Ways to Impact Retail Attraction

On September, 24, 2015, the Lamond-Riggs Citizens Association teamed up with Streetsense and DC’s Office of Planning (OP) to host “Vibrant Retail Streets – Fort Totten.” This is part two in a three-part series on the presentation, available here: Fort Totten – Application of DC Vibrant Retail Streets (pdf). The first part discussed the market analysis conducted by Streetsense. This post discusses suggestions made by Streetsense and OP on how residents can have an impact on retail attraction.

1. Give retail market time to prove itself: Want salad? Eat Five Guys

This area is an unproven, untapped market. Some of us may not be super thrilled about the announced retail options in phase one of Fort Totten Square (Five Guys and Subway), but they need to be supported because the success of those businesses will lead to more success. So say Streetsense and OP. That does not mean each one of us has to make hamburgers and cold cuts a regular part of our diet, but a little patronage will not hurt. On the contrary, giving dollars to those businesses will help our long-term goal of getting better retailers. If Five Guys and Subway do well, other (more desirable) retailers will see that this is a market in which they can do business.

On a personal note, this is a hard recommendation to stomach. If a developer knows that the retailers it is bringing in are not desired, then it should not be a surprise when people do not want to patronize them. If residents do not patronize them, then the conclusion becomes that the area cannot support retail when really the conclusion should be we will support the retail we want. Nevertheless, I have been repeatedly told that is the wrong attitude to have, so I will heed the advice from the experts. If we want a place to get a good salad or have a sit-down meal with drinks in the future, we should eat Subway and Five Guys . (I am not seriously knocking these places. It would have been nice to have one healthy sit-down option instead of all fast food in Fort Totten Square, but these are not bad options as far as fast food and non-sit-down options go).

2. Practical enthusiasm

Streetsense said residents should encourage developers to be ambitious in their tenanting strategies — but don’t be unrealistic. In other words, residents should have “practical enthusiasm.” I like this phrase because it nicely sums up the entire presentation. The great thing about the market analysis that was done is that we now have a better sense of what the neighborhood can support so we can manage our expectations. No, we are likely not getting a Lululemon any time soon. But we can shoot for a Panera Bread (or something like that and I know I am mixing retail categories with that example). Maybe we do not get the sit-down restaurant right away, and instead get a drugstore or dry cleaners. These are basic needs of any neighborhood, so there is room for excitement over these if they are designed well.

3. Understand tenants cannot go just anywhere, even with demand

Different retailers have different space requirements. Streetsense and OP held a full-day workshop in July that went into detail about retail economics. There, they explained the types of spaces retailers look for. For successful vibrant streets, we know that ground-floor retail space that engages the sidewalk and that is built for retail use is critical. Beyond that retailers have clear ideas about their space requirements. Retail space is classified in a few categories and share a few typical characteristics, according to Streetsense.

• Class A space:
  • Located at major intersections; prominently situated among in-line establishments
  • Minimum 14 feet floor-to-ceiling height
  • At least 20 feet storefront width
  • Depth of 45 to 90 feet
  • Constructed with quality materials
  • Well-maintained
  • Visible from primary streets
  • Properly lit exterior and display spaces
  • Clear pedestrian and vehicular access
  • Associated or adjacent parking
• Class B space:
  • Well-situated among in-line establishments
  • 12 feet or more floor-to-ceiling height
  • At least 15 feet storefront width
  • Well-maintained
• Class C space:
  •  Floor-to-ceiling height less than 12 feet
  • Storefront width of less than 15 feet
• Build-to-Suit (BTS):
  • Constructed for specific tenant
  • Conversion to another use or tenant difficult
  • McDonalds is a classic example

One thing made clear is that new construction does not automatically equate to Class A space. And having some Class B or Class C retail space is not necessarily a negative. One of the things Streetsense and OP hoped to do with this presentation and the toolkit is share some insight into how retailers make decisions so that if a developer presents a site plan with what looks to have mainly Class C space (even if it is new construction) and is promising retail that would need Class A space, then residents can engage in a conversation with the developer about how realistic the plan is and determine what may be the developer’s more realistic vision and tenant strategy.

