CIVILIS CONSULTANTS1310 NW Naito Pkwy, #303

Portland, OR 97209503.867.8465

www.civilisconsultants.com

SUCCESSFUL DOWNTOWNS AND MAIN STREETS

presented to

Downtown Astoria

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RETAIL CORRIDORS — AN OVERVIEW

In-cityurbanretaildistrictscanbegroupedintothreebroadcategories:emerging,transi-tion,andmature.Emerging retail districtstypicallyservelocalresidents,featurefewnationalchains,andaredistrictswithverylittleredevelopmentactivity.Transition retail districtsareevolvingandpossessahighernumberofactivegroundfloorbusinesses.Therealsoarealargernumberofimprovedbuildingsandthesedistrictscanoftensup-portnewconstructionintheirlaterstages.Mature retail districtsexhibitsteadysalestrendsandgenerallybenefitfromhighfoot-trafficcounts.Maturedistrictsoftenhavealargenumberofnationalchainsandexhibitaveryhighlevelofretailsophistication.

Thetypesofretailerswhosucceedinthefirsttwostagesofretaildevelopment—emerg-ingandearlytransitionretaildistricts—aredestinationbusinesses.Destinationpurveyorsdonotdependuponfoottraffictodrivetheirsales,insteadtheydrawtheirclientsfromawidergeographicareathanjustthelocalneighborhood.Theirvisitsareusuallypartofaplannedtrip.Thesuccessofthesedestinationshopsbecomesthestablebaseuponwhichacommercialdistrictcanrevitalize.Asacommercialareabecomesmoremature,ittendstobeabletosupportmoreimpulseretailers,orboutiquesthatsellitemsthatbuyerspurchasewhenshoppingasanactivity.Anothercharacteristicofadistrictthatismovingfromthetransitiontomaturestageisthatitcansupporthigherdensityresidentialconstructionwithoutpublicsubsidy.

Asanexample,let’slookatNorthMississippiAvenueinPortland,Oregon,whichhasrevitalizedrapidly,inpartduetoitssix-blocklength.Itisclearthatthestreetmovedintothelatestagesofatransitiondistrictonthebacksofdestinationretailers.Outofthe32retailersthatpopulatedthestreetinthefirstthreewavesofdevelopment,27weredes-tinationretailers.Itwasnotuntilthefourthwaveofdevelopmentthattherewasashifttowardimpulseretail,when8outof13newbusinessconceptswereimpulseretailers.Throughthefirstfourwavesofredevelopment,justover9%ofthedestinationretailersultimatelyclosedtheirbusinesses,whileroughly30%oftheimpulseretailerswentoutofbusiness.

What Is a Destination Business?

Destinationconceptsareonesthatsucceed,notduetofoottraffic,butduetoattract-ingpeoplefromawiderareathanjustthelocalneighborhoodforthespecificgoodsandservicesthatthebusinessoffers.Inotherwords,destinationpurveyorsofferaspecialserviceorproductthatpeoplewilltraveltoobtain.Ingeneral,thesebusinessesdonotcarryitemsthatpeoplejustcasuallywalkbyandimpulsepurchase.

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Examples of Destination Retailers:

FoodService(Restaurants,BrewPubs,etc.)•DaySpa(Massage,Facials,Steam/Sauna)•WellnessCenter(Naturopaths,MassageTherapists,Acupuncturists)•FabricStore•KnittingStore•MusicalInstrumentStore•SpecialtyPaperwithPrinting•BirdfeedSupply•Eyeglass/Optometrist•ComicBookStore•HairSalon•SpecialtyPetSupplies•NailSalon•SpecialtyLightingStore•SpecialtyBikeStore•LargeItemFurnitureStore•ArtGallery•

FoodServiceisthemostsuccessfulandimportantdestinationbusinessinemergingandtransitiondistricts,butotherdestinationretailers,suchastheexamplesonthislist,areneededtoroundoutthedistrictandprovideitwithactivatedstorefronts,exposure,andclientssothatitcangrowtowardbecomingmorestableandeconomicallyviable.

What Is an Impulse Business?

