Why downtown retail is coming back

This is one of a series of ongoing Public Square articles on the market, technological, and cultural transformation of the $5 trillion retail industry—and how it relates to a continued shift toward walkable, urban living.

In 1964, British pop singer Petula Clark released Downtown, a number one hit in the US, celebrating the excitement and magnetism of city cores, “where everything’s waiting for you.”

Downtowns, unfortunately, were already heading into a multigenerational death spiral, and nowhere was this reality more apparent than retail sales, which decanted to malls and big box stores in the suburbs. In a few short decades, downtowns lost up to 90 percent of their retail market share. 

Population also declined, especially the middle class and wealthy, a trend that has reversed in the last two decades. As downtowns and adjacent neighborhoods repopulate, their lack of retail represents a vacuum to be filled. 

While America as a whole is vastly over-retailed, downtowns are under-retailed. They have as little as one-tenth of the retail per person as suburbs, says urban planner and retail expert Robert Gibbs. “Retailers have saturated the suburbs and the next underserved market is the inner cities. And they are also thinking that it will be a trend and growth market.”

The Fashion District in Philadelphia is the major US retail project opening this month, a test of whether brick-and-mortar stores can complete as an investment in the e-commerce era, according to the Commercial Observer. Yet the 838,000 square foot outward-facing mall, spanning three blocks on Center City’s East Market Street, is less a test of physical stores than it is a bellwether for urban retail. 

Center City is gaining substantial population (close to 200,000, second only to Midtown Manhattan among downtown cores), and the demographics are changing toward professional millennials, the emerging Gen Z, and retiring Baby Boomers. Unless there is a major economic recession in the next few years, the Fashion District is poised to do very well. And, chances are, the Fashion District will draw shoppers regionally, benefiting other merchants in Center City, such as Macy’s—which runs a flagship store two blocks away—and Marshalls and TJ Maxx across the street. Early next year, an AMC multiplex cinema will open on East Market— another anchor, and an amenity that is surprisingly absent in a downtown of this size. Center City will once again be the dominant retail destination in a region of six million people, which hasn’t been the case since the 1960s. Cue Petula Clark, who is now 86 and still performing.

They’re back

Just a few years ago, Detroit went through bankruptcy and was considered an urban basket-case, having lost a quarter of its population from 2000-2010. But downtown Detroit has experienced a renaissance this decade of jobs and population, and the mixed-use has followed. This spring the city gained an anchor in a 25,000 square foot H&M store, to join other well-known stores that have located along Woodward Avenue in recent years. H&M is occupying the ground floor of three historic buildings—a far cry from the 1990s, when national chains exclusively built stores and in malls and strip centers fronted by acres of parking. H&M, the second largest clothing retailer worldwide, is one of many top retailers that are opening stores in walkable urban locations with street-facing storefronts. 

Target, the 8th largest US retailer, has pursued an urban strategy since 2016—and in the last three years nearly all of Target’s openings have been small-format urban stores in major cities and college towns. Target has increased its revenue, earnings, and assets every year since adopting this strategy.

As the media focuses on e-commerce and the “retail apocalypse”—widespread closures of name-brand stores like Sears, Bon-Ton, and Payless Shoes—the positive news of downtown retail has gotten comparatively little coverage. All of the experts on urban mixed-use that I have interviewed agree that downtowns are coming back, and that analysis is backed up by research and observation.

“Yes, there is demand for, and a return of, retail downtown—it’s not a fad” says Lee Sobel, a commercial real estate expert and program specialist with the US Department of Housing and Urban Development. Starting with the “creative class” and the rise of the knowledge economy, downtowns have become more competitive in the last two decades, he says. They were largely 9-5 p.m. business environments in the 1990s, and now they offer activity 18 hours a day with unique experiences and formats, such as food halls and pop-up spaces. “They fill niche, irregular spaces that are created from unusual circumstances that you don’t find in the suburbs,” Sobel says.

Walkable urban retail is growing and typically commands rent premiums, according to Foot Traffic Ahead: Ranking Walkable Urbanism in America’s Largest Metro Areas, 2019, by George Washington University School of Business and Smart Growth America. Since 2016, retail in regionally significant “walkable urban places” grew as a percentage of the total market in 21 of the top 30 metro areas, remained the same in 5, and declined in 4, according to Foot Traffic Ahead.

