HOW TO: Retail in Public Spaces

Nur is an Associate at Larisa Ortiz Associates.

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

Case Study 1: Times Square Plaza

Vendor: Coffeed, a NYC-Based coffee chain

Space: 100SF, in the center of Manhattan's most trafficked area.

Leasing: The Times Square Alliance, the local non-profit BID, designates an area within Times Square for interested vendors who are then required to build their own structures. Electricity, rubbish removal services, as well as security are provided by Times Square Alliance.

Estimated Rent: $20,000/ month with a revenue share of 8% of sales. Times Square Alliance leased the space via Appear [here], an online listing platform that matches temporary, pop-up retail spaces with creative brands and entrepreneurs.

Added benefits to the vendor: Co-branding and promotional opportunities with the BID on its social media platforms and through other initiatives that the Alliance provides to the tourist, business and residential community.

Case Study 2: Astor Place

Photo: The Village Alliance

Vendors: La Newyorkina and Astor Plate, NYC- based businesses that both had existing storefronts in nearby neighborhoods like Greenwich Village and TriBeCa

Space: 110SF (La Newyorkina) and 200SF (Astor Plate)

Photo: The Village Alliance

Leasing: The plaza in which the kiosks currently sit is property of the NYC Department of Transportation (DOT). However, the local Business Improvement District (BID), the Village Alliance, has a contract with DOT to maintain the plaza. Kiosk vendors contract directly with the BID.

The procurement and bidding process of kiosk operators was a long process, according to William Lewis, Marketing and Events Director of the Village Alliance.  The BID wanted to ensure that they were tapping into existing local businesses and building kiosks that were respectful of the surrounding environment and community. Not only did the BID strive to keep local favorite, MUD coffee, being served at the kiosks, the BID also ensured the design of the kiosks were contextual. For example, the kiosk on the south end of the plaza is a metal structure that reflects the style and aesthetic of  the famous Alamo sculpture (the Cube) and the kiosk design of La Newyorkina on the northern end of the plaza features a hand-painted mural that reflects the local neighborhood.

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

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

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

Case Study 3: Hunters Point South Park

Vendor: LIC Landing by NYC-Based COFFEED features a healthy selection of locally-sourced food offerings, craft beers, fine wines, and specialty coffees and teas. COFFEED is also a charity-minded café known for donating a percentage of its revenue to local charities.

Space: 1,500 SF, at Hunter’s Point South Park, Long Island City’s waterfront recreation destination.

Leasing: The concession spaces was designed and built during the initial development of the park. Bids were later put out for operators by the NYC Parks department.

Case Study 4: Union Square Park

Market: UrbanSpace has operated the Union Square Holiday Market for over two decades

Space: 30,000SF with about 100 vendors, of which 75% are NYC-based. Individual booth sizes range from half-booths (50SF) to double booths (200SF)

Leasing: The market is made possible via a five-year agreement with the Department of Parks and Recreation negotiated with the market’s operator and founder. The Parks Department opens a round of competitive bidding, issuing a detailed request for proposals and site visits for prospective bidders.

Selected market operators then hold open application calls for interested vendors online.

Estimated Rent: Vendor spaces average between $6,000-$18,000 per vendor, depending on location and size of booths. Each year, UrbanSpace has netted around $2.7 million in vendor fees and compensated the City over $1.5 million.

Case Study 5: Downtown Detroit Parks

Market: Winter in Detroit is sponsored by Bedrock and Quicken Loans Family of Companies. Detroit Downtown Partnership collaborates with the nearby property owners to organize the seasonal markets.

Space: 130SF, pre-fabricated glass structures designed by Philadelphia-based Groundswell Design Group

Leasing: The market operators hold open application calls for interested vendors online. Vendors are selected based on unique and creative retail concepts, quality products and packaging, design of booths, and originality of brand

Estimated Rent: $1,000 for the season (inclusive of electrical, lighting, heating, and security) According to reports, the 38 selected businesses generated more than $2 million in sales between November and January.

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

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

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

When skyrocketing rents don't always mean the death of a small business

Larisa Ortiz is founder and principal of Larisa Ortiz Associates.

Broadway between Houston and Canal Streets in
New York is one of the highest rent districts in the City. 

For many New Yorkers, Pearl River Mart was Pier 1 Imports before there was a Pier 1 Imports. The family run Asian-goods department store, founded in 1971, grew over many years until it occupied 30,000 sf on Broadway in Soho. When the lease was up in November of 2016, the landlord increased the rent from $1 million/year to $6 million/year and the family decided to close shop. At the time, the news reported that the "44-year-old store is the latest victim of rising rents on Broadway and increased competition from online retailers like Amazon and Alibaba." A simple explanation for what was likely a much more complex problem.

The old Pearl River Mart at 477 Broadway - among
the most sought after retail addresses in Manhattan, NYC.

