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Brookings Retail Revitalization


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Brookings Retail Revitalization

  1. 1. Retail Trade as a Route to Neighborhood Revitalization
  2. 2. [Photo of Richmond] IRON TRIANGLE, RICHMOND, CA
  3. 3. Retail development challenges Lack of large sites Development costs Crime and cleanliness Management factors Access to capital
  4. 4. The retail gap Porter brought attention to untapped spending power of urban neighborhoods in 1995 Potential overlooked by traditional market analysis Higher density and concentrated buying power Inner cities represent a $122 billion retail market 1/3 of retail spending ($40 billion) spent out of area
  5. 5. Can retail growth lead to neighborhood revitalization?
  6. 6. Defining “revitalization” Retail growth is relatively easy to measure. “Neighborhood revitalization” is harder to define Do lower income residents necessarily benefit?
  7. 7. Who benefits from retail growth? Or help them by creating jobs, and economic opportunities and promoting more mixed income neighborhoods Increased retail activity could harm low-income residents by contributing to displacement
  8. 8. How might retail benefit residents? Improved access to goods and services More jobs Strengthened social norms and networks Improved self-perception/identity Increased neighborhood competitiveness Changed neighborhood residential composition
  9. 9. Meeting basic needs Improved access to retail goods and services is a frequent goal for low-income residents Freeman showed that low- income residents saw new stores as a benefit even in in the face of rising rents and displacement
  10. 10. There must be more to it than jobs! Retail generally does not offer great jobs
  11. 11. People vs. Place People: Neighborhood economic development may be irrelevant because participation in the regional economy matters more Place: Neighborhood development creates social norms and networks key to success in regional economy
  12. 12. Retail as anti-poverty strategy Seidman: Commercial revitalization addresses poverty by: Creating a more positive environment Improving social interaction Changing resident self-perceptions and norms
  13. 13. The “excluded consumer” Individuals are aware of social exclusion when they can’t purchase basic goods Even whose who can afford goods experience exclusion based on the mode through which they purchase
  14. 14. New retail can alleviate this sense of exclusion New retail can alleviate this sense of exclusion
  15. 15. New retail can exacerbate this sense of exclusion
  16. 16. Retail as a “signal change” More important than the actual convenience of nearby shops may be the “signal” that retail development sends
  17. 17. Competitive position Neighborhoods compete for resources Retail development may improve a neighborhood’s competitive position
  18. 18. This neighborhood is getting better This neighborhood is getting better
  19. 19. Safer This neighborhood is safer
  20. 20. This is a better place to invest
  21. 21. Residential Composition: Chicken or Egg? More higher income residents, improve spending power and should support more stores Residents with economic options may prefer to locate in neighborhoods with more retail opportunities
  22. 22. Does population growth drive retail growth? Koebel and Immergluck found that growth in neighborhood spending power didn’t explain retail growth Non economic factors had a bigger impact
  23. 23. Does retail growth drive residential change? Retail growth may change who chooses to live in a neighborhood Retail development can be a tool to influence the character of changing neighborhoods
  24. 24. Mixed income neighborhoods Potential benefits for low-income residents Improved resources and services Better mechanisms for informal social control Social interaction with higher income residents could lead to improved economic opportunities
  25. 25. The difficult bind If we make the place better, won’t wealthier people outbid existing residents for the right to live here? Doesn’t any improvement eventually contribute to displacement?
  26. 26. There is more than one kind of change Low income growth Middle income growth Upper income growth “Bi-polar” growth (Galster) “Gentrification” (Freeman)
  27. 27. Retail development strategies
  28. 28. Three retail development strategies Public-led commercial development “Market-led” business attraction Commercial district revitalization
  29. 29. Defining success Retail as a route to revitalization 1. Do programs lead to retail growth? 2. Do residents receive direct economic benefits? 3. Do perceptions of the neighborhood change? 4. Does other investment follow? 5. Does neighborhood composition change? 6. How does population change impact residents?