A mixed-use district in San Francisco. Source: Foot Traffic Ahead. 

Even as chain stores close, urban places can gain retail, notes Sharon Woods of LandUseUSA | Urban Strategies, a market research and analysis firm. “If a 100,000 square foot building goes dark in a mall, 10,000 square feet can open up in a city center that is underserved and gaining population,” she says. “City centers used to be the centers for retail. There is an opportunity to recapture some of that role as retail is collapsing elsewhere.” 

Kennedy Smith, an expert on Main Street economics, adds that “Whenever a major national retail chain announces that it is closing stores, “we immediately look to see where the stores are closing and alert clients that there is ‘x’ million square feet of unmet demand in their area.” 

Getting an anchor store is key for cities, notes Gibbs. “Grocery stores are one of the best downtown retailers,” he says. “On average they increase regional sales 25 percent for all surrounding businesses. Department stores are the single best anchor for regional downtown shopping districts. They increase surrounding retail sales by about 35 percent and are responsible for about one-third of all visitors.” 

Downtowns are not single-use strips

Downtowns and main streets are mixed-use places, and urban retail will be accompanied by many other kinds of storefront businesses—such as professional offices, salons and other services, entertainment venues, and even civic and not-for-profit uses. “Retail was never the major component of healthy downtowns—no more than 15-20 percent of square footage,” says Smith. 

Downtowns tend to have a more diverse mix, and that includes more independent restaurants. There are 11 restaurant chains in the top 100 US retail corporations, totaling $135 billion in sales. With the exception of Starbucks, none of them can compete with the quality of food and service that independents provide in downtown locations—from street vendors to fine dining. 

Downtowns typically have fewer national chains in general than suburban malls and big box power centers. “In vibrant hot downtowns, national chains are typically only 10 percent of overall retail composition,” says Smith. “They always gravitate to ‘100 percent’ corners, so people perceive chain stores to be occupying more space than there are.” 

National chain stores can be beneficial to downtowns, she adds—they offer name brands that people recognize and they signal a level of economic performance that is reassuring to lenders and other businesses. Nevertheless, most of Smith’s clients are not looking for national retailers downtown—they want the “serendipity” of unique local businesses.

Downtowns come in various types and sizes. Not all of them are going to get a department store, or even a grocery store. “There are 29,000 towns and cities in US,” Smith says. “Not many main streets are sought out by national retailers. In a traditional downtown, what we need to plan for is two or three clusters of businesses. If you have that, you are creating visibility and driving in traffic.”

It ain’t easy

Racism is one reason for so little retail in cities, says Gibbs. “A lot of decision makers in the industry are biased against low-income minority families and think they don’t shop. If TJ Maxx is opening stores in the Detroit region, brokers will not show them downtown Detroit. They are redlined out.”

Downtowns have other challenges. One is ownership of buildings, frequently by “family trusts”—inheritors of wealth that may lack motivation to make to change. Retailers like Kohl’s or TJ Maxx require owners to invest substantial sums before they will locate in historic buildings, Gibbs says. “Many of the downtown property owners would rather get low rent than pay that $300,000 to prepare the building.”

Cities are sometimes their own enemies. Planning decisions over the years have hurt “shopability,” Gibbs says. “They have eliminated on-street parking and done a lot of basic things wrong. But the market is there for more downtown retail and a lot of retailers are realizing this.”

Yet downtowns have market advantages over new urban, mixed-use centers in the suburbs. “They offer history and placemaking and realness that a lot of people looking for,” Gibbs says. “But they don’t have a management advantage. They have multiple property owners and, often, bad parking.” 

The hostility of planners and economic development directors to national retailers is also hurting downtowns, Gibbs says. “People want downtowns to be a theme park, and they go there for entertainment—to walk around and feel like you are in Mayberry. Then they do their shopping at the mall and online.

“When successful, downtowns sell goods and services that people need. Downtowns should return to that fundamental role, which they served in the 1950s.” Some cities have done just that, Gibbs says. In the Charleston, South Carolina, region, “King Street (on the historic Lower Peninsula) is the place to open a store. When Apple came into the market, they chose King Street over two malls. It has higher sales—it was a pure business decision.”

