Retail Industry Isn't Entirely To Blame For Vacant Storefronts In Many Cities
Quote:
|
Quote:
People with zero to lose are always the ones ready to screw over people who have everything to lose. |
Why not just let the market determine how much ground floor retail there is? Is that so hard to figure out? If someone wants to build a highrise condo with no retail, go ahead. If enough developers pass on it, then there won't be enough ground floor retail space, and demand will increase enough that there will be an incentive for future developers to incorporate it into their building.
I wonder how many times these failing retail spaces where there is no foot traffic were not even wanted by the developers. |
This is a big problem in Seattle too.
Retail is required because people think building retail space translates to interesting streets, and have little clue abou the economics. It doesn't work for a number of reasons...most fundamentally, most buildings add far too few customers to justify their net increase of retail space. Americans use 40 sf of retail per capita, a fraction of which is non-grocery neighborhood retail, let's say 10 sf. But instead of building 2,000 sf for a 200-person apartment building, the city might require 10,000 sf. That might be fine on the neighborhood's top retail street if 20% of buildings have that requirement, but it's a disaster if required on every street. It creates empty retail and poorly-used retail, while also taking customers away from the main retail street. The ceiling height and depth points are important too. In Seattle the requirement is about frontage. Rents won't cover costs and ground-level space is needed for other things, so developers minimize the square footage by only putting it in front. So you get retail lite. The low ceilings are often due to height limits...a 40' building height means you can fit three residential levels above one retail level, if the retail is maybe 11' max, minus the ceiling-to-floor for a celing of 10' or so, and exposed mechanical systems below that. It's better to lose money on the retail than drop a level from the building so your retail will be a little less crappy. |
Quote:
|
Quote:
|
Let's say 10% of the building is unwanted retail. Eventually it goes to nail shops and an insurance guy (if considered "retail" enough by code) for half the price needed to justify building it. So what, right? The developer knew that would happen.
But that means the 5% has to be made up by the residential rents. Or said differently, they won't build unless the market is tight enough that they predict rents will be high enough. It's effectively a 5% increase in all local apartment rents. People contend that this is helpful for retail, and opens the door for other retailers. But mostly it seems to be the nail salons (which can operate with nearly zero overhead) and equivalents. A 50% rent cut might be a 10-20% drop in overhead...great except being on a side street might mean 50% less business. As for that potential to fine landlords...there's another reason not to build housing until rents rise due to lack of supply...in other words, holding out until the added rents make the bet worthwhile. |
Problem here in Miami too but I think the main problem is so many developers half-ass the retail portion. As the article states, they deliver spaces that are too small, with too low ceiling heights etc. The developers make their profit off the condo sales with the retail being a huge after thought just thrown in to satisfy zoning requirements.
|
In spite of the fact this article singles out San Francisco for criticism, in one of the city's newest neighborhoods they seem to be doing a better job. In Rincon Hill and vicinity, partly on land formerly taken up by freeway ramps leading to the Embarcadero Freeway that has been torn down, they are building high rise housing everywhere but they have designated a single street--Folsom St.--as the "shopping" (or "high") street of the new neighborhood and requiring round floor retail only there. Seems a better approach.
This is the neighborhood as it was maybe 12-18 months ago. In the center is the intersection of Folsom, the designated shopping street, and the Embarcadero. More towers are now partly constructed on the right side of Folsom in this view (you can see a bit of dirt on the sites peeking through). https://michaelleepicsnycdotcom.file...-1600x1037.jpg https://www.google.com/search?q=Rinc...hWyu1ppgWamoM: Here is a diagram. Folsom is shown in black. Pretty much all the proposed towers shown here are built or under construction: http://ww2.hdnux.com/photos/10/17/26.../9/920x920.jpg http://www.sfgate.com/news/article/R...ng-3301994.php |
Quote:
|
Quote:
While I agree that there is far too much unsuitable retail space being built, not sure this is the answer either. Even in areas with more than sufficient foot traffic condo developers may often wish to forgo retail that would be profitable as it simply adds extra complications to the ownership model. Also there areas which may have sufficient demand in the future but won't for some time. Once the building is passed over to the condo corporation though the original developer doesn't really care (not a slight, why would they?). By the same token simply requiring retail space in every building leads to unsuitable spaces that can end up vacant. I think the answer is a mix of oply requiring retail spaces fronting main / designated retail streets / areas and ensuring they meet a minimum specification (frontage, clear height, etc.). In other areas you can leave it up to the developer. I'm pretty much talking about condo development only - the same is not necessarily true for managed large scale rental apartment or office buildings owned by a REIT or investment group. Retail can become a lot more desirable then. |
Quote:
|
As mhays points out, that's treating ground floor retail like social housing (legally imposing something that's money-losing); obviously the costs will be passed on to the residential buyers.
