For Upstate NY Practitioners: Small Scale Real Estate Development Workshop

If you plan to be in the Syracuse area on June 27th, this looks like a great day-long session designed to introduce the principles behind neighborhood based real estate development projects. Small scale development is a an important community development strategy - but it requires small developers!

The workshop is conducted by the Incremental Development Alliance, a national non-profit that works to build local wealth in neighborhoods through ground-up real estate development.

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Small Scale Real Estate Development Workshop

WHEN: Wednesday, June 27, 2018 8a-5p
WHERE: Hotel Syracuse, 100 East Onondaga Street Syracuse, NY, 13202
COST:

• Early Bird Registration Rate ($170) open until Friday, June 8 
• Regular Registration Rate ($200) open until Monday, June 25 
• Last Minute Registration Rate is ($230) 

Register today at http://www.incrementaldevelopment.org/events/syracuseworkshop

Apply for a scholarship here

The workshop offers specialized training about how to create small projects, like 1-3 story buildings with less than 20 units, which are residential, commercial or mixed in use and 1,000-12,000 sf in size. The course assumes you know a lot about where you live, but not necessarily much about the real estate process or building development.

Through presentations on finance, design and site selection, a hands-on practice exercise, and networking with local like-minded people, this workshop is the first step to becoming a small developer yourself or creating a supportive ecosystem for small development in your city.

Who Should Attend?

• Individuals in construction, design, planning or real estate looking to either enhance their current practice or make career transition 
• Volunteers or professionals in business associations, main streets associations, historic preservation groups and neighborhood improvement groups looking to champion incremental development in their communities 
• Public sector professionals in city management, economic development, planning, and related agencies who are looking to make it easier for small development projects to occur in their town 
• Professionals in non-profit development organizations, churches, and community development or housing development organizations who need new strategies for small lot development 
• Private banking professionals specializing in mortgages, commercial real estate loans or SBA loans and professionals as at Community Development Financial Institutions and Community Foundations who want to become more effective investors 

Mall-to-Mixed Use Tracker

Nur Asri is an Associate at Larisa Ortiz Associates.

In recent months, we've seen a slew of headlines announcing the redevelopment of dying malls as walkable, mixed-use neighborhoods. These complex undertakings (read our post on the challenges associated with redeveloping malls) are popping up across the country as more commercial developers seek to diversify their portfolios in this turbulent retail climate. Join us as we round up some of the latest mall-to-mixed use projects:

Source: LOA (2018)

There are a number of uses other than 'Retail/ Restaurants/ Entertainment' that have been introduced to dying shopping mall sites. This includes housing, office space and hotels. In fact a majority (35%) of the projects we tracked now feature the full suite of uses - retail, housing, office and hotels. Retail and housing is the second most popular use combination on these former shopping mall sites, comprising 26% of total projects tracked.

When we look at the geographic distribution of these projects, the state of California comes up as a clear leader in these mall transformations. 29% percent of the projects we tracked are located up and down the coast from San Diego to the Bay Area. The State of Virginia also fares well with a 20% share of tracked projects located between Tyson's Corner and Richmond, however, it is the Mid-Atlantic region as whole that leads this redevelopment trend with 40% of projects located in VA, PA, MD, NJ and NY.

Source: LOA (2018)

The traditional American mall will no doubt continue to reinvent itself as consumer preferences and lifestyles change so keep your eyes peeled for similar projects in your own city! Comment below if your town is seeing a new mall-to-mixed use conversion. Here's a full list of mall-to-mixed use projects we tracked:

Source: LOA (2018)

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.


References:

National Business Incubation Association, Tips for Developers, www.2.nbia.org/resource_library/tips_dev.index.php

University of North Carolina Community and Economic Development Program Blog, Retail Incubators and Main Street Revitalization, ced.sog.unc.edu/retail-incubators-and-main-street-revitalization, August 2016

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

Commercial Revitalization by the Pint

Across the country small to mid-size cities (and their downtowns) are making a comeback. As reported in one of our previous posts on downtown trends, an increasing number of young and older population groups are moving to small and mid-tier cities attracted by their real estate affordability and quality of life. In many places, this renaissance is connected to a phenomenon that has attracted the attention of planners, economic development experts and commercial district practitioners: the surge and growth of craft breweries.