So it came as a pleasant surprise to see an article in The Wall Street Journal chronicling the retailer's travails since closing their original Broadway location. It seems they have developed a streamlined formula - a store layout with 3,500 sf instead of 30,000 sf - and a new location four blocks south of their previous location where rents are significantly less. Now the WSJ reports they are expanding to Chelsea Market, a "sprawling urban food hall" in the Meathpacking District - and a "must see" stop along the very popular High Line. Clearly a rent hike wasn't enough to put Pearl River Mart out of business. But they did need to reinvent themselves and find a suitable spot to relocate.

The "new" Pearl River Mart at 395 Broadway,
about four blocks south of its previous location. 

Chelsea Market, soon to be
home to a second Pearl River Mart location.

The lessons here for other businesses - and the city planning officials who support them - are worth noting. It reminds me of what fellow panelist Tony Hernandez, Director of the Ryerson University Centre for the Study of Commercial Activity said last week during our pre-conference session at IDA, "change is not new". This seems like a trite point, but it is one we have to recognize as an enduring truth of retail. He pointed out that since the 1940's, retail concepts have come and gone, and retailers have had to reinvent themselves again and again and again. From the climate-controlled shopping centers that dominated during the 1970's to the Entertainment complexes of the 1980's to the Power Centers of the 1990's, fickle customers and their every changing shopping habits have always been a challenge for retailers. Today's online challenges may be scary, but they fit a trend of innovation and disruptive change that is not without precedent.

What comes next is likely to result in painful change for retailers, but the good news is that retailers like Pearl River Mart have found ways to survive and thrive. The rent hike trend that caused Pearl River to close has also affected other retailers. In early 2016 we completed a market study for the Broadway SOHO BID and projected a market correction that was only then just beginning. In 2015 the Commercial Observer quoted a local broker said "Everybody's asking for too much money. Nobody wants to pay. It's a very overrated market." So it should come as no surprise that the softening the brokers were anticipating then is having an effect now. The same WSJ report that announced the expansion of Pearl River Mart also found that vacancy rates of 23% and asking rents that have fallen 14% to $478/sf.

Yet high rent does not mean lack of opportunity for intrepid business owners. As the Pearl River Mart move suggests, not every street commands the same premium as Broadway between Houston and Canal and businesses should generally search for a better deal in up and coming markets. In fact, the ability to both market and sell on-line means that a high rent location may be as necessary as it once was. In fact, our study found that within the BID area, asking rents of $425/sf were more than double neighborhood asking rents of $195/sf. So moving off the main corridor to lower rent space, and perhaps even shrinking a floorplate, might be a good opportunity, rather than a death sentence. In Perhaps the answer for communities is to support small businesses in their efforts to relocate to lower priced alternatives as a way to help them stay in business for the long haul.

The Do's and Don'ts of Outdoor Displays

A furniture store in Sanford, FL
curates a seating patio outside its store.

Nur Asri is an associate at Larisa Ortiz Associates

The public realm is extremely important in commercial districts. While plazas and parks offer areas for visitors to rest and enjoy a meal, sidewalks make up a larger percentage of the public realm and are often optimized by businesses to attract customers. As a result, many store owners have taken to displaying merchandise on sidewalks as ‘teasers’ to what else is in store for potential customers.

However, business owners need to be aware that every city has its own regulations around sidewalk merchandise displays. Here in NYC, although stores are permitted to have outdoor displays of merchandise with no required licenses (for the most part.. Note: ‘Zero Sidewalk Display’ streets and streets in historically designated areas), these displays are restricted by types of goods and by size and structure.

The City requires that items displayed outdoors consist only of goods that are available for sale inside the store and that all sales must still occur inside the premise. Structures used to display the merchandise outside the store must also be temporary in nature and may extend no more than 3 feet into the sidewalk from the building line, and no higher than 5 feet. If a business owner were to break any of these regulations, a fine between $250 and $300 may be issued by the City.

In Cambridge, MA, where we recently completed work on a citywide retail strategy, the outdoor display of merchandise is even harder to do because a sidewalk obstruction permit is required by the City of Cambridge and costs $75 to submit.

Regardless of municipality, businesses must recognize that the regulations around sidewalk merchandise display are often well-intentioned and aim to meet the following three key principles:

1. Maintaining standards of cleanliness and hygiene
2. Enhancing pedestrian comfort and safety
3. Ensuring collective business viability

More than 8' width pedestrian zone outside
this fresh food market in Mt Vernon, NY.

Through our work in different downtowns and commercial corridors across the state and country, we’ve seen a number of best practices in outdoor merchandise display but we have also seen some that have done more harm than good to the overall business environment. Here are some quick tips to ensure you use outdoor merchandise displays to your business’ and your corridor’s benefit.

