Post on 11-Mar-2021
ILCMA Financial Forecast Forum | January 21, 2020
Trends and strategiesMain Streets and TOD post-COVID
SB Friedman Development Advisors
COVID 19’s impact on downtowns and main streets
How can communities adapt and help businesses through the COVID crisis?
Will demand return for mixed-use places with active uses?
Is transit – and building community hubs around it – still relevant?
SB Friedman Development Advisors
Preference for walkability and proximity to servicesMain Streets & TOD: Pre-COVID trends
3
62%
45%
45%
55%
38%
55%
55%
45%
Live in a townhouse or apartmentEasy walk to shops & restaurants
Shorter commute
Live in a detached SFHDrive to shops & restaurantsLonger commute
Millennials
Gen X
Boomers
Silents/Greatest
Community & Transportation Preferences Survey U.S. Metro Areas, 2017, National Association of Realtors, American Strategies, and YouGov
In 2018:
The Chicago region had a 22% rent premium for walkable office development
The region’s suburbs had a 60% rent premium for walkable rental apartment development
Source: “Foot Traffic Ahead” Smart Growth America Study
SB Friedman Development Advisors
Consumer spending on typical TOD uses is down
4
Illinois percent change in consumer spending, compared to January 2020
Source: Opportunity Insights Economic Tracker
General retail has returned to normal levels in some places, but restaurants and retail remain low
By county By type of spending
SB Friedman Development Advisors
Consumers will shop or dine in-person, but in limited waysWork and essentials remain the core reasons to leave home
5
In the past 24 hours, have you visited any of the following places? Please select all that apply.
Source: Gallup poll, September 2020; SB Friedman* Date listed is the end of the 2-week polling period. Results are an average of the two week period.
Gym
Restaurant – dine in
Salon or barbershop
0%
10%
20%
30%
40%
50%
60%
5-Ap
r
12-A
pr
19-A
pr
26-A
pr
3-M
ay
10-M
ay
17-M
ay
24-M
ay
31-M
ay
7-Ju
n
14-J
un
21-J
un
28-J
un
5-Ju
l
12-J
ul
19-J
ul
26-J
ul
2-Au
g
9-Au
g
16-A
ug
23-A
ug
30-A
ug
6-Se
p
13-S
ep
20-S
ep
27-S
ep
4-O
ct
11-O
ct
18-O
ct
25-O
ct
1-N
ov
8-N
ov
15-N
ov
22-N
ov
29-N
ov
Grocery store
Place of work
Other store
Restaurant - carryout
SB Friedman Development Advisors
Working at work, eating out, and travel are prioritiesWhat activities do people want to get back to?
6
Once the government provides information that the spread of the virus is flattening how long will it take you to do each of the following?
0%
5%
10%
15%
20%
25%
30%
35%
40%
Visit the office Go out to dinner Go to a gymclass
Take publictransit
Stay in a hotel Go to themovies
Host/attend alarge societal
gathering
Fly on a plane Go to a sportingevent
Immediately Within 3 months 4-6 months 7-11 months A year or longer Never again
Source: Harris Poll, wave 40 (November 30-December 4, 2020)
SB Friedman Development Advisors
COVI
D C
risis
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Consumers shifted spending back to brick-and-mortar retail once lockdowns endedCOVID temporarily accelerated e-commerce adoption
7
Estimated Quarterly U.S. Retail E-commerce Sales as a Percent of Total Quarterly Retail Sales
SB Friedman Development Advisors
Business closures, ghost kitchens, and eventual rent resetsMain street businesses adapt to major shifts
Cushman & Wakefield estimates that up to 1/3 of restaurants will close if pandemic shut-downs continue
“Ghost Kitchens” have helped some restaurants operate delivery out of a shared kitchen, reducing costs and expanding markets
Small shops have transitioned to online storefronts, workshops, and expanded services
Increased vacancies from closures offer opportunity: Reset on rents in high-demand areas Communities can plan for / seek out more desirable
tenant types or uses
8Source: Costar
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
2,000,000
2015 2016 2017 2018 2019 2020 2021
Retail Net Absorption and Vacancy within 1 Mile of Transit vs Remainder of Chicago Region
0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%
2015 2016 2017 2018 2019 2020 2021
All other retail Within 1 Mile of Transit
Strategies
9
SB Friedman Development Advisors
A few key factors will drive recovery
Regulations: Federal, state, and local decisions on reopening timelines
