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The Incredible Shrinking Box

Retailers shape stores to fit urban settings

September 11, 2005 |
Great Lakes Bulletin News Service


Oakland, Calif., revived its Fruitvale district by converting part of a large transit station parking lot into a creatively designed collection of retail stores, offices, and mixed-income housing.

In the last few years, a veritable stampede of Americans has returned to city and older suburban neighborhoods, seeking shorter commutes and fun things to do. But they still end up spending Saturdays in the place they tried to leave behind: the newer suburbs.

It turns out that buying a week’s groceries at low prices means schlepping out to where the grocery giants can plant their preferred, massive footprints. The same goes for hardware, building supplies, or household sundries: City folks must que up on suburban expressway exit ramps to buy what they need. That is because, for years, the less-than-preferred demographics and physical constraints of inner-city neighborhoods kept retailers away. Even the older suburbs saw their small strip centers fade as the big chains chased affluence out to the next cornfield.

Now, as close-in areas draw new residents, a new generation of mixed-use, higher quality shopping environments is emerging. From Atlanta, where one of the largest redevelopment projects in the city’s history will bring IKEA and a host of other retailers downtown; to Chicago, with the first multi-story Home Depot; to Washington, D.C. and its retail renaissance, major retailers are discovering old and new urban neighborhoods in a major way.

Pushing the change are savvy local government officials who realize that, for urban and inner suburban neighborhoods, attracting major retail stores and mixing them correctly with residential development revitalizes communities. And some retailers are responding by locating their businesses within those communities, not just at the end of expressway ramps.

Such newfound flexibility has implications for cities around Michigan that are trying to either revitalize or protect their downtowns. In order to provide the true walkability that urban dwellers crave, cities as different as Detroit, Grand Rapids, Ann Arbor, Troy, Flint, and Traverse City need many more practical, downtown grocery, hardware, household, and clothing stores.

But the rising interest among chain stores in downtown retail could influence the growing resistance to big-box stores in rural areas, too. For example, after a recent court decision in their favor, a group of residents and elected officials in Acme Township, located just east of Traverse City, are working to convince Meijer, Inc. to drop its proposal for building another cookie-cutter, 232,000 sq. ft. store in the middle of a large field and instead build a two-story outlet, with a parking deck, in the middle of a "new urbanist" town center long envisioned by their township’s master plan for a site across the street. The center would include hundreds of houses, apartments, and condominiums, plus other stores, offices, and a park.

Surprising Signals
One of the strongest signals yet of how fundamental the shift in “big-box only” retail doctrine may be came at the International Council of Shopping Centers last December. Robert Stoker, senior real estate manager for Wal-Mart Stores, Inc., declared, “We've reached a stage where we can be flexible. We no longer have to build a gray-blue battleship box.”

Mr. Stoker cited several examples of the world’s largest retailer bending its once-rigid design formula to fit into existing neighborhoods, new mixed use developments, and even a high-rise. For the retail development world, it was as though the pope had changed the words in the Lord’s Prayer.

Wal-Mart is not alone in its new willingness to adapt to more urban environments after long refusing to veer from a formula that has held since the 1960s: A single-story building on a major arterial road surrounded by asphalt.

“In 1960, if you had 200,000 square feet of retail, it would have a footprint of about one acre in a multi-story building,” said Ed McMahon, a senior fellow at the Urban Land Institute who has written several articles on commercial design trends. “Until very recently, that same 200,000 feet would be in one story and cover three to four acres, fronted by 20 acres of parking.” 

Another large retailer, Target Corporation, was among the earliest to employ a more compact model. The company’s flagship store in Minneapolis has four stories, and the chain has two-story stores with parking structures in Atlanta, Gaithersburg, Md., and other places. Home Depot recently opened a three-story store in downtown Chicago. Wal-Mart has a two-story outlet in a mixed-use setting in Long Beach, Calif., and will soon occupy two floors of a mixed-use high-rise in Rego, N.Y.

Mixed-use urban projects are popping up all over, said Cindy Stewart, ICSC’s director of local government relations. “You still see lifestyle and power centers, but retailers going after that urban market are going into projects that also have housing, because there’s such a strong need for both.”

Why It Works
While building in neighborhoods requires rethinking architecture, footprint size, and loading dock placements and adding masked parking decks, Mr. McMahon said it can be worth it: Urban stores often out-perform their suburban counterparts. Increasingly, retailers are recognizing what he calls the place-making dividend: “People will stay longer and spend more money in places that actually earn their affection. Strip shopping centers are retail for the last century, and mixed use is the retail environment for this century.”