Do’s:

Leave sufficient sidewalk space for pedestrians to walk. On busy downtown commercial streets, for example, the City of Boston recommends a minimum of 8’-12’ width dedicated as the ‘pedestrian zone’ to ensure easy flow of pedestrian traffic on sidewalks. The clear path will ensure the sidewalk remains accessible to multiple users, including those in wheelchairs or pushing strollers, and will also maximize the foot traffic for businesses.

(NYC sure was right in limiting the depth of outdoor display structures to no more than 3 feet from the building line!)

Shoes on display outside this men's clothing store
maintains a clear path to the doorway.

Keep the path to the store’s entrance clear from any physical barriers. The fewer the barriers to entry, the more likely the customer will walk beyond the entryway. Having seen a teaser of products outdoors, businesses will want customers to continue browsing merchandise indoors and extend their dwell times so ensure that outdoor merchandise displays do not block the entryway nor reduce the visibility of the store’s entrance.

Maintain a neat, organized and relevant display rack. The success of your business and the success of your overall commercial district are interrelated. If your district’s sidewalks were spilled over with messy and unmaintained outdoor merchandise displays with expired or irrelevant products, the overall image of the district would be spoiled and customers would perceived a neglected commercial street and take their shopping elsewhere.

Switch out and rotate the merchandise you put on display outside every other day (in the case of fresh flowers, fruits and vegetables) or every few months (in the case of seasonal gifts and clothing) and ensure the display racks are kept tidy. Maintain a good image for the corridor and your business will only reap the benefits.

Curate and get creative with your outdoor merchandise display. A well-curated outdoor display can attract both visitor and resident customers. Take the time to select and curate pieces that market your business best. Furniture and antique stores, flower shops, and even bike shops are increasingly using outdoor merchandise displays to their advantages and luring customers with unique and colorful outdoor product displays.

Don’ts:

Florist on Montague Street, Brooklyn NY

Clutter products in the allowable outdoor display areas. If displays appear cluttered and messy, customers are more likely to be confused by the products offered by the store and will quickly move on to neighboring businesses. After all, “less is more” is the common rule for merchandising. According to retail experts, high product density results in visual chaos that overwhelms the shopper. There isn’t enough time for the shopper to sort through the clutter and determine if the merchandise is of enough interest to stop and shop. 

Stack products high in front of store windows. Often, business owners get overexcited about being able to promote merchandise outside and forget the importance of maintaining transparency of storefronts. Sure customers are now able to see products on display outdoors, however, storefront transparency also serve to discourage crime with ‘more eyes on the street’ and reduce energy consumption by letting natural light into the store. Remember that many storefront guidelines recommend having 70% of the façade surface completely transparent between 2’ and 10’ height above the sidewalk.

Display products that are hard to reach by customers. When businesses pack as many products as possible outside, it becomes “physically impossible for a consumer to shop comfortably”. As a result of stacks and stacks of products, shoppers are often unable to reach most of the products on display and are therefore unable to examine the merchandise more closely, resulting in them losing interest and walking away.

While outdoor merchandise display can do wonders in advertising and promoting goods on offer in stores, it is important to note that some products lend themselves better to outdoor display than others. For example, lighter-weight articles can easily be blown over by wind outdoors, and food and drinks may become spoiled from long exposure to sunlight and humidity. We’ve also seen long articles of clothing getting dirtied by outdoor dust and particles, ruining the overall appearance of the sidewalk display.

If you’re thinking of enhancing the vibrancy of the sidewalks in your commercial district, first make sure you abide by the regulations set by your municipality and, secondly, ensure that the displays don’t result in dirt or mess on the sidewalks, and don’t create tripping hazards, fire hazards or nuisances for your customers. After all, your customers’ experience is central to the success of this effort.

What the re-branding of Deals by Dollar Tree will mean for commercial corridors

 

We recently heard the news that Dollar Tree, the parent company of Family Dollar, will re-brand hundreds of its Deals stores into Dollar Trees or Family Dollar by next summer. At ICSC Deal Making early December, I spent a few minutes chatting with one Dollar Tree’s Real Estate Coordinators who confirmed the news: by the end of July 2016, Dollar Tree will convert 217 Deals stores into Dollar Tree Stores and five others into Family Dollar stores.

We have worked with a number of communities who have in recent years attracted a Deals store to their corridors, and they were all very happy with it. In many instances, the opening came through a lot of hard work to convince a national retailer to invest in low-income communities. In fact, the opening of a Deals store in many inner-city corridors signaled the retail potential that these communities have to offer and usually have had a catalytic effect by attracting other retailers to the area.

Deals stores sell a variety of discount items including toys, party supplies, seasonal items and home products at multi-price points. Dollar Tree sells everything for $1 or less, and Family Dollar sells a variety of items and national brands for $10 and under. Despite being a discount store, Deals has developed an image associated with affordable but quality products.  On the other hand, Dollar Tree and Family Dollar are usually perceived as downscale stores. I asked a commercial district manager here in New York what she thought about the change and she said: “No more 99 cents stores please!”

