and there has been no litter impact since the first phase of MARTA’s retail program was introduced in 2010 (NAIOP, 2015).

Finally, retailers definitely stand to gain from ‘captive consumers’ who have no choice but to stay at transit stations while waiting for a train or bus to board, or until the weather subsides. The critical mass of daily customers and the highly-trafficked locations at transit stops ensures that an adequate amount of minimum daily traffic supports retailers. Of course, the minimums may differ by geography. Where minimum daily traffic is not sufficient near transit stations, then retailers and transit authorities must ensure that there are other activities generating even more traffic in the non-commute periods.

Designing for transit retail

All over the world, transit retail formats are growing rapidly whether in new station developments or in old retrofitted stations. Paris’ Metro and London’s Underground are leading the innovative rehab pack by converting old subterranean mezzanines and ticket booths into small but viable retail spaces. Other transit systems may also soon discover that there are similar opportunities in underused spaces that can be converted into retail spaces for lease. 

Other resources:
Yeates, M., & Jones, K. G. (1998). Rapid transit and commuter rail induced retail development. Centre for the Study of Commercial Activity, Ryerson Polytechnic University. Retrieved from http://173- 254-37-135.bluehost.com/JSCR/IndArticles/Yeates_N298.pdf

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