Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Saturday, February 23, 2013

(The broken record continued) It's all about the rents: retail and commercial district revitalization

So last Saturday I went up to Philadelphia to attend a brief partial day conference sponsored by Next City (formerly Next American City) called "Crafting Corridors: Reinventing the Urban Street."

I wanted to go because I had attended Urban Forum in Philadelphia in 2003, which triggered my writing an op-ed that was published in the Philadelphia Daily News, comparing DC and Philadelphia in terms of revitalization opportunities and approaches.

The sessions at the conference were brief, reports really, on various innovative projects in various cities across the country.  I will be writing about a few of the projects, which I saw as representing scalar improvements in urban revitalization practice.  There is still a lot of necessary learning to do in terms of the opportunities within strong vs. weak market cities.

Left: St. Louis Style/Style House fashion shop.  Photo by Matt Robinson of MetroScenes.

One of the presentations, by the owner of the fashion shop StL Style (you can't have style without STL...) was about Cherokee Street in St. Louis, which apparently is really really really cool....

because St. Louis has low commercial demand and Cherokee Street has low prices, is decently located, and has some decent building stock and a handful of enlightened property owners, the street is becoming a hip, funky district (not unlike South Street in Philadelphia in its heyday, etc.)

The piece "Ten things to check out on Cherokee Street" from Metromix St. Louis, the area's alternative weekly, discusses some of the particularly cool stores and spaces, such as Cranky Yellow, a "combination shop, gallery and performance space" featuring "an eclectic mix of art, fashion, music, literature and kitsch."

Metromix describes the district thusly:

Historically, Cherokee Street has been best known as a place to troll for antiques and enjoy authentic Mexican cuisine. However, in the last few years, several new businesses and developments have popped up to breathe new life and excitement into this once forgotten area. Cherokee Street is undergoing a renaissance that is rapidly turning it into a hotbed of art and entertainment for St. Louis. Development of the Cherokee Street Alternative, a collection of independent businesses, organizations, cooperatives and individuals dedicated to creating and maintaining unique, original and authentic experiences, has spawned businesses and organizations that are decidedly hip and unconventional.

I went up to talk to one of the presenters afterwards, and someone from DC was talking to him as well (I won't name the person).

She was saying how cool his district seemed to be and how people in Adams Morgan had contacted her, asking for advice on how to bring cool back to Adams Morgan--which has long since been turned into a night time entertainment district, albeit with some, but not very much, neighborhood serving retail, ranging from supermarkets and Latino restaurants to the Idle Time used bookstore, and other restaurants and coffee shops like Tryst.

I was incredulous and said--and this person has 10x more experience than I do working with retailers, retail districts, and developers--that it's all about the rents.  (And I thought of my 10+ year line that cities like Baltimore or Pittsburgh or Philadelphia have to have a "desperate willingness to experiment because they have no other options.")

It's much easier to be funky and cool, especially in weak markets, when your rents are low.

I asked what his store is paying in rent and he said he gets a special, sweetheart rate, and it ends up being $5/s.f./per year!!!!!!!!!!!!!!!!!!!!!!

On the other hand, in a strong market like DC, even in crappy buildings in emerging commercial districts in DC, the property owner is asking for $35+/s.f. with no build out allowances, no rent rebates, rent payable during buildout, with buildings in need of tens or hundreds of thousands of dollars of renovation to become viable.

Rents in Adams Morgan are likely to be in excess of $50/s.f.  Not to mention that during the day most people are working so there is little demand for retail.  And when people go to the district to "consume it" at night, they are looking to dance and drink, not buy retail goods.

Is it any wonder that most of our commercial districts in DC offer pretty paltry retail (online commerce makes local retail even harder) and middling restaurants?

It's only as the city's population has been increasing recently that some neighborhood districts are starting to turn around--not surprisingly, in those neighborhoods that have been experiencing population increases. (And traditional retail is still tough anyway, as the sector continues to bulk up and as DC has so much strip retail space, which isn't always conducive to reuse for a variety of reasons of which I have already written about voluminously, e.g,, see "Retail Action Strategy.")

Anyway, Bloomberg has a story, "Desperate Art Galleries Give Up as Chelsea Rents Double," about the Chelsea district of Manhattan, and how the rents are skyrocketing, displacing galleries and artists, now that the district is hot and has been repositioned in response to the creation of the High Line linear park.

The article points out that the smaller galleries have to become bigger and diversify in order to remain.

Image: Iwan Baan/The High Line via Bloomberg. Section 2 of the High Line park, looking south. Section 1 is between 20th Street and Ganesvoort Street.

Unless you have extraordinary measures to protect less economically viable but still cool uses, such uses will always be displaced--unless they own their properties--as demand increases.

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At 10:14 AM, Anonymous Christopher said...

"And when people go to the district to "consume it" at night, they are looking to dance and drink, not buy retail goods."

This addresses to something of your daypart planning analysis. One thing that always strikes me when I visit DC from home in NYC is how EMPTY many of the neighborhoods are during the day. Jobs in DC still trend toward 9-5 jobs and without a lot of good paying jobs with more atypical or varied schedules the neighborhoods empty out during the day time when retail would get a boost by having people at home -- working or resting -- during the day.

Along the same lines, there aren't the enough small office spaces in residential neighborhoods that would further benefit businesses that operate during the day.

New York might be unique in some ways here, even the last time I was in SF I was surprised how quiet the streets were during the day. That is a change. I used to see people walking around shopping at like 11 am on Wednesday in SF a lot more than I noticed last time. Many neighborhoods in NYC will have pedestrian traffic at "off" hours.

At 11:19 AM, Anonymous charlie said...

One of the keys of the R-B corridor success is spreading office jobs out among the corridor. So retail has a chance, and also you have restaurants that can capture a lunch crowd. How many office jobs are up and down 14th?

That being said, dual purpose (art gallery + wine bar) stores can work as well

But Richard has pointed about how empty most of DC is during the day.

At 10:10 AM, Anonymous BeyondDC said...

Absolutely true. Through my wife's connections to the crafting scene, I literally know at least 100 people who would open funky stores next month if they could find a reasonable rent.

At 10:43 AM, Anonymous Cavan said...

That's true about the rents. You'll notice that the successful durable goods retail areas are mostly due to agglomeration and being so high-end (high profit margin) that it works. I point the the furniture/homegoods cluster on 14th Street NW spilling over the U St. You also have some national retail clusters in Friendship Heights and Columbia Heights.

Check out Silver Spring. There are some local stores there like CD/Game exchange, the record (vinyl) store, the used book store, the bicycle shop, the (plus-sized) corset shop, Strosnider's Hardware, a comic book/animation store, not to mention the niche national chains like City Sports, Pacers Running, and the mass market retailers like DSW and H+M.

I know the rent in the new buildings in Silver Spring is very high, hence why they're populated by national chains. Is the rent in the older retail building stock that much lower in Silver Spring where CD/Game, comic books, used books, corsets, etc. can survive?

There is a good bicycle shop in downtown Takoma Park not to mention a local food co-op. I get that the rent is too damn high. How do you change that short of disastrous economic contraction? It seems like a similar problem to affordable housing, which is a supply problem.


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