Rob Steuteville, the editor of CNU’s journal Public Square, recently interviewed David Milder about his article in The ADRR, Strong Central Social Districts: The Keys to Vibrant Downtowns. The interview was published on the Public Square website in two parts, on August 17th and 23rd. David thanks Rob for his great questions that helped him explain more fully CSDs and their importance.
Save the date for: Bringing Back Downtown Retail After COVID-19
Across the nation in downtowns large and small, leaders and stakeholders are beginning to ask questions such as:
Where will retail be in downtowns like ours as we recover from this very stressful crisis?
What are the best opportunities for regaining, and possibly increasing, the strength of our downtown’s retailing?
What strategies, projects, and programs can help us achieve those potentials?
To address these critical questions, the American Downtown Revitalization Review- The ADRR – is partnering with the University of Wisconsin Madison – Extension to present an online panel discussion on Bringing Back Downtown Retail After Covid19 on:
October 6, 2021,
at 12:30 pm CST.
The focus will be on downtowns and Main Street districts in communities under 75,000 in population. The webinar is part of Extension’s Learning from the Experts series. The panel will include three nationally known experts: Michael J. Berne of MJB Consulting, Kristen Fish-Peterson of Redevelopment Resources, and N. David Milder of DANTH, Inc. Bill Ryan of UW Madison-Extension will moderate the session. Stay tuned for details about signing up for the Zoom link needed to attend.
No, We Are Not Facing a Restaurant or Retail Industry Apocalypse
By N. David Milder
An Introductory Overview.
While the economic impacts of Covid19 are culling the weaker firms in the industries that frequently occupy downtown storefronts, and permanent closure rates are probably higher than those during the Great Recession, they are not anywhere near reaching the apocalyptic levels that would involve the effective decimation of these industries and impair their recoveries. Claims of industry apocalypses seem to be the rage in recent years starting with retail before the crisis. Since Covid19’s appearance the restaurant, personal services, and arts industries have also been seen in that light – often by industry leaders who are desperate to gain public attention and win strong government financial support for their member firms.
Many of the reported closures did not reflect economic failure, but legal necessity, and these operations reopen quickly when allowed by local regulations. A more accurate view of the situation should be based on the fact, as established by a research team from the Federal Reserve, that business deaths are a normal occurrence with about 7.5 percent of firms and 8.5 percent of establishments exiting annually in recent years. They also noted that small firms account for most of these closures. The team also found that “temporary business closure is common, affecting about 2 percent of establishments per quarter.” Covid19, as many crises do, has accelerated the processes of creative destruction that were already taking root in these industries prior to this crisis. Even if the permanent closure rates prove to be relatively higher than those produced by the Great Recession, there is no evidence that they will be so strong that they will prevent vibrant recoveries.
 Crane, Leland D., Ryan A. Decker, Aaron Flaaen, Adrian Hamins-Puertolas, and Christopher Kurz (2021). “Business Exit During the COVID-19 Pandemic: NonTraditional Measures in Historical Context,” Finance and Economics Discussion Series 2020-089r1. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2020.089r1.
As the readers of this blog probably know, I have spent a lot of time and effort on identifying the components of our Central Social Districts and analyzing what makes them succeed or fail. I’ve dug deeply into public spaces, movie theaters, housing, and various other components in cities large and small.
Recently, I was asked for one article that put it all together. I realized that I did not have one, so I consequently set out to write it. That article was recently published in The American Downtown Revitalization Review – The ADRR at https://theadrr.com/
Doing the topic justice meant that it would be long, about 30 pages, and more like a monograph than an article. Readers wanting a quicker take can just focus on the first six pages. However, if you are looking for more guidance about what to do and not do, you will need to dig deeper into the article.
Some of the important things I tried to do are to establish that some components are much easier and cheaper to establish than others, and which work better in different types of downtowns. I also tried to strip away a lot of the advocacy hype about some components that too often hides the challenges involved and obscures how progress needs to be evaluated, e.g., the arts venues, while spotlighting venues whose importance still goes widely unrecognized, e.g., libraries.
Here’s the article’s tease and link:
Strong Central Social Districts: The Keys to Vibrant Downtowns
By N. David Milder
CSDs and Some of Their Frequent Components. Since antiquity, successful communities have had vibrant central meeting places that bring residents together and facilitate their interactions, such as the Greek agoras and the Roman forums. Our downtowns long have had venues that performed these central meeting place functions, e.g., restaurants, bars, churches, parks and public spaces, museums, theaters, arenas, stadiums, multi-unit housing, etc. The public’s reaction to the social distancing sparked by the Covid19 pandemic, and the closure of so many CSD venues, was a natural experiment that demonstrated how much the public needs and wants these venues. They are the types of venues and functions that make our downtowns vibrant, popular and successful. To read more click here : https://theadrr.com/wp-content/uploads/2021/07/Strong-Central-Socia-LDistricts-__-the-Keys-to-Vibrant-Downtowns__-Part-1-FINAL.pdf
We Need More Than Pollyannaish or Wishful Thinking for Our Downtowns to Recover and Thrive
We are in the midst of what many observers have called the deepest crisis this nation has faced in many decades. It has been especially injurious to our downtowns because it has necessitated massive social distancing that makes it impossible for so many downtown entities, — e.g., shops, eateries, offices, movie theaters – to function properly or profitably. In this situation, it is understandable if downtown leaders and stakeholders look for signs that their future will be considerably better. Hope is perhaps the most underestimated, yet essential ingredient of any downtown revitalization or recovery. Still, if our downtowns are to recover, we must face realities and overcome some exceptionally strong challenges, while taking advantage of any new opportunities that this terrible crisis either creates or reveals.