However, a recent look at Dollar Tree and Family Dollar stores reveals that both brands are working to improve their image and product selection, especially in their new and/or rebranded stores, which may surprise many shoppers coming in for the first time. The change from Deals to Dollar Tree or Family Dollar might also help older Deals stores (stores built 10 or more years ago) and that would benefit from the renovation and retrofitting that re-branding will bring.

So the change from Deals to Dollar Tree or Family Dollar might not be such bad news after all: its implications to commercial corridors, especially traditionally disinvested inner-city corridors, will depend on how the parent company does the retrofitting of stores (the attention to the façade and interiors) and whether the quality of products offered in the retrofitted stores match previous offerings from former Deals stores.

The Secret to Macy's Success?

Whether you shop at Macy’s or eschew national chains in favor of local flavor, the work that this massive department store is doing to renovate and reposition their flagship store in Herald Square offers a number of lessons for commercial district practitioners. A $400 million dollar renovation coincides with some changing on the ground dynamics, including more tourism from Brazil and Asia and high end competitors like Nordstrom entering the market and grabbing those high end dollars. 

With that said, I really enjoyed this recent piece in the NY Times ("For Macy's, A Makeover on 34th Street", 10/1) which covered a number of basic concepts that we frequently use in our work. The most important concept they discussed was the need to dig deep and really understand your customer, and then tailor your merchandise and price points to fit those preferences. In fact, market research is the framework upon which much of this $400 million reinvestment is being made. At Macy’s, knowing their customer means stocking a wider variety of black leather tote bags in recognition of the larger number of office workers who work in midtown. Or offering Asian tourists more options in smaller sizes. Or finding ways to offer foreign tourists looking for prestige “American” brands the things that they want. In practice that means carrying more Ralph Lauren Polo, Tommy Hilfiger and Michael Kors, all classic American clothing brands. And while they are going upscale to meet these customer's expectations, they haven’t given up on price conscious customers. Macy's continues to offer coupons in weekend circulars. 

With 2.2 million square feet Macy’s is a shopping district onto itself, in fact, if it were a shopping center it would be classified not simply as a mall, but a “Super-Regional Mall” (which average 1.2 million square feet – so this Macy’s beats that average by nearly double!). This means that there are many stores within the store – and each seeks to meet the needs of customer with very specific expectations around price points and merchandise mix. This is why you can go to the shoe section (larger than a football field!) and find black boots differentiated by price and brand, ranging from $69 dollars to $229 to $1,160. Truly a store that offers a little bit of something for the customers that it already has and wants more of.

How Malls "Strategically Position" themselves – and what you can learn from it

I often use the term “strategic positioning” when I want to describe a shopping district by lifestyle, price point and tenant mix. This concept is not new to the shopping center industry – and it undergirds how shopping mall operators execute tenant mix in their shopping centers. I recently read an article that really drove this point home (“FIGat7th Bring Big Retailers to Downtown Los Angeles”, 2/5/2014).

Take FIGat7th shopping center, which happens to be located in Downtown Los Angeles at the intersection of Figueroa and 7^th Streets. The 28-year old, 330,000 sf property is getting a makeover by new owners Brookfield Office Properties, who purchased the site in 2011. When Brookfield looked at the demographics here is what they found -  a population of 530,000 living within a three-mile radius. Most are affluent and young, with an average age of 37 and average household income of $80,000. Additionally, 35,000 students live in the surrounding area, which is also close to public transit. And there are 10,000 downtown professionals who work within a four-block radius.

What Price Point and Lifestyle?

This is a hypothetical, but I’m sure the owners looked at that data and asked themselves "what retailers are the right fit for the shopper profiles we identified?" Was their target shopper going to patronize upscale shopping options? Or mid-market shopping options? The answer, according to the article was “chic but affordable”. With that strategic positioning in mind, the retailers they chose to pursue reads like a who’s who of affordable and contemporary offerings, including Zara, H&M, California Pizza Kitchen, Sports Chalet and City Target, along with “mall staples” Victoria’s Secret, L’Occitane and Bath and Body Works. Additionally, strategic positioning refers to tenant mix and in the case of FIGat7th, Brookfield ultimately decided to emphasize apparel and comparison shopping. 

The outcome? Simone Tatro, the store team leader for City Target was quoted saying, "We have exceeded the company’s expectations on sales since opening”. I’m sure the other retailers in the center would share similar sentiments.

So, how can you use strategic positioning to inform your efforts to manage tenant mix?

