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Larisa Ortiz March 2014

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Larisa Ortiz Presentation March 2014
- Commercial District Classification
- Market Data Training
- Retail Leasing Training

Published in: Government & Nonprofit
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Larisa Ortiz March 2014

  1. 1. Commercial District Classification Successful district management begins with understanding district needs
  2. 2. About Me Larisa Ortiz Principal, Larisa Ortiz Associates Lead East Coast Consultant, LISC MetroEdge Visiting Professor, Pratt Institute Former Director, Coro Neighborhood Leadership Program (NYC) Editor, The Commercial District Advisor ICSC Alliance, Public Sector Co-Chair
  3. 3. Experience in Commercial District Revitalization National New York New Jersey Philadelphia, PA Pittsburgh, PA Martinsville, VA Jacksonville, FL Chicago, IL Indianapolis, IN Kansas City, MO Houston, TX California •Bay Area •San Diego Seattle, WA International Puerto Rico El Salvador Chile
  4. 4. Strategic Positioning Market Analysis Administrative Management • BID • CDC Redevelopment • public space improvements • private redevelopment/real estate Retail Sales • marketing/promotion • event marketing Tenant Mix • retail retention/attraction STEP 1: DIAGNOSE STEP 2: BUILD CAPACITY STEP 3: TAKE ACTION ©Larisa Ortiz Associates Strategic Positioning Market Analysis Administrative Management Redevelopment & Retail Sales Tenant Mix The Framework
  5. 5. Density Vacancy Poor Physical Conditions Administrative Management Quadrant I Starting from scratch Quadrant II Places to shop, no reasons to stay Quadrant III Great bones, where are the people? Quadrant IV Manage & maintain Commercial District Classification™ © Larisa Ortiz Associates Excellent Physical Conditions
  6. 6. What do shoppers want? Source: Verde Group/ ICSC Global Research Network,
  7. 7. What do shoppers want? Source: Verde Group/ ICSC Global Research Network,
  8. 8. Commercial District Research •LISC commissioned, 2009 •Funded by the William Penn Foundation •Study Overview –10 year time series analysis –264 Commercial Corridors –Considered the impact of various investments and corridor conditions on corridor success
  9. 9. What characterizes a “successful” corridor? •Tenant Mix (offerings that reflect community needs) •Density (retail and population) •Physical Conditions –Street experience (i.e. physical space/amenities) –Access/location
  10. 10. What characteristics enable change? •Leadership •Administrative Capacity
  11. 11. Administrative Management Retail Sales Tenant Mix Redevelopment Clean & Safe Tenant Mix Redevelopment Physical Improvements Physical Improvements Quadrant I: Starting from scratch Quadrant II: Places to shop, no reasons to stay Quadrant III: Great bones, where are the people? Quadrant IV: Manage & maintain © Larisa Ortiz Associates Commercial District Classification™ Model Density Vacancy Poor Physical Conditions Excellent Physical Conditions
  12. 12. C B A Corridor Success: A Framework for Action Administrative Management TIME EXPERTISE NEEDS CHANGE Quadrant I: Starting from scratch Quadrant IV: Manage & maintain Quadrant III: Great bones, where are the people? Quadrant II: Places to shop, no reasons to stay Retail Sales Tenant Mix Redevelopment Private Property Redevelopment Public Space Clean & Safe Redevelopment Public Space Tenant Mix Redevelopment Private Property
  13. 13. Moving from Quadrant to Quadrant takes… TIME, RESOURCES, ABILITY TO ADAPT, AND ABILITY TO ACQUIRE NEW AREAS OF EXPERTISE
  14. 14. Quadrant I: Starting from scratch Nicetown, Philadelphia, PA Redevelopment Private Property Redevelopment Public Space Administrative Management
  15. 15. Quadrant II: Places to shop, no reasons to stay Pitkin Avenue, Brooklyn, NY Clean & Safe Redevelopment Public Space