  30. 30. Impact measures Job creation Vacancy rates Private investment/Public investment Tax revenue/property values Crime and safety Community Identity
  31. 31. Public led commercial developmentAttempt to “catalyze” market activity by subsidizing new real estate projects Projects developed by Community Development Corporations or private developers Key funding provided by local government
  32. 32. New Horizons Center • MBD Development Corporation – The Bronx • 134,000 square foot shopping center Pathmark Supermarket Athlete's Foot Blockbuster Video Paramount Home Decorators Radio Shack Rent-A-Center
  33. 33. New Horizons Center Outcomes 400 jobs; 85% neighborhood hires Most hires through MBD Job Center 22 national and regional credit tenants No local small businesses Access to healthy food Brought back life on the street
  34. 34. Sources of public capital Urban Development Action Grants Community Development Block Grants Tax Increment Financing EZ/EC Programs Historic Preservation Tax Credits New Markets Tax Credits
  35. 35. Public led commercial development•Job creation Jobs in construction andoperations May require higher subsidy per job than other job programs No data on multiplier effects •Vacancy rate No evidence •Tax revenue Direct impact of new stores Little tracking of indirect impact Investment High leverage of private investment in projects No data on investment in surrounding areas Crime and safetyNo data Community identityNo data
  36. 36. “Market led” business attraction “Creating a favorable environment for business” in place of direct government involvement Research to document the real spending power/market opportunity in urban neighborhoods Social Compact and MetroEdge
  37. 37. Retail Chicago Program of City of Chicago Assists retailers with finding sites and developing new retail in targeted neighborhoods Neighborhood economic profiles New metrics to identify untapped spending power
  38. 38. Retail Chicago
  39. 39. “Market led” business attraction •Job creation Anecdotal evidence of private projects creating jobs No data on multiplier effects •Vacancy rate No data •Tax revenue No data •Investment Anecdotal evidence of privately financed projects Often accompanied by significant public investment No data on investment in surrounding areas •Crime and safety
  40. 40. Commercial district revitalization (Urban) Main Street programs (Neighborhood) Business Improvement Districts CDC Revitalization Programs (LISC)
  41. 41. Revitalization programs “Soft” changes Neighborhood organizing Crime reduction/sense of safety Marketing and promotional events Facade/streetscape improvements
  42. 42. Fruitvale Main Street Established in 1996 LISC pilot site CDC led Committee Structure Design Promotion Safety and Cleanliness • Economic Restructuring
  43. 43. Fruitvale Main Street Design Façade Improvements •Matching Grants •Design Assistance Public Improvements •Fruitvale Plaza Park •Cultural Arts Banners •Antique Street Lights •Bus Shelters •Historic Preservation •Historic Markers
  44. 44. Fruitvale Main Street Promotion •Special Events • Dia de los Muertos Fruitvale Festival •Image Enhancement • Business Directory •Retail Events • Christmas Posada
  45. 45. Fruitvale Main Street Economic Restructuring •Market Analysis •Annual Economic Impact Study •Leakage Study •Training •Shoplifting Workshop •Taxes & Loans Workshop •“It’s Your Business”
  46. 46. Fruitvale Main Street Safety and Cleanliness Cleanliness •Anti-Litter Campaign •Improved Trash Cans •Ambassadors Safety •Relationship with Police •Pay phones ordinance
  47. 47. Fruitvale Main Street Results – First 5 Years • 140+ participants on Main Street committees • 133 net new jobs • 51 new business start-ups, 8 expansions • 110 facades completed • $2.7 million private sector investment • $2.1 million public sector investment • Adopted Business Improvement District
  48. 48. Fruitvale Village
  49. 49. Revitalization programs •Job creation •Average program generates steady job growth •Wide variation between programs •High percentage filled by residents •Vacancy rate •Documented declines in vacancy rates •Tax revenue •Documented increases faster than citywide average •Investment •Limited public investment leverages private capital •Most neighborhoods experience increased public investment •Crime and safety •Documented declines in crime rates •May relocate to nearby areas
  50. 50. Defining success Retail as a route to revitalization 1. Do programs lead to retail growth? 2. Do residents receive direct economic benefits? 3. Do perceptions of the neighborhood change? 4. Does other investment follow? 5. Does neighborhood composition change? 6. How does population change impact residents?
