Developing a Comprehensive Niche Retail Attraction Strategy

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Developing a Comprehensive Niche Retail
Attraction Strategy
Hudson Valley Main Street Summit
Larisa Ortiz Associates Advisors in Commercial
Corridor Revitalization Market Analysis
Strategic Planning Retail Development
Strategies
October 17, 2008
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Experience

• Over 15 years of dedicated experience in
  commercial corridor revitalization
• National and international experience in downtown
  and neighborhood commercial corridor
  revitalization
• Public, private and non-profit sector experience
• Area of Expertise
• Trade Area/Market Analysis
• Strategic Planning and Program Establishment
• Retail Attraction/Retention Strategies
• Event Management
• Feasibility Analysis

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Presentation Agenda

• Underlying Retail Principles that Inform Niche
  Retail Attraction Strategies
• Case Study New Rochelle Analysis and
  Recommendations

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II
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New vs. Traditional Commercial Corridor
How are these commercial districts different?

• Single-owner Lifestyle Centers

• Traditional Commercial Corridor

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New vs. Traditional Commercial Corridor

• Whats Different
• Individual buildings, individual ownership
• Less familiarity or comfort with sophisticated
  leasing structures (i.e. percentage rent)
• On-street parking/limited parking
• Whats the Same
• Need to ensure businesses are profitable
• Competition for the same customer
• Competition for some of the same retailers
• Customer expectations of adequate goods/services
• Need to set the stage by creating an attractive
  environment for retailers

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Retail Principles

• Attracting retail requires an understanding of
  retailer concerns and a willingness to address
  them in a comprehensive manner

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Retail Principles
Source ICSC, 2004. Developing Successful Retail
in Underserved Urban Markets

• Retailers Concerns As Ranked by ICSC Survey
• Crime/perceived crime
• Weak market demand (perceived or real)
• Theft or shrinkage
• High rents
• High build out/rehabilitation costs
• Difficulty identifying sites
• Inadequate parking
• Higher operating costs
• Higher construction and development costs
• Lack of amenities to attract out-of-neighborhood
  employees

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Retail Principles

• Characteristics of a Successful Neighborhood
  Commercial Corridors
• Critical mass of retail stores (Density/proximity)
  
• Balanced retail mix (complimentary/comparison
  goods)
• Visitors are able to find and purchase the goods
  and services they need, when they need them
  (merchandise mix, hours of service)
• Existing, captive market (housing density)
• Visitors feel safe and secure (clean and safe)

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Retail Principles

• Co-Tenancy
• Tenants require a critical mass of favorable
  tenants of a specific type and character to
  create the synergies necessary for success

Home Furnishings
Ladies Apparel
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Retail Principles
Does your district benefit from co-tenancies?

• Co-Tenancy on Commercial Corridors
• Replacement needs (supermarket, drugstore, dry
  cleaner, fast food)
• Restaurants/cafes and entertainment uses
• Restaurants/cafes and unique retail
• Comparison retail
• Jewelers
• Ladies apparel
• Shoes

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Retail Principles
What kind of customer are you attempting to
attract?

• Strategic Positioning
• Defining a customer and income segment
  high-end, moderately-priced, value
• Leasing decisions reinforce the strategic mix of
  existing stores
• Covering the basics in commodities and categories
  for every lifestyle segment
• Position like retailers in close proximity
• Finding retail gaps and filling them

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Retail Principles
What businesses that are right for your corridor?

• Defining what kind of retail makes sense on your
  corridor.
• Neighborhood Commercial District
• Convenience retail
• General Commercial District
• Convenience retail specialty retail
• Regional Commercial District
• Specialty retail, entertainment and lifestyle
  uses

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Retail Principles
Principles in Practice

• Improving the Existing Business Mix

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Retail Principles
Principles in Practice

• Using trade area to define retail opportunities

Disneyworld
Destination/Regional 30 min
Department Store/Big Box Retail
Comparison/General 15-30 min
Specialty Food Store
Drugstore
Convenience/Neighborhood 5-10 min.
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Retail Principles
Do you have the right residents?
Do you have the right kind of space?
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Retail Principles
Principles in Practice