On a recent trip to Waterbury, Vermont, I witnessed this resurgence first hand, and currently in a number of projects that we’re working on across NY State, we have observed the same. A look at the the latest statistic published by the Brewers Association is telling: the number of U.S. breweries is at a 128 year high with over 4,200 craft breweries across the US and 549 new breweries opening between 2014 and 2015.

Beer drinkers are not the only ones enjoying this growth; craft breweries have caught the eyes of local officials and economic developers and they are encouraging the development, growth, and attraction of these companies. Over the past couple of years a number of cities launched attraction campaigns to land the east-coast expansions of some of the largest western craft brewers.For example, Roanoke’s bid to lure Chico, CA based Sierra Nevada included calls from senior political figures, $13 million in incentives, and vials of local water.  Philadelphia marketed the city’s thriving craft beer scene in their campaign for Fort Collins, CO based New Belgium Brewery (maker of the popular Fat Tire Amber Ale) while dangling millions in tax incentives. Both companies, along with Lyons, CO based Oskar Blues, chose brewing hotspot Asheville, NC (and its surrounding region) as their second home, adding to the city’s growing craft beer cluster.

Asheville, North Carolina, is a small city that fights way above its weight class in the craft brewing world, with several Beer City USA titles under its belt. Asheville has numerous home-grown breweries, but it has been able to lure expanding West Coast breweries more than any other city in recent years. New Belgium, one of its recent attractions has recently opened their new facility in Asheville’s River Arts District, which will become a centerpiece of the redevelopment efforts connecting the city’s CBD to the French Broad River. In fact, Asheville has been so successful as a craft brewing center, that it did not win the most recent brewery expansion project–Deschutes recently announced its East Coast location will be in Roanoke, Virginia instead of Asheville –most likely because Deschutes wanted to be a game-changer in a city with a smaller, emerging craft beer scene.

Richmond, Virgina, attracted Stone Brewing (based in San Diego, California) for their East Coast expansion. This new brewery is an important part of the city’s urban redevelopment efforts along the James River near downtown Richmond. 

Cities aren’t just looking to attract established breweries; Wildomar, CA has sought to ease regulations to make their community more appealing to would-be brewers. Mesa, AZ, will soon have its first brewery as a result of a concerted effort to revitalize its downtown Main Street. Mesa chose to focus on breweries because of their ability to become magnets and drive a lot of people to an area as well as citizen support for a local brewery. 

States are also following the trend and seeking to encourage the opening and expansion of craft breweries. In 2012 New York State passed the New York Farm Brewery legislation supporting the state's craft breweries by giving them certain tax credits and other perks linked to the use of locally grown ingredients (to boost local farm production). Since then, the number of craft brewers has more than doubled (from 95 to 208), with production growing by 54% from 557,436 in 2011 to 859,535 barrels in 2013. According to a study from the Stonebridge Research Group prepared for the New York Wine and Grape Foundation and the NY Brewers Association on the economic impact of craft beer on the NY economy, craft breweries generated $3.5 billion on the state’s economy in 2013 and provided over 11,000 full-time jobs.

So how can commercial districts and local development officials help and encourage the trend?

Breweries are industrial operations, and they are expensive. Beer is a mass beverage, and even making it on a brewpub scale means you need to have quite a bit of space for the brewhouse, fermentation, and storage. All that equipment costs a lot, and real estate does, too. When you’re spending a quarter- or half-million dollars on equipment, you can’t afford expensive commercial space. So breweries end up on the fringes, in parts of town where the rent is cheap.

