Wednesday, April 25, 2018

Vacant Spaces: Blame it on the Bubble?

Dan McCombie is a research associate at Larisa Ortiz Associates

In my last blog post, I briefly discussed how in a down market some building owners choose to hold their retail spaces vacant, holding out until the market rebounds rather than get locked in to an agreement with a lower asking rent. I closed the post by saying that regardless what tool is used to address vacancies (whether that’s through a vacancy tax, a pop-up model, or through some thoughtful rejiggering of lease structure) the important point is that something gets in the space for the overall health of the district. But is this too simplistic? I wanted to dig a bit further. In particular, I wanted to better understand more of the reasons behind vacancies, especially when there are so many ways to temporarily activate the space and earn a rent roll without getting locked into a long-term deal. 

In an article by Konrad Putzier and Marker Maurer, writing for The Real Deal, the authors discuss how lease agreements can be structured in many different ways with varying impacts on rents. They give the example of a 27-story office building at 650 Madison Avenue. Despite soaring property sales citywide, the ground floor retail tenant of this building had a long-term lease with a below market rent. This below market rent held resulted in a lower net operating income, and therefore a lower perceived value for the entire building. If the property owner wasn't looking to sell, it wouldn't be a problem. But in actuality, the owner was looking to take advantage of a strong real estate market. What could they do? 

What they did was renegotiate the terms of their lease such that the retail tenant would pay a higher rent in exchange for cash payments from the owner. With the building showing a higher rent roll, it was able to command a higher value on the open market—eventually selling for a 91 percent premium over the cost of the original acquisition. And the buyer was made fully aware of the arrangement between tenant and landlord regarding the cash payments. 

650 Madison Avenue
Source: Google street view, Oct 2017
Another negotiable concession are tenant improvements (TI). The authors of the article describe a situation where a building owner providing substantial TI is akin to the tenant taking out a low interest loan from the owners instead of seeking outside financing with a less favorable rate. In that regard its win-win. 

The article goes on to state that this practice is not limited to retail. This is something I know to be correct, having shopped for a rental apartment and seen the offers boasting “first month free.” In these lease agreements, the tenant is essentially agreeing to pay the same annual rent, but spaced over 11 larger payments instead of 12. It works well for transient tenants like students or young professionals that don't typically sign for longer than a year, and allows the building owner to show a higher rent roll. 

This all answers to some degree the question why retail rents might be a bit "sticky" and cause vacancy rates to rise, even as news of the retail apocalypse echoes overhead. Lowering retail rent represents a direct hit to the value of a much larger asset. Except the practice can perhaps buoy rents beyond what retailers are willing to pay. Today a growing number of larger retailers are realizing their rents are not pegged to anticipated sales. The following quote from the article sums it up:   

It was in March of 2017 that Urban Outfitters' CEO Richard Hayne first likened the retail environment to the housing bubble, apportioning much of the blame in store closures to eCommerce and the burden of real estate oversupply. Putzier and Maurier differ in that they see a stronger parallel between the inertia of untethered optimism in housing values, and what had been longstanding optimism in retail rents. But there are myriad ways the current retail moment and the housing bubble are different. The housing bubble burst because of the securitization of subprime mortgage debt, not because everybody discovered they could now buy their homes from Jeff Bezos. What I mean to say is we still consume housing in basically the same way as we did before the bubble. But contemporary retail consumptions feels to be a bit more avant garde with more showrooms, less inventory, rapid fulfillment, and everything in between.   

Are we seeing a correction?

In Cushman and Wakefield’s most recent retail market report for Manhattan (Q1 2018), they identified three recent trends:

1. Almost all retail sub-markets posted reduced asking rents due to additional stores coming to market with lower asking rent (the only exception being the Meatpacking District).

2. The SoHo sub-market recorded its eighth consecutive quarter with a drop in asking rents

3. Announcements of new pop-up store openings have slowed down, signaling the trend may be losing some of its steam.

Source: Cushman and Wakefield, Marketbeat Manhattan Retail Q1 2018
Is this a correction? Are we seeing retail rents align with a more realistic market value? Is there a direct correlation between pop-up shop announcements and retail rents? Difficult to say. It does seem to say that property owners are becoming more inured to a condition they thought would be temporary. But an article from The Real Deal out today tells a different story, of rising rents in Brooklyn corridors where new development is taking place. Their narrative is one that says it's mature (and more competitive) markets that have had to adjust their rents while retail pioneers seem to still be doing alright. 

