The obscure zoning regulations that might be undermining your downtown revival

We have all heard the news. Retailers are increasingly experimenting with new business formats that blur the lines between uses that have never previously existed side by side. Things like education/instruction, production and retail now regularly occur in the same facility, making it difficult for planners to categorize these uses and creating the need for businesses to apply for expensive discretionary zoning actions for combinations that planners never dreamed of decades ago. By making it harder and more costly for businesses, particularly smaller, mom-and-pop (and often less capitalized) to open, cities are diminishing their competitive advantages and making it more likely that these businesses will locate elsewhere. As retail footprints shrink, a trend unlikely to change in the near future, successful commercial districts will be those that aggregate a diverse, robust set of uses in one place. Cities can't afford to lose interesting and unique retailers if they want to remain relevant to shoppers who can easily purchase the same goods on-line.

Table of Uses and Use Group Designations
Most cities have tables or use group charts that define, with great precision, the kinds of businesses that are allowed or restricted in certain areas. This made sense when noxious manufacturing uses were not anything you wanted around residential communities, but we have come a long way since then. Consider "Maker Spaces" that allow people to collaborate, build and create products. Or consider the new Nike store along Broadway in Soho. The entire first floor is dedicated to building your own pair of sneakers. Zoning restrictions in some communities might have prevent one or both of these concepts - yet these are precisely the kind of uses that downtown managers are looking to as they try to fill vacant spaces.

The Nike Store along Broadway in Soho dedicates the entire
first floor to the production
of sneakers. Would this use be allowed in your downtown?

Other examples include things like gyms, yoga studios and artisan specialty food manufacturing and breweries, all downtown friendly uses that are blurring the line between retail, service and manufacturing and frankly causing havoc in the zoning world. This is because most zoning codes do not often recognize the nuances inherent in these business models and as a result businesses are often required to enter expensive legal processes for permitting their businesses.

Here are a few concrete examples from our work that highlight the challenges...

Gyms and Spas
Times Square in the 1970's was not a place for the weak of heart. The problem, according to many, included the many adult massage parlors that operated with impunity. To fix it, the City amended the Zoning Resolution to prohibit "Physical Culture Establishments" and to require that these businesses obtain special permits to operate. Many parlors operating as gyms or health spas were closed and many credit the permit process with speeding up improvements to Times Square.

Fast forward forty years and the well intention special permit now exists in an environment in which healthy living is an important part of the urban lifestyle. Uses that we now consider normal parts of our everyday lives, including gyms, spas, martial arts schools and yes, legitimate massage studios, must apply for a Physical Culture Establishment permit that takes many months and according to Crain's New York Business cost $50,000 or more in fees and legal costs. While the code was later amended to allow as-of-right, art, music, dance or theatrical uses under 1,500 sf, this still leaves alot of legitimate uses open to the vagaries of the discretionary permitting process.

It should also be noted that as brick-and-mortar retail shrinks its footprint, these kinds businesses are precisely the kinds of uses filling many of the vacant spaces left behind. Yet expensive roadblocks like these make it harder for property owners to fill vacancies. Instead the spaces lie fallow.

While your downtown may not have a permit restricting gyms, you may have other impediments to retail businesses that are interested in locating downtown but may be scared away by permitting or restrictions that will cost them significant time and money.

Breweries, Bakeries and Furniture Makers
Another area of contention are retailers that do light manufacturing of some kind on-site. One of the most common is the brewery. More and more downtown's are seeing breweries as a real opportunity for downtown revitalization. We recently did some work in Morganton, NC, where no less than three popular breweries have set the stage for a full-scale downtown revival.

Brown Mountain Bottleworks
is located in a historic building in
Morgtontown, NC.

However many downtown zoning codes do not allow for this use. This recently happened in the City of New Rochelle, NY.  According to a local councilman, in the past year alone at least three breweries considered opening locations in downtown and all have chosen other locations. Under the prevailing zoning at the time, breweries were relegated to certain industrial zones or in new buildings, which effectively prevented them from locating downtown, which is where many want to be. To remedy the situation, the City Council amended the zoning code to ease regulations for breweries and other artisan shops that also include elements of manufacturing, including jewelers, bakers, furniture makers and coffee roasters.