Behavior: Vaccine uptake
Capital: Public or private funding available to remain open, retool, and rehire
Market: Consumer perception on safety, income sufficient to purchase goods, and persistence of COVID-era adaptations in housing choices
Federal Assistance: Economic aid to highly vulnerable populations and businesses
10
SB Friedman Development Advisors
Be flexible and plan for the many Consumers who are ready to return to experience-oriented districtsTOD and entertainment district strategies
Support affected businesses
Implement short and long-term Placemaking strategies
Plan for post-COVID priorities
11
SB Friedman Development Advisors
Link businesses to resources and adjust local policies and feesSupport affected businesses
Connect businesses to resources: PPP utilizes private lenders – many small or minority-owned businesses need help establishing
banking relationships Advertise EIDL and other SBA resources
State of IL – https://coronavirus.illinois.gov/s/resources-for-business
Counties and non-profit coalitions offer small operating grants
COVID CDBG funds can be utilized for small operating grants to businesses meeting local priorities
Temporarily adjust regulations and policies: Allow outdoor dining or sales, shifted hours of operations, etc. Suspend or defer fees for all businesses or certain types of operators
12
SB Friedman Development Advisors
Entertainment businesses have relief ahead
Limited relief from PPP funds because venues could not reopen
Save our Stages – a “Main Street” focus: $15 billion Grants up to 45 percent of 2019 revenue Includes performance, cultural, or hybrid
venues Targeted relief for businesses with <50
employees
13
SB Friedman Development Advisors
Consumers are likely to continue to seek urban amenities Expand Placemaking Strategies
Short term: Use public ROW flexibly (outdoor
dining, winter activities, street closures, etc.)
Test shared streets and other multimodal options
Long term: Improve mobility options Zone for a mix of uses Pursue innovative use of the public
realm
14
Melbourne, Australia: 20-minute neighborhood
SB Friedman Development Advisors
Post-vaccine, many consumers are ready to return to experience-oriented districtsMid term: Plan for post-COVID priorities
Plan for post-COVID economic development priorities
Identify market opportunities for vacant space
Update zoning, development policies, etc.
Put in place BIDs, TIFs, etc. to aid post-COVID reinvestment
15
0%
10%
20%
30%
40%
50%
60%
70%
Percentage of consumers wanting to return to an activity within 3 months of reduced COVID spread
Source: Harris Poll, wave 40 (November 30-December 4, 2020)
SB Friedman Development Advisors
Questions
16
SB Friedman Development Advisors
COVID 19’s impact on downtowns and main streets
Placemaking: Social hub Active and varied uses Comfortable and safe Accessible or central
SB Friedman Development Advisors
Post-COVID, more people are likely to work from home some days of the weekClass A Office: What might happen?
18
Working from home at least one full day per week, pre- and post-COVID, by industry
Source: Survey of Business Uncertainty conducted by the Federal Reserve Bank of Atlanta, Stanford University, and the University of Chicago Booth School of Business
SB Friedman Development Advisors
Homebuyers are willing to increase purchase prices, but desired amenities have changed minimallyResidential: What’s happening now
19
Change in desired home amenity features, July 2020
Source: Realtor.com, July 2020
SB Friedman Development Advisors
Retail overallNon-store retailers
Sporting goods, hobby, instrument, & book stores Building material & garden supplies dealers
Grocery stores Health & personal care stores
Furniture & home furnishing stores General merchandise stores
Electronics & appliance stores Department stores
Gasoline stations Food services & drinking places
Clothing & clothing accessories stores
Discretionary purchases and entertainment are down, while home improvement and hobbies are upRetail: What’s happening today?
20
Percent change in select types of retail and food sales (July 2019 to July 2020)
Source: US Census Monthly Retail Trade data, August 2020 dataset
2.4%
23.4%
17.6%
15.4%
10.8%
4.3%
1.3%
1.1%
-4.9%
-15.7%
-16.9%
-19.4%
-23.1%