If your district wants to attract breweries, the first and foremost requirement is to have enough space ( 2.16 square feet per barrel of yearly capacity, which is equivalent to 2,000 4,000 SF for a very small operation like a nano-brewery to over 15,000 SF for a mid-size operation). Craft breweries not only need large space, but they especially need affordable space (= cheap rent). This might be one of the most difficult challenges because it requires coordination with property owners, and possibly the crafting of some local incentives to offset less-than-ideal rental costs.

In addition, as the study from the Stonebridge Research Group reveals, most new investment in craft breweries in New York State has been self-financed, often with some help from the Small Business Administration. Commercial banks have provided support for some of the larger craft brewers, but not to the small ones.  Thus, assisting craft beer entrepreneurs find financial options and helping them navigate local bureaucracies is another way commercial district practitioners and local economic development specialists can help.

Craft brewers bring not only booze to their neighborhoods, but especially they bring vitality. Breweries are anchors, attracting folks who are curious to try a pint of locally made IPA. They can create little pockets of prosperity in cities that can (and often do) radiate out into the neighborhood. Pretty soon, other businesses see the bustle and consider moving in as well generating further economic activity and revitalization. Once a brewery moves in and refurbishes an old building, it reveals the innate promise of adjacent buildings to prospective renters.

What is the secret to a sustainble neighborhood economic development strategy? Start by understanding regional market trends and clusters

This here is a cautionary tale about good intentions gone awry. ("Cuomo's $15 Million High-Tech Film Studio? It's a Flop", NYTimes, 8/22) The story starts innocently enough. The goal was to create jobs in an area with a struggling economy. In this case the State of New York invested $15 million in the creation of a high-tech film studio. The idea was to "build a sustainable film industry in Central New York from the ground up" according to this press release.

But there is a problem. Economic development simply does not work like this.  "If you build it they will come" is largely a myth. Creating jobs, much less building an industry from scratch, is more often than not a fool's errand. A viable economic development approach must therefore be rooted in local opportunities, strengths and market reality. In many cases, it means being on the look out for industry clusters that have already deemed the market suitable. This is about developing a strategy that rests on improving the business environment for an existing industry cluster--a much easier lift than starting from scratch. While the cluster approach is not new (it is embedded within a long history of market-based economic development planning synonymous to many with Prof. Michael Porter) it unfortunately remains mysteriously absent from major public or non-profit led economic development decision-making strategies. And I'm not alone in thinking this. The Brookings Institute recently released a great paper, which I wrote about a few months ago, entitled "Remaking Economic Development" that made the point about clusters precisely, "Economic development should prioritize building strong business ecosystems for core industries, improving the productivity of firms and people, and facilitating trade— the market foundations from which growth, prosperity, and inclusion emerge."

So why all this discussion about regional economic trends and clusters? Aren't we talking about neighborhoods? Well, without the region there is no neighborhood economy. So when it comes to developing a viable neighborhood economic development strategy we need to next these efforts within a larger regional market. This means identifying industries that are already making a go of the opportunities and competitive advantages of an area, from a skilled labor force to critical infrastructure to the presence of complimentary firms. These are all the factors that enable a business to generate profit. Consider the unique local factors that led Hershey to build his factory in Pennsylvania--proximity to lots and lots of cows who produce milk, the main commodity in milk chocolate. Or why Detroit's auto industry has stuck it out in Detroit--there exist a cluster of suppliers, manufacturers, distributions, researchers, etc. that are quite difficult to move and replicate elsewhere. Putting these clusters on a more aggressive growth trajectory, whereby they are able to lower costs, grow profits, hire more people and fill more vacant real estate space is the opportunity that we have in our urban neighborhoods.

A study commissioned by Indianapolis LISC
offers insight into how a local
non-profit can tap regional economic trends to
build a real estate investment and job
growth strategy in low-income urban neighborhoods. 