Educational Establishments
Many downtowns thrive off of the presence of educational institutions that attract students. "Educational" designations can increasingly be applied to retailers who also offer instruction in their stores. In fact, some storefronts are predominantly places for classes that support minor accessory retail, rather than the other way around. In Watkins Glen, NY where we are working on the New York State Downtown Revitalization Initiative, a collective of 19 local knitters purchased a downtown business whose owner was retiring and turned it into Fiber Arts in the Glen, a gathering space for knitting groups, classes, and to a lesser extent the purchase of yarn. In fact, someone who enters the store is often surprised to find that many of the lovely knitted goods are not for sale, they are simply samples to show off the yarn that is being sold.

In some places this is precisely this kind of use that triggers changes parking requirements. Practice Space, a small business in Inman Square found this out the hard way. During our work with the City of Cambridge, MA, we found that when an existing use changes and the new use is thought to increase the intensity of use, additional parking is sometimes required. Practice Space could function in its location as a retail establishment, but when they added classes they quickly found that their location in an older building along a traditional commercial corridor offered limited to no opportunities to add off-street parking. This kind of parking requirement assumes a suburban context and therefore it can effectively kill the kind of new retail concept that many retailers are exploring.

As on-line retail increasingly results in stiff competition for customer dollars, our responsibility to downtown is to make sure that zoning codes and regulations do not stand in the way of innovative retail concepts that will ensure businesses survive and thrive during these challenging times.

Round Up: Buffalo's Architectural Heritage, Peoria's Parking Problem, Baltimore's New Zoning, NY's Small Towns, Rural and Urban America

How Buffalo turned architectural heritage into an engine for reinvention

Knowing their strengths, Buffalo has taken their many masterpieces, created by some of the biggest names in architecture history, and turned it into architectural tourism. Along with tax-credits and small-scale private urban planning, the city with such a past is seeing opportunity and a future.

Peoria's Parking Problem

Like many cities across America, there is an issue with overabundance of surface level parking. Peoria is one of those cities and is "so full of parking that the amount of land devoted to surface parking in the county actually surpasses the amount of land devoted to buildings." This continues the debate of paved space versus productive space.

Baltimore’s New Zoning Hoped to Boost More Mixed-Use Development

The new zoning code, unveiled in June 2017, has been in the works since 2012 and was the by-product of public debates and multiple revisions. While many of Baltimore's East-coast sister cities have either stabilized or grown, Baltimore has continued to lose population. The hope is that this new code will turn things around.

Additional website of interest: Discover Baltimore City Neighborhoods

For Oneonta’s Aging Downtown, a $10 Million Face-Lift

New York State turns its attention beyond NYC and Great Lake adjacent cities to its small towns through the Downtown Revitalization Initiative. LOA was part of the DRI Oneonta consultant team and look forward to seeing what outcomes and future lie ahead for these often overlooked economies.

The Divide Between Rural and Urban America, in 6 Charts

Beyond the political divide - rural and urban America have other issues. While job growth is higher in urban areas, rural areas still lead the way in entrepreneurship and small business start-ups. Unfortunately, rural areas struggle with poverty and disabilities more so in comparison to their urban counterparts.  

Retail in Coastal Towns

The season for sun, sand and sangria is upon us. As families and young professionals along the coast flock to the nearest beach towns for weekends or even a few months, retailers are also following suit. The latest trend in these coastal summer towns is the clustering of pop-up retailers and restaurateurs that have already established themselves in the nearest metropolitan city.

In Montauk and the Hamptons, for example, we’re seeing brands and restaurants that we’re already familiar with here in New York City. In a 2017 Hamptons Guide released by Guest of a Guest, a NYC lifestyle site, more than half of the featured retailers and food and drinking places were outposts of NYC stores. Arbor, for example, an outdoor bar and dining area has reportedly returned to Montauk for a second summer. It is run by Den Hospitality and is an expansion of the Manhattan bar The Garett. Likewise with Eleven Madison Park Summer house, the outpost of Eleven Madison Park restaurant by Michelin-starred Chef and Co-Owner Daniel Humm. In apparel, go-to women’s summer clothing brand The Reformation opened this season in East Hampton. Here in NYC, it has stores in neighborhoods like the Lower East Side and SoHo.

These retailers unfortunately are driving short-term leases in these coastal summer towns through the roof and while this has been helpful for property owners and landlords that struggle in seasonal markets, the retailers disappear after Labor Day for the next 8 months leaving empty storefronts… and less-than-happy residents.

