Hi All,

Here’s a teaser and a link to an article of mine that was recently published in the American Downtown Revitalization Review –The ADRR : How Many Residents Does it Take to Create New Functionally Diverse Downtowns – How to Think About Allocating Scarce Resources to Get There? Adding more housing to our downtowns is likely to be far more complicated than just converting outmoded office buildings, and many of its anticipated positive benefits won’t happen without a proper strategic approach.

The Challenge[1]

The recent strong impact of remote work in our large downtowns on how many office workers show up in their workplaces has sparked calls for the central business districts within them to be made far more multifunctional. Housing, in particular, has been highlighted as the function most in need of buttressing. On one hand the housing is seen as a possible replacement for unwanted office spaces, and a way to save outdated buildings while recapturing  lost real estate capital values and rental and tax revenues. However, the main focus in this essay will be on another reason to increase downtown housing offered by advocates of greater downtown multifunctionality: the ability of more housing to improve and strengthen how our downtowns function. The inherent aim is to make our downtowns more magnetic places for people to live, relax, play, and connect. It is an objective consistent with strongly improving the balance between a downtown’s Central Social Functions and its Central Business Functions.[2] When both are strong we have our strongest and most magnetic downtowns. 

The owners of downtown office buildings are doing what is economically rational for them to do, to try to regain market share and recapture value. That’s fine, especially since academics are foreseeing a destruction of $413 billion in office values nationally in the near future.[3] Downtown managers and city governments have different objectives. Most importantly, they have responsibilities for the well-being of  our entire downtown. They are the ones whose job it is to think strategically and propose needed interventions and incentives that may vary across the geographies of the downtown. Since resources for adding housing are bound to be limited, it is imperative that they have a well-grounded strategy to guide housing growth. Their attention needs to focus on downtown housing in a manner that goes well beyond just the conversion of outmoded office buildings, and to push the interests and concerns of the whole downtown community to the forefront, not just those of troubled property owners. The discussion below covers a number of analytical points and research findings that should help them formulate the needed well-targeted strategies.

An interesting question that currently is getting too little attention is how these two reasons for more downtown housing are related: will the conversion of outmoded downtown office buildings to residential uses necessarily make their surrounding areas better places to live and play? How many new units are needed to significantly lift downtown foot traffic and shopper spending, while reducing visitor fear of crime? Does it make a difference where the new housing is located within a downtown?

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[1] I want to thank Mark Waterhouse for his great editing of this article, and to Paul Levy, Richard Florida, and Andy Manshel for their very helpful comments on an earlier draft.

[2] For more about downtown Central Social Functions and Central Business Functions see: https://www.ndavidmilder.com/2021/12/a-search-for-a-clearer-and-more-useful-vocabulary-for-talking-about-and-analyzing-downtowns

[3] Gupta, Arpit and Mittal, Vrinda and Van Nieuwerburgh, Stijn, Work From Home and the Office Real Estate Apocalypse (November 26, 2022). Available at SSRN: https://ssrn.com/abstract=4124698 or http://dx.doi.org/10.2139/ssrn.4124698

Here’s the most recent post of The Downtown Curmudgeon vs The Retail Contrarian column Mike Berne and I write for The American Downtown Revitalization Review –The ADRR:

Will Retail Drive The Recoveries In Our Small and Suburban Municipalities?

MJB: So David, last time we went back and forth on the prospects for retail recovery in the more intensely-developed Downtowns of our larger metros.  How about, this time, we focus more on suburbs and small municipalities?  First, I’d like to give a shout-out to the recently retired Bill Ryan at the University of Wisconsin Extension Center for Community and Economic Development — he and his shop have done such great work over the years on these sorts of Downtowns.  Indeed, I’m eager to see what Bill has to say in response to our conversation.  O.K., so let’s get to it.  Earlier in the pandemic, there was this presumption that many of them would benefit from the rise of hybrid work and the flight from the cities to both suburban as well as second-home communities.  Certainly, there have been some high-profile brands — like Starbucks, Chipotle, Sweetgreen, Parachute Home and Faherty — stating explicitly that they would be skewing more towards such opportunities than they had in the past, but speaking more broadly, have you been seeing much evidence of this benefit on the ground?

NDM: Mike, I strongly join your shout out to Bill Ryan at UWEX!!  The State should declare him a WI Treasure!

