From Today to TOD - Retail

In a pair of recent posts (here and here), I wrote about the difficulties of integrating transit-oriented development (TOD) into communities that have a drivable suburbia slant.  The two previous posts addressed how providing parking for transit users can conflict with a desire for mixed-use development near a transit stop.  I also wrote about a transitional solution that the City of Petaluma hopes will provide a working compromise and the hurdles that the solution must yet overcome.

But parking isn’t the only element issue that creates transitional difficulties.  Some are even more intractable than parking.  Such as retail.

A favored vision of TOD enthusiasts, and of urbanists in general, is streetfront retail.  The image they evoke is of the communities of the 1930s in which our parents or grandparents were raised, with rows of locally-owned storefronts marking the downtown.

Consistent with this vision, ground floor retail, underneath residential or office space, is a key element in many urban planning codes and conceptual plans.

But three key elements have changed since the 1930s.  First, cars have become far more pervasive.  And we’ve constructed a world in which the incremental cost of car usage is so small that few feel constrained in how many miles they drive.

Second, drivable suburban development has met the retail needs of the car drivers.

Third, the internet is capturing an ever increasing share of retail.  About 18 months ago, a planner told me that internet sales were only about 3 percent of all retail sales.  When one considers that cars and food are among the largest sources of retail sales and that both are relatively immune to encroachment from the internet, perhaps the number was correct.  But it seems evident that the internet’s share of retail will continue to increase, perhaps even finding business models that can capture shares of car and food sales.

Many have rediscovered, or never forgotten, the value of shopping downtown for a handful of screws or a sheet of sandpaper.  But most, when looking for a new power drill or belt sander, will drive to a home improvement store or shop on-line.  And the absence of those big-ticket, big-profit items from downtown undermines the commercial viability of downtown retail.

Developers have long understood that cities were seeking more retail than the market could support.  I’ve worked on multiple projects where the space designated by the code as streetfront retail was given transitional titles of “live-work” or “interim residential”.  A commitment was given that the space would become retail as soon as the market could support it.  But no developer believed that change would ever happen.

Within the past week, an architect told me of designing residential space with 14-foot ceilings to meet a city requirement that the space be easily converted to retail at a later date.  The developer didn’t believe that the space would ever be anything other than high-ceilinged residential.

Perhaps most tellingly, a developer acquaintance recently tried to sell an entitled, but unconstructed, mixed-use project.  The potential buyers were consistent in their determination of the project value.  Approximately $35,000 per residential unit.  And no value for the streetfront retail.  Although the buyers would build the retail, they expected to discount rents significantly in order to keep the spaces filled.  So they couldn’t project any profits.  At least they weren’t considering retail a negative asset.

And if you need yet one more example, look at the vacant spaces in the Theatre Square project in Petaluma, especially in the locations away from the primary pedestrian routes.

The Petaluma Station Area plan met the problem head-on.  The team headed by Opticos Design of Berkeley that developed the master plan knew that retail would be dodgy.  Especially in a city that recently gave the green light to two drivable suburban shopping centers.  Not surprisingly, the Opticos team found that the market didn’t exist for retail along the full street frontages.

In the words of the Final Draft report, January 2013, “Retail cannot be supported at every building, but if the current conditions change such that more retail can be supported, the code should be sufficiently flexible to allow that use.”  (For those who are reading along, this is from page 3-17 of the Petaluma Station Area Master Plan.)

The effect is that the initial buildings, if they comply with the master plan, will have some retail, but not as much as would have been required under the current code.  Instead, much of the street frontage will be residential.   (Techniques such as stoops or small private gardens will be used to transition between the public space of the sidewalk and the private space of the homes.)

If retail conditions change, later buildings might include a higher proportion of retail.  Although I suspect that Target and Amazon will be actively working to prevent that possibility.  And will likely succeed.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (davealden53@comcast.net)