In recent weeks a number of articles have appeared that have been quite pollyannaish about the recovery of our downtowns based on either wishful thinking or sloppy analysis. These puff pieces may be good for instilling hope, and perhaps are even needed. However, they are no substitutes for the kind of critical thinking and contingent planning that we need to start doing now if we are to robustly recover as quickly as possible.
Will Entrepreneurial Gold Dust Really Fall to Spark Our Economic Recovery?
The Wishful Trend. One retail expert has recently written:
“When all the dust settles, the post-lockdown era should provide a boost to downtown areas, in part due to newly unemployed but highly skilled restaurant and retail workers opening new businesses in downtowns where rent prices will trend downward.
The pandemic has left millions of highly skilled workers from the retail and food and beverage industries unemployed and eager to work. Many of these people are highly motivated to start their own businesses, creating an unparalleled pool of talent and potential entrepreneurial interest.
In a recent Forbes article, Bernhard Schroeder wrote: ‘27 million working-age Americans, nearly 14 percent, are starting or running new businesses. And Millennials and Gen-Z are driving higher interest in entrepreneurship as 51 percent of the working population now believes that there are actually good opportunities to start companies.’”1
A Reality Check. However, Schroeder was citing data from the “Global Entrepreneurship Monitor United States Report 2017” published by Babson College in 2018. It must be noted that:
The GEM data are from before the swift and powerful economic decline the Covid19 crisis caused. There is no telling yet of precisely how the crisis has diminished the number of nascent firms or killed off the young firms under 42 months old that the GEM studies look at. A reliable picture of the situation may not be possible until the CARES subventions time out.
Although the 2017 Gem study found that the Wholesale/Retail sector accounted for the highest proportion of the nascent and young firms in the United States, 21% , it had not grown from the previous year and was “dramatically lower than the average of the 23 innovation-driven economies, 31%.”2 Just a year later the Gem study found that the finance, real estate and business services accounted for 27% of the new and nascent firms, while retail, at 26%, still considerably trailed the other high income economies at 36% (see chart below from the 2018 Gem study.) 3
Retail has long been a downtown storefront space use, but in pre-crisis years many downtown leaders were worried about their ability to attract and maintain retail tenants. The Gem study showed that we were not generating as many retail startups as other innovation driven economies. And that was in relatively good economic times.
The fastest growing sectors for entrepreneurship were those that involved technology and knowledge – possibly good for generating office demand , but not exactly the types of firms noted for tenanting lots of downtown storefronts.
The Millennials and Gen-Zers are among the two most economically screwed generations in living memory, so while many of them may have had an interest in entrepreneurship in 2017, even then raising capital for such a venture was probably a frequent barrier to actual entry. Many of them are so strapped for income that they are still living with their parents, and Covid19 has increased their numbers. Raising capital was probably less of a challenge for those with gig or freelance sole proprietorship, but those “firms” also don’t fill many downtown storefronts.
Most importantly, and more precisely, we don’t know how startup rates will be impacted in the sectors that are most likely to produce tenant prospects for downtown storefronts – or which sectors they might be. How the continued growth of online retail sales and their integration into omnichannel operations will play out in terms of the amount, kind and location of physical commercial spaces remains to be seen. While most pamper niche operations have low initial capital costs and relatively low operating costs so they can be reconstituted with comparative ease and speed during a recovery, there is a real question about the availability of the types of consumer discretionary spending dollars they depend on.
Nor do we know how the Covid crisis’s economic impacts will influence current and future levels of interest and intent in becoming an entrepreneur. Most importantly, we don’t know how interest and intent will be impacted in the sectors that are most likely to produce tenant prospects for downtown storefronts. The blue line in the above chart from the 2018 GEM study shows the level of people aged 18-64 who intended to become an entrepreneur within a few months. The path is upward, though it shows much fluctuation, a Great Recession climb, and a bumpy 2016-2018 ride. The red line shows the percentage of the 18-64 population who are either a nascent entrepreneur or owner-manager of a new business, e.g., between 3 and 42 months old. It dived through the start of the Great Recession and then had a mostly upward path since. Obviously, these firms benefited from a recovering economy. Unfortunately, GEM does not provide a sector breakdown. Given that the constructive destruction in the retail industry and serious problems in several parts of the restaurant industry had already appeared, there is reason to suspect that nascent and young firms in those industries were not doing as well as those in other industries.
Recent losses of retail jobs have been huge, and industry reports indicate it will continue to grow through this year, as record numbers of retail stores are closed (perhaps over 20,000), and many chains enter bankruptcy. Are more retail workers, past or present, likely to find appealing startup opportunities in this kind of retail industry than in pre-crisis years? Will other entrepreneurs find the opportunities in the retail sector more potentially rewarding and less risky as those to be found in other sectors?
The attempt to see unemployed retail workers as an asset that will convert into an above average level of new retail startups as we recover may carry with it the implication that unemployment creates a high level of job need to which heightened entrepreneurship is a response. The 2018 GEM study presents data on the number of nascent and young firms (the total TEA) that were “necessity driven (see blue line in chart below). The necessity driven firms over all the years studied steadily account for a relatively small portion of all TEA firms. While the Great Recession did increase their number for some years, overall their number did not change all that much, and never reached levels where they might spearhead startup led downtown recoveries.
