Retail on My Mind

Seems I’ve got retail on my mind. It all started in December, with Bob Gibb’s Placemaking@Work webinar, whose tweetchat sparked a Neighbourhood Retail BlogOff led by Steve Mouzon. Then last week Victor Dover’s PM@W webinar followed up with ideas about tactical retail, where he talked about the next version of mixed use being smaller, quicker, and more organic.

Building Mixed-Use in tough times 

We’ve long valued mixed use as a social condenser. And those gathering places that grow naturally out of mixing uses produce the highest dollars per square foot in the surrounding neighbourhood – for developers, owners, and cities. Keeping mixed use viable in tough times makes for economic resilience, yet it’s harder than ever to finance.

Necessity is coming up with all sorts of interesting inventions, often with smaller-scale, organic results. The frequently “cold, dead hand of common management” is being replaced by tactical urbanism for more authentic places.

Just off NYC’s High Line, traditional urban development on a lot by lot basis. Photo credit: Victor Dover

The first, most essential tool to enabling incremental development is the lot. Mixed use developed on a lot-by-lot basis can expand, contract, and repurpose, providing the zoning is character-based, instead of use-based. This also allows us to repurpose heritage buildings, as well as enabling small-scale infill. An incremental layering up by risk takers is then possible, and sweat-equity of entrepreneurs becomes a viable source of funds.

We’re seeing many suburban retrofits engaging horizontal mixed use instead of vertical. The bankers relax to only contemplate one use at a time — the other day a Wells Fargo senior analyst told me to stop talking about vertical mixed use in the US until the European credit crisis calms in the spring. A few weeks before that, a California developer suggested not saying the words mixed use to bankers, but to focus on individual components.

Mixed use development at this scale is not currently viable and lacks the intricacy and flexibility of the traditional urban lot. Photo credit: Victor Dover

Not everyone’s so bearish, but the truth is local markets often don’t support more than 1-story retail right now, so a mixture of horizontal uses within a 5-minute walk still makes for a great place and is easier to finance. And it allows for smaller developers to take on a few blocks — or a few lots — which is how most great old urbanism was built. More bullish markets are building 1-story structures strong enough to carry additional stories later.

Built from shipping containers. Dekalb Market, Brooklyn, NY. Photo credit: Victor Dover

Subdivision of lots — instead of large parcel development — was historically one of the greatest generators of wealth. Savvy cities are subdividing small lots again, and removing other zoning barriers like suburban parking requirements.

Small, light, easy to implement, and easy to reverse has always been the most viable retail formats in recessionary times. To do that, not only do we need to resurrect the tradition of lots, but also enable pop-up retail. All sorts of interesting examples are emerging:

Food trucks create a spontaneous piazza.
Photo credit: Victor Dover

  • Container stores like the DeKalb Market in Brooklyn
  • Farmers markets virtually everywhere
  • Food truck round ups organized by social media
  • Movable buildings – the Tipping Point at Hamstead, Montgomery, Alabama
  • Reversible demonstration projects that enable cyclists and pedestrians, and often provide expansions for restaurants, coffee shops, and cafés.
  • However, some have had a harder time, like the Hercules Market Hall in Hercules, California

Mixed-use has been enshrined in most comp plans across this continent. However, the building must be lovable enough to make us want to recycle it. So building design and urban form are critically important.

Retail: 1000 rooftops and other magic numbers

The BlogOff spent most of January debating the question: Does a corner store really need 1,000 rooftops to exist without subsidies?

Urbanists spent much of the last 25 years designing things that need subsidies. Scott Doyon talked about that a couple of weeks ago, in his piece about punk urbanism. To explore further, I reconnected with one of Scott’s anti-rock stars, Bob Gibbs:

Supportable means that the business can produce enough sales to pay market rate rents, labor, inventory, and taxes. The figure is determined by how much the average household spends on convenience food items such as beer, milk and chips. Corner stores are more expensive than large supermarkets, and therefore will capture only a tiny fraction of the household budget. They’re for when you need that baking soda or diaper now, and don’t care how much it costs.