  16. 16. Quadrant III: Great bones, where are the people? Uptown, Kingston, NY Administrative Management Tenant Mix Redevelopment Private Property
  17. 17. Quadrant IV: Manage & maintain South Orange, NJ Retail Sales Tenant Mix
  18. 18. 8% 21% 29% 11% 30% Quadrant I: Starting from scratch Quadrant II: Places to shop, no reasons to stay Quadrant III: Great bones, where are the people? Quadrant IV: Manage & maintain Retail Density Retail Vacancy Seattle Commercial District Classification
  19. 19. Quadrant I: Starting from scratch Quadrant II: Places to shop, no reasons to stay Quadrant III: Great bones, where are the people? Quadrant IV: Manage & maintain 11% 21% 24% 35% 9% Poor Environment Attractive Environment Seattle Commercial District Classification
  20. 20. Administrative Capacity 31% 12% 58% Strong Moderate Weak { { { Seattle Commercial District Classification
  21. 21. Quadrant I: Starting from scratch Quadrant II: Places to shop, no reasons to stay Quadrant III: Great bones, where are the people? Quadrant IV: Manage & maintain Poor Environment Attractive Environment High Density Low Density First Hill Beacon Hill First Hill First Hill Fremont West Seattle Columbia City Wallingford Ballard Georgetown Roosevelt Montlake Roosevelt Uptown/Lower Queen Anne Washington State = Lacks Admin Capacity Participant Outcomes Othello/Graham/MLK Lake City Rainier Beach West Seattle International District Pioneer Square Beacon Hill Othello/Graham/MLK
  22. 22. What’s your Classification? – Breakout Discussion Identify a “recorder” and a “reporter” •Discuss and list three major similarities between your districts •Discuss and list three major differences between your districts •Discuss your most successful activities – why were they successful •Discuss your most unsuccessful activities – why were they unsuccessful •Are there any similarities or trends with respect to the kinds of activities that are successful or not successful
  23. 23. The Basics of Interpreting and Using Market Data March 11, 2014 Prepared for the City of Seattle Office of Economic Development
  24. 24. Learning objectives 1.Defining Trade Area 2.Understanding your District’s “Strategic Positioning” 3.Basic Market Leakage Analysis 4.Interpreting Data and Applying Analysis
  25. 25. Information Foundation 60% Interpretation 40% Information
  26. 26. Trade Area 70%
  27. 27. Some thoughts on Trade Area Primary trade area vs. secondary trade area The 1:4 ratio. Travel versus Time Expended. Districts with more shopping options typically have a larger trade area. Why? People will travel farther for better selection and more options. Different BUSINESSES have different trade areas. i.e Furniture versus grocery. Or destination restaurant versus local restaurant. For a DISTRICT or SHOPPING CENTER, trade area size is typically defined by the anchor. “Anchors” do not have to be retail stores.
  28. 28. Drugstore Specialty Food Store Department Store/Big Box Retail Disneyworld Convenience/Neighborhood – 5-10 min Comparison/General – 15-30 min Destination/Regional – 30 + min Trade Area International 1.Differs by retail category – but for a district it is typically defined by the anchor 2.Influenced by geography, natural and psychological boundaries 3.NOT defined by political boundaries
  29. 29. What is Strategic Positioning? Trade Area Size Customer Profile Merchandise offerings Price point Lifestyle
  30. 30. Which best describes your commercial district? Convenience Retail/Services –Neighborhood Center –Neighborhood Commercial District –Main Street –Necessity Retail –Convenience Retail Comparison/General –Main Street –Mix of Convenience and Specialty Retail Destination Retail/Services –Lifestyle Center –Entertainment Districts –Regional Center –Central Business District –Destination Retail Elmora, Elizabeth, NJ Pitkin Avenue, Brooklyn, NY Strategic Positioning