B&M retail stores are taking on new functions and that may mean the skill sets of former retail employees are increasingly outdated and provide no advantage for starting up new types of retail and restaurant operations. For example, a new type of department store is appearing, — e.g., Neighborhood Goods, Showfields, b8ta – that sells curated collections of merchandise created by online birthed merchants.4 Also, the growing number of “ghost kitchens” can reduce the relevance of kitchen skills in the restaurant industry.
Restaurants, another major source of downtown tenants, also have been clobbered. Prior to the crisis many parts of this sector, e.g. casual dining, were already showing stress. The current need for social distancing and the apparent current danger of indoor dining, makes it very hard for restaurants to make needed profits. Until models for restaurants operating profitably under these conditions emerge, or the crisis significantly abates, will the sector be able to maintain the interest of entrepreneurs and its skilled workforce?
Here again the competitiveness of the opportunities the restaurant industry offers in terms of potential rewards and risks is very relevant. Restaurants have long had a very high failure rate compared to other industries – and Covid19 has certainly not done anything to diminish that fact. Also, external financing for restaurants has long been relatively hard to get, and their startup costs, if a full kitchen is involved, can be high. Self-financing during a recession and in its recovery years is also likely to be difficult.
Much is being made about the costs of store space. They typically amount to about 10% of the total sales of restaurants and various studies over the years have found that they are between 8% to 12% for most downtown merchants.5 Rents may indeed be important, but these firms have many other costs such as labor, inventory, insurance., etc., to factor in and be concerned about.
The Kauffman Foundation’s 2017 State Report on Early-Stage Entrepreneurship found that “the rate of new entrepreneurs ranged from a low of 0.16 percent in Delaware to a high of 0.47 percent in Wyoming, with a median of 0.30 percent. This considerable geographic variation certainly might also characterize the emergence of new entrepreneurs as we recover economically from the Covid crisis. It certainly suggests that entrepreneurship levels are dependent on a set on conditions, not just the cost of space, and will vary geographically with their strengths and weaknesses.
This is not to say that the recovery will not see either new downtown firms appearing or the full reopening of downtown firms that had suspended their operations. The question is how many of these startups and recovering firms can fill downtown storefronts with well activated and magnetic uses? Will they bring downtown vacancies back to acceptable levels? Will they bring customer traffic back to or above prior levels? Or will they just fill a few vacancies with drab uses that attract weak flows of customer traffic? Right now the difficulty of answering those questions is compounded by the fact that we probably won’t know the full extent and dimensions of our downtown vacancy problems until after the CARES subsidies time out, when the downtown operations then have to support themselves from “normal” type operations.
Is There a Real and Strong Startup Trend That Downtowns Can Ride to Recovery? If one goes back to some Kauffman Foundation studies about entrepreneurship in the decade or so prior to Covid19, one sees that there was not any steady trend of growing entrepreneurship. Indeed, there were ups and downs, with some concerns about it stalling or even seriously declining. 6 Covid19 may be sparking a number of startups in industries that help individuals and firms cope with the crisis, but I have not observed, or heard from professional friends, or seen any published reports that claim it is causing lots of new downtown storefront-filling firms to open. There is no data-proven strong startup trend for downtowns, especially in smaller cities, to ride to their economic recovery.
In sharp contrast, there are loads of data to show that remote work increased enormously in response to the crisis and lots of surveys that show that significant numbers of both workers and employers now think their remote work arrangements will continue on into the post crisis era. These are signs that remote work is a trend that has a good chance of lasting. There are no comparable data signals for resurgent entrepreneurship in the sectors that might occupy downtown storefronts, such as retail and restaurants.
Do We Just Sit on Our Hands? The settling of the crisis’s dust may or may not occur anytime soon. Whether it happens quickly or slowly can be pivotal. As John Maynard Keyes famously wrote “In the long run we are all dead.” The full impacts of other trend breezes such as remote work, changes in commuting patterns, and e-shopping may well take a decade or more to play out. They in turn may have big impacts on the demand for downtown storefront spaces, space uses, and occupancy rates.
What will happen to our downtowns during those years? Should downtown stakeholders and management organizations then just wait for the dust to settle and hope that new startup merchants will appear? If not, then what should/can they do?
Since it is far from certain that entrepreneurial gold dust will fall from heaven as the Covid crisis ebbs, perhaps it is valuable for downtown leaders to do some contingent development planning about what they can and will do to cultivate the types of small businesses that can tenant their district’s storefronts. Here, again, the variation in local conditions will probably mean a corresponding variation in responses. And prudence suggests anticipating a process of trials, errors, learning and adapting.
Community Supported Enterprises. For many years prior to the Covid crisis, in downtowns and Main Streets that were suffering storefront vacancies, severely weakened retail, and even food deserts, some local leaders created successful solution paths to these challenges. In our Covid economic recovery period, many other downtowns of all sizes may find these solution paths worthy of consideration. These solutions were most apt to succeed in situations where profitable operations were possible, but investors considered the rewards of entering these downtowns or Main Streets lower and riskier than the opportunities they were being offered elsewhere. Some of these solution paths are:
Using crowdfunding to help open and/or maintain businesses strongly wanted by the local community
Using Community Owned Enterprises to save and operate key commercial operations
Using local social assets, such as social clubs, to leverage business development 7
Towns buying and operating failing essential retail operations, such as groceries.
