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Cities Chasing Retail

The April 2007 issue of Governing magazine has an interesting cover story called, The Retail Chase with a subitlte: Cities will do almost anything to land the story of their dreams. From the article:

Much of the change in the retail market is happening not just within cities but in the middle of downtown. All over the country, young professionals and empty nesters — people with disposable income to spare — are moving into new lofts and high-rise condos. Those new residents have to shop somewhere. In downtown Minneapolis, now home to 30,000 people, three grocery stores are coming, and not one of them requested government subsidies. “For years, all the cities in the Midwest wanted to have a Michigan Avenue,” says Minneapolis Mayor R.T. Rybak, referring to Chicago’s famous high-end shopping street. “Michigan Avenue is spectacular, but we’re not all going to have a Michigan Avenue.” What’s evolving downtown now, in Rybak’s view, is a hybrid retail model where destination shoppers can still buy $200 shoes, but where the people living upstairs can find a dry cleaner. “Focus on the housing first,” Rybak says, “and the retail will follow.”

The above is valid, we don’t buy expensive shoes everyday (I never do). What we do need are groceries, toiletries, prescriptions, basic clothing and dry cleaners. A number of these are available in downtown St. Louis currently. But really, every neighborhood needs to have these in close proximity (… a short walk).

The online version of the issue also has some additional interviews with retail experts. One of the three is Robert Gibbs. As it turns out, Gibbs was in town recently as the retail consultant to DPZ on the Dardenne Prairie town center charette. He was certainly interesting to talk to and he did a great job communicating retail strategy to the general public. One of the things he stressed was having high design standards, explaining that retailers have several store models and will simply do the least they can get away with in the community. Retailers, much like home owners, don’t want to overbuild for the area. Gibbs indicated high standards for store fronts and lighting were very important. From one of the online-only articles:

It’s generally agreed now that the underserved markets are urban markets. From inner cities with low-income populations to high-end wealthy cities, urban centers are vastly under-retailed for lots of reasons. If you’re a retailer and you’re growing your stores, you have to figure out how to get into urban locations. To do that retailers are doing things they never would have considered five years ago. They’re modifying their old standards for store sizes in order to fit on smaller, more compact sites. They’re lowering their parking standards. They’re even changing the merchandising mix to fit the urban consumer. So there’s a tremendous opportunity for cities to attract retail.

You mean, we don’t just have to accept the type of store the retailer builds in the exurbs? The city of St. Louis is underserved from a retail perspective. We can have our cake and eat it too: higher design standards and still attract retailers seeking a market in which to grow their business.

Cities don’t have to turn themselves into a mall, but they do have to do what shoppers want. Last year 70 percent of all sales occurred after 5:30 at night. If downtown is going to compete, it has to have stores open in the evenings or on Saturdays. It has to offer the goods that people want to buy at the prices people want to pay. Last year only 2 percent of all apparel sales occurred in downtowns. In that 1950s, that’d be more like 90 to 95 percent. Downtowns have lost almost all their market share. Most are either entertainment districts or they sell knick-knacks and antiques and other things we don’t need.

Yes, evening hours are harder on the mom & pop stores but if that is when the public has time to shop that is when you need to be open for business. This is not the 1950s anymore, mom works to help the family get by so she is not out at 2pm shopping. Despite being gay, I do not go antiquing.

Cities should have a master plan to show how they can accommodate modern retail. Cities should have a written policy saying they want to be competitive and gain market share. Cities need to have high design standards for signage, lighting and building design and be willing to enforce those standards. And they have to have a public parking strategy.

Are you folks down at City Hall and the downtown partnership getting this? A plan, a policy and “high design standards” that are actually enforced! And by “parking strategy” I don’t think Gibbs is advocating the razing of historic structures for additional parking garages, he is referring to good parking management. Gibbs continues:

Cities can get back up to 30, 40 or 50 percent of market share with a policy. There’s a demand for retailers. A lot of them want to locate in downtowns. A lot of cities don’t know that.

The eight or ten cities we consult in have this huge unmet demand. Even a blue-collar town with modest income has a big demand for shoes and apparel. Urban consumers drive farther than normal to get goods and services, and the goods and services they do get downtown they overpay for. That’s the norm. Old Navy knows that now. Target knows that.