What does this mean for district managers?

It's important to think strategically when approaching vacancies. If you observe a high rate in a district, you might now wonder if it stems from a lack of customer demand, or determine if there is simply a mismatch between asking rents, the tenants who can pay those rents, and if those specific tenants are in demand. Are local property owners institutional investors, or are they longstanding residents with no debt on their property? And of course, there may also simply be an issue with the individual operator, which is a whole other discussion. These are all good and necessary questions to ask oneself. Without asking them we cannot hope to arrive at good and necessary answers for addressing vacant spaces.

Thanks for reading!

Thursday, April 19, 2018

Food Hall Site Selection

Nur Asri is an Associate at Larisa Ortiz Associates

Earlier this month, Cushman & Wakefield released a report titled, “Food Halls of North America”. Since their first report on the trend in November 2016, food halls have grown exponentially all over the country, and especially in New York (see #5 of our 2018 trends list).

The report lists twenty five different food halls in New York City (we’ve left out Essex Street Market because it’s an institution we’re more familiar with as a public market, more on this in a previous blog) but guess where they’re mostly located? That’s right, Manhattan. 

80% of the city’s food halls are located in Manhattan.

Source: LOA
Drawing a 5-minute walking radius around each of the food halls, I took a closer look at the demographics and worker populations surrounding these food halls to figure out why Manhattan is continuing to draw this attraction.

Source: LOA

When compared with food halls located in Brooklyn and the Bronx, those in Manhattan were situated in neighborhoods with higher population density, higher median household incomes, higher educational attainments, and higher proportions of Millennials aged 25-40. These are unsurprising facts for anyone who lives in the city but if you’re elsewhere looking to attract a food hall operator; these are just some of the criteria your downtown or neighborhood may need to offer.

The psychographic tapestry segments that dominated the food hall neighborhoods in both Manhattan and Brooklyn were Laptops and Lattes’, ‘Trendsetters’, andMetro Renters’ . These groups, as you can imagine, are all made up of high-earning, well-educated young professionals who are socially and environmentally conscious, technologically savvy, and enjoy discovering local art and culture and dining out.

Given that food halls are highly-curated cultural hubs for new and old restaurateurs to test food concepts and set trends, having an educated audience that seeks this type of experience and is hyper aware of the nutritional value of their food would be highly beneficial and complementary to the mission of food halls. These are the same customers that will likely come in to a food hall and Instagram their meal and night out, driving greater marketing and sales.   

Speaking of dining out – I also found that residents living near food halls in Manhattan spend more eating out annually than those in the outer boroughs. The exception lies in DUMBO, Brooklyn where the upcoming Time Out Market is slated to open later this year. Within a 5-minute walk of the soon-to-be-opened food hall, households are spending an average of $6,091 annually on eating out. This is even higher than those residents living near Canal Street Market, American Market by Todd English, and Gotham West Market!

The high density of worker populations is another trait food halls seem to prefer. All the food halls located in Manhattan have between 20,000 to over 100,000 daytime workers within a five minute walking radius. In comparison, the food hall with the greatest day time worker density in an outer borough is Gotham West Market at the Ashland (Brooklyn) with only 16,353 workers within a five minute walk.

Photo: Lou Stejskal  (Flickr)
Meanwhile, in Manhattan, the top three food halls with highest worker population densities are all located in and around Grand Central Station (Urbanspace at 570 Lexington, Urbanspace Vanderbilt, and Great Northern Hall), where there is a strong cluster of banks and financial services offices and over 100,000 daytime workers. Furthermore, most of these workers earn more than $3,333 per month, indicating strong spending potential particularly during lunchtime and after work.

Even within New York City, there are nuances with where food halls are growing. Food halls in the west side of Manhattan– from Chelsea up to Midtown West – appear to be riding on the wave of high population growth rates. Populations around Gotham West Market and Hudson Yards Food Hall, for example, are expected to grow between 14-15% in the next five years (some of the highest rates in the city!). And the same can be said of the growth in food halls in the outer boroughs. Aside from Industry City, all the food halls in the Bronx and Brooklyn are located in neighborhoods with rates of population growth higher than their respective County levels.

So it appears that even if your downtown doesn’t quite have the traits that we’ve seen with the food halls in Manhattan (i.e. high population densities, high worker densities, etc.) but is undergoing a renaissance and seeing an impressive development pipeline of residential homes and offices, then maybe attracting a food hall operator is not completely out of order.