Using such business models, and any riffs upon them, may help many downtowns and Main Streets recover their vibrancy over the next few years. They may be essential components of a New Deal program to revive retail. For more information about many of these business models see The Spotlight group of articles in the forthcoming Fall Issue of the American Downtown Revitalization Review at https://theadrr.com/ that will appear in September 2020.
Creating Supportive Small Town Entrepreneurial Environments.8 While much attention has been given to the creation of Innovation Districts, this concept is so large scale and complicated that it is only really applicable to big city downtowns and neighborhoods that are present in about 349 of our cities. Our remaining approximately 19,000 incorporated places also need a supportive startup culture and environment, but one that is simpler, less expensive to create and operate, and appropriately aspirant in its growth objectives. That is especially true at a time when many, if not most, downtowns will probably be striving to cultivate their own startups to occupy their storefronts. Such a Small Town Entrepreneurial Environment (STEE) might include: social places for new and small business operators to meet and network; access to viable funding sources; effective technical assistance; joint marketing programs, and affordable spaces in reasonable condition. It basically can take many existing downtown assets, such as libraries, bars, coffeeshops, makers places, community colleges, a downtown organization that invests in businesses and has niche marketing programs, etc., to create an informal district-wide business incubator and accelerator, Libraries in particular, are emerging as critically valuable STEE assets. Unfortunately, most downtown organizations do not yet see being actively engaged in small business development and expansion as a proper role for them to play. Nor do they exhibit any comfort or skills in playing that role when they do. A contingent planning effort could focus on how downtown leaders would foster the emergence of STEEs, should the need for it arise. This will likely entail a reappraisal of the roles the downtown organization should and can play.
Small Merchant Training. The Covid crisis has reinforced the growth of two important nascent merchant trends:
Small and micro firms were weaving increased online activities with the operations of their brick and mortar stores. Customers ordering online and then picking their orders at the curb or at the storefront is one example of this.
More small merchants were tapping customers in distant market areas via their online storefronts and attending distant trade shows and fairs.
A contingent planning effort also could focus on how downtown leaders could encourage and train more of our smaller downtown merchants to use an omnichannel marketing operation that would help them to capture more sales dollars from both local and seldom before penetrated distant markets.
However, even prior to the Covid19 crisis, small merchant training has long been a challenge. In my experience, merchant training programs are often advocated, but seldom effectively implemented. The vast majority of them underperform because they ignore basic merchant needs and behavior patterns. Far too often, they want to EDUCATE the small merchants, and make them, for example, marketing savvy or bookkeepers. That can take a lot of merchant time and effort while providing them with more information than they have any need for near-term or even probably well into the future. Instead, what the merchants want is not to be taken to school, but actual solutions to their specific immediate problems. They want action steps that are credibly viable, affordable and easy to do. They don’t really want courses, workshops, or seminars. And they prefer not leaving their places of business.
Also, in my experience, many small merchants are resistant to any suggestion that they are not doing things as well as they could be done, while others find it hard to ask for help even when they badly need it. Small merchants are often small merchants because of their need for independence and a strong sense of their own efficacy.
Merchant training programs would probably be more effective if they:
Consider small merchants behaviors and attitudes as much as they do the information the program’s experts believe the merchants should learn
Give merchants access to training that is closely tied to their immediate needs, and less into making them better, more knowledgeable entrepreneurs. Blasphemously, feed them fish, don’t try to teach them how to fish. Small merchants play too many roles to be experts in all of them, and they lack the dollars to hire others to take on some of them.
When possible, facilitate merchants learning from their peers whom they know, like and respect. In turn, that means it’s very productive to identify in a downtown those merchants who can be models and mentors for other merchants, and then to leverage them.
Start off by identifying the low lying fruit that can produce the quick wins that will enable the training program to swiftly show other nearby merchants what it might do for them.
Perhaps some of national organizations such as IDA, IEDC, and National Main Street can develop such improved small merchant programs that can then be easily tailored to local conditions. Leaving their development solely to organizations such as SCORE or the SBDCs is a massive mistake. A strong need for such programs existed well before the Covid19 crisis, and will very likely far out last it.
1) Robert Gibbs. “After Lockdown, New Opportunities for Downtown Shopping Districts” at https://dirt.asla.org/2020/05/13/the-pandemic-will-lead-to-a-revitalization-of-main-street-retail/ Matthew Wagner wrote an interesting article on the Main Street Blog that also extolled our penchant to be entrepreneurs as a path to recovery, but most of the piece usefully went into the need for various things that I would associate with creating what I called above a STEE. See: Matthew Wagner,” Main Street America. Main Spotlight: COVID-19 Likely to Result in Increased Entrepreneurship Rates” June 9, 2020. https://www.mainstreet.org/blogs/national-main-street-center/2020/06/09/covid-19-likely-to-result-in-increased-entrepreneu
Contact: N. David Milder, Editor The ADRR — The American Downtown Revitalization Review 718-805-9507 [email protected]
THE CREATION OF THE AMERICAN DOWNTOWN REVITALIZATION REVIEW (THE ADRR)
There currently is no real professional journal for the downtown revitalization field. For many years, that has been strongly lamented by many of the field’s best thinkers. To remedy that situation, a band of accomplished downtown revitalization professionals are creating The ADRR. It will be a free online publication, appearing four times each year. The target date for the debut issue is now set for the June 1-15, 2020 timeframe, with the second issue aimed for the Sept 7-14, 2020 timeframe.