We all know that coastal summer towns are popular areas for second homes and while this leads to high housing vacancy rates*, they also often affect the retail and commercial markets. When the part-time population leaves the coastal summer town for 8 months of the year, the full time live-in population left behind can barely support the retail square footage that is available in town. On a visit to Montauk on a surprisingly warm weekend in April, I was welcomed into town by closed or vacant storefronts being renovated for summer tenants. I could not imagine being a resident of Montauk in the autumn and winter months with almost no retail offerings available on Main Street. (Of course, the picture is much different now in the middle of July.)

To make matters worse, seasonal customers often have very different lifestyle preferences, median incomes, and median ages than the live-in residents, which results in a segmented market demand in these coastal summer towns. This means that retailers that are solely attracted to coastal summer towns for the trendy young summer customer may often overlook the needs and preferences of the live-in residents –driving an even greater divide between the customer groups. A quick look at the demographics of Montauk NY, Chatham MA and Block Island RI, all popular coastal summer towns, quickly showed that live-in residents in these places are much older, more car-dependent, and more traditional in taste and “stick to the brands they know” (not exactly the experimental pop-up brand supporter).

Furthermore, live-in permanent residents by default need year-round convenience goods and services versus temporary art galleries or summer clothing stores that strive to entertain the visitor for a couple of weeks. Balancing the retail mix in these towns is hard but when retailers follow migratory habits of customers, it is often the resident that loses the battle.
The light at the end of the tunnel for these coastal summer towns, however, lies with the abundance of experience-based businesses. Food and drinking places, personal care service facilities, indoor fitness studios, and entertainment venues still make up the lion’s share of the retail mix in these towns and for the most part they stay through the year.

These businesses support the tourism and accommodation sectors, and more importantly contribute to an overall experience of relaxation and retreat that even residents crave on weekends. Through rain, shine, or snow, the live-in residents continue to eat, drink and play at these coastal towns’ niche seafood restaurants and indoor fitness studios. In Montauk, even Gurneys Resort and Spa has introduced indoor stand-up paddleboard yoga in the heated seawater pool of the hotel available in the cool seasons.

The experience-based businesses certainly are more apt to modify their services and amenities in these seasonal coastal towns and certainly can sustain the vibrancy of the towns year-round. The coastal towns themselves however need to ensure that their zoning codes and ordinances are supportive of such experience-based businesses especially when new and innovative indoor activities are introduced along commercial corridors of these towns that may not be an allowable use in the ordinance, such as yoga studios or art studios. In fact, in East Hampton, residents have complained that restrictions on establishments that serve food or drinks have dampened the opening of the more experience-based restaurants on Main Street.

In light of the constantly changing retail environment of coastal summer towns, flexibility for retailers is important. Outdated land use restrictions – particularly those that prevent businesses from testing new concepts and incorporating new offerings – limits the ability of retailers to diversify their revenue streams in the cooler seasons and to meet the demands of the year-round live-in residents of these coastal towns. 

The Growth of Food Trucks

Food Truck Fest in Troy, NY (Photo: Townsquare Media)

Here at LOA we are paying close attention to food trends as this category continues to grow its share of overall consumer spending. Consumer dining habits are rapidly shifting as more and more spending is happening on meals outside the home than on buying groceries and eating in, according to the most recent expenditure data (Bureau of Economic Analysis, Q1 2016). In recent months, we’ve covered the new categorization of food services, and delved deeper into food hubs and food halls, but now it’s time to take a closer look at food trucks.

Food trucks are establishments primarily engaged in preparing and serving meals from a mobile truck. Food is normally prepared, stored and cooked on the truck and the truck may or may not use the same location every day. Today, there are over 4,000 food trucks across the nation. According to IBISWorld, a market research firm, from 2011 to 2016 industry revenue grew at an annual rate of 7.9% and in 2016 reached over $1.2 billion – and that’s why we’re paying attention to this industry.

NYC Food Truck (Photo: Sacha Fernandez)

Like full service restaurants and other eating places, food trucks can primarily be found in densely populated cities and regions. According to a Zagat survey from 2012, the most concentrated cities include New York (11.1% of industry establishments), Boston, Washington, DC, Miami, Houston, Austin, TX, Cleveland, Chicago, Portland, OR, and Los Angeles. The West and Mid-Atlantic are the most important regions for this industry, accounting for an estimated 25.2% and 23.3% of food trucks in 2016, respectively. As its popularity grows in Florida, the Southeast is also anticipated to account for a greater substantial share of food truck establishments.