Like attracting all other tenants, however, it is crucial to first consider the types of residents and workers that will be entering these new developments, what their spending patterns are like, and if these align with the traits that food halls are craving.

Are their disposable incomes high?
Are they trend-seeking consumers?
Are they younger, digitally-apt customers that will continue to support and market the food hall?

After all, as we’ve seen, the food hall is not for everyone. And it’s certainly not for every neighborhood.

Friday, April 13, 2018

Retaining "Mom-and-Pops" in the New Retail Reality

Dan McCombie is a research associate at Larisa Ortiz Associates

Lots of rumblings lately about the statement New York Mayor Bill de Blasio made on local radio WNYC, wherein he spoke about his receptiveness to a commercial vacancy tax to address rising vacancy rates in the city. The issue is decisive to say the least. Certainly we don’t need to go into detail about all the reasons why retail vacancies are problematic (apologies if you’re new to CDA). Nor should we fail to recognize that using public policy to regulate private property is nothing short of a perennial third-rail. What’s the right move?

My purpose in this blog post is not to wade into the vacancy tax debate. It's a complicated issue. Yes, vacancies are problematic and in many instances can create a chain reaction to eventual blight. But policy prescriptives, even with the best intentions, can also be clumsy tools. You want to save mom-n-pops so you tax the vacant space. But if the landlord decides to swallow the cost, or brings in a Verizon Store instead, what did you really solve for?

Photo: essygie

For me, the interesting part of this debate is in understanding how developers and property owners are exploring how to tenant retail spaces with local and regional independents instead of nationals. Why? Because these classes of tenants are typically less "credit-worthy" than your Bank of Americas, Verizons, and Dunkin Donuts, and therefore carry more risk for investors and owners. But they also  have the capacity to bring much more in the way of unique character to a commercial district. So what can be done to mitigate against the credit risk? I found the following example telling...

The Market Line – Lower East Side, MH

The following statement came from Essex Crossing marketing material and can also be found on the Market Line website:

“Anchored by the new Essex Street Market, The Market Line will extend three full blocks from Essex Street to Clinton Street. With over 100 vendors and 150,000 sf of gross floor area, The Market Line will be one of the largest markets in the world, reminiscent of iconic locales like Boqueria, Borough Market, the Grand Bazaar, and Pike Place Market. While there will be an unparalleled collection of prepared foods, this will not be a food hall, but a market. The Market Line will be a microcosm of the Lower East Side with an eclectic mix of local food purveyors, artists, gallerists, musicians, and designers…” (emphasis added)
The emphasis on the local independent tenant mix is worth noting. The other day I spoke with an individual with some knowledge regarding the tenanting strategy for the Market Line, and I posited the question: “How does one tenant a space with local and regional operators when many investors perceive them as carrying more risk?” The response was fairly simple:
  1. Provide smaller floor plates with shorter-term leases
  2. Partner with architects/designers to create and curate attractive turnkey spaces
  3. Seek out tenants with a proven record of success

Again, none of this feels surprising. But it helps to contextualize these tenanting strategies within larger trends. Retailers across the board are right-sizing into smaller spaces, which may be more costly on a PSF basis, but cheaper on the whole. And a whole new industry is sprouting up around the design, buildout, and brokering of flexible pop-up spaces. The Market Line seems to demonstrate how these play out at the ground level. Yes, having a short term lease may be untenable for many, but the property owner can certainly mitigate against this by providing more upfront support through tenant improvements so the merchant doesn't feel like their throwing their money away on the build out. To understand this further let me present two more cases...

Photo Credit: The Market Line

Williamsburg, BK

Consider the case of the impending L-Train subway shutdown and the Williamsburg neighborhood in Brooklyn. Fears are that without a direct link to Manhattan, merchant performance is going to take a hit during track work, and so many of them have left or attempted to negotiate lower rents. Rather than bring down rents to offset the hit, some landlords have opted instead to weather the storm until the work finishes, believing an empty storefront is preferable to signing a long-term lease with a myopic rent. As a result, the retail vacancy rate in the neighborhood was recently reported to be at 13%, which is definitely cause for concern. Are the property owners right to hold tight until business as usual returns? Next example...

