The success of urban neighborhoods versus Downtown as a laggard

A man crosses a bustling Dorchester Avenue in Fields Corner at midday. (Photo: Jesse Costa/WBUR/NPR.)

The Boston Globe has a bunch of articles ("Boston’s neighborhoods are thriving. Downtown, not so much," "Boston's residential neighborhoods are thriving while Downtown struggles") about how the city's neighborhoods and commercial districts are doing much better than Downtown Boston ("Why how Downtown Boston is recovering depends on which Downtown you're talking about")..  

That's because Downtowns haven't and may never recover from work from home (WFH) practices accelerated by the response to covid.  Mayors in plenty of cities and Trump wrt the federal workforce are calling for RTO--return to the office, to support occupied office space, Central Business District centric transit systems, and retail and restaurants.

-- "What is the competitive advantage for the post-covid city? Doubling down on place values" (2022)

WRT the latter, reports from Boston and Chicago find lunch business in the CBD is down as much as 50% pre-covid.  Most heavy rail transit systems are moving half of the number of people to CBDs compared to pre-covid times.  

There is massive vacancy in office space and commercial office building valuations are cratering ("One of Boston’s skyline-defining towers is on the auction block — and expected to sell at a big discount," Boston Globe, "Does assessor Fritz Kaegi appreciate the true horrors of downtown Chicago’s commercial real estate market?," Chicago Tribune), "The brutal reality of plunging office values is here," Crain's New York Business).

This is a serious problem because local government revenue streams typically include great amounts of revenue from commercial property taxes.

By contrast neighborhoods still have people in them, and in dense neighborhoods like those of Boston and its inner ring suburbs, people walk places, do things, and patronize local business.

According to the Globe, vacancy rates are minimal in Boston's successful neighborhood districts.  Part of that is that while there might be fewer patrons overall, there are more than in the CBD, and neighborhood properties have much lower rental rates.  In Downtowns, property owners find it difficult to lower rents because of mortgage responsibilities, hence a lot of vacant storefronts.

Bristol's Clifton Village, number five in Knight Frank’s top 150 high streets © Robert Harding/Alamy

In this vein the Financial Times has a story "How bougie is your high street?," about the gentrification of commercial districts, mostly referring to neighborhood-centric ones.

A curated mix of chichi cafés, artisan bakers and premium gyms is changing the tenor of neighbourhoods in an era of clicking ‘add to basket’ 

... does the “Waitrose effect” identified nearly a decade ago by Lloyds Bank (how living close to the upmarket supermarket could add as much as 10 per cent to property prices), still up the kudos of an area?

“Yes,” says Tom Bill, Knight Frank’s head of UK residential research. “The quality of the local high street is one of the important factors for those looking for homes.” It’s why the estate agency undertook research to identify the top 150 premium high streets in the UK. “In the context of growing scrutiny around the composition and future of the high street, we wanted to analyse the most popular amenities that might increase the chances of people buying or staying in a particular location. That, of course, can become a virtuous circle for retail and residential markets.”

Pavilion Road, Chelsea, is a cobbled mews offering a village-like counterpoint 

to the grandeur of Sloane Square’s thoroughfare © Harry Mitchell

... It’s a sentiment that resonates internationally. The Rue Sainte-Catherine in Bordeaux, Europe’s longest shopping street, mixes international brands, uniquely French names and small independents in a soft-stone 18th-century backdrop that draws both local residents and visiting tourists — no one wants an identikit high street you can find back home. Coconut Grove, Miami’s oldest neighbourhood, is leafy and filled with cafés and small boutiques. Why trek to Collins Avenue when you have this on your doorstep? But if the mix is no longer about life’s essentials, and instead a new wave of chichi cafés, artisan bakers and fancy nail bars — are we right to ask, not how useful is your high street, but how bougie?

... “A high street sets the tone for a neighbourhood. We’re not saying there’s necessarily an uplift in property prices in the best areas, but home buyers are often choosing a way of life, and the ‘right’ blend of shops and facilities can add value, both for the character of the area and house prices.”

-- High Streets: Life beyond Retail?, 2024 House of Lords report, response

The idea of mixing a small number of premium chains with locally owned businesses was identified by Kennedy Smith, former head of the National Main Street Center, as an indicator of success, in part because consumers see the upscale shops as an endorsement of the neighborhood.