Still, a rule of thumb is just that. The 1000 homes rule of thumb assumes that 100% of corner store sales are generated only by the surrounding homes. This is seldom the case, especially if the corner store is located along a busy road, or if there is an employment center or civic use nearby that attracts shoppers beyond the neighborhood. As an extreme, zero homes are needed to support a corner store if it sells gasoline along a highway.

Corner stores that sell liquor, specialty deli, wine, or baked goods can reach beyond the typical sales performance. An example is Kentland’s corner store, located near live works, a Whole Foods, a million SF of retail, and lots of office. Large amounts of their sales come from beyond Kentland’s 300+ homes.

If the store is located away from an urban center or supermarkets, it may capture a larger percent of the household’s food budget.  Multiple corner stores may be viable if specialties are varied between them: wine, baked goods, or prepared foods.

“Pop-up retail,” like this in Seaside, Florida, maintains low overhead. Photo credit: Victor Dover

In the case of a building owner with no mortgage who’s interested in creating a groovy corner store with modest return, all rules of thumb are off.

Cities and new urban communities are filled with closed corner stores. As a rule of thumb, under no condition, should the developer or anyone else subsidize a corner store.  This leads to lazy operators that offer poor goods and services.

Encouraging prospects

Despite the economic challenges being faced in all aspects of our built environment, I’m especially excited by what’s happening with retail. Not because I’m expecting a return to business as usual but because we’re finding ways to leverage resources not in short supply: Creativity. History. Ingenuity. Even moxie.

What are your ideas?

–Hazel Borys

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Comments

  1. While pop-up stores and food trucks can provide quick retail and and food for urban areas, there is a downside. They suck sales from surrounding bricks and mortar stores and have an urfair advatage. They pay less property taxes and have lower fixed expenses. The small independent businesses that we like to like, fear pop-ups, and for good reason.

  2. I’ve been thinking about this a lot as I’ve read all the posts in the blog off and contributed my own. I think we should start with one store or one plot at a time. Once the comp plan is established, we should work to create and cultivate stable corner markets or markets that can be converted to different uses throughout the season. Also, there are vacancies everywhere, even in the upscale markets. The key there is finding something unique to replace the hole. For the communities with high vacancies, starting small is vital. There is still demand, but it is smaller and will have to be rebuilt to it’s former size again, if it gets there.

  3. Bruce Donnelly says:

    Hi, Hazel, Bob, Kristen.

    I have to ask, what is lost if we have less retail in general? I go to a coffee house every day, but it’s just to meet people and say “hi.” Meanwhile, I recently bought hubcaps online, and books, and socks and underwear. That’s a few trips that I could be doing in public, but do you know what? It comes down to quality time. I’d rather spend 2 hours on a Saturday sure I’m going to run into friends than spend 2 hours running around looking for hubcaps or the precise Gold Toe socks I want.

    • I’m with you Bruce. I like going to places to socialize, but I tend to go into Target or WalMart or order from Amazon once or twice a month and stock up. Yet, while everything can be purchased online, some things still need to be touched, tried on, etc. Clothing that is bought online may fit well, but if it’s from a retailer you don’t know well, then energy is wasted with the packing and shipping back and forth. If you know what you want, then retail gets reduced. Yet, if you need to inspect your meat or try on a different size, then to the store you go. Better if that store is smaller or at least people-scaled.

  4. I recently experienced the pop-up wholesale retail market of Dongdaemun Market in Seoul, S. Korea. While the area is known as a shopping district for its built malls (similar to those in N. America, only much higher), an organic and “guerilla” after-hours street market emerges from the sidewalk, stopping traffic and reclaiming the street for countless blocks. This market lasts all night, and has become a subculture sensation, bringing thousands of midnight-5am shoppers and creating opportunities for a host of food vendors, street musicians, and artists. Its really quite amazing.

  5. Bruce, This is a good question, and is frequently asked: Do we need more retail? The answer of course, depends on one’s personal situation. Most tony suburbs are over supplied with cushy shopping centers and restaurants, and indeed don’t need additional square footage or stores. However, they are frequently located in non-walkable centers that do not promote sustainable neighborhods or employment centers.