This ADRR is intended to be a lean and mean operation, based totally on the availability of free online resources and the time, energy and elan contributed by its authors, advisory and editorial board members, and its editor.
How to Subscribe to The ADRR
Those interested can now visit The ADRR’s website, www.theadrr.com , where, on the home page, they can sign up to become subscribers. This enrollment places the subscriber on a MailChimp mailing list so that they can receive New Issue Alerts (see below).
How Issues of The ADRR Will Be Distributed.
New Issue Alerts, containing the Tables of Contents of issues and links to their downloadable pdfs of articles are sent to subscribers via a MailChimp email blast and posted to the ADRR’s website. Each issue’s pdf files initially will be stored in a folder in ND Milder’s Dropbox account from which they can be downloaded. Subscribers can download only those articles they want to read and whenever they want to read them. The ADRR also can be found via Google searches.
The Content We Are Aiming For. Only manuscripts about major downtown needs, issues and trends will be considered for publication. They will be thought pieces and not just reports about a downtown’s programs and policies that its leaders want to brag about. Articles must have broad salience and their recommendations broad applicability within the field. The “voice” of The ADRR will be anti-puff, and very factual, evidence driven, though not dully academic. Discussions of problems and failures will be considered as relevant as success stories if, as so often is the case, something substantial can be learned from them. The ADRR will not avoid controversial issues.
Also, the focus of The ADRR will not be overwhelmingly on our largest most urban downtowns, but also provide a lot of content and relevant assistance to those in our small and medium sized communities, be they in suburban or rural areas.
Who Will Write the Articles?
Hopefully, they will be from people in a broad range of occupations – downtown managers and leaders, municipal officials, academics, developers, landlords, businesspeople, consultants, etc. — who have significant downtown related knowledge and experience.
Curated Articles and Wildflowers. Initially, the ADRR will solicit articles to prime the content pump. Once The ADRR is up and running some articles will continue to be solicited on topics deemed a high priority by the editorial board members. Each board member can select a topic to curate an article on and seek the author(s) to write them. However, there still will be a continual traditional general call for submissions (wildflowers) focused on subjects selected by their authors. All submissions, curated or wildflower, must demonstrate sufficient merit to warrant publication in The ADRR. All submitted articles will be reviewed by board members. We hope to see many submissions!
Article Length and Author Responsibilities.
There will be short reads and long reads. Articles of 1,500 to 5,000 words will be considered. Multi-part articles of exceptional merit and salience will also be considered. What counts is their quality, not their length. Authors must have their articles thoroughly proofread prior to submission. Poorly proofed manuscripts will be rejected. Guidelines for submissions may be found on The ADRR website.
Published four times per year, with a minimum of 5 articles in each issue. Given that this is an online publication, from a production perspective, the number and length of the articles is not a particular problem. However, from an editorial and content management perspective, the number of articles and their lengths can quickly become burdensome.
How It Will Be Organized.
The ADRR will be published by an informal group for its first year, with no person or group having ownership.
Editor. During the ADRR’s first year, N. David Milder has volunteered to serve as its editor.
The Advisory/Editorial Board :
Jerome Barth, Fifth Avenue Association
Michael J Berne, MJB Consulting
Laurel Brown, UpIncoming Ventures
Katherine Correll, Downtown Colorado, Inc.
Dave Feehan, Civitas Consulting
Bob Goldsmith, Downtown NJ, and Greenbaum Rowe
Stephen Goldsmith, Center for the Living City
Nicholas Kalogeresis, The Lakota Group
Kris Larson, Hollywood Property Owners Alliance.
Paul R. Levy, Center City District, Philadelphia
Beth Anne Macdonald, Commercial District Services
Andrew M. Manshel, author
N. David Milder, DANTH, Inc
John Shapiro, Pratt Institute
Norman Walzer, Northern Illinois University
Articles in our first issue that will be published in June 2020
Michael Berne, MJB Consulting, Working Title, ” Bringing Downtown Retail Back After COVID-19”
Roberta Brandes Gratz, “Malls of Culture.”
Andrew M. Manshel, “Is ED Really a Problem?”
N. David Milder, DANTH, Inc., “Developing a New Approach to Downtown Market Research Projects – Part 1.”
Aaron M. Renn, Heartland Intelligence, “Bus vs. Light Rail.”
Michael Stumpf, Place Dynamics, “Using Cellphone Data to Identify Downtown User Sheds”.
The Spotlight: “Keeping Our Small Merchants Open Through the COVID-19 Crisis”
Katherine Correll, Downtown Colorado, Inc.
David Feehan, Civitas Consulting
Isaac Kremer, Metuchen Downtown Alliance
Errin Welty, Wisconsin Economic Development Corporation.
in 2017, I published “Quality-of-Life Based Retail Recruitment” in the IEDC’s
Economic Development Journal (1). Among its main arguments were that:
Many of the new retail shops in our smaller and
medium-sized downtowns are being opened by new or returning residents
These new and returning residents are most strongly drawn
by the town’s quality of life.
There are a lot of talented people who prefer the
lifestyles offered in our small and rural communities, many of whom are now
residing in other locations.