• Tenant Specific Research
• Do you have the right people?
• Einstein Bros. Bagels ?70 some college education
• Mandees ? trendy young women with mod/low
  incomes
• Do you have enough people?
• Auntie Annes ? 30 pp. every 5 minutes during
  off-peak
• Do you have the right space?
• CB2 ? 6,000 9,000 sf stores targeting young
  professionals
• Fresh Easy ? 14,000 sf store
• Pinkberry ? 600 1,600 sf

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Retail Attraction
Principles in Practice

• Where do you find tenant specific information?
• Websites
• Tradeshows
• Brokers/Leasing Agents
• Regional Real Estate Reps
• Networking

Starbucks Booth at an ICSC Tradeshow
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New Rochelle Project Overview
Principles in Practice

• Niche Retail Analysis
• Assessment of Existing Conditions
• Trade Area Analysis
• Interviews
• Property Owners
• Business Owners
• Institutional Stakeholders
• Niche Opportunities and Recommendations

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New Rochelle Existing Conditions Analysis

• Strengths
• Strong, stable business improvement district
• Successful façade improvement program
• 20 Façade Restoration Projects Completed
• New businesses and promotional events
• 17 New Businesses created
• 4 major promotional events established
• New retail - Target, Kohl's, and Barnes and Noble
  affirm downtown retail viability

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New Rochelle Existing Conditions Analysis

• Opportunities
• Growth in downtown residential population
• 165,000 sq. ft. of New Residential and Commercial
  Space
• Approx. 1,400 new luxury apartments
• A critical mass of stores selling home related
  products
• A critical mass of restaurants that distinguish
• New Rochelle is already know as a local foodie
  destination

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New Rochelle Existing Conditions Analysis

• Challenges
• Persistent negative perceptions of Downtowns
  economic recovery
• Proliferation of storefront vacancies
• Disjointed broker community
• Accessibility constraints
• Low pedestrian foot-traffic
• Inability of existing businesses to articulate
  regeneration efforts

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New Rochelle Existing Conditions Analysis

• Existing Vacancies
• Approx. 100,000 sf of vacant retail

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New Rochelle Existing Conditions Analysis

• Existing vacancies inconsistent hours

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New Rochelle Niche Opportunities

• The analysis considered four key niches
• College Goods and Services
• Weddings Goods and Services
• Hospitality (Dining, Shopping Entertainment)
• Home Goods

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New Rochelle Niche Opportunities

• College Goods and Services
• Limited Opportunities
• College administrators seeking to work
  collectively with BID
• 4,651 student boost untapped market
• Store with cross-over-appeal
• Barriers
• Commuter v. Four Year University
• Differing purchasing needs among students
• Not convenient to larger student population

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New Rochelle Niche Opportunities

• Wedding Goods and Services
• Opportunities
• Concentration of Wedding Reception Venues
• Stationary and Tuxedo Stores
• Concentration of Hotels
• Barriers
• Time consuming niche to develop
• Market saturation along New Rochelles North
  Avenue
• Preferred wedding consultants and space list

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New Rochelle Trade Area Analysis

• Retail Leakage
• Capture Rate 15

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New Rochelle Trade Area Analysis

• Retail Leakage
• Capture Rate 15

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Niche Analysis Recommendations

• Hospitality and Restaurants/Entertainment Niche
  offer the greatest opportunity for growth and
  development
• A critical mass already exists in these business
  categories that serves to jump start the BIDs
  Retail Niche Attraction Plan

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Restaurants/Entertainment

• Locally-based retail recruitment to improve mix
  of downtown dining options
• Fusion/Asian
• Ice cream or Dessert Café
• Sushi
• European Bistro

• Strengthen marketing outreach to new downtown
  residents
• Support for entertainment activities within
  eating establishments or in vacant retail space
  (Chashama)

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Home Goods

• Focus on Value Based Home Goods
• CB2
• Design Within Reach-The Annex Outlet Store
• Fishs Eddie
• Straight From the Crate
• Jennifer Convertibles
• Laytners Linen Home
• Gracious Home

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General Organizational Recommendations

• Getting the Niche Businesses Organized
• Establish Restaurant/Entertainment and Home Goods
  sub-committees
• Include downtown residents, property owners,
  developers, businesses, institutions, and other
  stakeholders
• Create yearly and monthly work plans
• Use this study to turn local brokers and property
  owners into agents of the niche strategy
• Convene coordinated broker tours of niche related
  retailers
• Host joint sponsored quarterly broker breakfast
  meetings Educate existing property owners,
  businesses, and downtown residents on attraction
  strategy

