Tuesday, January 20, 2009

Rise and Shine!

It's a new day as the sun sets on Dark Years (with a ticking time bomb waiting to go off) as I've got the inauguration running in the background while I work today.

As for the article that I linked above regarding the gloomy forecast for the retail industry, once again I look at this positively. Despite being wary of the pain for some industries, especially in the architecture/real estate fields, to me the falling of the House of Cards was always viewed as a good thing. It would wipe out the pretenders. Those who don't really know what they were doing and were in it, whatever it was, for a quick buck.

Not to diminish the necessity of the profit motive, but IMPROVEMENTS should be profitable. NOT anything that makes us all the worse for the wear...i.e. Sprawl, meaning the system was broke.

To me, the optimism of the day is underscored by transparency. Open government, but also as this article points out, one where all the dirty secrets and rotten economies get a bright flashlight shone upon them:
“In the midst of all this doom and gloom, it's hard to imagine it getting better... But keep in mind, what happens in strong downturns is there's a hefty pent-up demand. It's wrong to extrapolate these conditions for the next year or two."

But Mr. Niemira is probably wrong. There is no pent-up demand. Americans have bought everything they’ve desired for the last twenty years. The over-spending and over-leverage will take a decade to unwind.

According to the ICSC, about 150,000 stores are anticipated to shut down in 2009, in addition to the 150,000 that closed in 2008 and 135,000 in 2007. Normally, 110,000 to 125,000 new stores open per year. At least 700,000 of retail jobs will be lost. The opening of new stores will grind to a halt in 2009.

The author is correct. We as a country are horrendously over-retailed. It doesn't take a Mathematics degree from MIT but it probably takes an MBA from the Wharton School to convince you it makes sense to figure that out. Dare I call it a recess(ion) of the ideological high tide of qualitative growth over quantitative. At some point, everyone being in debt can't possibly finance more stuff - without potential of future earnings - which doesn't appear to be on the horizon (on the whole) any time soon without some nationwide elbow grease.

Why could this "restart" be such a good thing (for the purposes of this discussion, I'll keep it limited to retail format and its cause/effect relationship with urban form)?

For one, there will be a grand contraction (Ya think so professor?). Retailers will prune back their stores, there business models will shrink and that will open room for smaller and start-up businesses to find their niche.

Second, retail still requires synergy of other retailers. To borrow a term, it is about complementarity. That is, the synergy created by complementary uses. For retail, they need other retailers, large and small, usually best coordinated via a business partnership.

They ALSO need people and this happens in two ways: 1) via nearby residents, i.e. "live above the shop" and mixed-use buildings/neigborhoods, and 2) the spatial relationship to the "movement economy." You see it all the time currently, except that movement is typically always via car, on roads built solely for the car, which means they are hostile to any other form of transportation and, in turn, actually repel visitation.

[Does this look like a place you want to be?]

The movement economy is important for retail clusters because it means greater amount of people than just the neighborhood, which can only support neighborhood scaled retail, i.e. a corner store, a dry cleaners, and maybe a deli/cafe/or pub. You get the point. But, the transportation system has to be multi-modal (meaning more people) and better "people-friendly" environment (thus being further inviting).

Because of this, in cities like Dallas, places that are positioned to accommodate multi-modal transportation will see their value spike because these will be the only places retail (as we know it today) will work. Many strip centers will completely die off as retailers prune back the amount of stores they can keep open.

This "pruning" will leave blighted "gray fields." In Dallas, this pretty much means the retail clusters that are organized on the original 1-mile super-grid, with single family neighborhoods in between will have to find a new manner of existence.

[Typical Dallas retail with little to no relationship between land uses and entirely auto-oriented.]

For those that can survive, will need to densify as this former strip center did in Winter Park, FL. [Dover Kohl did the planning, RTKL did the architecture on the garage/retail].

This exact same phenomenon is occurring currently with malls. The biggest and best are densifying with residential and office uses, accessing public transit, and adding amenitized, outdoor public spaces. They are becoming both more people friendly AND more business friendly. Those less fortunate (if you happen to sympathize with the plight of a particular mall) are finding life as something else, if not being scraped altogether.

For those "children left behind," as in surface parking lots and empty big box stores, can turn into centrally located community centers, parks, and new schools that are designed and situated to be walked to, saving schools money and kids time from bussing all over the city (not to mention CO2 & gas); essentially, they would become neighborhood centers.

A couple of the places best positioned in Dallas are Cityplace/West Village for the urban street grid, the trolley line, the DART adjacency, the already existing density (which is the by-product of everything I've said in this article), and Central Expressway. The other, off the top of my head, is DTD. Yes, downtown Dallas. It might be struggling now, but there are few places in the city that have DART, MATA, density (from residential and office, present and future), political desire if not yet will, soon to be parks, and presumably improved pedestrian-friendly streetscapes (someday).

[The requisite economist-y chart to illustrate my point. Taken from Gateway Planning Group's Presentation to TxDOT.]

There are also many others (which must be sized and scaled appropriately and directly proportional to the level of complentarity/mobility establishing a hierarchy of mixed-use nodes or centers), but these are the two that are head and shoulders best prepared for increase density, activity, and (if we're smart) attention/care/and cultivation.

Retailers and residents will flock to be in or near these places. They are currently some of the highest value places in the city from a people and real estate perspective, but they are still operating well below their potential future ceiling. We just have to make sure the regulatory and political environment are prepared and organized to allow for this city and retail reorganization.

They are currently below the LoMac area which is a joke of tangled spaghetti arterials, deep setbacks, narrow sidewalks despite having nearby freeways and the MATA trolley line. This area is exactly the end result when getting the details right is paid zero attention and the only effort is to cynically deliver "product to the market" not places for people. This means that the value of this place is ultimately limited whereas in CityPlace and Downtown, it is infinite.

[Going from 0 babies to 1 baby is an infinite leap on the livability scale. And, as we all know, those Wharton School MBAs will tell you that infinite growth is possible.]