Many will not need new jobs, or they can bring their
current jobs with them, or they will create their own new jobs.
They represent a substantial market segment that should
be targeted by downtown EDOs in our smaller and medium sized communities. Such
a program might be the most cost effective way to attract high quality
independent retail operators to these downtowns.
Over the past year, I have had consulting
assignments in a number of communities that are relatively rural and have
populations under 35,000: Auburn, Cortland, and Oneida in Central NY, and
Vinalhaven in ME. In the last few months, I also came across some research done
in Minnesota, Nebraska and nationally that, I am embarrassed to admit, I should
have found years ago, but that somehow eluded my earlier internet searches.
These studies were done back between 2007 and 2015. They and my consulting
assignments both provided new data and arguments that support the analysis I
presented in my QofL retail recruitment
article and expanded my understanding of many of the points I had made.
Rural Areas Have People in Creative Class
Occupations, But Fewer of Them.
a study published in 2007 of the
creative class in the nation’s rural counties by David McGranahan and Timothy
Wojan found that: “While in metropolitan counties about 30.9% of the workforce
were in creative class occupations, in rural counties it was just 19.4%” (2).
People Being Drawn to Small and Rural
Communities by Their QofL Assets Is Not a New Trend. The Buffalo
Commons survey of the Panhandle Region of Nebraska as well as research led by
Ben Winchester in northwestern Minnesota found that these rural areas had
“brain gains” as well as “brain drains,”
and that the incoming migrants were overwhelmingly attracted by a town’s
QofL assets. For example, the Buffalo Commons
survey found that migrants into the Panhandle’ counties were motivated by the
A simpler life, 53%
A less congested place to live, 50%
Being closer to relatives, 50%
Lower housing costs, 48%
Lower cost of living, 45%
higher paying job, 39%
Living in a desirable natural
environment, 37% (3)
Winchester’s study found that “There were a
number of factors that were important in the newcomer decisions to move:
To find a
less congested place to live , 77%
environment for raising children, 75%
better quality local schools, 69%
To find a
safer place to live, 69%
To lower the
cost of housing, 66%
To find a
simpler pace of life, (66%
To find more
outdoor recreational activities, 63%
To be closer
to relatives, 62%
To live in a
desirable natural environment, 60%
To lower the
cost of living, 53% (4)
Additionally, the study by
McGranahan and Wojan found that:
” The present analysis of recent rural development in rural US counties,
which focuses on natural amenities as quality of life indicators, supports the
creative class thesis”.
In the rural counties of metropolitan
areas, “ The creative class moves into less dense metropolitan counties in
search of a higher (more rural) quality of life; the building of a creative
class (then) creates an environment for job growth; and this leads to further
The In-Migrants Are Often Quite Skilled. Both the Minnesota and Nebraska studies found that these migrants “have significant education, skills,
connections, (and) spending power” (6). The Buffalo Commons survey found, for
example, 45% of them had skills in the
management, business, financial and professional fields. Many of them would be considered members of
the “creative class”.
However, findings of the McGranahan and Wojan study suggest that the
skill sets of rural and metropolitan creatives might differ in important
ways. For example: more metropolitan creatives had college degrees,
56.2% than the rural creatives, 36.8%. while
21.4% of the rural creatives were self-employed compared to 17.1% of the
metropolitan creatives (7).
Rural Innovation. A topic one might hypothesize is
strongly related to workforce skill sets is innovation. One useful definition
of innovation is: the introduction of
“new goods, services, or ways of doing business that are valued by consumers” (8).
A research report written in 2017 by Tim Wojan and Timothy Parker, of USDA’s
Economic Research Service found that:
Urban establishments in nonfarm
tradable industries were more likely than rural establishments to be
Innovation rates in urban and rural manufacturing
industries are very similar.
In the service industries, the innovation rates of
rural establishments are lower than those of the urban firms in the same
The manufacturing industries with the
highest rate of innovators in rural areas were pharmaceuticals, chemicals,
computers, plastics and textile mills.
The only tradable service-providing industries
with a high share of substantive innovators in rural areas were
telecommunications and wholesale electronic markets.
About 30% of metro establishments could
be classified as substantive innovators, while only about 20% of the nonmetro
establishments fell into this group. Importantly: “The metro-nonmetro
differences in innovation are considerable but less than commonly assumed” (9).
Artists Havens. Another
study published in 2007 by Wojan,
Lambert, and McGranahan, “The Emergence of Rural Artistic Havens: A
First Look” focused squarely on the issue of the ability of rural counties to
attract the artist subset of the creative class in 1990 and 2000. Counties
meeting some minimum employment levels and with more than 40 people in artistic
occupations were deemed to be artistic havens. Functionally, the existence of
an artistic haven occurs when “a minimum
critical mass of artists or performers” has been established so that “members
of the community benefit from substantial interaction among themselves and the
group is large enough to affect culture of the wider community” (10).
The authors identified two kinds of artistic havens. “Existing havens”
were those identified using 1990 census data, while the “emerging havens” were identified with 2000 census data. Altogether,
only about nine percent of our rural counties then had such havens.
However, what was noteworthy in their findings was that the number of
havens had doubled over a decade. (See table above).