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Immediate Programmatic Activities

• Engage in targeted promotion and branding of
  downtown niches
• Share business success stories with the media
• Coordinate positive messaging from existing
  business-owners
• Collaborative marketing efforts
• Consider options to incentive-ize the broker
  community
• Engage a consultant in targeted retail prospect
  identification
• Identify and target retailers (both national and
  local) whose business model is not wholly
  dependent on foot-traffic.
• Canvass local business districts for non-national
  retailers
• Prepare targeted marketing packets for each nich

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Immediate Programmatic Activities

• Work with local property owners to improve the
  physical appearance of existing vacancies
• Funding should be provided for façade improvement
  and temporary displays in the windows of existing
  vacant storefronts.
• Promote the unveiling of these storefront
  displays
• Activate existing vacant retail space through
  lively and temporary arts/culture uses
• Provide arts organizations and local artists
  temporary access to vacant commercial space free
  of charge to create lively exhibits that can
  increase downtown pedestrian traffic.
• One such organization is Chashama
  , led by Anita
  Durst

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Immediate Programmatic Activities

• Allow for the flexible use of loan and/or grant
  funding to help underwrite niche retail expansion
  goals
• Assist niche businesses with signage upgrades,
  tenant-interior improvements, or rent subsidies.
• Improved parking signage and payment procedures
• Current downtown parking situation is exacerbated
  by the lack of clear directional signage.
• Customers who do patronize the current municipal
  lot behind Main Street complain that the payment
  procedure is inconvenient and the meter is poorly
  located, making it necessary to climb over a
  metal car barrier to find the quickest route to
  Main Street.

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Long Term Recommendations

• Develop a long term parking strategy
• Accommodate 100,000 sq ft of new retail space
• Commercial lenders 3.5 to 4 spaces per 1,000 sf
  (up to 400 spots)
• New York City CBDs 1.5 or 2 per 1,000 sf (up to
  200 spots)
• Identify convenient parking easily accessibility
  to retailers front doors
• Locate new garages or surface lots on secondary
  streets to protect prime retail real estate
• Improve visual impact of Downtown
• Make infrastructure upgrades (streetscape)
• Reorient train station to Main Street New
  Rochelle
• Continue to put more feet on the street through
  upper story residential units and larger-scale
  housing projects

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Long Term Recommendations

• Strengthen downtown arts and cultural activities
• Determine the feasibility of a black box
  theater
• Encourage artists related upper story live-work
  space

Chashama OASIS 2008
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Recommended Niche Hospitality

• Abate parking issues
• Create way-finding signage to better identify
  parking options
• Install lighting system and security cameras at
  public garage
• Identify hospitality-based businesses and
  specialty retailers
• Gourmet food grocer with grab and go take-out
• Causal cafes and bistros and upscale dining
  options
• One-of-kind unique boutique shops
• Targeted Activities
• Leverage the BIDs palette of promotional events
  such as Taste of New Rochelle
• Establish a Prix Fixe event among downtown
  cafes
• Engage Annual Zagat Restaurant Review and wider
  distribution of the BIDs Guide to Downtown
  Dining
• Cross promote existing arts and cultural
  programming with downtown restaurateurs

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Recommended Niche Home Goods

• General Recommendations Home Goods
• Identify other home goods-related businesses to
  expand the niche
• Develop targeted recruitment strategy for design
  professionals to support upper story occupancy
• Targeted Promotional Activities
• Capitalize on the success of the Designer
  Showcase to encourage other special home goods
  events
• Brand downtown as a Value Based district
• Create a referral system among home-goods niche

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Blueprint for Investment

• Clear, concise menu of investment opportunities
• Matching funds for joint niche marketing
• Identify funds to support a box theater project
• Retail consultant for targeted prospecting
• Flexible loan fund in targeted area
• Parking signage
• Programming to fill vacant storefronts (street
  sales, window display events with local artists
  or local retailers, etc)
• Commission-based incentives for brokers who
  attract niche based businesses

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Larisa Ortiz Associates Advisors in Commercial
Corridor Revitalization 37-43 77th Street, 1st
Floor Jackson Heights, NY 11372 P (917)
696-1374 F [phone]