Food trucks, however, were never this popular in the past. Early on in its inception, food trucks predominantly existed to serve the budget-strapped working class citizen searching for a cheap lunch deal. Trucks would be parked by construction sites and a hefty meal would cost no more than $6-8. Food trucks were also widely acknowledged by entrepreneurs as the quickest and most affordable way to break into the food business with low set-up, operating and licensing costs.

Today, the tables have turned. Food trucks are increasingly being used as promotional and marketing tools for established chefs, hotels, and restaurant brands. Bigger companies and national chains are using food trucks to service private events and music festivals just to get their name out there. Brian Pekarcik and Rick Stern, co-owners of Spoon and BRGR restaurants in Pittsburgh, launched a BRGR truck for that very reason. “As brand recognition, it's a great advertising piece,” they explained. “And we expect that it will drive customers to our restaurants.”

Food Trucks on parking lot in San Francisco, CA (Photo: Quinn Dombrowski)

And meals are not as cheap anymore because the trendy, young professional seeking new and gourmet food has now become a major customer segment in densely populated cities.  These changes are also reflected in successful sales locations for food trucks. In 2015, only 15% of food truck sales were made at industrial/ construction work sites versus 18% at venues and events, according to Mobile-Cuisine.Com.

Cities, however, are still trying to navigate this burgeoning industry. Some are implementing programs and policies in support of these small food businesses, while others are taking a protectionist approach by heavily regulating and hindering the growth of food truck operators for fear that they may take away sales of brick-and mortar restaurants and eateries. Others also blame mobile food trucks for congesting sidewalks and streets and diminishing the urban quality of life.

Food trucks outside restaurant in Cleveland, OH (Photo:E Little)

In Chicago, IL, for example, food trucks are being held back by regulations that prohibit them from setting up shop within 200 feet of a bricks and mortar restaurant or from parking in any one location for more than two hours. Bricks and mortar restaurants are often, if not always, located near the retail core of downtowns and near entertainment and leisure destinations where a considerable amount of foot traffic is already established. By disallowing food trucks from setting up in those areas, they may be pushed to peripheries of downtowns or less attractive streets where there isn’t a sufficient threshold of customers to break even. Also, in Chicago, where parking ratios are lower, food trucks would be hard pressed to find desirable parking spots quickly – resulting in lost critical sales hours. These restrictions and more have stifled the industry’s growth in Chicago at a 1:100 ratio of food truck to restaurants.

Food truck on Leather Lane, London UK (Photo: duncan c)

This defensive position, however, may be unfounded because the Bureau of Labour Statistics has found that counties that have experienced higher growth in mobile-food services have also had quicker growth in their restaurant and catering businesses. For example, in Seattle, the number of restaurants and surrounding King County has grown by 16% since 2010 in spite of a thriving food-truck scene. In Travis County, Texas, which includes Austin, the restaurant count has jumped 18% even as food trucks have increased more than six-fold. In fact, in Houston TX, restaurants have experienced increased business generated by food trucks parking nearby and drawing more people to the restaurants’ neighborhoods. Restaurant owners themselves have reportedly asked the Houston City Council to ease existing laws that make it difficult for food trucks to operate.

In other cities, parking laws and other ordinances are evolving to catch up with the industry’s transformation and although there is no one-size-fits-all solution, here are some best practices from around the country if you’re looking to take a supportive approach leaned towards fair ordinances that allow food truck vendors to flourish.

BEST PRACTICE: Austin, TX – Simple and non-prescriptive Food Truck Ordinance

In the City’s Zoning Ordinance, mobile food establishments, or food trucks, are permitted in all commercial and industrial zoning districts and are minimally restricted from operating between the hours of 3:00 am and 6:00 am. The distance restriction on operating a food truck near a restaurant is also very minimal at 20 feet, versus the 200 feet in Chicago.  In more residential neighborhoods, the City allows for neighborhood association areas to reasonably request further restrictions on the operations of food trucks to avoid noise and litter nuisances in predominantly more residential areas.  And that really is the end of the restrictions on food truck operations in the City.