    On the other hand, many inner city residents, especially the poor, have almost no access to the goods and services that they both need and desire. They, also suffer from limited transportation and poor education, resulting in vast food and shopping deserts. They are often taken advantage of, and overpay for low quality groceries, shoes, furnishings, auto parts, etc. Many of these residents don’t have bank accounts, credit cards or (you better sit down) even access to the internet.

    While many of us are bored with our own shopping options, and can buy whatever we want on line, or at any number of shopping centers, we should also advocate for those that don’t have this option. Yes, the U.S. as a whole is over retailed, but only in the suburbs.

    • Bob- Glad you brought this up. In smaller cities like mine (Greensboro, NC) we are rapidly becoming a small town as far as retail goes. For a city of 270,000 and counting we have about five major retail centers, one which is one 8 mile long 6 lane wide strip. We are also seeing increased property crimes. Major retailers use that as an excuse to hang in those targeted areas, but that would reduce the rate if we had need based retail spread out. I live on the line between the upscale retail and the sweepstakes internet parlor.

  6. Bruce Donnelly says:

    Bob,

    Let’s put it this way. I think that there will be a sorting-out of retail sales that will change the types of goods sold in unanticipated ways.

    Ironically, back when “Webvan” was dying during the first internet bubble around 2000, I was getting food delivered by a high-end grocery store which has since gone out of business–in favor of high end food retailers that mimic public markets inside. It’s a bit dizzying. It’s like the fact that Horn & Hardart’s went out of business at the same moment that fast food joints swamped the market.

    So I propose some rules.
    *Anything that can be off-shored can be automated.
    *Retail that sells _precisely_ the correct commodity item will go online: Books, hubcaps, exactly the right Gold Toe socks, Not the dress that catches your fancy, not personal contact, not melons you want to sound for freshness.
    *As security concerns are addressed, and tablet sales increase, more of that shopping will go online.
    *I expect the Internet-access issue will go away eventually. For instance, Amazon either just breaks even or subsidizes the Kindle Fire, which is basically a sales floor on a tablet.
    *At the same time, the need for human contact will probably increase to fill in the gap. This may actually make local retail more “sticky,” but I have also been seeing more in this vein lately: http://bit.ly/wf2jte (_Eating as a Spiritual Practice: Is Food the Next Big Spiritual Discipline for American Christians?_)

  7. Bob, Kristen, Bruce, good to “see” you, as always! David, glad for a new TEDxManitoba face on PlaceShakers — I have a chocolate egg fan in my house as well, by the way.

    There are all sorts of takes on this issue, so thanks for bringing up more perspectives. Constricting budgets can afford neither our expensive auto-scale urbanism nor the transportation costs to consumers. Innovative, inexpensive methods to retrofit both suburbia and cities with more nodally placed retail sparks local markets to shore up economic resilience.

    Is it less total square footage? Maybe. Is it in more walkable, higher value-capture formats? Yes, if we’ve learned anything from recent experience.

    We’ve been seeing malls contract until recently, with supply restructuring into main streets and lifestyle centers. National retailers are getting more comfortable with urban formats, and inner cities when the planning’s right (Charleston).

    That could allow for an expansion of retail in human-scale walkable formats that can do a lot to heal the damage of our auto-centricity.

  8. your blog and its comments confirm the difference between the urban structure and fabric in the US and European cities. American style out of town shopping malls are common here and maintain the debate about dying highstreets, as do the arguments about online shopping and its displacement of face to face shopping as a social activity. Alternatives such as the popularity of street markets comes down to lifestyles and how people prefer to live in their cities. Despite strict land use controls, a lot of spontaneous activities are taking place in London’s streets where I live and enjoy diversity not just in my area but throughout the city, easy to reach by public transport. Here contemporary planning encourages compact cities and mixed uses. In my view they will be successful in open cities with ample public realm is accessible to all. I am discussing pressures on open cities in my blog http://www.urbanthinker.com and would welcome views from all walks of life.

  9. Bruce Donnelly says:
  10. Bruce F. Donnelly says:

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