The table below is based on the pooled responses for the American Community Surveys for the years 2007-2011. It was constructed by USDA researchers. Their results should be viewed as describing the situation during that time period. However, the ACS’s investigation of the number of “artists” is problematical because the average standard error on its estimates of the number of artists in each non-metropolitan county is about 45%. Nevertheless, the data may still be useful if we try to make some adjustments for that strong margin of error and treat the results as ‘directional” rather than definitive. To that end, instead of looking at the number of non-metro counties having more than 40 artists, I bumped the magic number up to 60. There are 668 non- metro counties that the ACS found having more than 60 artists, or about 35% of all non-metro counties. That suggests that there was probably a very substantial increase between 2000 and 2011 from the number of artistic havens, 199, Wojan et al identified in their 2007 paper. Prudence suggests refraining from claiming an exact number, such as 489 (668-199=489), but very substantial growth seems very likely.
Wojan et al explain that
the strong relationship they found between the emergence of new artistic havens
and the presence of large numbers of 25-44 year olds with college degrees is
based on the highly educated workers being viewed as a very powerful proxy for
quality of life” (11). They go on to state that: “The implications of these
findings are that counties that have been unable to retain highly educated
workers are less likely to attract artists in sufficient numbers to constitute
an arts community”(12). That all sounds
very Floridian, but the unstated implication is that a lot of these highly
educated workers is necessary. There are several problems with that. Richard
Florida is quite adamant in his argument that it is the type of work people
perform, not their education levels,
that is the defining factor of creative class members.
More importantly, there are small towns and cities like Auburn in NY where the percentages of college graduates, 20.7% , are quite lower than the nation’s, 30.9%, yet they are attracting between 50 and 100 artists who represent less than 0.5% of their town’s population. Nevertheless, they are able to build a sense of there being a recognizable artistic community, or “haven” in their communities.
Also, McGranahan et al
reported that about 63% of rural creatives lack college degrees. Does that mean
they lack the magnetism of other
creatives? That seems highly unlikely.
If the highly educated workers are a strong proxy for QofL, then it would appear that more precisely investigating what the components of that QofL are is essential. The Buffalo Commons and the northwestern Minnesota studies give some strong indications about what some of them are. My own discussions over the years with creative types living in smaller towns and cities suggests that, while they certainly like having other creatives nearby, and appreciated the beauty of their area, also very important are such factors as being closer to family, a slower pace of life, having a stronger sense of community, affordable housing costs, having active social places such as eateries, bars, public spaces and arts and cultural venues . In other words, they appreciated central social district type venues and the activities associated with them.
Getting back to the
table, some of the data in it are presented in ranges determined by + and – 45%
of the original estimates. For example, the mean number of artists per
non-metro is between 41 and 107. When the error factor was 8% or less, just the
estimates are reported in the table. This mostly occurred with the data on
creative class occupations. As night be expected, these data show that the
non-metro counties will have far fewer creatives and they will represent a
lower proportion of those employed than in the metro counties. However, these
levels are not negligible.
While Young Adults May Be Leaving, 30-49
Year Olds May Be Returning. In both NE
and MN, in-migration appears to have resulted in a surge in the populations of
residents in the 30-49 years old age group in some rural locations (13). Of
course, their populations in the young adult cohort show a consistent loss.
This suggests that a significant amount of boomeranging may be occurring. The
youths leave for better job prospects and a more urban life style, and many
then return to small and rural towns later
in life with more skills and resources that strengthen their new communities. For example, the Buffalo Commons survey found
that 38% of the respondents and 32% of their spouses had lived in their current
community prior to returning to it. Winchester found, though with a much
smaller sample of 53, that 43% of the “new” residents has previously lived in
or near their current community.
Boomerangs Are Important. One analyst has argued that
boomerangers are not that important because they only account for 30% to 40% of
the new migrants. To the contrary, it might more convincingly be argued that
they are very important because no other prior residential location has
anywhere near those numbers. Additionally, from the perspective of developing a
business recruitment program that targets QofL prospects, there are several
obvious possible networking opportunities with potential boomerangers that are
completely absent with other prospects. Moreover, there have been several
successful “Return Home” campaigns launched in communities such as Ann Arbor,
MI, Scranton, PA, and Superior, NE from which much can be learned (14).
QofL In-Migrants Can Have Impacts Larger Than
Their Numbers Might Indicate. My assignments in the Central
NY communities was on a project led by the Lakota Group to assess the
feasibility of establishing arts/creative districts in their downtowns. In each
community, well-attended focus groups
were held for local artists, arts leaders and business people. In each
town, a strong majority of the creatives
were either not natives of the town or boomerangs. When asked, most explained
their reasons for moving to that town In terms of the QofL assets it offered.
Auburn. The situations in Auburn and Oneida are very revealing about the impacts these QofL migrants can have on the local business community. In Auburn, in recent years they have opened a number of shops that are very highly regarded by local leaders and shoppers. They are certainly viewed as much better operators than those who previously occupied their storefronts. Their current number is below 10, but their presence suggests that the downtown is now in a much more upbeat place on its revitalization arc. It can be reasonably argued that their positive impacts on the downtown far exceed what their small number might suggest. Moreover, even If they keep coming at a rate of only one or two a year, in a few years there will be a substantial bolus of them with more than ample customer magnetism and image making power. They are successful because they are bringing in strong skill sets that are even relevant if they do a career reboot, as well as significant financial resources.