The Indianapolis chapter of the Local Initiative Support Corporation (LISC) is helping lead an effort of this kind by commissioning an report that served as a guide for industrial investment strategies in urban places. The findings? Three clusters showed "particular promise and a competitive edge for Indianapolis...Food Manufacturing and Distribution, Business to Business (B2B) and Technology." The recommendations offer the beginning of a road map for how LISC, one of the nation's largest CDFI's, can help grow industry clusters through targeted, place-based real investments. Some notable recommendations include supporting feasibility analysis for industrial buildings and developing accessible expertise around site selection, industrial building re-use and conversion.

Another approach is helping to absorb build out costs for the kinds of capital investments necessary for the Food Manufacturing Cluster. Ensuring space can accomodate enhanced refrigeration and electrical loads, or can support high-quality processing and distribution all while maintaining high health and safety standards requires a site by site analysis to determine feasibility and any gap financing needed to make a project viable.

The solutions aren't always easy - in some cases they involve developing regional working groups that will open lines of communication between the public and private sectors to guide and inform investment and policy initiatives over time. As it turns out, engaging a broad spectrum of private sector partners and ground-truthing potential public investments might have made a difference between a great New York Times piece and an embarrassing one.

Round Up: Urban Taxidermy, Tightening the Rust Belt, Tips for a Successful Art Tour, The Elements of Placemaking

Jargon Watch: "Urban Taxidermy"

As cities struggle to maintain character of neighborhoods and commercial districts, they are conflicted between two options, the preservation of old buildings versus allowing development to proceed. By preserving a district you also preserve a "walkable, vibrant streetscape where people want to be." Enter Urban Taxidermy.

Robert Allsopp defines urban taxidermy as "the art of preserving, stuffing and mounting buildings for lifelike effect to simulate an intrinsic social, cultural or commercial vitality."

Before urban taxidermy.

After urban taxidermy.

Do Parts of the Rust Belt ‘Need to Die Off’?

Experts suggest that struggling Rust Belt cities must look to the future of their cities by slimming down strategically through "smart decline."  Smart decline refers to "the ways in which cities can plan around population loss and find ways to manage it (and maybe grow again one day)." Some strategies include moving lowest density occupants to compact neighborhoods, building greenbelts instead of maintaining untraveled streets, encouraging urban farming or letting the barren areas revert to nature.

Helping the Public Enjoy Art

A multi-tiered approach to getting people out for an art tour in downtown Des Moines, Iowa offers some ideas on how to attract visitors to your district for one-off events and beyond.

Public Space at the Crossroads of Everything

The "place" in Placemaking is the combination of many more elements than you might've previously even considered. 

Five Design Principles that Every Facade Improvement Program Should Incorporate

By Patricia Voltolini, Associate, LOA

What is the first thing you notice when you visit a commercial district? Storefronts and buildings probably make that list. Great storefronts are critical to a vibrant street environment. They engage passersby and contribute to active street life. Not surprisingly, façade improvement programs have become a common and effective tool in many commercial district revitalization efforts.

Yet many facade programs go wrong quite quickly. Without design guidance, the "after" might not look much better than the "before", and resources spent will have less impact than you might like. Unfortunately, overcoming this issue can be a challenge. Many BIDS, BIAs or CDCs working to revitalize low-income or distressed corridors do not have the budget to engage a retail designer to help prepare and review façade improvement applications. Even when they do, this person is often not a retail design expert.

With that in mind, we thought it would be helpful to share some of our own insights as they relate to the key takeaways from a wonderful new publication entitled, Laying the Groundwork:Design Guidelines for Retail and Other Ground-Floor Uses in Mixed-UseAffordable Housing Developments, prepared by the Design Trust for Public Space in partnership with the NYC Department of Housing Preservation and Development. The publication is the result of extensive research and collaboration from a broad range of design and retail experts - including our own Principal, Larisa Ortiz - who served on the advisory panel. It is available for purchase on the Design Trust website.

While the report outlines best practices and provides practical guidance for those building new retail space in mixed-use buildings, we think it also provides excellent insight for those looking to develop facade improvement programs. A good facade improvement program not only impacts the overall look and feel of the district, but if done with certain principles in mind, can help businesses achieve higher sales. Incorporating these concepts into your facade program design will help ensure that the program meets the objectives of your district stakeholders as well as the businesses themselves.