First, you need to ask yourself whether your businesses are reflective of the lifestyle and price point of your target customer. We recently worked in a community that had seen some significant demographic shifts over the past 10 years towards a younger, more trendy population of young professionals. But the retail mix still read like a page from an early 1990’s mall, including Gap, Express , Conway, Claire’s Boutique, NY&Co., Benetton Outlet and Bakers. Not bad, but not great. To add insult to injury, the stores had not been updated in that long either, so the street read as tired, old, and in need of a major face lift. Not the kind of place that young, trendy professionals go when given options. Moreover, nearby shopping malls were creating more and more competition for these shoppers. When we talked to businesses, what we found was not surprising, store sales were slipping and the street was not attracting the same number of shoppers, despite the improving demographics. Yet property owners were still living in the hey-day of the street, demanding rents that exceeded what current sales could support.

So what were the major take-aways?  Keeping in mind the limited staff resources available for the retail attraction effort, we focused on four key strategic tasks as follows:

• Focus significant effort on attracting a brand-name retailer that is both affordable and contemporary/trendy. Think H&M or Zara. We developed a hit-list of about 23 handpicked prospects that fit squarely within their strategic positioning statement - they were contemporary/trendy in their offerings, their price point was mid-level or value-oriented, and they square footage they were looking reflected the kinds of spaces that were available on the street. We then developed an outreach plan to begin identifying vacant properties that might be a good fit for those tenants. The next step involved sit downs with property owners to enlist them in the recruitment effort. This also included educating them on the kinds of rents that major credit tenants would pay - and what they wouldn't - for spaces on the street. 
• Communicate the retail strategy, again and again. Enlisting property owners and brokers is critical for successful retail attraction efforts. While the “prospect hit list” we prepared for our client is a basic tool that the BID can use in initial outreach efforts, property owners and brokers will have their own hit lists. The goal is to get them to buy into the strategic position as a "theme" to follow. So while we may have suggested H&M as a potential tenant, there might be other similarly positioned retailers with an interest in the street. In cases like this, brokers can be your best friend. They have deep knowledge of the local market and may come up with other retailers that are just as appropriate as the ones you want. Either way, it’s a win-win for the street.
• Façade Improvement for Regional Independents and Mom & Pops. Fortunately the street looked really good owing to the excellent job the BID had done in landscaping and street maintenance over the years. But the dated facades were a real problem, so we recommended a façade improvement program to help existing businesses refresh their facades and signage.
• Develop a campaign to get Nationals to clean up their act. Given the predominance of national chains on the street, we recommended developing a targeted campaign to get national retailers to refresh their stores through outreach to corporate headquarters (and letter writing campaigns if necessary). Update: since our study, Express and Gap have both upgraded their stores.

The update? The effort is still in its early stages, but tenant mix on the street continues to improve. Within the past year, a Blink Fitness opened (this is a younger, trendier version of Equinox), two new organic food stores have opened, the Express store got a facelift and expansion, and the Gap store got an interior store redesign. Not bad - and all moving in the direction of the district's new strategic position. 

BEFORE: Express is in need of a facelift. Sun faded awnings covered in
pigeon poop are not quite the right image for the street.  

AFTER: New awnings, clean facade AND an expansion.
Seems that Express knows that this street is a good investment after all. 

Author Larisa Ortiz is Principal at Larisa Ortiz Associates. 

When Census Data Doesn't Cut It: 5 (Fun) Alternative Sources for Understanding Neighborhood Change

When you work in neighborhoods undergoing significant, rapid change, it helps to get a little creative with your research and data sources, especially as we move further away from the last census.

Here are some of our favorite (and fun!) tools that we use to understand what’s been happening in the communities where we work. Let us know in the comments what tools you use to understand neighborhood change.

Tracking Buzz

Yelp Wordmap

Yelp’s new Wordmap (launched yesterday!) shows density of keywords used in Yelp reviews around different cities. These maps are helpful in understanding characteristics and mix of local businesses, and the consumers in each of these neighborhoods. They may also prove useful if you’re searching for prospective retailers to bring to your community, or for businesses that are considering expanding into new markets.

They also reveal some subtle differences in clientele (Williamsburg has a density of Hipster businesses, while Park Slope and Prospect Heights are more appealing to Yuppies) and regional differences (Yelpers like to eat/review Biscuits in Portland, OR, Hoagies in Philadelphia, Dim Sum in San Francisco, Poutine in Toronto, and Bacon just about everywhere.) We hope they’ll add in a timeline feature so we can see how these clusters change over time!

Yelp Reviews that Mention "Hipster" in NYC

Google Trends

Google Trends allows you to see how, when, and how often people have been Googling different terms (since 2005). We use this to evaluate any “buzz” around a neighborhood, and to see how communities stack up against one another in terms of search popularity. See below how NYC’s five boroughs have trended over the past eight years.

(Just for fun - try putting in different parks and beaches to see how the trend lines change with the seasons.)

