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RV 2014: Riders, Revenue and Rubbish- Managing Concessions and Making Money by Lorna Moritz


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Riders + Revenue = Rubbish: Managing Concessions and Making Money

Riders are coming to our stations, anyway. Can we make some money off them? Capturing the value of a transit investment can take many forms. Is providing concessions and services a good way to generate a meaningful income? Or just another way to provide amenities for transit riders? Vending machines or specialty retail? Hear from our panel about what it takes to develop a successful program -- from impediments, to thresholds needed to support certain uses, to who picks up the fast food garbage on the train. Advice, lessons and time for discussion.

Moderator: Theresa O'Donnell, AICP, Acting Assistant City Manager, City of Dallas, Texas
Jason Ward, Manager, Joint Development, Metropolitan Atlanta Rapid Transportation Authority, Atlanta, Georgia
Zahoor Kareem, President, Blinq, a Transmart Company, San Francisco, California
Lorna Moritz, President, TR Advisors LLC, Boston, Massachusetts

Published in: Real Estate
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RV 2014: Riders, Revenue and Rubbish- Managing Concessions and Making Money by Lorna Moritz

  1. 1. Retail Concessions on Transit Properties Speaker: Lorna Moritz, TRA President | 617.502.1418 |
  2. 2. Transit Retail Myths • Transit retail will solve your budget problems • ATMs are security problems • Cost of trash collection outweighs revenues • Tenant mix is impossible to control given the public bid process • It’s not worth it --- it depends….
  3. 3. Pros • Provides goods and services wanted by transit riders • Provides convenience for transit riders • Creates non-fare revenue for transit agency • Provide opportunities for economic development • Provides opportunities for minority owned or other small businesses • Provides additional eyes within the station for security (“See something – Say Something”)
  4. 4. Cons • Creates additional trash in the station areas and on trains • Certain types of businesses are management intensive • Poorly planned retail spaces can result in vacant and unused space • Creates new management issues that require the attention of the agency – you’re the landlord now! • If not properly executed revenues may not provide expected returns
  5. 5. Access, Access, Access! Program approach and success differs based upon station design –Subway •Soot, fumes, vibration •Requires high traffic counts –Elevated •Consider load factors •Under-El presents potential leakage problems –Concourse •Helps traffic flows to platforms •Easier retrofits –Regional Multi-Modal Centers •Higher traffic •Longer dwell times •Neighboring community access –Commuter Rail Depot •Business limited to peak times –Beyond the turn style •Operating challenges for deliveries •Requires high traffic counts •Vending and ATMs
  6. 6. Subway In the subway or at the street level entrance:
  7. 7. Elevated • Track Bed Leakage Issues • Noise and Vibration • Street Access • Connected to Neighborhood
  8. 8. Concourse • Cleaner & brighter • More dwell time • More potential space
  9. 9. Regional Multimodal Centers
  10. 10. Commuter Rail Depots • Self contained • Peak hours • Village center connections
  11. 11. Beyond the Turnstyle • Operating Issues – Deliveries and trash removal – Queueing space – Noise, vibration, fumes, soot – Security – Vending & ATMS
  12. 12. Developing a New Program • Master developer • Direct lease • DBE requirements • Fixed spaces vs kiosk or pushcart • Popup stores & food trucks – Trial program – Seasonal Opportunities • Management – Staffing – Technology
  13. 13. Designing Retail into Station Plans • New stations • Modernization programs • Retrofitting existing stations for retail • Don’t forget need for power, water, & sewer! Shiny new but no power or water! Tucked out of sight, out of mind!
  14. 14. The Kiosk Option • Lower capex, high quality, movable.
  15. 15. Pushcart Programs • Lower entry cost: ~$10,000 • Higher management involvement • DBE opportunity • Community Involvement • Storage
  16. 16. Financing a New Program • $500-800 per foot in stations for fixed space • $10-$100,000 for kiosks • $10,000 for pushcart • Modular construction • Developer paid program – give up 35-50% of revenues towards capital costs – 20 + years – Incentives for options – Aligning of interests at the end of the term • Tenant paid single locations build out – evaluate required build out to determine term
  17. 17. Hierarchy of Revenues per SF • ATMs • Branded Coffee (e.g. Dunkin Donuts) • Branded Food & Beverage • Non-branded coffee/food and beverage/news stands/sundries • Specialty Vending e.g. Red Box • Beverage Vending • Snack Vending • The Exceptions – Allowing Lotto, Cigarettes and Alcohol