The one problem still, is selling convenience goods.  While these business districts often have home hardware stores and pharmacies--often chains--there aren't good options for well priced supermarket foods, at least in the US, because that industry isn't set up to operate at a small scale.  By contrast, there are supermarkets in UK districts, but definitely smaller than the typical US supermarket of 65,000 sf.

The large number of Marks & Spencer stores across the UK aren't department stores, but food halls, based on the conpany's tradition of knock your socks off prepared food offerings  in their London based flagship department store.

The other problem from "bougie" is that the price point trends upward.  The chi-chi cafes aren't pricing food comparable to the old time diner or other type of neighborhood-based restaurant.   ("A wealthy Calif. town is about to lose both of its dive bars Inbox," San Francisco Chronicle).  Etc.

“At the top end of the market, the high street is increasingly being curated,” says Michele Galli, chief executive of branding specialist The One Atelier. Bougie breeds bougie. “[People] want to step out of their doors and feel instantly immersed in a world that reflects their values in terms of wellness, craft and culture. Even in the era of delivery and convenience, physical quality of the streetscape still counts. It’s not just about access to services but a sense of place.”

The European districts share characteristics with those districts highlighted in Boston.  Tighter building stock in that buildings aren't spread out, walkable community, and a relatively dense population.  In the great book Cities in Full--and these numbers pre-date e-commerce--the author posits that you need 10,000 residents within a half mile to have a successful commercial district.

You see this in urban neighborhoods in the East, Middle Atlantic, and Midwest, where secondary business districts in cities had great form.  Usually anchored by regional department stores--which have closed or consolidated into Macy's--many of these districts, like Germantown Philadelphia are somewhat decrepit but with great bones.

Downtown Royal Oak, Michigan.

Certainly in automobile-centric suburbia this doesn't exist.  However, extent older towns like Royal Oak Michigan or Phoenixville, Pennsylvania outside of Philadelphia provide such an option even if people mostly drive  Certain districts in Montgomery County, like Bethesda, although they've long since lost the original town architectural antecedents (Bethesda Row case study, Urban Land Institute), function similarly.

Shopping centers have managers and headquarters personnel working on issues of retail recruitment with an eye to the mix.  

In 1964, the retail owners in Downtown Corning, New York figured this out and hired its first "manager."  It took 14 years, but the Main Street commercial district revitalization program was created by the National Trust for Historic Preservation to bring residents, institutions, the local government, property owners, and retailers together to improve the commercial district through management, and the addition of volunteers.

Later, people were reaching out to the National Trust for Historic Preservation for help in saving historic buildings in town business districts that became empty because of chaining up of retail, consolidation, a move to a much larger physical footprint, the next generation of national chains, like Walmart, and a shifting of retail to suburban shopping malls.  

The Trust figured out that the issue wasn't so much preservation and "saving the buildings," as it was rebuilding the micro-economy of the commercial district.  Hence a multi-faceted program for revitalization that was less focused on preservation--although still present--and more on business and district economic success.

In England, where many properties in independent commercial districts are owned by the equivalent of real estate investment trusts, they have the same idea, but more from the realm of corporate realty:

“We’re the stage managers. The retailers and restaurateurs are the performers who put on the show,“ says Hugh Seaborn, Cadogan’s chief executive. “Our goal is to provide public and private spaces that give exceptional experiences and encourage community connections, exactly what is lost in online transactions.” 

In the US, this doesn't work as well.  REITs are more focused on return from simple investments, so they shy away from traditional commercial district properties in favor of single use properties run by chains.  Companies specialize say in the real estate of pharmacies or quick service restaurants. 

-- "Problematic outcomes as real estate investment trusts buy more "high street" retail real estate" (2015)
-- "Further evidence of DC being an international/national real estate market," (2018)

Separately, I've mentioned how Edens, originally a Carolinas-based shopping center owner, was able to pivot to curated retail, when it bought property in DC's wholesale food market, Union Market("Two years in, Union Market thrives," Post, "Vendor's Game: Meet the Chef Behind Union Market," Washington City Paper).

This is still a rare occurrence, outside of traditional commercial shopping centers--malls, lifestyle centers, and strip shopping centers.  Although the lifestyle center is based on the old model of a mixed use town center.

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This piece is about a couple of local commercial districts in DC and Salt Lake, both micro.  By contrast Salt Lake's 9th and 9th District ("Visiting Salt Lake," Washington Post) is more like the successful ones discussed above, albeit smaller.

-- "Thinking about the opportunities for success with neighborhood commercial districts: comparing Manor Park in DC to 15th and 15th in Salt Lake" (2021)