Thistypeofbusinessischaracterizedbyboutiquesthatcarryitemsthatpeoplepurchasewhenimpulsebuyingastheypursueshoppingasanactivityuntoitself.Impulseretailde-pendsheavilyuponhighfoot-trafficcountsandacriticalmassofotherimpulseshoppingconceptsnearby.Typically,youseethelargestconcentrationofimpulseretailinmatureretaildistricts,andsomeintransitionretaildistricts.

Examples of Impulse Retailers:

ClothingStore•CandyShop•GiftShop•CardShop•MusicStore•IceCreamShop•

Housewares•Bookstore•MakeUpStore•JewelryStore•CandleShop•

Impulseretaildependsuponahighlevelofretailsophisticationtobesuccessful.

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Tips for Downtown and Main Street Retailers

VISUALAPPEAL.Theexteriorofthebuildingmustbeattractiveandenticingtothe1.eye.Usecolor!

EXTERIORLIGHTING.Theexteriorshouldbewelllitsothateveningandwintervisi-2.torsfeelsafeandwelcome.

STOREFRONTDISPLAYLIGHTING.Lightingaboveandinsidethestorefrontwin-3.dowsiscriticaltomakingiteasytoseeinsidetheplaceofbusinessduringtheday.

INTERIORLIGHTING.Interiorstorelightingisveryimportant.Yes,itisexpensiveto4.operatespotlightingeverywhere,bothfromafixtureandongoingoperationalper-spective.But,amixofdirect/indirectfluorescentwithmoreexpensivespotlightingthathighlightsattractiveinventorycanmakeahugedifference.

RETAILCLARITY.Adriverorapedestrianshouldbeabletolookatastorefrontand5.easilytellwhatabusinessisofferingwhentheyglanceinthedirectionofthestore.Thisisaccomplishedwithoutdoordisplays,storefrontwindowdisplays,signs,andappropriatestorefrontwindowlighting,asdescribedabove.

SIDEWALKACTIVATION.Outdoorand6.sidewalkactivationisalmostirresistible.Youdon’twantapristinesidewalkenviron-mentdevoidofornamentationoractivity.Sidewalktables,art,planterboxes,opendoors,andsaleitemsareallwonderfulvisualcuesthattellpeopletostay,toenjoy,toshop.

CASHANDCARRY.Allretailers,espe-7.ciallythosethatselllarge,big-ticketitems,shouldhavesomeinventorythatissmallandsuitableforwalk-inbrowsingandpur-chasing,contributingtoastrongpedestrianshoppingenvironment.

LEVERAGETHEMES.Businessesshouldbelookingforwaystoincreasetheprofile8.oftheirindividualbusinessandthedistrictthroughprogramming,events,andclasses.Thisshouldbeoccurringonabusiness-by-businessbasisallthewayuptodistrict-wideevents.ThisbringspeopletoyourdowntownorMainStreet,createsidentity,andgivesreasonforpressoutletstowritestoriesaboutyourdistrict.

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TENANT AND SPACE PROFILESEMERGING AND TRANSITION DISTRICTS

Foremergingandtransitiondistricts,thevastma-jorityofpotentialtenantsarelocalbusinesspeople.Generally,intermsofcreditworthiness,yourbestcasescenarioasadeveloperorpropertyowneristoattractatenantopeningasecondorthirdlocation.Occasionally,youcanlureregionalchaintenants,suchasanUmpquaBankbranch,oraBishop’sBarberShop.Localretailersdonotmakedecisionsbasedontheultimate$/SFthatcanbegeneratedwithinadistrict.Instead,mostofthemworkback-wardsfromtheirbusinessplantocomeupwithamonthlyrentthattheycanafford,thentheytryandfindaspacethatissuitable.

Priceisthesinglebiggestdriverfordestinationtenantsthatareabletotakeariskonanemerg-ingdistrict.LocaltenantsinPortlandtypicallywanttokeeptheirrentexpensesatbetween$1,500to$2,000permonth.Asanareashiftstowardbecomingatransitiondistrict,andthereforebecomesmoreexpensive,theidealsizedspaceshrinkstoreflectthesesamedesirestokeepcostsbetween$1,500to$2,000permonth.Forinstance,whenrentsonNMis-sissippiwere$12/SF/Year,thespacesmostindemandwereroughly1,500squarefeet.Whenrentsapproached$18/SF/Year,theidealspacesizeshrunkto1,000squarefeet.