So keep in mind the following key principles as you design your facade improvement program....

1. Maintain Transparency

There is growing recognition of the importance and value of transparency in driving retail sales. A transparent storefront invites customers inside with products and services on display. It also discourages crime by providing what urban theorist Jane Jacobs called “eyes on the street”. Making the facade as transparent as possible allows for a full visual exchange between indoors and outdoors. Customers and shopkeepers inside the store see what is happening on the street and pedestrians outside see the activity and offerings in the store. This interdependent relationship benefits both customers and retailers. 

The same storefront with different window treatments create a very different corridor environment. The previous merchant (also a pharmacy) completely covered the windows and failed to create any visual connection to the interior of the store. The new pharmacy made the windows completely transparent, and uses them to showcase products while allowing enough visual exchange between indoors and outdoors.

In order to maximize transparency, the design guidelines recommend having 70% of the façade surface completely transparent between 2’ and 10’above sidewalk-level, with measures in place for attractive privacy solutions when needed.

In many urban districts, retailers (even after a façade improvement program) cover their windows with sales posters and signs. Store-owners want to attract customers with these signs but in doing so they block visual connection between inside and outside and often create an uninviting storefront. A customer who can't see inside a business is highly unlikely to walk inside.

One way to keep the façade transparent and place signs  at the lower (or upper) section of the storefront, immediate below (or above) eye-level.

The same facade before and after renovations. The image above (before) shows all windows entirely covered with signs, a typical feature of many supermarkets and delis in urban districts. The image below shows the same supermarket after a facade renovation. Despite significantly covering the windows with sales posters, the owner  made an effort to keep some level-of transparency by placing signs below and above pedestrian eye-level.

This dollar store has large windows (over 70% of its facade is glass) but the store owner has covered it almost completely with products, blocking any visual connection to the interior of the store.

Another common occurrence is having non-retail stores (salons, professional offices, etc.) with minimal transparency. These businesses should also be regarded with the same design standards as other retail businesses as they are also key components of the streetscape and as responsible for creating vibrancy in the corridor as retail stores are. In fact, the design guidelines presented in Laying the Groundwork  target not only retailers but also banks, laundromats, and even community uses like cultural space, healthcare and childcare facilities.

This facade provides an excellent example of what non-retail stores should look like (or not). The space on the left has a highly transparent and engaging storefront while still providing some level of privacy to its users. The space on the right, however, has windows but they're completely covered with shades and gates and impede any visual connection between inside and out.

In order to guarantee full transparency, facade improvement programs should add a clause requiring windows to be kept free (or with minimal) signage and that product display should not block vision to the store's interior. In fact, the  minimum of 70% transparency recommendation does not refer only to the substantial presence of store windows, but that these windows be kept fully transparent.

Exterior illumination provides light on the sidewalk and highlights the facade at night. Exterior lighting can also be used to accent trees and planting. An active, well-illuminated street frontage improves safety for retailers, residents, and the district. It also reduces the need for security gates by creating a safer street front.

One important consideration is the relationship between lighting and store signage. Both should be coordinated and the new façade design should minimize lighting presence above the sign, especially if the units above are residential.

2. Maintain  Connections between the Storefront and the Street by Minimizing Barriers

An active, well-illuminated street frontage improves safety for retailers, residents, and the district. It also reduces the need for security gates by creating a safer street front. Ideally, security gates should not be allowed in retail spaces under lease agreements. There are many other ways to provide security, including security systems with video, sensors, alarms, etc.

Unfortunately, in many urban communities, transparency is often trumped by safety concerns. For example, many retailers elect to put up solid security gates as a anti-theft measure. However these gates only serve to accentuate concerns about safety. Your facade program should discourage, or require, less obtrusive forms of security. If roll down gates are required, share alternatives to exterior rolls down gates. (See our previous post "Are there viable alternatives to roll down gates?")