“While shopping centers are still a viable land use, a renewed interest in urban living, working, shopping and dining, has positioned downtowns … to reclaim market share and attract the amenities and development to improve the quality of life for the community,” Gibbs notes.

PADD seeks new Executive Director

Due to retirement, the Panhandle Area Development District (PADD) in Scottsbluff/Gering, Nebraska is seeking its next Executive Director. The Executive Director is the chief administrator and oversees the daily operations of PADD, including meeting with local governments and various groups to explain services available and promote membership , preparing and monitoring the annual budget, supervising staff, and writing and producing technical publications.  This position is responsible for grant writing and grant administration and must have or be willing to  be certified as a Community Development Grant Block Administrator. PADD is a public, non-profit, council of governments serving the 11-county Nebraska Panhandle. PADD is governed by a board of regional leaders who are committed to developing programs and strategies to make the Nebraska Panhandle a highly desirable place to work, live, and visit. PADD’s professional staff is engaged in a wide variety of community and regional activities to improve regional competitiveness, stimulate economic growth, and enhance community vitality.

Our next Executive Director will have at least three years of management and planning/economic development experience with a proven track record in rural development program development and implementation. A bachelor’s degree in a relevant field of study, including planning, economic development, economics, public or business administration is required. The director must have the ability to interact with others inside and outside the organization, and must exercise participative management skills that support team efforts, quality processes, working well with a wide variety of personalities, and ability to establish and maintain a professional relationship with organization contacts and the general public.

Hours of work: Monday thru Friday, 8AM to 5PM, but may include some evening meetings. Some overnight travel required to attend meetings in and out of State. 

NEPADD is an equal opportunity/affirmative action employer. 

Benefits

  • PTO
  • Sick Leave
  • Stipend for Health Insurance
  • Retirement
  • Flexible Spending Accounts for medical and child care
  • Paid Holidays

Pay: Depends on Experience

How to Apply:  
Email cover letter and resume to the Panhandle Area Development District Executive Director Search Committee at NDOL.ScottsbluffWFD@nebraska.gov
or
Mail cover letter and resume to:
Panhandle Area Development District
Executive Director Search Committee
1620 Broadway, Suite A-10
Scottsbluff, NE 69361-3184 

Leadership To Grow

Join us September 6, 2019: 9 am – 5 pm at the Harms Center. A day-long leadership training will equip participants with processes for implementing successful community projects. Participants will hear from two panels of community members who led efforts in Scottsbluff. Nebraska Community Vitality educators will use the lessons learned as a springboard for Leadership to Grow.

July 2019 55+ Job Fair

The Nebraska Department of Labor invites you to attend and learn about the GREAT job opportunities available. Come prepared to find your next career!

Participating Employers

  • Railcrew Xpress
  • Housing Partners of Western Nebraska
  • Dollar Tree
  • CAPWN
  • Regional West Medical Center
  • Waterbed Showcase
  • We will be adding new businesses!

Community Resources

  • CAPWN
  • Nebraska Commission for the Blind and Visually Impaired
  • Proteus

EVENT FLIER

Panhandle Area Development District seeking comments on Regional Economic Development Strategy

The Panhandle Area Development District (PADD) has updated the regional economic development strategy for the next five-year period and is seeking feedback from the community on its effectiveness and accuracy for the region.

The Comprehensive Economic Development Strategy (CEDS) can be viewed on the PADD website (www.nepadd.com) under the economic development tab and then under the CEDS tab. The full site address is: https://nepadd.com/wp-content/uploads/2019/06/CEDS-FINAL-DRAFT-1.pdf

The purpose of this document is to analyze our current economic position as a region and to provide a path forward based on feedback from entrepreneurs, service agencies, employees, and employers.

PADD encourages anyone to provide feedback on any portion or all of the document. Comments will strengthen itsefforts as a regional agency and help PADD to know where best to direct resources.

The comment period will be open from June 10 through July 10. Please submit your comments to Megan Koppenhafer at megank@nepadd.com.

Red Carpet Service Training – Chadron

 CHADRON- Northwest Nebraska Tourism and the Chadron Chamber of Commerce will host a Red Carpet Service Training May 30 in Chadron.