It is interesting that when interviewed, these QofL migrant entrepreneurs say that the presence of a significant arts community in the Auburn was an important factor in their decisions to live and work in their new communities. Since the Finger Lakes area is filled with numerous scenic places, outdoor recreational opportunities, vineyards, charming restaurants and inns, and historic sites, Auburn’s arts assets probably helped it compete successfully with other towns in the region to attract these new merchants.
The leader of a local artists organization
estimated that there are about 75 to 100 local residents who are artists of one
form or another. That means that the city of Auburn, with a population around
26,000, today seems to be an artistic haven: it has besides its resident
artists, nine major arts and cultural
attractions that have a combined annual attendance of about 199,000 that brings
about $6,273,356 in spending power to the city that local merchants can capture
(see table above).
Auburn is now on the path of creating an arts/cultural district to help provide a support structure for its arts community and to help it have stronger marketing and promotional capabilities. According the Americans for the Arts, there are now over 300 culture districts in the US (see the map below). They are proliferating, though only a small proportion our 19,000+ villages, towns and cities have them. The number in smaller and rural communities is unknown, but they are not scarce: e.g., Peekskill, NY; Paducah, KY; Ridgeway (900 residents), Salida and Crested Butte in CO. As a point of comparison, BIDs started to appear in serious numbers in the early 1980s and today there are over 1,000 of them across the nation. The culture/arts districts have not yet had 39 years to grow in.
Oneida. Downtown Oneida is now in the initial stages of its revitalization arc. Consequently, I was happily surprised to find in its struggling downtown a small group of independent merchants who are among the most marketing and internet savvy retailers I encountered in the overall project. While the old downtown retailers were dead or dying, these merchants were internet savvy and knew they had to tap consumers well beyond the town’s borders. One operates a vendor mart that brings a considerable variety of merchandise into town and provides some business incubation functions. Together, this group of operators formed a marketing campaign that targeted the visitors to a gambling casino located about an eight minute drive from the downtown. Two of these operators are boomerangs, and the spouse of one telecommutes on his job with a Fortune 500 corporation. Though the group is now small in number, it is modeling business behaviors for other merchants in the community, be they new or old, while bringing a badly needed perspective into the town’s decision-making about economic policies and programs. They are, consequently, helping to change the business culture in Oneida along several important dimensions as well as the way the downtown business community should be seen within the whole city. Moreover, I’ll bet their presence will attract more businesspeople who are like them.
Vinalhaven. This beautiful island is located about a 75 minute ferry ride off the coast of Maine. It’s roughly the size of Manhattan. It has a year round population of about 1,400 that bulges to about 5,000 in the peak tourist summer months. Lobster fishing and tourism are it major economic engines. Home-owners who are part-time residents and relatively longer stay home rentals are the most important components of its tourism. These renters are often annual visitors. The thing that binds the year round residents, the part-time residents, the long-stay renters and the fisherman is the island’s highly venerated quality of life. They are quite overt in their awareness of this. The community is also united in its concern that any growth in tourism should be balances so as not to endanger their strongly appealing QofL.
The island’s downtown is relatively small, with
relatively few storefronts, yet it is still the community’s economic and social
hub. On a recent visit, I found that several of its merchants were QofL
migrants with impressive previous careers elsewhere in the nation. They opened
their shops on Vinalhaven to provide themselves with some income and/or to keep
busy. This often meant career reboots. Some of the more recent arrivals wanted
to live and work on Vinalhaven so much that, because the of very high costs of
flood insurance, they had to pay cash for their new business locations. On
Vinalhaven, if you subtract the QofL migrants who opened businesses there, the downtown would be deader than a doornail!
Vinalhaven is also an artists haven. A local
gallery reported that about 70 artists are associated with it who spend at
least some part of the year in Vinalhaven. These artists have displayed an
attraction to Vinalhaven’s QofL. The gallery not only provides the artist with
a marketing channel, but also serves as the artists main local social venue. Robert
Indiana was a longtime resident. His estate may be opening some kind of museum
in the downtown.
The ability of small and medium sized communities in
rural areas to attract talented new and returning residents because of their
QofL assets is not a new phenomenon, but it has not been significantly
Rural QofL assets have traditionally been mostly as natural
amenities. However, more recently, a
high quality of life” is seen as being more broadly defined . That means that newcomers
being able to perceive the presence of an
ample number of people like themselves, strong central social districts humming
with some vibrant restaurants and watering holes, and strong public spaces are
increasingly the assets smaller communities will need to pull in talented new
residents and boomerangs.
“Brain Gain” and “Brain Drain” can happen in the same towns,
with the young adults leaving and
mid-life adults, many of whom are boomerangers, moving in from larger, more
Simply stated, the underlying challenge for small and
rural communities is to have the brain gain be larger than the brain loss.
Some of these new and returning residents will open downtown businesses. Though
early on their absolute numbers may be small, say just two to five, their
influence on the downtown’s revitalization can be exponentially greater. The
ability to even recruit 1 or 2 of such QofL entrepreneurs annually could have
very profound positive impacts on a downtown. Smaller and rural communities do
not have win hordes of new residents to see meaningful positive changes.
Potential boomerangers are an obvious market segment that
a recruitment program should make a high priority target.
However, anyone visiting the town, especially on a
recurring basis, should also be targeted – e.g., visitors to local hotels/motels,
restaurants, parks, museums, theaters, etc.
Smaller communities are, well, small, so you do not need
to attract hordes of creative class members — or their artist subset — to
spark significant economic development.