  51. 51. Researching link between retail and neighborhood revitalization • Overall picture • Effects of specific programs
  52. 52. Data and methodology • Data to measure revitalization • Geolytics • National Establishment Time Series (D&B) • Units of analysis: tracts and zips • Defining neighborhood change types based on income categories (Berube & Tiffany)
  53. 53. Diversity Index = 1 < 50% 50-80% 80-100% 100-120% 120-150% 150% + AREA MEDIAN INCOME PERFECT DIVERSITY
  54. 54. Neighborhood Change Types • More low income • Share in bottom two groups • 2000 > 1990 • > 25% by 2000 • More middle income • Share in middle two groups • 2000 > 1990 • > 25% by 2000 • More upper income • Share in highest two groups • 2000 > 1990 • > 25% by 2000
  55. 55. Methodology: Increasing Bipolarity • Bipolarity index measuring income distribution and diversity (1990-2000) (Galster & Booza, 2007) • Nominal entropy index (0 to 1) • Ordinal entropy index (1 if bimodal) • Ratio of nominal/ordinal (>1 = bipolar)
  56. 56. Ratio of ordinal/nominal entropy > 1 INCREASING CONCENTRATION OF HOUSEHOLDS BELOW 50% AMI AND ABOVE 150% AMI
  57. 57. • Housing price appreciation > regional average • Increase in educational attainment > regional average • Income at 40th percentile in starting year; and • Central city location Gentrification: Modified Freeman (2005) Definition
  58. 58. Bay Area Neighborhood Change by Census Tract, 1990-2000
  59. 59. Neighborhood change typology San Francisco Bay Area, 1990-2000
  60. 60. Retail Change by Neighborhood Change Type
  61. 61. Chain Stores by Neighborhood Change Type, 1990 and 2005
  62. 62. Startup Businesses by Neighborhood Change Type
  63. 63. Did retail respond to existing middle- income residents or newcomers?
  64. 64. Neighborhood Case Studies • Increasing bipolarity: Menlo Park • Gentrifying: Tenderloin, SF • Becoming more low-income: Richmond • Becoming more upper-income: Berkeley • Becoming more middle-income: Alameda vs. San Leandro
  65. 65. Increasing Bipolarity: El Camino Real, Menlo Park • Income diversity declined while bipolarity increased • In 1990 18% <50% AMI, 36% >150% AMI • In 2000 18% <50% AMI, 44% > 150% • 5% increase in estabs 1990-2005 (vs.18% in region) • 5% increase in sales (vs. 34% in region) • -3% change in employment (vs. +12% regionwide) • 10% chains (vs. 12% in region) • 5% startups (vs. 10% in region)
  66. 66. Gentrifying: Tenderloin, San Francisco • Gain in income diversity by losing low-income • <80% AMI decreases from 57% to 50% • Median home price increase above regional average, educational attainment increase above regional average • 1% decrease in estabs 1990-2005 (vs. 18% in region) • 7% increase in sales (vs. 34% in region) • 11% decrease in employment (vs. +12% regionwide) • 10% chains (vs. 12% in region) • 4% startups (vs. 10% in region)
  67. 67. Becoming more low income: MacDonald Avenue, Richmond • Low income diversity with gain in low-income • <80% AMI increases from 65% to 69% • 16% increase in estabs 1990-2005 (vs. 18% in region) • 65% increase in sales (vs. 34% in region) • 23% increase in employment (vs. +12% regionwide) • 6% chains (vs. 12% in region) • 8% startups (vs. 10% in region)
  68. 68. Becoming more upper income: Gourmet Ghetto, Berkeley • Declining income diversity with gain in upper-income • >120% AMI increases from 25% to 30% • Stable establishments, employment, sales 1990-2005 • 6% chains (vs. 12% in region) • 8% startups (vs. 10% in region)
  69. 69. Becoming more middle income: Park Street, Alameda • Increasing income diversity with gain in middle- income – 80%-120% AMI increases from 20% to 25% • 18% increase in estabs 1990-2005 (vs. 18% in region) • 7% increase in sales (vs. 34% in region) • 0% increase in employment (vs. +12% regionwide) • 7% chains (vs. 12% in region) • 7% startups (vs. 10% in region)
  70. 70. Becoming more middle income: San Leandro • Increasing income diversity with gain in middle- income • 80%-120% AMI increases from 25% to 28% • 1% decrease in estabs 1990-2005 (vs. 18% in region) • 37% increase in sales (vs. 34% in region) • 2% increase in employment (vs. +12% regionwide) • 16% chains (vs. 12% in region) • 9% startups (vs. 10% in region)
  71. 71. Conclusions and Next Steps • Different strategies  different impacts • Commercial district revitalization most demonstrable impact on neighborhood revitalization • Neighborhood composition matters: • Retail revitalization associated with increase in middle income groups • Retail composition matters: • Chains stores may help fortify income diversity • Further research on chicken/egg question needed