Gibbs give a good reason why we can demand higher standards:

Time matters for retailers. Stores have to open to keep their stock prices rising. A development director for a chain is told to open five stores in a region by a certain date, and if they don’t open he gets fired. So those people will go to a city only if the city can give them some assurance that the store can open by a certain date. That’s hard to do.

With good zoning & urban design codes we, as a city & region, can demand better retail design. It will not be offered to us on a silver platter, we must ask for it — no — we must demand better. The chain’s development director, faced with termination for not opening enough stores, will work with us and reluctantly pull off the shelf one of the more urban formats used in other cities. Walgreen’s will not abandon the City of St. Louis. They are on a mission to be in every part of every city and state. They are also trying to beat CVS in the race to tap new markets. QuikTrip is in a similar situation.
Wall Street doesn’t give a damn about St. Louis or if a new store is urban or has a big parking lot in front. Their concern is new growth as evidenced by new stores and eventually, steady or growing same store sales. Period. All these national retailers want to make sure they please their shareholders and Wall Street. They build the very least they can get away with and still please investment analysts that track their stock. If a reasonable urban design code requires good sidewalk access, bike parking, and caps the auto parking then the retailer will go along — that is much easier than answering to shareholders when the stock takes a dive.

Part of the problem is that retailers generally don’t build their own buildings. They work with developers, often local developers, to construct & own the facility and lease it back to them. In the St. Louis region we have a limited number of such retail developers like THF, Koman Properties, and DESCO. These developers, through campaign contributions throughout the region (Missouri & Illinois) keep things favorable to themselves. High design standards? Not for them! They will cite retailers demands but we know that really isn’t true. If they want to stay in business they will need to comply with the community’s design standards. Do you think THF included all the trees in the Chesterfield Flood Commons project out of some altruistic reason? No way! Chesterfield has high landscaping standards. With enforced design standards in place a developer can go back to a retailer and say, “our hands are tied, [insert municiapity] requires that you [insert requirement].

In addition to some basic demands, non-financial incentives can be used. For example, parking can be reduced if the developer includes bike parking (up to a point, and distributing the bike parking throughout the development). Many cities use creative incentives to improve design by giving developers choices that will make the project look & function better and not really add to the overall costs.

It is time for St. Louis to stop acting like a city losing thousands of people every decade. We are on the upswing per the latest figures from the census.

 

The Loop: Eclectic Stores vs. National Chains

Recently I read about two chain restaurants taking over the Streetside Records building on Delmar in the Loop. The store was not closing but the building owner made a deal to lease the space to two chain restaurants when the Streetside lease expires. To everyone upset about the loss of “record” stores, don’t be. When was the last time you passed a typewriter store? Markets shift and like it or not records are like 8 track tapes. Hell, I can’t even recall the last time I purchased a physical CD — certainly before the iTunes Music Store opened.

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This week the RFT had a follow up story on the subject of chain stores in the loop, it seems some local merchants want to set a limit on the number of chain establishments:

Spearheading the move to institute a cap on chains is Patrick Liberto, owner of Meshuggah Café, who says the incursion of two new restaurants spurred him to action.

“We are going to lose our eclectic qualities. We’re going to look like Clayton,” Liberto complains. “The Loop is going to get a lot less interesting to people if they see the same things here that they see in their own neighborhood.”

Liberto wants to set a limit that no more than ten formula restaurants and ten retail chains be permitted in the Loop, and that none can occupy a space greater than 4,000 square feet. The Delmar Loop is home to seven retail chains, including Footlocker and Blockbuster Video. When Chipotle and Noodles & Company arrive, the number of chain eateries will rise to thirteen, versus thirty-four independently owned restaurants.

The irony here is Streetside Records is part of a chain of stores! 

I personally hate chain places, especially chain restaurants. We have so many wonderful locally owned establishments in our region, why go generic. That said, I’m not sure I believe in artificially creating such a cap. First, we must define a chain. Is locally owned Pasta House a “chain” because they have muliple locations? Do we distinquish between a locally owned & operated franchise (say a Subway) vs. a company owned store from a non-local national operator? The St. Louis Bread Co. is most definintely a chain — they had two locations at one time on the loop (disclosure: my investment club is a very minor shareholder in Panera).