However, maybe it does make sense to impose it -- the arguments would be pretty similar to the ones used to force a % of social housing in new developments ("makes the neighborhood more interesting and less sterile, and if we don't force it the free market just won't do it; residential buyers are rich enough that they'll still come anyway, even if it makes their units a bit pricier"). I haven't yet taken the time to evaluate where my own position would be on this issue... except that I'm 100% sure not every street needs to have retail; it's perfectly fine to have residential neighborhoods. In areas that are already known for ground level retail and who would likely drift away from that due to market pressure, that's where I'm on the fence and see arguments for both sides. |
Quote:
I can think of at least two main streets in my hometown where ground level retail -- every building in those areas had it -- has had a hard time when the automobile became popular (segments of streets that used to be very busy, and where nearly everyone now drives past the buildings on their way to somewhere else) and now it's nearly all converted to residential. It's a self-reinforcing loop obviously. There are barely any pedestrians to be seen in those areas anymore and it's been the case for at least a couple generations (and likely more). Pretty sterile and uninviting. To top it off, the ex-retail street level apartments' windows are often mirror-tinted for privacy and/or have bars like jailcell windows for safety. |
Quote:
|
They're paying attention to the economics. Most buildings are built by businesses.
A year or two of vacancy (if limited to that) can be better than building out a store that fails, or signing a six-year lease at half price. |
Quote:
Retail has been the defacto method for activating streets but that method has led to a glut of available space. Cities are now struggling with how to create street activity by other means and I truly think that the activity will be organic and highly specific to the city and location, so planners will not have some formulaic solution. Continuing the require retail is only going to exacerbate the problem. |
Seattle has allowed "live/work" units in some locations where it's the most clear that retail won't work. These are often two-level units (fit into 16' perhaps) set back slightly from the street, with a two-level room out front. However there's not much demand for live/works and many aren't in great locations. So they don't rent until the prices are cut substantially. And when they do, they're generally residential only. It turns out that people don't like having living room doors that open right onto commercial, semi-commercial, and/or loud streets.
|
Maybe something that would work better, that doesn't require mandating things for private developers and building owners would be to build public parks/plazas that support food trucks, temporary pop up structures, markets, etc.
You could argue this is a legitimate function of local government. Creating a venue for small business activities, public gatherings, etc, that wouldn't be able to exist otherwise is one benefit. Parks and plazas are an established domain of city responsibility. It seems like the public approves of projects like these. Houston's discovery green was highly praised. And, these kinds of things can be built on parking lots or vacant land in locations which are really bad and need more activity, and then attract development on lots around them. I don't know about a place like San Francisco or New York taking this approach since there isn't room for a plaza and there's enough activity already around busy areas. For a sprawling city in Texas or Florida or a rust belt city with a lot of vacant lots or ruined buildings downtown I believe this is a good solution for their lack of appealing urban spaces. Also there's something democratic about a public space and the process of creating it and managing it which is different from the process of mandating the shape and function of private spaces to fulfill similar roles. |
Quote:
https://s3-media1.fl.yelpcdn.com/bph...A9bmbwlg/o.jpg https://www.yelp.com/biz_photos/ferr...qwL3BxA9bmbwlg |
All times are GMT. The time now is 2:37 AM. |
Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2024, vBulletin Solutions, Inc.