The Shay – Washington, DC

A relatively new mixed-use retail development in the Shaw neighborhood of DC, “The Shay,” has also been struggling with retaining retailers. The primary reason for this is that the tenanting strategy from the outset was admittedly a risky one. Jay Klug, executive vice president of retail at JBG Smith (the developer), confirms that instead of focusing on restaurants and national chains (low-risk) they would seek smaller stylish brands looking to expand into the DC market. In order to entice these tenants, the developer negotiated percentage rent agreements. Steve Gaudio, VP at JBG is quoted as saying “There was a risk that their percent of sale would never be that high, so there were different flexibilities for both the landlord and the tenant to determine, if this didn’t work out, that they could walk away.” As might be expected, many tenants didn’t hit their marks and did walk away. But notably, many of those tenants were soft-goods brands like Kit and Ace and Steven Alan, and were subsequently replaced by businesses like “The Shop” hair salon and “Turning Natural” smoothies shop. This is not to imply that soft-goods and apparel/accessories can’t survive; the Shay also houses the first DC location of Warby Parker and the fourth Bonobos location in the region, both of which have been said to be performing at a high level. What it says to me is this development may want more high-end neighborhood-serving uses and less comparison goods. In any event, the mix needed to be tweaked a bit, especially for a new concept still establishing an identity.

Photo Credit: The Shay

The Takeaway

The Market Line tenanting strategy has flexibility built into both the lease and the space itself so that if a tenant isn’t working out, the arrangement can be modified expediently. The Shay, adopting a similar tenanting strategy, uses a different mechanism with percentage rent agreements. In Williamsburg, some owners are simply holding their breath. Are any of these success stories? Hard to say. The Market Line hasn’t opened yet, and The Shay is still struggling with vacancies. Both are big (150K SF and 120K SF, respectively) and have the benefit of a single entity curating the space, and lots of design muscle behind them to make the spaces attractive to tenants. And even Williamsburg is a bit of a snowflake; it's an iconic neighborhood so it may be able to hold on after all. For that reason, I caution against making too hard and fast a conclusion. But the one thing that seems to have unanimous consent these days is that retail has changed, and likely changed irrevocably. As a result, we need to be creative with how we tenant spaces and not be afraid to tweak not only the mix, but the way spaces are constructed and agreements are negotiated. And there’s no way to know what works when the space is empty. 

Thanks for reading!

Friday, April 6, 2018

HOW TO: Retail in Public Spaces

Nur is an Associate at Larisa Ortiz Associates.

In a previous post I talked about the benefits that parks and retail may stand to gain from being co-tenants. Today, we look at specific ways in which retail has been incorporated into our parks and open spaces. Depending on the size of your public space, you may decide to incorporate permanent retail spaces or temporary, seasonal ones that can easily be taken down to make room for more pedestrians and park users. Either way, these additional retail spaces can be great opportunities for local businesses and entrepreneurs to test new markets, if made convenient and affordable.

Case Study 1: Times Square Plaza
Vendor: Coffeed, a NYC-Based coffee chain
Space: 100SF, in the center of Manhattan's most trafficked area.
Leasing: The Times Square Alliance, the local non-profit BID, designates an area within Times Square for interested vendors who are then required to build their own structures. Electricity, rubbish removal services, as well as security are provided by Times Square Alliance.
Estimated Rent: $20,000/ month with a revenue share of 8% of sales. Times Square Alliance leased the space via Appear [here], an online listing platform that matches temporary, pop-up retail spaces with creative brands and entrepreneurs.
Added benefits to the vendor: Co-branding and promotional opportunities with the BID on its social media platforms and through other initiatives that the Alliance provides to the tourist, business and residential community.

Case Study 2: Astor Place
Photo: The Village Alliance

Vendors: La Newyorkina and Astor Plate, NYC- based businesses that both had existing storefronts in nearby neighborhoods like Greenwich Village and TriBeCa
Space: 110SF (La Newyorkina) and 200SF (Astor Plate)
Photo: The Village Alliance
Leasing: The plaza in which the kiosks currently sit is property of the NYC Department of Transportation (DOT). However, the local Business Improvement District (BID), the Village Alliance, has a contract with DOT to maintain the plaza. Kiosk vendors contract directly with the BID.
The procurement and bidding process of kiosk operators was a long process, according to William Lewis, Marketing and Events Director of the Village Alliance.  The BID wanted to ensure that they were tapping into existing local businesses and building kiosks that were respectful of the surrounding environment and community. Not only did the BID strive to keep local favorite, MUD coffee, being served at the kiosks, the BID also ensured the design of the kiosks were contextual. For example, the kiosk on the south end of the plaza is a metal structure that reflects the style and aesthetic of  the famous Alamo sculpture (the Cube) and the kiosk design of La Newyorkina on the northern end of the plaza features a hand-painted mural that reflects the local neighborhood.