Air conditioning units can also be barriers and jeopardize a facade design's  potential to creating vibrant streets. Avoid whenever possible the installation of air-conditioning units over doorways or having them protrude through the façade. Instead, plan the placement of louvers to enhance the facade and the quality of the retail storefront. Provide a clear zone for louvers on the exterior storefront. Finish louvers to match the color of the surrounding storefront elements so that they are an integral part of the facade design.

A store's visibility has significant impact on retail sales - this is why businesses pay more for corner locations ("end caps" in retail parlance) where the store is visible to customers from a variety of angles. Effective signage can also play a role in improving visibility. In pedestrian environments, signage that projects from the building (i.e. blade signs) offer pedestrians strong visual cues that there are businesses in the vicinity. In one community where we worked, the installation of blade signs increased pedestrian traffic down a previously quiet street by 30%. (See our post "Pittsburgh Neighborhood Unveils Strategies Aimed at Drawing Tourists")

3. Keep the Street Wall Continuous and Avoid Gaps

The conditions of street-level retail are intimately connected to the quality of the customers’ experience in your district. The benefits of well-designed storefronts extend far beyond district attractiveness. From fostering community pride to serving as catalyst for further economic investment, they create positive changes to the social, economic and environmental health of the commercial district and surrounding communities. Although this recommendation is not technically about facade improvements, it does suggest that by clustering facade improvements and/or creating a continuous street-wall of improved storefronts, the program can have greater impact. Consider using the the facade program in a targeted way along a single block front for a limited amount of time. Or design the program as an incentive to fill vacancies - perhaps by increasing the allowable grant contributions when used for a vacant space. 

4. Maintain Flexibility for a Variety of Potential Tenants

Effective retail spaces are flexible. In many districts, the needs of tenants vary widely. Offering flexibility means greater potential to fit the needs of a larger set of prospective tenants. One suggestion is to design the façade program so that it has the potential to accommodate multiple entries. Another is to require improvements that result in on-grade pedestrian entries to ensure ease of access. Consider a retailer whose customers are young families with children - a set of steps will cause immediate concern. How might a parent with a stroller make it up the steps? Or a senior citizen - or anyone with mobility challenges? 

5. Remain Distinctive so that Shoppers Can Easily Find the Retailer

Retail entrances that are clearly marked and distinct from other street-level uses (residential or office entrances) facilitate wayfinding and help catch a shoppers eye. While the guide suggests a minimum of 15 feet between any retail entrance and other uses, we think that clear visual delineations are more important than actual physical distance. Awning and other design elements, like signs, can be deployed in a way that ensures a retailer has a clearly defined entrance.  

What do "Emerging Trends in Real Estate" mean for the commercial district practitioner?

The Urban Land Institute (ULI) and PwC just released “Emerging Trends in Real Estate" 2016 and there are quite a few insights and takeaways for commercial district practitioners. These come in the form of market-based opportunities and threats that will need to be considered - and acted upon - in the coming years.

Here are a few of the findings, as well as some practical takeaways on the impacts and actions that might be necessary....

Opportunities continue to grow in secondary markets – what ULI calls “18-hour” cities. This is great news for many smaller downtown's looking for investment. These are places that still provide investors better upside opportunities, in part because the dense primary markets are already stiff with investor competition. 18-hour cities offer lower costs while maintaining some if not all of the excitement of 24-hour cities. A great competitive advantage is brewing here.

Takeaway: If you are in one of these “18-hour” cities, places like Nashville, Austin, Denver, San Diego…the time might be ripe to revisit your district with an eye towards redevelopment opportunities. Now is the time to find investors and developers who might be more receptive to your pitches.

For all the hoopla surrounding downtown development, suburbs are still a force to be reckoned with. The report suggests that it will only be a matter of time before millennials, many who have deferred starting families, will start heading out to the suburbs to raise families. While 37% of millennials indicate a preference for urban living, we all know how quickly these preferences change when people become parents. That might not be good news for cities that don't stay ahead of these changing preferences. 

