Locally serving retail and the current market

Having locally serving retail is difficult because over the past 50 years the industry has changed significantly by scaling up. In the process, independent shops have lost pricing power to supercenters, big box discounters, and other large stores. So it is difficult to successfully provide local retailers in many categories in all but the largest neighborhood-serving areas.

There is a lot of discussion about this here and there in terms of current conditions, irrespective of the fact that the U.S. has much more retail space per capita compared to other nations. Given this overhang of space, many overleveraged companies are now going out of business, faced by the double whammy of increased financing costs (or no financing being available) and lower sales.

The New York Times discusses how some property owners are now willing to renegotiate pricing, in order to retain tenants. See "Recession Has Landlords of Retail Tenants Extending Discounts of Their Own." Also in New York City, the report "No Go for Local Business," by the Urban Justice Center and Good Old Lower East Side, found that three quarters of small businesses felt their profits were not increasing enough to meet rising rent and utility costs. The report outlines a number of proposals aimed at helping the small businesses, including rent guidelines and new city zoning laws to encourage commercial diversity.

In England, a piece in the London Times "Think Tank: New ideas for the 21st Century: Use the post offices to revive credit," suggests that the government should look at Post Offices as anchors for revitalization of rural commercial districts through the expansion of their capacity as local financial centers.

Greater Greater Washington discusses the 17th Street NW commercial district and the current moratorium on liquor licenses there in "Balancing 17th Street's retail: a moratorium, parking policy, or something else?" He suggests market rate parking pricing as a solution to decline. I would argue that parking isn't the issue, that the issue is whether or not the commercial district is neighborhood-serving or a destination for non-residents.

Indirectly, the moratorium protects non-food retail--the commercial district there on 17th Street is rare in that it has a grocery store (Safeway), a pharmacy (CVS), and a hardware store, in addition to a video rental store and some other service retail such as banks, not just restaurants. What the moratorium has done is limited additional demand for restaurants, which would normally price out more traditional retail, which generates less revenue per square foot.

The district is constrained, under 2.5 blocks in length and unable to grow. It will never be able to serve as a destination comparable to how the Whole Foods anchors the 14th and P Street area. But who says that's a bad thing?

For the work that I do, on commercial district revitalization, I do worry about the future of absorbing currently empty space, although in places with good transit, where people are able to devote less of their income to transportation, there is more discretionary income available that can support local retail. Commercial districts and locations within commercial districts that are less desirable are going to have a hard time getting leased up.

Also see "bonifant street: the anti-ellsworth" and "singular puts self-righteous silver sprUng-haters in their place" from Just Up the Pike.