4. Support office development when the market improves

One challenge this neighborhood presents for retailers is a low daytime population within a one mile radius of the commercial nodes. Particularly for food and beverage retailers, like the coffee shop many people want, sufficient daytime traffic is critical. Certainly there are several businesses in the neighborhood, but many of them are small businesses. There are a few medium to larger size ones like the community college and Food & Friends. One resident at the meeting thought it was curious that no forthcoming development is being marketed with office space, but apparently office projects are tough to finance right now. So Streetsense’s recommendation is that residents support office development when the market improves to bolster food and beverage demand.

I am not sure how this recommendation will fly. There have already been plenty of concerns expressed over traffic and parking. Some residents think the planned projects are too big at four and five stories and some ado has been made about wanting to maintain a low-density neighborhood. But it is clear that if residents want more food and beverage retailers, decent places to share a meal with family, friends, neighbors, then we need more people who will be able to support those businesses.

5. Identify entrepreneurial spirit among residents

OP said this is the only neighborhood in which they are making the recommendation to identify entrepreneurial spirit among neighborhood residents. There is and will be plenty of Class C space available. These spaces command less rent than Class A and B space, so they may be more accessible to residents with small businesses. We love to talk about supporting local businesses and always make a point of asking developers to keep an eye out for great local retailers.

Why not create that great retail ourselves. Residents who have given serious thought to opening their own business, whether food and beverage, some sort of maker/creative space, or any other type of small business should realize that there will be an opportunity to work in and shape the neighborhood. So work on those business plans, host a pop-up event, invite neighbors over to sample your latest recipe. Who knows, you could end up opening a great neighborhood spot.

On September 24, 2015, the Lamond-Riggs Citizens Association teamed up with DC’s Office of Planning and Streetsense to host “Vibrant Retail Streets – Fort Totten.” This post is the first in a three-part series providing a recap of the presentation. (A brief synopsis was provided on the listserv). Fort Totten is one of eight commercial areas in which OP and Streetsense are offering technical assistance to promote vibrant and sustainable retail options. This meeting was one part of their technical assistance and was designed to give residents the vocabulary, data, and tools to be able to champion our own vibrant streets. The Vibrant Street boundary selected for this neighborhood is Riggs Road NE between South Dakota/3rd Street and Chillum Place NE with a second node on South Dakota Avenue NE between Galloway Street NE and Kennedy Street NE. A copy of their presentation is available here: Fort Totten – Application of DC Vibrant Retail Streets (pdf).

Why we want Vibrant Streets

In the words of OP and Streetsense, the purpose of the Vibrant Streets toolkit is “to give every neighborhood the necessary tools to create a Vibrant Street of their own, regardless of population, ethnic composition, location, income, or budget.” Streetsense began the presentation by noting that retail is fundamentally a commercial activity. It has to make money and it has to be sustainable. With that, OP and Streetsense outlined several attributes that successful vibrant streets share:

(1) Managed by a civic/nonprofit or merchant association;

(2) Retail-appropriate spaces like transparent storefronts and wide sidewalks;

(3) Mix of tenants;

(4) Safe as perceived by shoppers and pedestrians;

(5) Championed by private and/or public sectors;

(6) Anchored by a cultural feature that attracts people for a non-commercial use;

(7) Walkable as part of a walkable community; and

(8) Unified by a common character.

Steps one through four are the most important steps, with step one being the most significant in their view. There should be some entity (a civic association, business association, committee, something) that has the sole purpose of engaging residents in the retail process and creating dialogue among residents, retailers, public sector officials, and other stakeholders.

Fort Totten Retail Market Analysis: Supply & Demand

The second part of the technical assistance Streetsense and OP offered was a mini market assessment of the Fort Totten area. They presented their preliminary analysis at the meeting. A market analysis was done because the neighborhood is changing rapidly and most of the retail is coming online around the same time in the near future. Therefore, we wanted to have a more realistic picture of what retail could legitimately be supported by the neighborhood in the next three to five years. We also wanted to know what impact the Walmart would have on retail activity.

In a nutshell, Streetsense looked at current consumption patterns in the neighborhood and projected future consumption patterns based on a similar neighborhood with the density this neighborhood is expected to have.