Like in Times Square, selected operators built their own structures but worked closely with the Village Alliance to finalize designs.

Ensuring success: According to Will (Village Alliance), the kiosks are really popular and doing very well a year since their opening. Their success lends itself to creative menus, a variety of products, a strong daytime population, and of course strong connections to the local neighborhood.

The location of the public plaza by new office developments and the Cooper Union School ensures that the kiosks get strong foot traffic throughout the day. In addition, the BID arranges outdoor tables, chairs, and parasols (like in Times Square!) to support the congregation of large groups and encourage outdoor dining in the warmer months.

Case Study 3: Hunters Point South Park

Vendor: LIC Landing by NYC-Based COFFEED features a healthy selection of locally-sourced food offerings, craft beers, fine wines, and specialty coffees and teas. COFFEED is also a charity-minded café known for donating a percentage of its revenue to local charities.
Space: 1,500 SF, at Hunter’s Point South Park, Long Island City’s waterfront recreation destination.
Leasing: The concession spaces was designed and built during the initial development of the park. Bids were later put out for operators by the NYC Parks department.

Case Study 4: Union Square Park
Market: UrbanSpace has operated the Union Square Holiday Market for over two decades
Space: 30,000SF with about 100 vendors, of which 75% are NYC-based. Individual booth sizes range from half-booths (50SF) to double booths (200SF)
Leasing: The market is made possible via a five-year agreement with the Department of Parks and Recreation negotiated with the market’s operator and founder. The Parks Department opens a round of competitive bidding, issuing a detailed request for proposals and site visits for prospective bidders.
Selected market operators then hold open application calls for interested vendors online.
Estimated Rent: Vendor spaces average between $6,000-$18,000 per vendor, depending on location and size of booths. Each year, UrbanSpace has netted around $2.7 million in vendor fees and compensated the City over $1.5 million.

Case Study 5: Downtown Detroit Parks
Market: Winter in Detroit is sponsored by Bedrock and Quicken Loans Family of CompaniesDetroit Downtown Partnership collaborates with the nearby property owners to organize the seasonal markets.
Space: 130SF, pre-fabricated glass structures designed by Philadelphia-based Groundswell Design Group
Leasing: The market operators hold open application calls for interested vendors online. Vendors are selected based on unique and creative retail concepts, quality products and packaging, design of booths, and originality of brand
Estimated Rent: $1,000 for the season (inclusive of electrical, lighting, heating, and security) According to reports, the 38 selected businesses generated more than $2 million in sales between November and January.

Regardless of retail model and leasing structure, we must remember not to get carried away with commercializing parks and public plazas whose first objective is to provide spaces of relief from urban living and circulation opportunities. There is always the potential that highly-curated retail experiences with higher price points may indiscreetly exclude a segment of the population that has less disposable income and therefore is less likely to enjoy a costly park retail experience. 

Incorporating free experiences with the retail activities may alleviate such impacts. Last season, at the Union Square Holiday Market in NYC, for example, there were free goodies and interactive photo booths open-to-all. Candy and cups of hot chocolate were distributed for free to all visitors- thanks to sponsorship by Citibank. These goodies were handed out at the sponsor's booth, where free mobile device charging stations and warming stations and lounge seating were also offered - much needed respite from the cold of winter.

As the weather clears up in the coming weeks *fingers crossed*, keep your eyes peeled for the growing trend of retail concepts in your local park and let us know if you think it's a much-needed public space activation strategy!

Monday, April 2, 2018

The Real Impacts of Downtown Sporting Venues

Nur Asri is an Associate at Larisa Ortiz Associates.

The 2018 Major League Baseball season is upon us. Like every other major professional sport, the season reminds us of the vast impacts– both good and bad – that sport has on our cities and downtowns. Across the country, downtowns are becoming choice sites for sports arenas. In 2016, the Brookings Institution found that 45 stadiums and arenas for the four major professional sports — football, baseball, basketball, and hockey — were constructed/renovated in the United States from 2000 to 2014 with a large majority of these being built in urban centers.

This map shows a concentration of sports teams (and by extension, their stadiums) by city from 2012.