Takeaway: Downtown – and its surrounding urban neighborhoods - need to start thinking about how to meet the needs of millennials as they graduate from roommates to partners and families. This will require thinking more holistically. How are the local schools – all the way from elementary to high school? Is the neighborhood safe? Is housing affordable and adequate? And how is the physical environment? Are there safe bike lanes for tots who are learning to bike – i.e. dedicated lanes rather than sharrows? Are sidewalks and crossings - and the whole pedestrian environment for that matter - safe for those ages “8 to 80”, as Gil Penalosa founder of 8 80 Cities, likes to say. Are there adequate playgrounds within walking distance of people’s apartments and homes? While the report didn't mention this explicitly, let's not forget the growing senior demographic. Are these easy places to walk to grab a bite to eat if driving is no longer an option. If not, get cracking!

Work lifestyle and expectations are changing – and this is good news for downtown and other similar urban environments. The growth in co-working spaces is growing as the “gig economy” heats up. Is your city up to meeting the demands of these businesses and the workers they bring? 

Take away: For those districts where real estate development is an opportunity - what is your downtown organization doing to remain attractive to this changing worker lifestyle? Can your organization become proactive in helping to re-position or reuse existing assets to make them more attractive to investors looking to develop this product type? Have you thought of a game plan for how you are going to meet the needs of this growing worker segment? In 2013, the Downtown Brooklyn Partnership, the parent organization that manages three Business Improvement Districts in downtown Brooklyn, NY, helped lead a study and strategic planning process called the Brooklyn Tech Triangle (check out their website and plan here). The effort brought together the public, non-profit and private sectors to ensure everyone was working from one playbook when it came to strategies and investments that would ensure that the area remained attractive to the tech employers - and by extension tech workers. 

Housing in short one word: affordable. The report suggests that the lack of affordable housing for a variety of incomes is especially problematic. Recent housing production has been skewed “toward the luxury end [and] a shortfall of supply in the mid-to-lower end of the residential market is putting upward pressure on pricing…exacerbating already severe affordability issues.” Simply put, the development of luxury product has far outpaced other housing types lately, and the limited supply of more affordable options is being acutely felt in many markets. Without housing for a variety of income ranges, ULI suggests that markets will stagnate a bit. How can a business survive if its workers cannot afford adequate housing or are relegated to a lifestyle that involves a 3-hour round trip commute? As ULI states, “developing improved housing options for everyone…is passing from the realm of “nice to do” to “must do.”  

Take away: Has your community sought to address issues of housing affordability? Do your housing incentives support the creation of affordable housing, for people from both low and moderate income bands? Does your downtown zoning framework outline a clear and transparent process for development, one that offers developers the ability to ascertain costs and development timeline with some degree of precision? 

Parking - we still don't know what the future holds, but hold on tight, because change is coming. The ULI report mentioned trends that are notable, including the decline in driver’s licenses among younger drivers, driver-less cars, car sharing that supports a reduction in car ownership, etc., all things that will change parking demand.

Takeaway: We still don't know what this means, and quite frankly in my opinion, our zoning framework is probably not prepared to accommodate these changes without significant alternations. Keep your eye on what cities of your ilk are doing as they respond to the changing dynamics of parking. 

Infrastructure investments are critical, but don't hold your breath for public money to solve the problem. The need to invest in downtown infrastructure has never been more acute. Deferred maintenance on things from the water supply and distribution, road and bridges, rail and public transportation access, etc. will be our undoing. The cities and downtowns that address these issues will retain a competitive advantage over those that don't. 

Takeaway: In light of this challenge, there may be a need - and opportunity - for BIDs to take on bonding for public improvements as a benefit to their constituents. But keep in mind - in some states BIDs are restricted from or have limits to the amount they can leverage towards bonds, so the enabling legislation for your individual state needs to be considered carefully. 