The Loop is quite unique to the region but not just because of the mix of the stores & restaurants. The architecture and scale of the place is unique as well. I’ve been to the Noodles & Company at South County mall twice now and I can certainly say the experience is totally unlike going to the Loop. Sure, the food might be the same as well as the interior decor but the Loop still has the right feel I am looking for when I am out and about.

I personally am not a fan of regulating uses, my usual concern is building form which creates the feel of the public space (aka the street). Some franchise places have very strict standards on their signage & storefronts while others are more flexible, allowing adjustment for local flavor.

I think it should be noted “The Loop” is often considered that portion of Delmar in University City — up to the lions heads on the west end. However, over the last few years the portion of Delmar in the City of St. Louis has become quite interesting. I consider them together to be the Delmar Loop or simply the Loop, I never say the U-City Loop. But, it is the U-City portion feeling threatened by the influx of chain stores.

if the merchants want to be concerned about the character of the area and attracting people they need to look at doing something about the bad buildings such as this one:

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These cars are all in for repair. Across the street, within the city limits, is another old gas station that has been boarded for years and the lot is simply used for additional parking.

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At Skinker we have this horrible gas station, hardly a good anchor for a pedestrian district. The next rebuild should require the convenience store functions to be moved to the corner to create more urban context, leaving the pumps in the back less visible to the street.

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The Church’s is no gem either. I believe these types of buildings, not their uses, do more to detract from the loop experience than the addition of a chain noodle shop in an urban building. I’d have not problems with the Church’s in a more urban building form sans drive-thru.

But let’s say you want to make sure you keep attracting the eclectic crowd, not minivans full of suburban families? The Loop merchants need to take a look at the street and see what is missing for their core market. Warning, this is morphing into a brief bike rack rant:
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I stopped by the loop earlier today just to briefly snap a few pictures of the Streetside Records building and in the few minutes I was there I noticed four bicycles in front of several shops across the street.

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Two parking meters, a sign post and finally a tree. Wait, what is that in the background? Yes, an old fashioned “dish drainer” style of bike rack. These are horrible, no wonder none of these cyclists decided to use it. First, it doesn’t look well secured — someone could steal the bike & rack. Second, when you put your front tire between the smaller vertical bars it can warp your front rim. Place your mountain bike tire in the wide opening and the bike easily falls over (I don’t think most of these bikes had kick stands). It also makes it hard to lock the frame securely – especially when using U-shape locks as the first three are. The Loop group needs to think about proper bike racks if they plan to keep their core customers.

But the debate really isn’t about chains, gas stations or even bike racks, it is about money. As owners of buildings decide to retire or when they die the buildings get sold for current market value. As such, new owers seek to recoup their investments with higher rents. Chain stores with deep pockets or local franchisee’s seeking to establish a business seek out thriving areas like the Loop.   Do places that can’t afford the newer rents need to think about relocating to other commercial districts in their price range? Of course, if many of the local places leave that will hurt the chains as well as they moved in because of the foot traffic the area generated. Areas can become so popular they hurt themselves.

The RFT article talks about a “tipping point” of having too many chains to the point where people stop coming because a place has become too generic. The problem is, in my view, is that is so hard to quantify. What number of chain restaurants or retailers is the right number? Is it simply quantity or a percentage of the streetfront or square footage? Maybe some retail experts have done some research but then I’d want to know who paid for the reseach.

My advice to the smaller local merchants: get a long term lease, buy your building, plan for higher rents in the future or think about options for new locations.

 

BJC/Forest Park Lease is Simply Par for Course

St. Louis has a serious lack of leadership at the top. Following the lack of a second yesterday on a motion to accept the BJC/Forest Park Lease Mayor Slay indicated he was “disappointed.” Well, Francis, welcome to my world. I am disappointed daily by you and pretty much every other elected official out of city hall.

I am disappointed in fellow members of the Board of Estimate & Apportionment, Jim Shrewsbury and Darlene Green. I’m not disappointed because they wouldn’t go along with the current deal, but because they, like the Mayor, are reactionary. Board President Candidate Lewis Reed and all his followers on the Boad of Aldermen are no better. BJC is not really the bad guy here, nor is Shrewsbury or Green. The culprit is how we do business in this town.

