Thursday, July 18, 2013

CNU Urban Retail Panel

Last night the Congress of New Urbanism North Texas Chapter held a panel on the topic of urban retail.  The panelists included Jack Gosnell of UCR Urban who represents virtually all of downtown retail space, David Levine of Urban Partners, who put together West Village and CityPlace, and Jason Clauchner of Catalyst Commercial.  I live tweeted the highlights of the event which you can see below.

I also asked a few questions during the Q&A and I swear they were not rhetorical questions but either A) issues I go back and forth on and could argue either side, or B) was honestly interested in their opinion.

The first two questions were primarily for Jack as he was the surrogate representative of downtown.  One was, "was it worth compiling all of the necessary subsidy/public investment to Forest City and the Mercantile area or could that $$ have been more effective split into several areas of downtown?"  Long story, short Jack's answer was that it was best invested in one place.  I think I agree with him, but again, I'm of two minds on that.

As I wrote yesterday, the danger w/ Keynesian "urban defibrillation" is that if you don't get over the tipping point where the market is then profitable on its own, you risk the public side having to be an overly large participant in private development again and again.  This could be underscored by one of the tweets below where Clauchner said they actively look for deals with at least 15% public participation, be that in infrastructure, public improvements, or some form of financial partnership.  There is not an overarching qualitative statement to be made about that as each of those component parts that the public side can participate in can be wise and executed well, or very very misguided.

The second question revolved around Tim Headington's development in and around Main Street.  That was, "since you mentioned median incomes are trending down in downtown, is Headington's super high-end retail play missing the market and is it sustainable?  Furthermore, does his investment badly skew the market expectations with regard to land value?"  Again, Jack said it can only be a good thing that somebody is willing to invest in downtown.  Others chimed in and said they hoped Headington was willing to subsidize in perpetuity.  /shrug

My last question was to the entire panel.  This one could be construed as rhetorical since I know how I would answer, but I was interested in their take.  I asked, "you've spoken quite a bit about luring national credit retailers and the fundamentals that it takes to get them into deals.  What competitive advantage do small, local businesses have, if any?"

The consensus from the panel was that the competitive advantage of small business is market differentiation. That's true, but a bit vague.  If I were to summarize my thoughts on the subject, it would be that small, local retailers primary advantage is in the relationship with their customers and the ability to thrive as a third place, primarily due to their nature (the successful ones) as places of both economic and social exchange.  Think Cheers.  Relationships are established between proprietor, their staff, and their customer base.  And this dynamic really only works in walkable, neighborhood environments.  A lesser competitive advantage could be that smaller businesses are more willing to go into more unusual, less formulaic buildings and spaces.

However, this implies one of the bigger elephants in the room that wasn't specifically addressed.  That's the differentiation between neighborhood-scaled retail (which we don't have enough of) and regional retail (which we have way too much of and is highly competitive, cannibalistic, and unstable).  More specifically this duality is an issue facing downtown.  Is it a neighborhood or do we envision it as a regional draw?  Can it exist as both without one negatively affecting in some way the other?  On a much grander scale, think of Times Square, which isn't just a regional center of gravity but a global one.  New Yorkers hate it and avoid it at all costs.

Tweets in reverse order.

  1. Peanut gallery, aka me and , "nothing in Dallas is complete. Ever."
  2. Gosnell responding to Q about Cowboys: "Mixed blessing, Dallas took political heat, but it would've sucked all the TIF dry."
  3. We're guessing we've got 50-60 people here including some influential real estate types standing room only
  4. Levine: "you can't apply suburban formulas to urban development." - he couched that saying density is overrated
  5. but then he said downtown Denver is less vibrant than downtown Dallas. I think he contradicted himself.
  6. Levine: "downtown Denver is stuck in the 80s. We're pulling tenants from 16th street and Cherry Creek to Larimer."
  7. Levine: "In Denver we were more willing to be venturous with our non-national credit tenants than in Dallas."
  8. Levine: "our sales at Larimer Square in CO are 300% of what they were 17 years ago."
  9. Levine: "if you're a regional tenant, you've gotta be really special when somebody drives by." (pressure comes from lender)
  10. Levine: "we learned that retail and residential above had to be under centralized leasing."
  11. Levine: "West Village (Dallas) is not a lifestyle center, it's a walkable urban place."
  12. good point, Golden Rectangle in Milan is in between centro and main train station
  13. Gosnell asks, "what's the in between lesson for Dallas." Levine: "none of these areas are downtown, mile away from downtown."
  14. Levine: "I was just in Bucktown Chicago. Tenant list rivals SoHo. It's a wishlist."
  15. David Levine: "retailers are getting bigger, and they're getting smaller."
  16. Regarding my last tweet (not directed at Celeste), emphasizes my point that public policy and infrastructure is the invisible arm.
  17. ed. note: too many developers and brokers are following data and inertia inherent, exasperating entropy, rather than leading it.
  18. Clauchner: "we look for 15% in public money in projects, whether that's infrastructure, pub improvements, PPPs, etc."
  19. Clauchner: "however we're conservative when it comes to parking, we like our floating rows and parking out front."
  20. Clauchner: "too many projects don't incorporate complete streets and walkability."
  21. Clauchner: "and we need some residential component, as a [life raft]"
  22. Clauchner: "we look for a single direction, whether that's a single owner, a BID, or a form-based code..."
  23. Side note: if you have any inclination to ever ride Arlington's foray into mass transit, follow
  24. Clauchner: "80% of your retail is driven by the residential w/in a 1-mile ring."
  25. Gosnell: "the Continental bldg is signing leases as fast as they can print them. And we have good signs on the ground floor"
  26. Gosnell: Levy said, "I want a ton of money from the city, I want a development district, and a one-stop shop for retail."
  27. Gosnell: Asked Forest City pres how he liked Dallas, "how do I like it, it's like a Fellini movie, there's no GD people!"
  28. Gosnell: Forest City had no interest in Dallas, "everybody is a developer there."
  29. Gosnell: I became interested in downtown when area around Neiman Marcus looked like Beirut
  30. Three panelists are David Levine of Urban Partners (cityplace), Jack Gosnell (UCR urban - downtown retail), and Jason Claunch (Catalyst)
  31. Former president Alicia Winkleblech is giving the intro (I'm current president but buried in audience)
  32. That's like most marriages too
  33. Jack Gosnell VP of UCR urban told me something I wrote recently was 90% exactly right, 10% drove him crazy. I think that's a bullseye
  34. Going to live-tweet this urban retail event (if it's interesting of course).