Irecommendthatdeveloperscreatespacesthatareroughlydivisibledownto900SFbecauseitallowsformaximumflexibilitysothatalandlordmayaccommodatethewidestpossiblepooloftenants.Typicaldimensionsthatworkwellincludespacesthatare15to25feetwideand50to75feetdeep.Whilehistoricbuildingsareparticularlypopular,ifnewspaceisdevelopedproperly,itcancommandarentsimilartoanhistoricbuilding,withtheaddedadvantageofhavingtheseismicratingneededforlargerrestaurantsthatrequireanassemblyoccupancydesignation.

ThedesignofnewgroundfloorspacesindowntownandMainStreetenvironmentsshouldincludegenerousstorefrontwindows,highceilings,andexposedbeams,eveniftheyareGlulam.Intermsofexterioraesthetic,amodernlookcanbeabsorbedwellbythetenantclassfoundinemergingandtransitiondistricts,butanydesignthatmirrorsthatofsuburbanofficeparksormallsshouldbeavoided.

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Inemergingandtransitiondistricts,rawspaceismoredifficulttoleasetotenantswhoareopeningtheirfirstbusinessandhavezeroexpertiseorexperiencemanagingabuild-out.Often,inlieuofatenantimprovementallowance,adeveloperofnewretailspacewillneedtobepreparedtoofferwarmshelldelivery,includingframing,sheetrockthatistapedandsanded,andprovidingabathroom.

AnoteonNNNexpenses:redevelopedspacecanhaveanadvantageovernewcon-structionifanexistingbuildinghasalowertaxbasisbecausethatbuildingcanchargealowerNNNfeethannewconstructionprojectsthathaveahigherassessedvalue.Sincelocaltenantsmakedecisionsbasedonoverallmonthlyrentexpenses,highNNNexpensescancauseaprojecttohavetolowertheirbaserenttocompensate.

Additionally,inemergingdistricts,developersandlandlordshavetobewillingtoconsidergrossleasingwhentenantsophisticationislow.StartupbusinesspeoplewhoarenewtorentingcommerciallyaredeeplydistrustfulofNNNleases.

Lessons from Successful Downtowns and Main Streets

DESTINATIONVS.IMPULSEBUSINESSES.Emergingandtransitiondistrictsneeda1.solidbaseofactivedestinationbusinesses.

RESTAURANTS.Foodserviceiskeyto2.makingadistrictadestination,particularlystaplesthatbecomeneighborhoodhang-outs:bakery,breakfast/lunchdiningop-tions,pizzaplace,andacoffeeshopareallexamples.

STRENGTHENNODES.Focusimprove-3.mentonareasthatarealreadyactiveandengaging,thenworktoconnectthem.

TENANTFORVALUE.Tenantingtocreateplaceandgroundflooractivationresultsin4.long-termvalueforalldowntownstakeholders.Loweringrentinitiallytogetthecor-recttenantuseinthedoorisaprovenstrategythatworks.

WALKABILITY.Everybusinessandeverybuildingshouldcontributetoavibrantand5.activeenvironmentforpedestrians.

SPACESIZEANDFINISH.Highceilings,woodfloors,exposedbrick,dramaticwin-6.dowlines,andoldworldcharmareallvaluable.Don’tmakespacestoobig.Flex-

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ibilityisamusttoappealtothewidestpossibletenantpool.Spacesdivisibledowntoabout900SFareideal.

CONNECTIVITY.Blanksinadowntownormainstreet,whethertheybevacancies,7.emptylots,orinwardfacingofficeorindustrialuses,killaretaildistrictandloweritsabilitytogeneratesalesandfoottraffic.

PROMOTE,PROMOTE,PROMOTE.Eventplanning,largeandsmall,isahugepart8.ofcreatingcivicidentityanddrivingtraffictotheexpertiseofferedbypassionatelocalbusinessowners.

WIDESTAKEHOLDERINVOLVEMENT.Activeandconnectedbuildingowners,9.propertyowners,publicsectorofficials,andresidentscandevelopandimplementstrategiestoeffectivelyplanevents,promotethedistrict,andcreateplace.Strongrelationshipsarethekeytotenanting,tocreatingcommunityfabric,andtospurringsuccessfulrevitalization.