  31. 31. Drugstore Specialty Food Store Department Store/Big Box Retail Disneyworld Convenience/Neighborhood – 5-10 min Comparison/General – 15-30 min Destination/Regional – 30 + min What is your Trade Area? International
  32. 32. Important caveats about the data you have in hand The market data you have MAY NOT correspond with your district’s trade area. Therefore, today’s analysis MAY NOT be accurate for your district. This is an exercise… this is only an exercise. It is not a substitute for proper market analysis. If you need to re-pull data, you can do so for a nominal fee at Esri Business Analyst Online There is no substitute for visiting the market. Strategic Position defines Trade Area
  33. 33. 11 Market Data: Secondary Sources Sources of Standard Market Data - Census - Esri - Claritas Additional Market Data - Home Mortgage Disclosure Act - New Housing Units - Crime statistics Esri Reports for Reference - Retail Marketplace Profile - Demographic & Income Profile - Retail Goods & Services - Traffic Counts - Business Summary
  34. 34. Shortcomings of Secondary Market Data -Census Undercount -Income Underreporting -Business Turnover -Business Reporting -Measures only residential demand Market Data: Secondary Sources
  35. 35. How do we compensate for the failure of secondary sources? Primary Market Data: Consumer Research Compensate for shortcomings of market data  Helps in profile non-residential customer Identify non-demand related barriers to retail attraction and marketing Market Data
  36. 36. 14 Standard Sources of Consumer Data - Consumer Surveys - Mail - In-store - Online (SurveyMonkey, Facebook) - Focus Groups - Employees - Merchants - Residents - Merchant Surveys Market Data: Primary Sources
  37. 37. 15 Standard market analysis is typically based on secondary sources. Primary market data can be expensive to collect and analyze. Market Data
  38. 38. Market Analysis: Understanding Secondary Market Data Demand Supply $$ Question: If a new store opens in the trade area, how much of that leakage can we reasonably capture? This is called “capture rate”
  39. 39. General Overview: Retail Marketplace Profile
  40. 40. Spot-check Number of Businesses General Overview: Retail Marketplace Profile
  41. 41. General Overview: Retail Marketplace Profile
  42. 42. Workshop Exercise How much additional square footage of new retail can your district support in a particular retail category? Which retail categories offer opportunities for growth and expansion Where should you focus your efforts to improve you tenant mix? What strategies can we use to build weak markets?
  43. 43. Workshop Exercise
  44. 44. Column A: Select a retail category •(for this exercise, select “Health + Personal Care ”) Column A, B, C: Select Category and Determine Supply, Demand and Gap Health + Personal Care Retail gap within .5 miles Heath + Personal Care Retail Gap within .5 miles = $3,719,740 Example: Othello/MLK Exercise #1: Drug Store Sales Analysis
  45. 45. Retail gap within .5 miles Column E: Apply a capture rate: What portion of “leakage” can you capture? Convenience Trade Areas 20 – 60% Comparison/Neighborhood Trade Areas 5 – 10% Destination < 5% Column D Column F Apply Capture Rate to determine Effective Demand $3,719,740 x 60% = $2,231,844 KEEP IN MIND – a higher capture rate results from: Few options, no competition Residents with limited means to travel outside of the district Transit is inconvenient Exercise #1: Drug Store Sales Analysis X by Column E =