Understanding New Customers

LOA Lifestyle Matrix

Inspired by retail guru John Williams approach to tenant mix analysis, we’ve created the LOA Lifestyle Matrix that we use to plot both customers (using psychographic data) and retailers in a particular commercial district by Income/Price and Lifestyle. By overlaying these two data points, we can visualize fairly quickly how well stores in a particular place are meeting the needs of their community, and what consumers want (do they want an expensive trendy store like Opening Ceremony, or one that is trendy but inexpensive like Rainbow? Is this a J. Crew shopping district or a Talbot’s kind of market?). We can then identify any mismatch between offerings and customers, and use that insight to both attract the right mix of new retail, while also helping retailers adapt to neighborhood change. Even if you don’t have access to psychographic data, try creating your own matrix with census data, Yelp reviews, and other free sources.

Impact of Transit on Neighborhood Change

Annual Subway Ridership

So much of urban development is influenced by access and proximity to transit. In New York, the MTA collects annual ridership by station. Using this data, we can see where the most significant increases in ridership are happening, which can help us understand where new activity and investment is taking place and project what neighborhoods might be next.

Tracking Recent Investment and Growth

Property Shark Maps: Home Price Changes by Neighborhood (2012 vs 2004)

Property Shark maps the change in price per square foot of residential properties by neighborhood. This helps to illustrate where new investments are being made, and what neighborhoods are struggling, stagnant or soaring.

Brooklyn Price/ SqFt Changes 2012 vs 2004

Evolution Fresh. Coming near you?

The first Evolution Fresh, a Starbucks spin-off in Bellview, WA

Love 'em or hate 'em, Starbucks has made a splash on commercial corridors throughout the nation and world. For many, the appearance of a Starbucks in a district is a bonafide sign that the community has "made it". Now Starbucks unveils its next concept - Evolution Fresh, serving up smoothies, juice and healthy food. They just opened their first store in Bellview, Washington and have plans for expansion...Starbuck's style. Does this mean that Evolution Fresh will be making waves soon on a corridor near you?

Own up. 30% of a shopper's experience belongs to you...

It's time to face the hard, cold truth. Shoppers visit a district to shop. No one ever says "I shop there because the street lamps are AMAZING!" or "Man, you gotta go to that district, those brick pavers are HOT!" Ultimately, people choose to shop, not because of good lighting or decent signage, but because of the retail offerings and merchandise. The research, and not to mention good ole common sense, back this up.

Yet a shopper's decision to visit your district is based on multiple factors - a big part of which you DO in fact control.  Customer loyalty research, some of which is being done by the Verde Group, sheds light on what makes shoppers loyal versus recoil. What they have found is that 70% of a shoppers decision are based on "inside the store issues" - things related to merchandise mix, price point, customer service, etc. These are all issues that often can only be addressed by the merchant.

Yet its not all bad news, the balance, or about 30% of customer loyalty, can be attributed to "outside the store issues" - the location, the convenience or accessibility of the district (aesthetics, safety), the look and feel of the district, district amenities (are there activities for kids?), entertainment offerings (street musicians? general ambiance?), retail mix (is there a good balance of stores, a nice place to grab a bite after a day of shopping?), and the physical conditions of the street, etc.

Whenever I share this concept with groups of commercial district managers, I get responses that range from relief to frustration. Relief because I have better defined their role - or better yet the limitations of their responsibilities - but also frustration because it becomes clear that they do not control the majority of issues that affect shopper choice. Yet when you know WHAT you control - and make no bones about it, 30% of a shoppers decision is a big chunk - you can be better at doing your job.

In this competitive environment, your work on that 30% becomes even more critical. It can make the difference in that split decision when a shopper decides whether to turn left or right out of their front door, that is, between spending money in your district versus another.

Malls draw inspiration from downtown

Today's New York Times covers a phenomenom that has been evident to those of us in the field for many years - the oversaturation of retail square footage and the trend of underutilized malls, or "grayfields". The recession has only made the problem worse. Mall owners and managers are now struggling with many of the same challenges that faced downtowns over the past twenty years...significant vacancies and disinvestment. What these owners are now doing is trying to reposition their mall assets by replicating the mix of uses found in traditional downtowns. [Making over the mall in rough economic times, NYTimes, 2/6/12]

Many owners recognize that shopping habits are changing...and not in their favor. People are shopping on line. When they do finally choose to venture away from their computer screens, they expect something more than simply a retail transaction. The article suggests that Americans today,"rather than going to big, overwhelming malls...prefer places where stores can be entered from the street, featuring restaurants, entertainment and other Main Street mainstays." A representative from Simon Properties, one of the largest mall owners in the nation, reflects on this trend, saying malls today have to “provide a unique set of shopping, dining and entertainment experiences”.

Station Square, a Forest City owned property on
Pittsburgh's South Side is home to a mix
 of tourist oriented retail...and a trade school.