Ms. Stewart cited two reasons why big boxes are reshaping themselves into downtown-ready formats.

“The suburbs are saturated,” she said, “and developers and retailers are looking for new markets, and those really are old markets that may be undergoing a rebirth. And when you go out to the green space there are a lot of growth management laws in place that make those projects more difficult to do.”

She added that the fastest-growing sectors of her retail association’s membership are local governments and community organizations working on commercial restoration. Some larger cities and older suburbs are redeveloping strip corridors not just as a place to shop, but as a place to be: Mixed use, walkable neighborhoods with a Main Street feel — precisely what Acme’s master plan calls for.

Residents of Michigan’s inner cities, inner-ring suburbs, and exurbs could learn from recent community-retailer collaborations on new, successful store designs.

Rebounding in Washington
One such partnership is in Washington, D.C., where the mayor and a local business partnership established the Washington, DC Marketing Center to lure skeptical retailers into the city’s rebounding neighborhoods.

“We compiled all the retail opportunities into a single resource,” said Michael Stevens, the center’s CEO, “and posted them on our Web site. We know the demographics and traffic counts.”

Extensive research revealed that the neighborhood has a tremendous amount of buying power, thousands more households than the Census counted, and far more disposable income than anyone imagined. Yet the area was annually sending about $424 million, two third of it buying power, to stores elsewhere. So the city assembled a deal to build Tivoli Square, a project with a Giant Foods store — an urban rarity at 53,000 square feet — a restored Tivoli Theater, 25,000 sq. ft. of shops, and 28,000 sq. ft. of upstairs office space.

Tivoli Square has triggered the largest retail project in the District, called D.C. USA, which will mix regional and national retailers with restaurants and a health club.

Oakland’s Transit Village
An Oakland, Calif., project is repairing the damage done to the Fruitvale district by years of sprawling suburban development.

“Fruitvale had become a very unattractive neighborhood and it was just filthy dirty,” said Arabella Martinez, the former head of the district’s Spanish-speaking Unity Council, a non-profit promoting Latino opportunity throughout the Bay Area.

The boulevard was dilapidated; the nearby BART rail station, surrounded by acres of parking, was unconnected to the commercial district. The council rallied the community to develop, on its own, a “transit village” in BART’s parking lot. The group reasoned that shops and restaurants serving both the neighborhood and commuters would link the commercial district to the station and provide a community gathering spot. It added housing and planned offices to bring more jobs. Today, with construction almost complete, the area is transformed.

“You see tremendous numbers of people shopping, and you don’t see all the security bars on the storefronts,” Ms. Martinez said. “The district went from a vacancy rate of about 40 percent in 1990 to 1 percent now. All evidence is that the strategy to focus on the retail worked. I’m living my dream.”

New Life for St. Louis Park
While the Oakland and Washington projects point the way for possible projects in Detroit or Grand Rapids, a successful effort in Minnesota could guide places like Troy, or even tiny Acme. Both lack a downtown and face threats from ongoing sprawl.

By the early 1990s, St. Louis Park’s main commercial strip had declined to a collection of pawnshops, check-cashing storefronts, and struggling retailers. Officials decided it was high time for a downtown.

“People really wanted to have a place in their community where they could go and just hang out, a real town center,” said Richard McLaughlin, the architect and town planner who conducted public workshops that planned a shopping district and housing surrounding a town green. The city hired TOLD Development Company, which, paying close attention to the retail atmosphere, broke ground in 2001 on 100,000 square feet of retail space and 660 housing units. The firm’s principal, Bob Cunningham, said the plan paid off.

“What’s really attracting people to live there is the mix of retail, because that enhances their lives,” Mr. Cunningham said, adding that residential occupancy rates have never dropped below about 94 percent.

The mix includes a daycare center, Pier One Imports, restaurants, Panera Bread, Starbucks Corporation, and locally owned boutiques, as well as a farmers market and public events that transformed the 600-foot long town green, connected to 30-acre Wolfe Park, into a town focal point.

The town helped the project by building smaller, shared-use parking structures, and revising its tax code to capitalize on rising property values to finance the city’s investments in the town green and streetscapes. Mr. Cunningham said that financing was the trickiest part: “Lenders are still either apartment, condo, or retail lenders. Most don’t do mixed use. But this is a product type whose time has come.”

David Goldberg, a regular contributor to the Michigan Land Use Institute's Elm Street Writer's Group, is the communications director at Smart Growth America. Reach him at dgoldberg@smartgrowthamerica.org.

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