The notion of having to maintain Forest Park cannot possibly have been a new concept in 2006 when BJC floated this idea past the mayor’s office. Forest Park Forever, the non-profit group that raised so much money for the restoration of the park, was started in 1986 — two decades ago! Did nobody stop to think, “hey we are going to need to find a way to maintain all these improvements” along the way?

The lack of leadership from City Hall has brought us to this point today. BJC is now issuing threats to the citizens that they will look elsewhere if they don’t get their way. Maybe BJC is the bad guy too. Don’t threaten me, I don’t care how big you are. Take your ugly buildings, your closed off streets and those aweful parking garages you’ve littered the landscape with and hit the road. Yeah, that’s right. Get lost you big f*cking bully. I’m calling your bluff — something the spinless folks at city hall would never do. Proof? The St. Louis Cardinals got a new stadium downtown.
Sometime in the last 20 years we should have had a discussion about paying for Forest Park, and all our parks frankly. Does anyone recall Mayor Slay making this a priority during his 2005 re-election campaign? What about Ald. Roddy? Nope.

Good leadership would have said, “OK folks, we’ve invested millions in the renovation of Forest Park but now we need to find a good way to keep it up for the long haul.” A panel could have been formed to investigate options, a town hall could have been held. Something, anything. Instead they waited until re-elected and then turned BJC land-grab into a immediate crisis, designed to scare voters into submission. You know, something President Bush might do.

I’ve never come out fully against the idea of BJC getting that land for future expansion — it was the process I disliked, not the basic land concept. Again, good leadership from city hall would have told BJC, “We can’t take this to the people until we figure out how & where to replace the open space lost and ammenities.” You can’t take away over 9 acres of park used by nearby residents without figuring out how to accomodate their needs. Yet, when this came up last year the issue of replacement park land was one of those “oh we’ll figure that out later items.” Uh, no! We’ll figure it all out or we won’t do it at all. The Kiel Opera house was one of those “later” projects that still hasn’t happened.

Our city operates in a vacuum, looking soley at a project at a time. Whether it is paying for park maintenance or a master plan for a blighted section of South Grand we simply don’t plan ahead. We sit back or wait for a sweet-looking deal to arrive and push for it. Ald. Florida was all in favor of a McDonald’s drive-thru without once doing a master plan for a mile-long stretch of Grand blighted some 10 years earlier. What is the true cost to maintain our parks and if we did the BJC lease would that solve everything? Doubtful. We need to have discussions about commercial cooridors and park funding before we have an impending proposal on the table.  Only then can we possiblly hope to have a rational discussion about the future of our city.

Given the way our leaders continue to operate, I don’t give this city much of a future.  The potential is here, but we continually squander what we have and push those with creative thinking to other cities.  This region is not growing, at least not by much.  Sure, we are building stuff on the edge of the region but that is not the same — I’m talking population and jobs, not sprawl.  The city has to fight with the Census annually to show we’ve stabilized our population rather than continue the decades-old downward spiral.  Other regions in the U.S. have their act together while this region sticks its collective head in the sand.  We are so far behind and all the folks we elect can do is point fingers at each other.  Well, I’ve got a finger for them…

 

Cherokee Street: Big Controversy Over Tiny Place

You’ve all heard the story by now, Ald. Craig Schmid has a moritorium on liquor licenses for the 20th Ward. You want to sell beer, then you need to have 50% of your revenues from food. In other words, restaurants are OK, bars are not. Enter Steve Smith, owner of The Royale on Kingshighway near Arsenal. Smith wants to open a bar along Cherokee street and and serve no food in the space located at 3227 Cherokee known as “Radio Cherokee.”

The controversy has escalated to the point that Schmid, a 12-year veteran at city hall, is being challenged by resident and business owner Galen Gondolfi in the election for alderman to be held on the 6th of March. This issue has some fun little twists and turns that I have not seen in the media.

First, opponents cite a number of concerns. One is parking, another is food sales. Of course, I fail to see how Smith getting 50% of receipts from food sales lessons the parking issue any — it might in fact make it worse? Parking too seems like a red herring, the city has literally thousands of corner storefront places but we cannot expect them to each have a dedicated parking lot without destroying the character of our neighborhoods.