The Red Carpet Service Training is free and open to any restaurant and hospitality management businesses. The two and a half hour research-based session is tailor-made for staff and management. The training will serve those working in local attractions, convenience stores, restaurants, retail shopping, lodging, and others.

Nebraska Extension Community Vitality is hosting the event and Cheryl-Burkhart Kriesel is the key-note speaker.

If any employee from your business would like to attend, please contact Gabby Michna at 308-432-4401. Additional information about the Red Carpet Service Training can be found at http://discovernwnebraska.com/event/red-carpet-service-training/ or at http://www.chadron.com/events/details/redcarpet-hospitality-training-2299.

Blizzard/Flood Relief Resources and Information

RESOURCES FOR NEBRASKANS:
Cities, Counties, and Tribes: FEMA’s Public Assistance (PA) grant program provides federal assistance to government organizations and certain private nonprofit (PNP) organizations following a Presidential disaster declaration. Click here for more. 
Agriculture: The Department of Agriculture has provided a list of disaster relief resources for farmers and ranchers in Nebraska. Including:  USDA’s Farm Service Agency offices located throughout the state The Livestock Indemnity Program and lost machinery programs are also available. The Nebraska Farm Bureau and the Nebraska Cattlemen have also provided a portal for disaster assistance to help members of the ag community that have been affected by this storm. Click here for the Nebraska Farm Bureau assistance page and here for the Nebraska Cattlemen assistance page.
Businesses: As a result of the emergency declaration, Nebraska businesses can now apply for low-interest federal disaster loans. These loans from the U.S. Small Business Administration (SBA) can help repair the damages to their businesses. The application filing deadline for physical damage is May 20, 2019. More information from the SBA’s fact sheet. Apply for a Disaster Loan Assistance here.  
This list of resources comes from Deb Fischer’s office.  

2019 Nebraska Affordable Housing Trust Fund (NAHTF) Application Guidelines Workshop

Free workshops to review the requirements for the 2019 NAHTF Application Guidelines.  The workshops will be held on:

  • Thursday, March 14, 2019 |  1:30pm – 4:00pm CST | Online via WebEx | Register
  • Monday, March 18, 2019 |  1:30pm – 4:00pm CST | La Vista Conference Center, La Vista, NE | Register
  • Tuesday, March 26, 2019 |  10:00am – 12:3pm CST | Online via WebEx | Register

If you have any questions please contact:

Public Hearings for the Proposed 2019 Annual Action Plan

The Nebraska Department of Economic Development (DED) and the Nebraska Department of Health and Human Services (DHHS) is conducting public hearings on the Proposed 2019 Annual Action Plan.  The Proposed 2019 Annual Action Plan describes program funding, national and state objectives, application schedules, eligible activities, and selection criteria for projects for the following programs: CDBGHOMEHTFESGHOPWAHSATF, and NAHTF.

Public Hearings are scheduled on:

March 13, 2019

  • North Platte | 9 a.m. CT | Nebraska Department of Labor, 600 E. Francis, Suite 9, North Platte, NE
  • Kearney | 2 p.m. CT | Kearney Public Library, 2020 1st Ave., Kearney, NE
  • Scottsbluff | 2 p.m. MT | Lied Scottsbluff Public Library, 1809 3rd Avenue, Scottsbluff, NE

March 27, 2019

  • Norfolk | 9:30 a.m. CT | Norfolk Public Library, 309 N 5th St, Norfolk, NE 68701
  • Lincoln | 2:30 p.m. CT | Nebraska State Office Building, Lower Level A, 301 Centennial Mall South Lincoln, NE
  • Website Streaming | 2:30 p.m. CT/1:30 p.m. MT | Register

The website streaming option is utilizing Webex software, if you are attending the public hearing through this method, please register in advance to receive the access code.  Registration is free.  

The Webex service may require use of a telephone to have access to the audio portion of the workshop.  Upon registering, you will receive a confirmation email with instructions for the workshop and a call in number.  This number will incur long distance charges.  If you do not want to incur these charges, please select the Call Me option when accessing the workshop.  This option will call you directly at the number you enter.

If you have any questions concerning the 2019 Proposed Annual Action Plan Public Hearing, please contact Rebecca Schademann at (402)471-3172, (800) 426-6505 or via email, ded.publiccomment@nebraska.gov