There are three large-scale projects planned or under construction.

1.  Fort Totten Square

• Phase 1: 345 apartments; 130,000 square feet of retail, including approximately 120,000 square foot Walmart (opening in the next couple of months)
• Phase II (Proposed): 170 townhomes; 27,000 square feet of retail

2.  Art Place at Fort Totten

• 1st phase: 500 apartments; 100,000 square feet of retail (scheduled for 2017)
• Ultimately 920 apartments; 300,000 square feet of retail; children’s museum; cultural/art spaces

Art Place Building A Site Plan, South Dakota Ave

3.  Fort Totten metro/Donatelli

• 345 apartments; 10,000 square feet of retail (scheduled for 2017)

Existing retail demand totals 277,200 square feet. Additional demand created by new residents from new development totals 32,000 square feet for a subtotal of 309,200 square feet of new retail demand.

Streetsense noted the commercial node around South Dakota Avenue and Riggs Road creates an east-west trade area that is somewhat unique in DC and is almost shaped like a star, which creates trade areas in several directions. That said, the market analysis found that there will be some competitive pressure from Brookland (retail activity spurred by Monroe Street Market); the Walmart on Georgia Avenue NW; Petworth (clusters just north of Petworth metro station); Hyattsville (Arts District); and Prince George’s Plaza.

Walmart Effect

Walmart throws a monkey wrench into the supply-demand analysis. Streetsense determined that Walmart will create a larger trade area (called a tertiary trade area) that will draw more people into the neighborhood. This will increase the retail demand, so Streetsense calculated a revised total retail demand of 440,200 square feet.

Existing retail demand: 277,200 square feet

Projected total retail demand: 440,200 square feet

At the same time, Walmart will have an impact on what kind of retail can be sustainably supplied in the future. Here we will get a little technical. Streetsense calculated the retail demand as follows:

• 54% for Neighborhood Goods & Services (think basic needs like grocery, pharmacy, florist, dry cleaners, hair salon, wine/liquor store). NG&S is supported by regular, multiple trips within a small trade area (less than 1 mile).
• 18% for Food & Beverage (think dining out). Food and beverage retailers rely on a larger trade area than neighborhood good retailers (1-3 miles).
• 28% for General merchandise, Apparel, Furnishings, & Other (GAFO).  GAFO is supported by even fewer trips from an even larger trade area (for example, clothing, hardware, pet, furniture, electronics, office supply, toy, home décor, jewelry stores).

Walmart will supply a sizable portion of the General Merchandise demand (but not all) as well as a small portion of the Neighborhood Goods demand. We also know that Subway and Five Guys have signed leases, so those will supply a small portion of the Food & Beverage demand.

Positive News for the Retail Market

Ultimately the preliminary analysis provides positive news for the retail market. The types of retailers that Streetsense concludes can be sustainably supported by the neighborhood is great news for those residents who have been clamoring for more retail.

Suggested tenant mix provided by Streetsense:

• General merchandise (GAFO):
  • A few small shops
  • Possibly junior anchor
• Neighborhood Goods/Services:
  • Gourmet/organic grocery store
  • Children’s activity center (like a Gymboree)
  • Drugstore/pharmacy
  • Hair/nail salon
  • Dry cleaner
• Food & Beverage:
  • 1 – 3 full-service restaurants
  • 5 – 7 quick service eateries
  • 3 – 5 take-away service eateries

This list might contain a few surprises for some. In our neighborhood wish list, we suspected that there could be a market for a smaller organic grocery store in the neighborhood, so it is nice to see that view supported by the data. Also, the neighborhood is viewed by some as a majority elderly neighborhood when it is not. There are plenty of families with young children in the neighborhood and plenty more moving in, so there is a market for a children’s activity center in the neighborhood.

Keep in mind, this analysis was done by Streetsense, so this is just one view from one retail brokerage firm. Streetsense is not a broker for any of the neighborhood projects though so we can trust that the data comes from a disinterested party.

In the next two posts in this series, we will look at suggestions made for ways to impact retail attraction and forming a retail organization.