Dying malls that have made the plunge into mixed use are now home to a diverse blend of users, from schools to other civic, religious and cultural institutions. In fact, in one mall, the Galleria in Cleveland, mall owers hide the food court with a curtain and rent the space for events and weddings. Getting creative about filling space is critical to ensuring the long term value of these assets. On a recent visit to Pittsburgh's Station Square, an old school "Festival Marketplace" located within an old train depot, I noted that a significant part of the main retail floor was occupied by the Bradford School, a small school offering associates degrees and diplomas in the health care, design, technology and business fields. The execution of the concept needs a bit of help as the rest of the retail area felt old and lacked excitement, but the mix of uses helped to ensure a steady stream of customers for the food court businesses, if not for the other more tourist oriented businesses.

Downtown is really no different - and our approach to filling spaces needs to be similarly creative. Of course, the greater challenge is the fact that downtowns have multiple owners who are not necessarily on the same page when it comes to vision, and seldom coordinate their actions in the same way a single mall owner can. But the real take away here is that downtown is the model for what many malls strive for these days - and it is up to us to take advantage of the authentic downtown brand that is already ours for the taking!

Commercial districts take their retail attraction efforts to ICSC

Retailers, brokers and developers set up booths at ICSC for
the purpose of making deals. Commercial districts can benefit
from ICSC's tradeshow too.

EXHAUSTED! Yes…that’s what I am right now after having spent the past two days walking the floor of ICSC with five different non-profit organizations and Business Improvement Districts. For those of you unfamiliar with ICSC, the International Council of Shopping Centers hosts the grand-daddy of all trade shows where members of the commercial real estate industry (mostly all retail and restaurant focused) come together to make deals. The largest ICSC trade show is in Las Vegas every May, but the New York show is the second largest with over 6,000 participants and 300+ booths. If you have vacant sites and are looking for national or regional chains this is a place where, over the course of two days, you apply good ole’ fashion shoe leather to meeting people and making connections. Instead of spending days and weeks of staff time researching retail websites in search of site selection criteria and contact information, you spend two days walking the floor and accomplish work that would otherwise take you much, much longer. Not only that, but face time with retailers, brokers who represent retailers, developers, service providers, etc. can also make the difference between an email/phone call that gets returned and one that doesn’t. In at least two cases, our sites walked the floor with their local property owners...even better!

So how do you prepare for ICSC? Planning starts early…
Our team has spent the past year preparing these sites to attend ICSC. The process began with market analysis, but certainly did not end there. We helped these groups develop a retail vision for their districts while simultaneously identifying opportunity sites by working with landlords and local brokers. We also developed district-wide leasing plans that pin-pointed retail categories that reflected three basic criteria – 1) retail categories could be supported by the market, 2) retail categories that matched the space available in the district, and finally 3) retail categories that complemented local community needs and wants. Finally, we prepared marketing material that conveyed the message of these leasing plans for distribution and use in retail prospecting.

Once all those elements were in place, preparing for ICSC included scouring the exhibitor and attendee lists to develop a hit-list of retailers (and brokers who represent those retailers) who reflected our priority retail categories. With district marketing material and sell-sheets for the available spaces in hand, we worked the floor methodically, approaching booths, grabbing business cards and site selection information. In some cases, we made appointments with the right people in advance. In others, we simply walked up to the booth and asked to speak with the rep for the region we were in. If we couldn’t talk to the representative at that moment, we grabbed a card and moved on.

...and doesn't end once the trade show is over!
As you can imagine, a lot of work happens after the trade show ends. Follow up is critical. The contacts made at ICSC are invaluable, not just in the short-term, but in the long-term. We will recommend that each district send regular e-mail blasts detailing their vacancies to their now growing list of brokers and retailers. These retailers may not need space right now, but you never know what their expansion plans will be in 6 months or even two years. It’s a slow-tedious process….but it works!

Landlord acknowledges that leasing decision can transform a neighborhood, but let's space lie fallow

An older image of Tony Malkin's building,
once occupied by Conway

Tony Malkin is the owner of a long vacant retail space along the Broadway corridor near Macy's in New York City. He's not wanting for interested retail tenants, yet the retail space, located across the street from the beautifully renovated Herald Square, sits hulking and vacant.

Malkin acknowledges the impact of his leasing decisions on the neighboring district, saying in a Wall Street Journal article that selecting the right retail tenant doesn't just change a building, it can also transform a neighborhood. Yet despite interest from tenants over the past few years, ranging from Nordstrom Rack to Best Buy to Nike, he hasn't even begun formally marketing the space. Landlords like this are frustrating, on one hand they acknowledge that their leasing decisions play a significant role in neighborhood transformation, yet they conveniently ignore the negative impact that a vacant space can have on the district. Malkin goes on to say "With the right tenant," Mr. Malkin says, "I see no reason for us not to be a logical extension off of 34th Street and Macy's." Yet because his cash flow needs are likely met by the office space above the ground floor, he's in no rush to lease his space. Not many owners are in a position to forgo millions of dollars in yearly cash flow, but clearly Malkin thinks the right tenant is worth the wait. What do you think?