Communities around the country are often told by political leaders of the potential economic effects of building these stadia or arenas; however the reality is often a lot less rosy. Sure, these attractions are bringing in visitors downtown in large numbers like no other business might. Last year, the average attendance to any Major League Baseball game in the US was approximately 30,000. In 2016, the Yankee Stadium in the Bronx saw over 3.5 million spectators enter their doors.

As a result, local bars and restaurants might see hikes in foot traffic due to pre- and post- game crowds seeking replenishment. In Downtown Sacramento, pedestrian traffic in the immediate area of the NBA Kings stadium grew by 10%, according to the Downtown Sacramento Partnership. Many bars have even leveraged these pedestrian counts by hosting parties that coincide with game days and even hired special DJs or introduced sport-themed menu items to lure passing crowds. Unfortunately, the same impact is unlikely for retailers offering goods and services unrelated to entertainment, dining, or sports and wellness. So the jewelry store, hair salon or local book store aren’t naturally going to be the biggest fans of a stadium.

The No-Trickle Effect
In recent years, stadiums themselves have become increasingly mixed-use and entertainment-focused attractions. This means that the developments are inward-looking and offer amenities and attractions that responsive to what already exists in adjacent areas. In particular, the retail and food and beverage offerings found within stadiums are driving visitors with busier schedules to completely skip stopping by outside bars and restaurants before games and spending their dollars directly in these arenas.

In an anecdote from 2012, owner of the Yankee Tavern in the Bronx, Joe Bastone, stated that his business was not really making more money as a result of the new Yankee Stadium’s opening. He claimed that the stadium in fact killed local business because once inside, “visitors can choose from 444 souvenir shops, eateries and concession stands, nearly 50 percent more options than in the old stadium. From hot dogs to Cuban sandwiches and sushi, and from pennants to pinstriped jerseys, Yankees fans can find it all without setting foot outside the stadium.”
Photo: USA Today
Some stadiums have carefully curated concession stands to offer local fare and structured vendor deals with local restaurants. For example, the Barclays Center in the Prospect Heights neighborhood of Brooklyn, home to the Nets basketball team and Islanders hockey team, offers Brooklyn-based Williamsburg Pizza, Café Habana Cuban sandwiches, and of course Brooklyn Lager on tap. However, stadium and sports arena developments still have much more to do in terms of growing partnership with small businesses and downtown associations and to enhance cross-shopping opportunities outside the arenas to support adjacent economies.

Furthermore, having tens of thousands of bodies arrive all at once in a concentrated geography doesn’t always bode well for businesses and residents. The hordes of spectators entering and leaving the downtown can be noisy and disorganized, and will certainly impede the regular operations of a business. To mitigate the impacts of human and vehicular congestion on game days, downtown associations are taking a few precautionary measures:

Educating potential visitors on available parking options and street closures. Partner with local news outlets to publish day-of articles that include details on how to get to sporting venues by car or by public transit. This information helps visitors plan their trip ahead of time and reduces frustration on the day of the game.
Uber at Coors Fields, CO
Partnering with ride-share services to manage people and vehicle flow near the venue. Designated Uber pick-up and drop-off areas with clear signage and instructions should be made available to riders to reduce congestion near the stadium.

Detroit Tigers, for example, signed Uber as the official ride-sharing partner for Comerica Park in downtown Detroit. The partnership not only designates pick up areas but also offers first time riders promotional codes. The same deal was made with the Detroit Lions and Detroit Pistons.

Providing shuttle rides to and from transit stops or parking lots farther away. Nashville’s Bridgestone Arena partners with the Downtown Partnership to provide such a service during event days. Again, this helps reduce congestion near the arena and makes the experience downtown less stressful for visitors.
Photo: San Francisco Bicycle Coalition

Providing convenient, attended bike parking service. This strategy has in fact made driving to games the more inconvenient option for those in San Francisco. A regulation passed by the San Francisco Board of Supervisors in 1999 requires monitored bicycle parking if an event incurs a street closure and anticipates more than 2,000 participants. As a result, all San Francisco Giants games played at AT&T park now provide valet bike parking services to more than 200 spectators, thanks to an arrangement with local bike advocacy group, SF Bicycle Coalition.

So if you’re thinking of attracting a sports team to make its home downtown in a new arena to catalyze further investment in the area and attract visitors, think also about the potential impacts it will have on foot traffic diversion and vehicular congestion. Prepare small local businesses for game days and at the same time, make sure that the arena is responsive to and supportive of existing businesses in the area.