  46. 46. Column G: Identify Sales per Square Foot (data via ICSC Mall Report) Column G Identify Sales per Square Foot: Drug/Health Beauty Aids= $980 GAFO: General Merchandise, Apparel, Furniture, Other 201312 Blank cel ls = no data avai lable December-13 Year-over-Year % Change Year-to-Date (SAAR) % Change from Prior Full Year 2012 % Change from Prior Year 2011 % Change from Prior Year Apparel and Shoes $480 3.9% $474 3.6% $457 7.3% $426 8.5% Women's Ready to Wear - Total $355 7.5% $342 5.8% $323 1.8% $318 1.9% Women's Accessories and Specialties $795 9.6% $776 4.8% $741 6.9% $693 13.3% Men's Apparel $318 -9.6% $356 0.7% $353 1.8% $347 11.2% Children's Apparel $363 -1.8% $377 3.7% $363 5.2% $345 1.3% Family Apparel $417 0.0% $434 3.2% $421 6.5% $395 8.2% Women's Shoe Stores $590 7.0% $632 12.6% $561 6.1% $529 12.1% Men's Shoe Stores $381 6.2% $358 -4.6% $375 6.6% $352 -0.7% Family Shoe Stores $479 0.1% $466 2.7% $454 9.3% $415 4.6% Athletic Shoe Stores $489 14.3% $446 7.2% $416 18.8% $350 11.4% Children's Shoe Stores $657 -7.5% $615 1.0% $609 26.5% $482 7.5% Apparel and Accessories - Misc. $2,194 27.2% $1,753 5.3% $1,665 18.1% $1,410 26.2% Furnishings $1,569 -1.3% $1,456 0.6% $1,448 20.2% $1,205 20.4% Home Furniture and Furnishings $369 -18.0% $437 -4.4% $457 11.7% $409 14.0% Home Entertainment and Electronics $3,008 6.6% $2,526 3.5% $2,440 22.8% $1,987 19.1% Other GAFO-Type $725 4.0% $718 4.6% $687 11.3% $617 13.0% Stationery/Cards/Gifts/Novelty $372 3.8% $373 2.3% $365 5.8% $344 7.9% Books $228 -1.9% $203 -8.8% $222 -4.3% $232 2.8% Sporting Goods/Bicycles $285 14.5% $297 25.7% $237 9.0% $217 2.1% Toys/Educational/Hobby $791 10.3% $764 11.9% $683 68.7% $405 13.3% Personal Care $894 5.2% $878 5.6% $832 10.7% $752 10.3% Jewelry $1,319 7.1% $1,257 4.9% $1,198 5.6% $1,134 14.5% Other GAFO-Type- Miscellaneous $783 3.3% $749 -1.4% $759 4.0% $730 13.4% Total GAFO-Type $616 3.9% $598 3.8% $576 10.0% $524 11.0% Food Service $641 0.5% $643 5.8% $608 8.0% $563 4.6% Fast Food $499 -4.4% $520 -2.7% $534 5.5% $506 6.3% Food Court $959 2.2% $969 5.2% $921 8.2% $851 3.9% Restaurants $589 1.3% $585 7.7% $543 8.6% $500 5.6% Other Non-GAFO Categories $370 2.6% $380 3.7% $367 6.7% $344 9.1% Specialty Food Stores $804 3.3% $795 5.2% $756 9.3% $691 8.0% Drug/HBA $1,299 13.4% $1,225 25.0% $980 14.8% $854 5.3% Personal Services $400 -2.9% $409 1.8% $402 3.0% $390 1.9% Theaters $132 7.2% $129 -0.2% $129 4.1% $124 -0.5% Mall Entertainment $69 -22.4% $72 -10.3% $80 3.7% $78 5.5% Other Non-GAFO-Type- Misc. $504 -1.9% $509 3.5% $492 4.5% $470 55.7% TOTAL NON-GAFO-Type $497 2.3% $507 5.5% $481 7.9% $446 7.2% memo: GAFO-Type + Food Service Total $619 3.4% $604 4.0% $580 9.8% $529 10.1% GRAND TOTAL $587 3.6% $576 4.1% $553 9.5% $505 10.1% memo: Total less Home Entertainment and Electronics $516 3.1% $517 4.1% $497 8.2% $459 9.2% An ICSC Shopping Center Benchmarking Report CenterView™ Seasonally-Adjusted Annual Rate (SAAR) Calendar Year ** Sales Productivity for Non-Anchor Tenants in U.S. Pacific Malls Change display date to:* Date format: yyyymm Exercise #1: Drug Store Sales Analysis
  47. 47. Step 5: Determine Potential Square Footage Divide Effective Demand by Sales per Square Foot for the desired category to determine the potential square footage of retail that can be supported. Exercise #1: Drug Store Sales Analysis Effective Demand ($2,231,844)/ Sales per SF ($980) Column H: Determine Potential SF Potential Square Footage = 2,277
  48. 48. •International Council of Shopping Centers Mall Report •Dollars and Cents of Shopping Centers, ICSC (Used versions can be purchased at significant discount) – last version is 2008. •Industry-specific trade associations (i.e. Food Marketing Institute) •Local brokers •Local retailers •City sales data •Google search Resources for Sales Per Square Foot KEEP IN MIND ICSC Sales/SF data is based on primarily on suburban sites Finding local sales/SF is the most effective alternative Retailers do not like to share sales data
  49. 49. What does it all mean?