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Above is the location in question, located on the NE corner of Virginia (street on left) and Cherokee. The very tiny storefront can only hold so many people and quite a bit of on-street parking is available along the side of the building above (on Virginia). Similarly, more cars could easily be parked on the west side of Virginia.

The neighborhood is not ready,” was one comment I heard. Well, what defines ready? What is the plan to get the area ready?  Granted, this property is much closer to Gravois and is therefore not part of the main commercial area we think of as Cherokee.  This is outside the Cherokee community improvement district.  Still, every block between here and the main section of Cherokee contains at least a single storefront, in many cases several.

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On the same block as “Radio Cherokee” is the former Cherokee Auto Parts with a greenhouse/nursery business on the end of the block.  In the background of the picture you can see a corner storefront on the next block.  Back to the site in question.

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The small place is actually part of a 4-unit building, with one residential unit above and two attached but set back from the street.  The building lot is only 24ft 8 inches wide.  So as you can imagine, both the residential units and the bar space are narrow.

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Peaking inside through the front door glass we can see a place basically ready to go.  No major build out or extensive rehab required.  Currently the space is simply sitting empty, not being productive for the neighborhood or city.  Now, I’ve never been in the food services business (well, except those 4 days at Arby’s when I was 16) but logic tells me you need a certain volume of business to operate a restuarant.  With such a small place and lacking a kitchen space it seems unrealistic to expect this space to be anything but a bar.

Sure, I suppose it could be gutted and turned into a retail space of sorts but that seems even more likely to fail.  Retail operations would do better in the main commercial district.

Currently, to my knowledge, Cherokee street has no master plan — no vision has been established.  In looking at the blocks on this end with a mix of storefronts of varying sizes, flats and single family homes I see a small bar fitting in nicely, nothing too big.  A block or two east is the old Black Forest restaurant which has been closed for sometime.  That is a very large space with a large kitchen (I’ve shown the building to prospective buyers so I’ve been through the whole thing).  It is even complete with a parking lot.  But the pro-forma to buy and renovate that place relative to this is night and day.  In reality, both spaces need to be open and active.  We just can’t fault Steve Smith for not having the cash/credit of a say Joe Edwards.   The old Black Forest space will make an excellent restaurant once again.  As a bar only, it would be way too big.

So my solution to this issue is this — for Cherokee Street only:  Set up a sliding scale, the very tiny Radio Cherokee space that Steve Smith is interested in should have a zero percent food requirement.  On the other end, spaces like the large Black Forest should be required to have 50% food.  Other storefronts, such as the old Auto Parts place, might fall somewhere in the middle.  What this does is set up a guideline along Cherokee only where small bars can be introduced and have a chance to succeed while the larger spaces cannot be bars only.  This should be implimented along the length of Cherokee from at least Jefferson to Gravois while the area works on a master plan for Cherokee.
In the interest of disclosure, I have not spoken with either candidate about this concept but I did happen to run into Steve Smith yesterday and he seemed to think it might be a good compromise.  In researching this post I discovered that Galen Gondolfi owns the property in question along with another person.  He also owns the old auto parts place on the same block.  He owns larger buildings in the next block east where he lives, has a gallery space and leases out a storefront to a cafe.  He clearly has a vested interest in seeing this section of Cherokee street succeed and prosper.

 

State Rep. Mike Daus Begins Blogging

Missouri State Representative Mike Daus (D-67th) has started a new blog, 67thdistrict.blogspot.com covering issues in his state house district. Daus has two years left on his term in Jefferson City so expect to see speculation about him seeking another office. But why wait for the speculation, I’ll get it started.

Daus lives in the 4th State Senate District where Jeff Smith was just elected in 2006 so that leaves out a run for another job in Jefferson City unless he were to attempt a state-wide office. Daus ran for 15th Ward alderman in 2001 against Jennifer Florida, who narrowly defeated him by something like 20 votes. Will Daus return to the aldermanic arena after having served eight years in Jefferson City? Interestingly, campaign finance reports for both Florida & Daus show them each having roughly $19,000 in their respective campaign accounts.

To learn more about blogging see my FAQ About Blogging.

 

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