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!

Mall to Mixed Use

Nur is an associate at Larisa Ortiz Associates

Over the last year we’ve heard story after story report on the closing of large anchor retailers such as Macy’s, Sears, and J.C. Penney and how the trend might result in another wave of regional mall closures. Analysts from across the board are predicting hundreds more shopping malls in the US to shut down as a result of being unable to find enough retailers to replace ones that have gone, leaving millions of square feet of developed but vacant commercial space.

At the same time, we have also seen story after story emerge of mall owners getting innovative and replacing traditional department stores with a slew of entertainment uses and non-conventional tenants such as offices and urgent healthcare clinics.

It is not surprising then that, now more than ever, shopping mall owners are also going to the extreme of complete overhaul of their properties to create mixed-use neighborhoods as another solution to save themselves. The mall-to-mixed use redevelopment movement started more than two decades ago with the conversion of the Boca Mall in Boca Raton, FL into a mixed-use neighborhood consisting of residential homes, office spaces, shops, and restaurants.  We first wrote about this transformative project in 2015, along with another early project Villa Italia in Lakewood, Colorado which was transformed into the neighborhood of Belmar in 2004. Since then, various other shopping mall owners have taken the same leap in redeveloping their properties into mixed-use communities. Today, we take a closer look at two more recent and still underway projects – City Centre, Houston, Texas and Promenade 2035, San Fernando Valley, California. We look at what it really takes to get a giant mall redevelopment to take off.

City Centre, a mixed use urban development with office buildings, multifamily residential homes, brownstones, hotels, restaurants and retail, and conference spaces, sits atop the former Town & Country mall on the edge of metropolitan Houston area. The regional shopping mall which opened in the early 1980s, closed following the departure of anchor department stores J.C.Penney (a story we’ve heard before).

Like any typical mixed-use development, City Centre is centered on a public square and features a grid-like street network and a pedestrian-friendly environment. Financing it, however, was not so typical. The project was developed by Midway, Cos. a real estate investment and development firm, in partnership with several other companies. Midway Cos had to finance the project by function, identifying separate partners for the various components of the project, seeing as capital partners were not comfortable with such a large and risky undertaking.

Financing and structuring such large mixed use developments continues to be difficult. Rules hindering financing such projects “had their genesis during the Great Depression or early post war era, and are based on the obsolete assumption that mixed-use developments are financially riskier than single-purpose residential developments.”, according to a 2016 Regional Planning Association report. However, with shifting demographics and market preferences leaning towards connectivity and walkability amongst both young Millennials and Baby Boomers, single-use projects may in fact become riskier than ones with higher shares of non-residential uses.

Although not yet expansive and popular yet, the Small Balance Loan program (SBL) by Freddie Mac, launched in 2014, may be a new and viable financing tool for mall owners hoping to transform their portfolio into mixed-use communities like CityCentre. The multifamily housing financial program is a “welcome liberalization in long-term financing” and is designed to provide fast approval of loans for projects with “40 percent of their income—or 40 percent of their space—related to commercial uses”. Thus far, the loans are easiest to get in densely populated metropolitan areas, however, the SBL program is growing fast and may, in the future, become an even more useful tool for forward-thinking mall owners.

With Promenade in San Fernando Valley, the challenges facing the redevelopment of a failed shopping mall were slightly different. Local community scrutiny has been a real impediment to the project still scheduled to be completed in 2035. Given that the 43-year old mall had become a huge “drag on the surrounding neighborhoods” over time, as it became a blighted site subject to “intense speculation over its future”, community support for such a radical transformation was not instantaneous and took a lot of grappling. Even retail tenants were blaming the owner for “allowing the mall to deteriorate to a mere shadow of its former self”.

In order to maintain the mixed use redevelopment project’s transparency, the developers, Westfield Corp, launched a website to seek local residents’ vision for and needs from the mixed use redevelopment, and also to better inform locals of site plans and the sustainability and economics of the project.

Next, to ensure that the mixed-use development remains viable thru 2035, the developers have also ensured that the design of commercial spaces are on trend with what’s occurring across the industry. With the market understanding that the way employees and businesses work will continue to evolve, approximately 150,000 SF of office space will be designed as creative workspaces that include a mix of indoor/outdoor office spaces, co-working spaces, traditional office suites, gallery spaces, and about 60,000SF will consist of work/live studios.

Indeed, mixed use mall transformations as described above may bring several advantages to the local community. From diversifying housing types for existing and future residents to built-in residential market demand for retailers and reduced car trips between work and amenities, the mixed use mall transformation could act as a catalyst for further reinvestment and development in the area. However, mall owners hoping to transform their properties with other partners need to ensure they’re not “dictating supply rather than responding to demand”. As demonstrated by Promenade 2035, market analysis is crucial early on in the planning process to determine what types and how much residential, office and retail space can be viably supported by the local market.

In addition, design experts in commercial spaces need to be engaged to ensure the mall transformations or new developments can accommodate the types of operators determined by a preceding market analysis.

Community engagement throughout the planning process is also key and although many mall developers today are not known for such outreach work, it is important they begin to take on this responsibility with the help of local non-profits because community needs are often nuanced. Conversations with local stakeholders may not only encourage public buy-in but also bring to light different kinds of needs that may not necessarily come up in strict market analyses, including social service, healthcare, public space needs, and architectural preferences. Sometimes, “communities may not be ready to embrace the densities and design standards required to accomplish successful mixed use neighborhoods”, according to Robert Gibbs a retail planning expert, so the open dialogue between mall owner/ developer and the local community can serve to build an understanding around such concerns and guide any concessions that need to be made.

Although the mall to mixed use trend is becoming popular amongst commercial real estate developers, it certainly is no mean feat. But it is one of the solutions that may help us transform the failed suburban landscape across the country and with stronger partnerships, such projects may be easier to accomplish in many more places.