Main Streets and TOD post-COVID - ILCMA€¦ · TOD and entertainment district strategies Support...

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?


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


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


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


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)


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


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


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


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


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

https://coronavirus.illinois.gov/s/resources-for-business


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


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


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)


Questions

16


COVID 19’s impact on downtowns and main streets

Placemaking: Social hub Active and varied uses Comfortable and safe Accessible or central


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


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


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%

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