  50. 50. If the market can support roughly 2,277 square feet of new retail in the category of Drug Stores, can we successfully attract a drug store to our community? Interpreting Results Walgreens Average Store Size: 14,500 Mom and Pop Store Size (estimate): 2,000
  51. 51. Demand Supply Leakage Capture Rate* Effective Demand Sales PSF Potential (Retail Potential) (Retail Sales) by Category SF A B C D E F G H NAICS CATEGORY Given Given B-C Given D*E Given F/G Take 10 minutes and conduct this exercise for another retail category Health + Personal Care $3,719,740 0 $3,719,740 60% $2,231,844 $980 2,277
  52. 52. •Do you have the space? •Do you have willing property owners? •Business Expansion: Are there existing drug stores that can improve their capture rate of existing retail leakage? •Business Attraction: Are existing drug stores servicing the vicinity poorly? Is competition in the interest of the community? •Is there opportunity within a larger trade area? •Look at another category The Market Data say yes. The Market Data say no. The Market Data is not definitive. Using Data to Define Strategy Interpreting Results
  53. 53. Using the Data •Attract more customers from your existing trade area (Mount Washington) –Improve “Tenant Mix” through Retail Attraction –Help Existing Businesses •Improve Visibility/Access •Support Marketing/Promotion –Address necessary Physical Improvements •Improve Cleanliness/Safety –Grow the Market •Grow the trade area (add more shoppers by growing the primary trade area) •Build density through development (add more shoppers to existing trade area)
  54. 54. Using the Data: Develop a “Tenant Mix” Strategy Develop a Retail Sales and Tenant Mix Strategy •Springfield, Jacksonville, Fl •Combined market data and consumer preference data to develop a “nodal” retail attraction strategy
  55. 55. •A Comprehensive Strategy for Improvements •Lower Broadway, Newark, NJ Potential grocery store site. Five years of resources and staff time went towards identifying and attracting a grocer to this location Using the Data: Recalibrate your Strategy 1 Mile Radius
  56. 56. Using the Data: Help Existing Merchants
  57. 57. Using the Data: Improve Visibility Mt. Washington, Pittsburgh •Challenge: –1.5 million visitors annually –Very few venture down Shiloh Shiloh Street. Curve in street reduced visibility 1.5 million visitors ride incline annually
  58. 58. Using the Data: Improve Visibility Mt. Washington, Pittsburgh, PA •Solution: Increase visibility through signage –Businesses were allocated $500 per sign –Pedestrian counts increased by nearly 30% –Business report increased sales –A local business went from part time to full time hours –Other businesses want to replicate signage
  59. 59. Using the Data: Grow Customer Base •Improve access my multiple means of transportation Jackson Heights, NY
  60. 60. Using the Data: Grow Customer Base
  61. 61. 39 125th Street, Harlem, NY Map retailers, retail categories to match space configuration and availability. Rezoning to encourage new development Major Development Opportunities Using the Data: Redevelopment Opportunities for Independent Retail
  62. 62. Questions?
  63. 63. RETAIL LEASING Identifying and Attracting Appropriate Retailer & Developers Instructor: Larisa Ortiz, Larisa Ortiz Associates, LLC www.larisaortizassociates.com www.commercialdistrictadvisor.com Twitter: @cdadvisor
  64. 64. RETAIL LEASING INTRODUCTION About you urban vs. suburban? upper-income vs. middle-income vs. lower income years of experience retail attraction (multi-site) previous experience with retail attraction?