BEST PRACTICE: Cincinnati, OH – Streamlined permitting process

Austin , TX and Cincinnati, OH are two cities that have streamlined and centralized their food truck permitting processes. This strategy lowers time and cost on the part of small business owners hoping to license their food trucks and start operating. Austin’s permitting web page has detachable forms and blank spots for the necessary signatures, with instructions regarding who to contact to obtain those signatures. On the same page, it also specifies the actual schematics of the truck components required for food preparation and handling safety, and best of all, nowhere does it suggest to refer to a subsection of the zoning code or statute not included in the document. Simplifying and making the process clear is crucial to encouraging food truck vendors.  Meanwhile in Ohio, the Cincinnati Department of Health is the only agency responsible for the city’s permitting process, application process, and payments associated with the city’s mobile food vending. Half the time, food truck vendors are required to submit applications to four or five different agencies and this process can become confusing for applicants.

Food Truck Thursday in Washington DC (Photo: Ted Eytan)

BEST PRACTICE: Washington DC – Mobile Roadway Vending Zones

Farragut Square, Washington DC, is now a vibrant outdoor food court since the city implemented Mobile Roadway Vending zones, or MRVs, in 2013 allowing trucks to vend for four continuous hours without breaking parking laws. The city rolled out eight MRVs that year, including ones at Farragut Square, Franklin Square, L’Enfant Plaza and Metro Center. 95 parking spots were made available in the MRVs and are handed out via a monthly lottery. These food trucks sell food at lunch hour to the thousands of workers in each district.

Food truck on private lot in Brooklyn NY (Photo: Jason Lam)

BEST PRACTICE: Portland, Oregon – Vacant Lots for food truck clusters

After a study in 2008 by researchers at Portland State University that concluded food carts benefited residents, the city began encouraging the use of vacant land for food-truck clusters or “pods”. The No-Vacancy guide explores temporary use of vacant space (including food truck vending!) and its applicability in the Central Eastside Industrial District. The guide shows property owners and food truck vendors how to navigate permitting and zoning processes in these scenarios.

Establish a pilot program!

If your downtown is still getting its feet wet in the food truck business, try implementing a pilot program to make informed decisions on what regulations to adopt in the future. Pilot programs are meant to test the waters and can very easily bring to light the issues that are unique to your community.  A small pilot program will also minimize any unintended impacts while still gleaning insight on what works and what doesn’t locally.

The City of Cambridge, whom we are currently consulting with on a citywide retail market strategy, launched a pilot program in 2011 that allowed permitted mobile food trucks to park in spots adjacent to riverfront parks. An initiative of the Community Development Department, the program was used to determine whether a future, permanent program should be implemented.  In the pilot, food truck vendors had to apply to participate in the program and spaces were leased on a week-by-week basis for a per-day fee.

By the end of the pilot, the City learned that the designated vending spots did not work for trucks. The City has selected low pedestrian traffic areas or times because it had wanted to activate these spaces, however it backfired on vendors who found they could not make their businesses financially viable in those areas. The City also learned quickly that a cluster of trucks needed to be marketed versus just one at each spot. Marketing and communicating to the customers that there were more than a single food option was found to be more effective.

With all the lessons learned, the City of Cambridge hopes to re-launch a new food truck program with policy improvements that were suggested by food truck operators.

Let us know if your city has an effective food truck program too!

For more examples, read NLC’s Food On Wheels Report: www.nlc.org/sites/default/files/RI_FoodTruckReport2013_final.pdfhttp:/www.nlc.org/sites/default/files/RI_FoodTruckReport2013_final.pdf

Institute for Justice’s Food-Truck Freedom Report:

http://ij.org/report/food-truck-freedom/

http://ij.org/wp-content/uploads/2015/03/7-myths-and-realities.pdf

Urban Vitality Group and City of Portland’s Food Cartology Report:

www.portlandoregon.gov/bps/article/200738

Fake News - Retail is not dead!