Food. Food. And more food. 

The trend towards food as an activity, food as a lifestyle choice continues, and downtowns are naturally occurring foodie destinations. The growing demand for interesting food offerings, especially from among those with more discretionary dollars in hand bodes well for downtowns. 

Takeaway: Is your city positioned to take advantage of this trend? Food destinations are usually places where food offerings are clustered. The experience of choosing a place to eat become almost as interesting as the meal itself. In some places these are called "restaurant rows", though food trucks are muscling in on restaurant territory in some places. Is your organization marketing your food options adequately through social media? Do your events give food establishments opportunities to introduce themselves to new customers? Have you found ways to add complimentary experiences - including street buskers, nice places to stroll after dinner...what I call ambient or impulse entertainment? Since most dining happens at night - what is the arrival experience? Is parking adequate and is it safe and comfortable to walk to and from a car? Can you encourage retailers to remain open later on some nights to give diners another thing to do before or after they eat? The list goes on...

Big banks are getting bigger, while small banks are specializing, and the guy in the middle will have to choose. What this means is that financing for smaller projects may become harder because they won't attract the big banks.

Takeaway – Don't despair, this means that regional banks will likely fill in the gap. Have you developed relationships with your local regional banks? Do you have access to – or can you create – dedicated lending tools to help promote development and investment in your district? Projects in the $20 million to $50 million range are what ULI suggests are the sweet spot for smaller investments. Have you looked at your district with an eye towards cultivating developers and projects – either new development or reuse – that meet this criteria?

Finding a way to incorporate these trends into downtown and commercial district strategic planning efforts will remain critical in the coming years. So good luck!

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

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

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

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

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

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

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

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

It's not about the retail, stupid

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

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

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

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

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

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

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

Back to fundamentals...what are the building blocks of vibrant retail streets?

Figuring out what makes a great retail street is probably one of the most important research tasks in our field. This information allows us to make more informed decisions about which investments will create the most impact, and allows us to better advocate for policies that will make a real difference in the districts we serve.

In 2012 the City of Washington D.C. commissioned a report to do just that. The DC Vibrant Retail Streets Toolkit attempted to unpack the elements of extraordinary retail streets. While the authors acknowledge that retail is too innovative to be formulaic in every situation, there were a number of findings that inspired us to take a look at how these building blocks reflected our own philosophy of what makes for great retail environments.

The study considered two kinds of retail streets - small-scale neighborhood streets and destination streets. They then collected data for 16 case studies to see if the similarities could inform a set of policy and planning principles for the District of Columbia to follow. We took the liberty of organizing the elements into the assessment framework that we use in our work: Administrative Capacity, Physical Environment, Business Environment and Market and Demographic Data.

Source: The framework above was developed for the New York City Department
of Small Business by our team on behalf of the Local Initiative Support Corporation. 

ADMINISTRATIVE CAPACITY: In our own research, we have also found that administrative capacity remains a consistent factor in successful retail environments. We we thrilled to see this study reinforce that finding. Again and again, studies into successful retail districts have consistently reinforced the importance of leadership and capacity to district success.

BUSINESS ENVIRONMENT: The vibrant street case studies that were considered in the study all reinforced the importance of market forces to great retail environments. Customers are driven to visit a place when the offerings are reflective of what they want to purchase and what they want to do. This is why a fairly tight node of great offerings, which should include a healthy mix of traditional retail anchors as well as non-traditional anchors such as civic and cultural institutions, is imperative to retail district success.

MARKET/DEMOGRAPHIC DATA: The strength of the market - both from residents and non-resident visitors - is another key consideration.

PHYSICAL ENVIRONMENT: And last but certainly not least, the condition of the physical environment plays a role. And our conjecture is that this will become even more the case as our retail environments are compete against on-line shopping options. It is the quality of the physical environment and the experience that the retail district offers that provides the most fundamental differentiation from the on-line experience. Districts that get this right are in good shape to ensure long term viability and vibrancy.