  65. 65. RETAIL LEASING Why does tenant mix matter? There must be a reason why you are here…
  66. 66. RETAIL LEASING COURSE AGENDA 1.Develop a Strategy for Retail Attraction 2.Get “Retail Ready” – Addressing barriers to retail attraction 3.Know your Retailer 4.Turn Plans into Action – examples of successful retail attraction
  67. 67. RETAIL LEASING 1. DEVELOP A STRATEGY
  68. 68. RETAIL LEASING How do we define “success”? •Shopper choice •Retail sales •Property values Source: Econsult , “A Strategic In vestment Framework for Philadelphia”, 2009
  69. 69. RETAIL LEASING What makes a successful commercial district? –Density of retail –Tenant mix –Convenience (parking and transit accessibility) –Condition of the physical environment
  70. 70. RETAIL LEASING Density of Retail •The ability of a shopper to visit multiple stores in the same area •Corridors with more stores out-perform lower density corridors and have a consistently positive impact on real estate values and retail sales •Commercial districts with more offerings typically draw customers from a larger geographic area
  71. 71. RETAIL LEASING Density of Retail Impact Trade Area U.S. Shopping Center Classifications Center Type Average SF Typical # of Tenants Trade Area Size Travel Time Regional Mall 400k – 800k 40-80 5 – 25 miles ≤ 30 min Community Center 125k – 400k 15 – 40 5 – 15 miles ≤ 20 min Neighborhood Center 30k – 125k 5 – 20 3 miles ≤ 10 min Strip/Convenience < 30k NA < 1 mile ~ 5 min Size and location impact the relative distance a customer would be willing to travel Source: International Council of Shopping Centers
  72. 72. RETAIL LEASING Know your target customer –Residents –Daytime employees –Visitors Defining your project’s “strategic position” in the marketplace –retail offerings –price point –Customer preference The importance of co-tenancy Tenant Mix: Getting it Right
  73. 73. RETAIL LEASING Strategic Positioning TJ Maxx Brooklyn Industries Macy’s Retailer Price Point and relative Income Benchmarks. Dollar Store Talbots Blink Gym LOA Strategic Positioning Matrix Mapping your District’s Business Mix
  74. 74. RETAIL LEASING Strategic positioning in action Rego Park Center, Queens, NY
  75. 75. RETAIL LEASING Co-tenancy •Retailers like to be grouped with retailers who are attracting the same customer •Competitive retailers like to be near one another to give customers opportunities to comparison shop (apparel, jewelry, shoes, etc.) •Some retailers include co-tenancy provisions in their leases –Co-tenancy provisions give retail tenants the right to pay reduced rent or to terminate their leases, or both, if other specific tenants or a percentage of tenants do not open or if they leave a shopping center.
  76. 76. RETAIL LEASING Retail Clusters
  77. 77. Overview RETAIL LEASING PHASE I DIAGNOSE THE MARKET PHASE II DEVELOP A LEASING PLAN PHASE III GENERATE LEADS, AGAIN & AGAIN PHASE IV RECOGNIZE & SUPPORT SUCCESS 1.ASSESS THE DISTRICT AND BUSINESS MIX 2.UNPACK CONSUMER DEMAND 3.IDENTIFY OPPORTUNITY SITES AND RETAIL CATEGORIES 4. COMMUNICATE YOUR VISION 5.DEVELOP AND DISTRIBUTE MARKETING MATERIAL 6.IDENTIFY PROSPECTS 7.MAKE THE CALL & MAKE THE INTRODUCTION 8. BE READY TO HELP 9. CELEBRATE THE DEAL! 10. EVALUATE THE OUTCOME
  78. 78. The Process RETAIL LEASING PHASE I DIAGNOSE THE MARKET Walk your district and observe the existing retail mix Assess the physical shopping environment Identify your traffic generators Talk to those in the know STEP 1: ASSESS THE DISTRICT AND BUSINESS MIX
  79. 79. The Process RETAIL LEASING PHASE I DIAGNOSE THE MARKET STEP 2: UNPACK CONSUMER DEMAND DYNAMICS Determine trade area Estimate leakage by category (leakage refers to retail sales lost by a community to businesses outside of trade area) Consumer profile data (i.e. psychographics)
  80. 80. RETAIL LEASING PHASE II DEVELOP A LEASING PLAN TJ Maxx Brooklyn Industries Macy’s Retailer Price Point and relative Income Benchmarks. Dollar Store Talbots Blink Gym •What is “Strategic Positioning”? LOA Strategic Positioning Matrix Mapping your District’s Business Mix
  81. 81. The Process RETAIL LEASING PHASE II DEVELOP A LEASING PLAN 1. Map your Businesses LOA Strategic Positioning Matrix Mapping your District’s Business Mix TJ Maxx Brooklyn Industries Macy’s Retailer Price Point and relative Income Benchmarks. Dollar Store Talbots Blink Gym
  82. 82. RETAIL LEASING PHASE II DEVELOP A LEASING PLAN Develop an opportunity site inventory STEP 3: IDENTIFY SITES & RETAIL CATEGORIES Lease expiration dates Owner expectations – lease rates, uses Owner interest - don’t engage if an owner is recalcitrant to share information. Typically you do not want to go to a retailer without some assurance that you have a viable site
