(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.