This past weekend we had the privilege of attending the National Planning Conference at the Javits Center here in New York City. There were over 600 sessions, discussions, and mobile workshops on topics ranging from retail and downtown revitalization to short term rentals and agricultural tourism. A theme that seemed to permeate many of these discussions was one of continued strength and adaptations in brick-and-mortar retail. City officials, architects, market consultants, and planners at various panels resoundingly agreed that retail was not dead in their communities, or in communities they were working for, and that there are still steps to take to support its growth. We've all read the recent reports on large national retailers like Macy's pulling back on storefronts and abandoning suburban shopping malls. However, this calamitous picture being painted in the media of retail's impending doom seems to be clouding the realities on the ground. As Steve Dwoskin, Vice President of Callison RTKL, aptly said in his session on The Reality of Planning for Retail, "It's Fake News".

Retail Trends
There are so many ways that retailers today are adapting to changing consumer trends and habits in order to sustain growth. At the same session, Kate Coburn a partner at HR&A, explained the importance of understanding the changing shopper demographics across the country and using that to retail's advantage. Millennials, as many of us know, currently make up the biggest proportion of the population with over 92 million of them here in the U.S. This group, combined with the growing Generation X-ers, are the shoppers that retailers need to watch and adapt accordingly to. More importantly, there is also a growing Hispanic and Asian population here in America that needs to be accounted for in retail market strategies and downtown retail tenant mix. Not to forget the high rates of urbanization that are also forcing retailers to rethink configurations of properties, store formats, and partnerships.

Here are some ways in which retailers, downtown organizations, and developers are adapting to these dynamic consumer trends:

1. Reconfiguring properties from single purpose malls to mixed use developments in more urban and transit-served areas
2. Changing store sizes and formats to fit downtown main streets rather than suburbs
3. Repositioning and retenanting resulting in many developments shifting reliance on department store anchors to entertainment and dining anchors
4. Focusing on experiential retail as a result of growing e-commerce competition
5. Targeting localized tenants that cater to diverse demographics in different localities
6. Using multimedia strategies and moving from traditional media to social media advertising

Ikea was an example of a retailer that has been seen to adapt to its changing consumer habits. Its original 400,000 SF model has since been shrunk to 100,000 SF stores in order to be able to fit into more urban places. Its aim was to "bring the Ikea home furnishing range and expertise closer to customers" who lived in urbanized areas. Although these smaller formats are not able to carry full product ranges, customers are still able to order from the Ikea online range for collection at dedicated collection points of smaller format stores - similar to Target's fulfillment centers that we wrote about last week. It's important to acknowledge, however, that furniture is one of few retail categories that has fortunately been less vulnerable to e-commerce. Make-up/ cosmetics, services like hairdressers and laundromats, and restaurants are some other categories that continue to thrive despite the growing shift toward online shopping because they all require in-store product experience and demonstrations before consumers are able to make purchases. Likewise, local businesses that offer authentic experiences are becoming most valuable in today's retail climate. 

What cities can do to create a supportive system for all types of retail to thrive

1. Provide appropriate spaces for retail
• Cities can often provide tax incentives to landlords and property owners so that they may renovate and provide viable retail spaces. In our work, we 've often seen downtowns struggle with high ground floor vacancy rates and yet long lists of potential tenants. This is often the case because tenants and small businesses do not have the capital to rehabilitate and fix up the vacant spaces in order to make them viable for business
2. Be strategic about co-tenancies
• A block-by-block tenanting strategy should be developed by merchants associations or downtown organizations in order to effectively cater to communities living in surrounding neighborhoods and also to increase retail diversity
• Curating retail mix can only be effective when property owners are involved in the strategizing. However, this often requires that cities provide financial incentives for them to be active in such discussions.
3. Grow customer base close to retail corridors
• Provide diverse housing options that meet full range of household incomes needed to support a variety of retail
• Encourage flexible spaces of employment (office and manufacturing) near retail corridors that encourage strong daytime worker populations with a range of income and interests
4. Right-size parking and vehicular areas
• With the increasing use of shared car services like Uber and Lyft, and with retail moving to urban places, parking requirements no longer hold the same weight as they did. Retailers in urban areas are instead seeing the need for drop-off areas more so than large swathes of parking. Some downtowns are even revisiting parking requirements for retail uses given the changing environment.