  83. 83. RETAIL LEASING PHASE II DEVELOP A LEASING PLAN Property Owner Engagement Opportunity Site Identification Identify requirements Engage early through market research Communicate your strategy Move on if recalcitrant Don’t give up. Revisit after successful execution Request formal commitment before expending time/resources
  84. 84. RETAIL LEASING PHASE II DEVELOP A LEASING PLAN STEP 3: IDENTIFY SITES & RETAIL CATEGORIES Identify Retail Categories to Target Consumer demand Community preference Size and configuration of opportunity sites
  85. 85. RETAIL LEASING PHASE II DEVELOP A LEASING PLAN Make the commercial real estate community aware of your targeted retail approach STEP 4: COMMUNICATE YOUR VISION Share your findings and vision with the stakeholders Become a vehicle connections • monthly real estate alerts (vacancies, new business openings, businesses for sale, business testimonials
  86. 86. RETAIL LEASING PHASE III GENERATE LEADS, AGAIN & AGAIN STEP 5: DEVELOP AND DISTRIBUTE MARKETING MATERIAL Map of the district that clearly identifies major activity generators Information about any incentives or resources for retail Testimonials from merchants Sales figures for your district
  87. 87. RETAIL LEASING PHASE III GENERATE LEADS, AGAIN & AGAIN STEP 6: IDENTIFY PROSPECTS Seek Out Prospects. National vs. Regional Independents - Trade shows vs. brokers vs. good ‘ole shoe leather Network, shop, and advertise Get creative! Keep a Prospect Database
  88. 88. RETAIL LEASING PHASE III GENERATE LEADS, AGAIN & AGAIN PROSPECT DATABASE Keep a Prospect Database •Business Contact Information •Broker Contact Information •Lifestyle/Price point •Square Footage Needed •Desired Rent •Other locations •Strength of prospect (hot/warm/cold) - Keep track of when to follow up - Be persistent
  89. 89. RETAIL LEASING PHASE III GENERATE LEADS, AGAIN & AGAIN STEP 7: MAKE THE CALL Conduct Prospect Outreach Invite prospects on a Choreographed Tour of your District
  90. 90. RETAIL LEASING PHASE III GENERATE LEADS, AGAIN & AGAIN STEP 8: BE READY TO HELP Play the mediator to negotiations , don’t be the broker (unless you have to) Be prepared with resources that will help tenants in their interactions with the landlord Don’t be discouraged, getting to “yes” can mean hearing “no” multiple times
  91. 91. RETAIL LEASING RECOGNIZE & MEASURE SUCCESS PHASE IV STEP 9: CELEBRATE THE DEAL! A grand opening is an exciting recognition Best way to build credibility, engage more property owners, and attract more retail Issue press release, invite local leaders, cut that bright red ribbon
  92. 92. RETAIL LEASING RECOGNIZE & MEASURE SUCCESS PHASE IV
  93. 93. RETAIL LEASING RECOGNIZE & MEASURE SUCCESS PHASE IV STEP 10: TRACK PROGRESS, AND THEN KEEP GOING Have a system in place to measure success as well as failure Sharing your success will provide your organization with valuable recognition Rinse, wash, and repeat!
  94. 94. RETAIL LEASING 2. GET “RETAIL READY”
  95. 95. RETAIL LEASING Lessons Learned: What role can you play? •The good and bad news…. –30/70 rule –There is no silver bullet •Retailers have varied approaches to site selection, get acquainted with site selection criteria for the categories you plan to pursue –Urban communities still confound. –Physical constraints matter (though less so where there is density) •Access/Parking •Visibility •Retail density and a reliance on individual property owners participation
  96. 96. RETAIL LEASING Setting the Stage: Clean and Safe Source: John Skinner, Verde Group/ ICSC Global Research Network Summary of Strategies
  97. 97. RETAIL LEASING Setting the Stage: Clean and Safe Source: John Skinner, Verde Group/ ICSC Global Research Network Summary of Strategies
  98. 98. RETAIL LEASING “Getting Retail Ready” Hierarchy Tenant Mix Safe Clean Access/Visibility Attraction Retention Fundamental Advanced Summary of Strategies Redevelopment
  99. 99. RETAIL LEASING 3. KNOW YOUR MARKET
  100. 100. RETAIL LEASING What indicators matter to retailers? Generally… –Median Household Income (not average) –Total number of households
  101. 101. RETAIL LEASING Specifically… Source: ICSC, Social Compact, “Inside Site Selection. Retailers’ search for strategic business locations”, 2008 Site Selection Indicators 1. Average Household Size 2. Average Income 3. Competition (presence, type, location) 4. Crime 5. Daytime Population 6. Educational Attainment 7. Ethnic Composition 8. Homeownership 9. Home Sales Values 10. Income Change 11. Major Employers in the Area 12. Median Income 13. Neighborhood Orientation 14. Number of Households 15. Pedestrian Traffic 16. Population Change 17. Population Size 18. Visibility What indicators matter to retailers?