And, of course, I also strongly agree on the small rural and suburban municipalities as our focus in this conversation. As for what I am seeing on the ground, it’s not been much since we have not traveled much outside of NYC since the beginning of the pandemic because of health reasons. That said, I have been looking via the internet into some of these towns I know around the nation and some of their managers and stakeholders, and at the store location functions of the websites of the internet born retailers like Warby Parker and Bonobos, etc. What I am seeing from those sources are that Central Social Functions venues such as food, beverage, entertainment and pamper niche operations – e.g., hair and nail salons, dance and yoga classes –are opening at a faster and larger clip than retail, and that the admittedly small sample of eight or so internet born chains I looked at still are looking at very primo suburban locations, and still not in smaller independent rural cities, in the 25,000 to 75,000 range.

Let me then jump to noting that when we start off by talking about retail chains, we immediately narrow our focus to a much smaller group of downtowns and Main Streets that have any real chance of attracting them. That in turn raises the point that knowing and accepting if your downtown can or cannot attract comparison shopping type retail chains is one of the most important things the leaders in these downtown can do. I know that for me, and I suspect for you, working with these downtown organizations when they have not accepted this reality can be very frustrating. And then even if they can attract chains it will be likely for some kinds and not others.

What I am looking for these days, more than info on the chains, are: 1) if small merchants are really learning how to utilize omnichannel marketing strategies and tools that can enable them to better connect with customers in their traditional trade areas, and to attract e-shoppers from much larger market areas, and 2) the demographic shifts in population, and creatives, to smaller towns and cities, and even some rural areas. While the media and academic focus has been on how the pandemic generates remote workers who may or may not have fled to sparser regions, I think that for retail the far more important trend is that the pandemic really accelerated the adoption and use of omnichannel strategies and tools, and filtered out a great number of operators who were deficient in these skills.

MJB: When I’m presenting on the subject, I always make sure to point out that these expansion-minded DTC’s, along with the still-healthy legacy brands, are only willing to consider a tiny subset of Class A locations.  This includes a few suburban Downtowns, though they’re almost always ones that have long been shopping destinations, and in many cases, anchored by an institutionally-owned lifestyle center, like Bethesda, MD (with Bethesda Row) or Walnut Creek, CA (with Broadway Plaza).  It is a trend with little to no relevance to 99% of the suburbs and small towns out there.

It is, as you say, all about analyzing and understanding what is and is not realistic for your retail mix.  I do think that the Downtowns in these suburban and small municipal settings — which I’ll abbreviate as SSM’s for the purposes of brevity — will be very hard-pressed to support commodity-based businesses which consumers generally patronize on the basis of convenience.  Larger cities, with their much higher population densities within walking distance and their much higher tolerance for hassle, have a greater chance of sustaining storefront grocery and drug stores, but in SSM’s, most such tenants — with the exception of Dollar General or a legacy ACE Hardware — will need their on-site parking along high-traffic arterials. In some cases, they might be able to find such opportunities on the Downtown periphery, but more likely, they’ll look to the strip corridor further out, nearer to the freeway interchanges.

A specialty positioning is even more essential in these SSM’s, then.  I’m less bearish on the potential for boutiques than most — such shops can and do exist even in the absence of fashion co-tenancy, but only when the merchant is well above-average in sophistication, savvy and resourcefulness.  This is also where your comment about omnichannel comes in — it is certainly not a silver bullet but at this point, it is table stakes.

What has struck me — though not entirely surprised me, given how these things generally work — is how so many main streets of smaller towns these days have been adopting the retail forms that originated in and are still primarily associated with the urban core.  Driving through Kansas and Wyoming last summer, I saw a lot of them with say, a third-place coffeehouse, a craft brewpub, a denim boutique,  a co-working space, maybe a parklet or two.  If the community is large enough, there might even be a small-scale food hall.  I’d be curious to know how such concepts are received in these places, as I’m not one to believe that what starts in cities necessarily reflects the preferences and sensibilities of every consumer.  Then again, there is a Central Social District (CSD) component here that seems universal…

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I invite you to sign up for The ADRR’s email edition here . It’s free, and I am sure you will find a range of very interesting content about downtown revitalization presented in a number of appealing formats. The ADRR has taken the lead in covering a number of topics: downtown safety and order; capturing community value; Central Social Functions; the conversion of offices to housing; the impacts of remote work on our downtowns, and retail recovery. 

Hi All,

Here’s a teaser and a link to an article of mine that was recently published in the IEDC’s Economic Development Journal. I think its title aptly signals its content.