Ways to support small businesses through zoning
More specifically, zoning can be an effective tool in supporting the growth of retailers and small businesses. A panel discussion opened by Arista Strungys, Firm Principal at Camiros, Ltd, dived into some tried and tested zoning modifications and tools that have lowered barriers to entry for businesses. The session cautioned municipalities about out-of-date use structures that were often the biggest barriers to small businesses thriving downtown. According to the panel, building flexibility into zoning and land use ordinances is key to supporting small businesses, including retail. This flexibility can be achieved by establishing a generic use approach rather than specific use approach and also tailoring uses to different districts. The former encourages readability of the ordinance by eliminating pages and pages of descriptions that outline every specific use allowed. Instead of listing retail categories such as 'Clothing Stores' or 'Book Stores', the ordinance simply says 'Retail Goods Establishments' to build in flexibility for allowed uses. Tailoring uses to districts, on the other hand, is best represented in a 'Uses Matrix' like the one below. This approach also encourages readability of the ordinance and eliminates the cumulative structure of traditional ordinances.

Eastern Neighborhoods Zoning Guide - Sample Use Matrix

Finally, monitoring new types of uses is also key to being flexible for businesses. Robert Azar, Deputy Director of the Department of Planning and Development for the City of Providence, Rhode Island showed how his City was encouraging small businesses by introducing newer use types in the ordinance including Residential-Commercial/ Residential-Professional uses that encourages live-work spaces downtown. By doing so, the City is using these new permitted types as a calling card for itself - inviting newer types of businesses downtown such as micro craft breweries and specialty food producers and retailers.

For all the news articles and media bombardment of brick-and-mortar retail declining, there is also a strong movement at local levels to grow retail in dense, urban areas through a myriad of financial and regulatory tools. If your town or city is also doing something innovative to adapt to the changing retail trends and consumer habits, let us know! Get in touch at info@larisaortizassociates.com

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!

If you like this post, please sign up for our FREE quarterly newsletter by clicking here. 

Commercial District News Round Up - Week of March 16th

Skimming the internet for news, so you don't have to...

Outlet Malls Move Closer to Cities in Upending of Rules, Bloomberg Business

"After years of outperforming regular malls, outlets are increasingly encroaching on downtown shopping districts. The shift is part of a painful dislocation for brick-and-mortar retailers, which are abandoning decades of etiquette as they chase a dwindling number of shoppers."

LA City's re:code-Pitched as Simplifying City's Complex and Opaque Zoning Code

LA is starting a very huge project to update its zoning code - the second oldest zoning code in the US for major cities.  It is a five-year project that will produce two zoning codes (one for the central downtown area and one for the rest of the city) and a dynamic web-based code delivery system, which they plan to showcase at the APA national conference in Seattle.

Sausalito Leaders Consider Cap on Bikes Entering City Streets

Not typical news, but Saulsalito is considering measures to limit the number of rental bikers coming to their city from San Francisco due to safety concerns. There is resistance and plenty of businesses that feel this is unnecessary. This is not a done deal and only in investigation phase.  The situation doesn't look anything similar Amsterdam's current bike overload woes.

Amsterdam bike overload

Regional Planning Agency forms first Millennial Advisory Panel

Now that Millennials outnumber Baby Boomers in the Atlanta area they have become a constituent group that has expressed desire to be involved with regional planning issues.  The Atlanta Regional Commission (ARC) Millennial Advisory Panel formed in the wake of this desire and looks to be a sea change in the future of America's planning. The panel will formulate policy recommendations related to infrastructure, innovation economy and healthy, livable communities.


Why Some Parklets Work Better Than Others

A report from CityLab on why some parklets work and others don't shows that the type of businesses closest to the parklet plays a key role in its success.  The study showed that an adjacent business with modest interior seating and large front windows were very successful at attracting good parklet usage. Interesting article.

Parklet peak use time varied depending on location, Image: University City District

Parking Madness 2015: Nashville vs Amarillo

Coming out at the same time as college basketball March Madness, Parking Madness, is an interesting series presented by Streetsblog USA and puts two US cities against each other in a bracket tournament of sorts to win the title of "Golden Crater".  It's eye-opening to see how bleak these downtown centers are with so much of the land covered in parking lots.  Some pictures look devoid of human existence.

Amarillo from above (Google Maps).

Egypt's Strange $45 Billion Plan to Abandon Cairo as its Capital City

Similar to Brasilia in Brazil, Abuja in Nigeria, or Islamabad in Pakistan, Egypt looks to create a new capital.  The $45 billion plan would establish the new city to Cairo's east, closer to the Red Sea and would sprawl an estimated 150 square miles for 7 million potential inhabitants.