  102. 102. RETAIL LEASING Industry Research Characteristics Duane-Reade CVS Walgreens Trade Area Size 3-5 miles Trade Area Population 25,000 18,000 20,000 Store Size SF 12,900 (96 x 137) 14,560sf (112 x 130) Site Preferences High visibility, high traffic count Signalized intersection with heavy traffic count Parking Requirements 75-80 cars 70+ cars DRUGSTORE GROCERY STORE
  103. 103. RETAIL LEASING What indicators matter to retailers? Specialized retailers rely on additional indicators…
  104. 104. RETAIL LEASING Do you have the right kind of space? Do you have the enough of the “right” residents?
  105. 105. RETAIL LEASING Do your homework before making the pitch… •Tenant Specific Research – Do you have the right people? •Einstein Bros. Bagels 70% some college education •Mandee’s  trendy young women with mod/low incomes – Do you have enough pedestrian traffic? •Auntie Anne’s  30 pp. every 5 minutes during off-peak – Do you have the right space? •CB2  6,000 – 9,000 sf stores targeting young professionals •Pinkberry  600 – 1,600 sf
  106. 106. RETAIL LEASING Prospect Research Where do you find tenant specific information? – Websites – Tradeshows – Brokers/Leasing Agents – Regional Real Estate Reps –Networking –Industry publications •Shopping Centers Today •Retail Traffic •Reference USA (sales psf) 44
  107. 107. RETAIL LEASING Data retailers want but struggle to get… •Generally includes data NOT captured by the census •Short-term change at the neighborhood level (one year, two years, five years) –Retailers unaware of new data sets, notably the Home Mortgage Disclosure Act (HMDA) •Daytime population information •Visitor population information •Pedestrian traffic counts •Detailed ethnic composition (i.e. Latino market) Hint, Hint. This is where you come in….
  108. 108. RETAIL LEASING Barriers to Retail Development •Land availability •Market demand to support a particular business •Evidence of that market demand
  109. 109. RETAIL LEASING What can economic development professionals do? •Do your homework. Know the retailers perspective. •Offer information on future neighborhood change, i.e. development plans, new housing •Demonstrate a commitment and willingness to overcome obstacles, i.e. licensing, permitting, incentives, etc. •Stir up the competitive juices Harvey Gutman, Brookside Advisors ICSC , “Inside Site Selection”
  110. 110. RETAIL LEASING Offer evidence of market demand •Marketing Material – they will do their own research. So don’t stress too much about this. •Sometimes its about getting on their radar •Site Visit
  111. 111. RETAIL LEASING 4. TURN PLANS INTO ACTION
  112. 112. RETAIL LEASING Downtown Brooklyn. Nightlife.
  113. 113. RETAIL LEASING South Bronx. Aspirational Staging Vacancy: Before
  114. 114. RETAIL LEASING South Bronx. Aspirational Staging Vacancy: After
  115. 115. RETAIL LEASING Woonsocket, RI. Main Street Open House
  116. 116. RETAIL LEASING Bed-Stuy Social Media It takes a team… Grand Opening!
  117. 117. RETAIL LEASING Parting Words •Retail attraction efforts are not a “quick fix” •Relationships are key to successful leasing •Engage your board and local residents to serve as district ambassadors •Don’t get discouraged – there may be many “no’s” before a “yes”
  118. 118. RETAIL LEASING THANK YOU! Larisa Ortiz 718-205-5116 lortiz@larisaortizassociates.com Twitter: @cdadvisor Facebook: Commercial District Advisor Blog: www.commercialdistrictadvisor.com

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