Let’s Recognize and Leverage the Opportunities the Covid Crisis Has Given Our Downtowns: Some Examples

Abstract

Since the early stages of the Covid19 crisis, our downtowns, especially the larger ones, have been pictured in the media to be either in serious decline or on the verge of failure. While there have been strong analyses that refute such arguments, there has been little recognition of the fact that a robust crisis can not only be destructive and create serious problems, but also new or expanded opportunities for our large downtowns to grow and prosper. These growth opportunities also are appearing robustly in many suburban downtowns. The intent of this article is to attract attention to some of these crisis generated growth opportunities so downtown leaders and stakeholders can start to take meaningful positive active steps to help their districts recover.

Introduction

This article is driven by a deep concern that far too much attention has been paid to doom and gloom prognostications, while far too little is being paid to the opportunities the crisis has created that, if seized upon, can help our downtowns recover robustly.¹

While we need to acknowledge that we are not going to have a full return to a pre-Covid world, that does not mean our downtowns are in for a catastrophic future, for it is well known that  crises can create substantial opportunities as well as serious challenges. One reason for this failure to look for crisis-generated opportunities is that while the doom and gloom discussions have focused on the Central Business Functions (CBFs) found in our large downtowns, especially office uses, many of these potential opportunities involve venues associated with a downtown’s less appreciated Central Social Functions (CSFs). In turn, that is probably influenced by a widespread misconception that Central Business Districts and downtowns are interchangeable terms.²

Given that for well over 30 years, knowledgeable leaders and admired urbanists such as Jane Jacobs have argued against monofunctional downtowns focused on office work and use, one might suppose that this issue is long settled .³  As Mike Berne, in a recent discussion among downtown experts, stated: “Can someone tell me why the need to convert from sterile, office-only Downtowns to more diversified ones complete with residential is worthy of so many articles these days? Haven’t Downtowns been moving in this direction for a quarter-century now?”⁴ The answer seems to be that movement away from office monofunctionalism has been very slow, as the current crisis demonstrates, probably because the real estate industry continues to believe the financial highest and best use in these downtowns is office development. That was strongly reflected in NYC a few years ago by the industry’s insistence that the East Side of Midtown Manhattan be rezoned to give a strong priority to very dense office development.

Additionally, while downtown office use may be influenced by strong long term structural challenges posed by remote work and office buildings becoming outmoded because of their inability to attract tenants adopting hybrid work models, the visibility of the recovery and growth opportunities generated by the CSFs is situational, varying with the ebbs and flows of the Covid#19 virus and our ability to cope with it.  That means that at first glance these opportunities will often appear to be just potentials, or to lack credibility. However, one might reasonably argue that their persistent resurgence demonstrates a proven strength that will be fully unleashed when either the pandemic significantly ebbs, or we learn how to better cope with it.

Also, the importance of some of these CSF assets, such as housing, attractive public spaces, and strong entertainment/cultural assets, to the health and well-being of our downtowns, and even to the value of their office buildings, too often have not been properly appreciated in the past. In Europe, for example, city centers have not been as dominated by office uses as is the case in the U.S. As downtown office assets have apparently weakened, the spotlight is shifting to these other assets.

The time has come for analysts, leaders, and stakeholders to look at these new opportunities, and to start forging realistic, viable strategies and programs for the recovery and future growth of their downtowns. Moreover, these opportunities may appear in surprising manifestations. An objective of this article is to provide some examples that will encourage downtown leaders and analysts to look for other new crisis generated opportunities in their downtowns.

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As many of you may know, the Downtown Curmudgeon is also the founding editor of The American Downtown Revitalization Review –The ADRR. Since almost its inception, members of The ADRR’s advisory board have engaged in an ongoing discussion on a wide range of subjects. A subset of those discussions has been the email give and take between me and Mike Berne, who blogs as The Retail Contrarian. I’d say that we agree about 60% to 70% of the time, but its our interchanges when we disagree that we most enjoy, and from which we often learn most from each other. Recently, we decided that The ADRR would add columnists whose articles would be a regular new feature, and the first of such columns is The Downtown Curmudgeon vs The Retail Contrarian. Here’s the LINK to our first article for that column titled “Whether And How Retail Will Drive The Recoveries In Our Large Downtowns?” Our next column will look at retail in our suburbs and rural communities. 

 By the way, I invite you to sign up to receive The ADRR’s email edition. It’s free, and I am sure you will find a range of very interesting content about downtown revitalization presented in a number of appealing formats.” The ADRR has taken the lead in covering a number of topics: downtown safety and order; capturing community value; Central Social Functions; the conversion of offices to housing; the impacts of remote work on our downtowns, and keeping our downtowns activated during cold weather.