Getting Commercial Brokers on Your Side

Not every community has an active commercial brokerage community. In some communities, property values and rental rates are so low that the brokerage community might be nonexistent. There just isn't enough value to justify putting the time into making a deal. In these cases, the only way to drum up retail prospects and fill vacancies may be for district managers to actively prospect for new retail themselves. That includes working with property owners and showing retail spaces to prospective tenants of YOUR choosing. But more on that another time...

This post is not for the district manager who has no brokers to work with. This post is for those district managers who have a decent brokerage community and need to figure out ways to harness that community for the benefit of the district. The first step is to understand how commercial brokers work. There are two kinds of commercial brokers. There are those that work for property owners in search of tenants, and then there are those that represent tenants looking for space. And of course, there are brokers who do a little bit of both - but let's keep it simple. Your job as a district manager is not to meddle with this system - the last thing you want to do is be perceived as competition to your local brokers. Instead, you want to make sure they see you as a partner in their efforts, rather than competition for clients. So here are a few pointers:

• Make it easy: brokers get paid when the deal is done, regardless of whether the lease is signed by a check cashing agency, or a cute boutique. If the property owner doesn't care who rents a space, then neither will the broker. So half of your job is to make it easy for the broker by providing leads for businesses that YOU want in the district. If you stumble across a retailers or restaurant that you think would be a great addition to your district, talk to the owner, ask them about their expansion plans, and then offer them a tour of your district. Coordinate that visit with local brokers so that the owner can see as many spaces of possible that fit his or her criteria.
• Map your district: Brokers like maps. Retailers like maps. Create a compelling map of your district that shows where all the major traffic generators are. By traffic I mean PEOPLE. What major businesses or venues attract people? Are there hotels or offices that attract visitors or employees? Is there a Post Office or Library that brings people to the district. Take the time to map - and if possible - estimate how many visitors go to that destination a year. While you are at it, include major retailers and their logos on your map.
• Market your district by telling a 'market data-based' story: Brokers market their spaces very well. They create 'sell-sheets' that provide basic information about the retail space. What they often don't have is very compelling district marketing material. In this day and age, this doesn't need to be printed en mass, you can print marketing material as you need it, or better yet, create a nice PDF that includes your district map, some compelling market data, and a clear statement describing the kinds of retail that you want and need.
• Keep a prospect list, grow it and selectively share it: Make your prospect list a resource that is available to brokers when they need it. Over time (and these things do take time to build) identify a wish-list of local retailers - sometimes the best place to find these are other similarly situated districts), include contact information and site selection criteria. If brokers know you are keeping this list, you will be their first stop when they sign a client and start prospecting for tenants.
• Know your market better than the brokers do: Collecting market data is all well and good, but the problem is that most market data is based on census data - which only tells the residential story. If your district includes a significant number of visitors or daytime employee, gathering information about the customer quickly becomes cost prohibitive for any individual broker to compile for any individual site. A better thing to do is to commission a detailed consumer survey at least every few years. Use this survey to collect information about where your visitors and employees work and live, how much they spend, where they shop and what other retail and restaurants they would like in the district. Turn this survey data into a report that can be distributed to the brokerage community - and include tidbits that help you build your story in your marketing material.
• Develop relationships with your brokers: The world is built on relationships. Keeping up with your brokers and property owners will ensure that you have the inside scoop, and can ultimately help influence, their tenant decisions. But this only happens when you have developed a trusting relationship over time and they have come to value your judgement.

By serving as a repository of useful information, and a source of easy leads and deals, you will transform your brokerage community from a force that works against your district vision to something that helps advance your district vision.

Sharing Retail Space - More than Just Sharing Costs

Sharing retail space is not an uncommon approach to reducing costs among retailers. I recently toured the Lower East Side Business Improvement District with representatives from the City of New York's Small Business Services and was excited to see a nice example of shared space. The Lower East Side is historically known as America's original bargain district. Today its identity is in transition, as some of the original garment stores co-exist beside new entries into the market. One of those new stores is Earnest Sewn, a back to basics men's clothing store that fits right in with the district's historic identity as a garment district and newer identity as a hip place to shop, east and visit. We got to meet the owner and hear about his growth (this is their second store, the first is in New York's Meatpacking District). What intrigued me was the boutique flower store is tucked in a corner inside the store. At first it didnt' seem the most logical fit, until you looked around and noticed how wonderfully the floral and plant arrangements complimented the merchandise. The owner mentioned that the shared space arrangement is something that they have replicated in their other location.  I took some pictures to share...enjoy!