One of the results of an increasingly national, if not international, economy is the rise of larger organizations to outbid smaller competitors with standardization and greater access to resources. We can see it everywhere from the clothes we wear, to the homes we buy and the food that we eat. One vibrant battleground is the retail environment where more and more small business owners can wind up being unable to compete with larger entities for survival in the face of rising rents. Contrary to popular belief, in order for more privately owned shops to survive (and the contribution they provide), neighborhoods need proactive measures of support rather than counting on market forces to do all the heavy lifting.
Recently, I was having a conversation with a West Village resident talking about the opening of the second location of a sandwich shop called Il Bambino, designed by new architecture firm DCP. Her excited response was, “I’ll take anything that isn’t a chain pharmacy or a bank!” reflecting an increasingly noticeable reality in the swiftly rising rents in New York that are slowly changing the face of neighborhood streetscapes.
No neighborhood seems immune with examples of casualties ranging from the quiet mom-and-pop shop all the way to Danny Meyer’s Union Square Cafe, which refused to renew its lease after its landlord more-than-tripled the space’s rent to $650,000 a year. Even spots like the former 5th Avenue home of celebrity chef Bobby Flay’s Mesa Grille has remained empty for over two and a half years after being in business for two decades. The landlord reportedly doubled the asking price per month.
While one could use the “efficiency of the free market” as justification for this trend being a consumer-driven choice, there is a growing number of sources that are saying the deck is increasingly stacked against unique, small business owners. A recent article by Oscar Perry Abello over at NextCity framed the depth of the issue on how the game plays into the hands of the outlets of larger corporations. It is not uncommon that “Signing a national brand tenant can even be the difference between getting financing or not getting financing for a commercial or mixed-use development project.”
A Lackluster Landscape in the Wake
As retail rents continue to climb in the city, the repercussions that are already becoming apparent are two-fold: the first is the slow but steady loss of neighborhood business that have helped to define the city and its individual neighborhoods for decades. The second is an increasing number of vacant storefronts as landlords wait for the tenant that can meet their rent goals. This combination is doubly-detrimental, fostering not only the loss of character, but also discouraging overall foot traffic. No one likes walking down empty streets.
The thought that this evolution is being driven by retail consumers doesn’t really hold water. At some point, even a restaurant that is full from open until close can only afford so much in rent and still charge prices people are willing to pay for food. While some credit could be given to the rising sale prices of high-end residential properties in the city, the two are not inexorably linked and trade (historically) in different orders of magnitude.
If the rash of overly optimistic landlords continue to spread at the cost of the urban experience then the question is: Will the market right itself? Maybe not–at least not in time. The cultural devastation would need to reach a point of such intensity that momentum of appreciation for authenticity would need to start from some version of scratch. Urban areas can take a more proactive stance to equalize the playing field.
Using the Zoning Code
Zoning can be an effective tool to serve as a filter for the kind of neighborhood that will be created within its parameters. In the same way that zoning can be used to promote the things we want, it can also be used to corral the things we don’t want.
Most zoning ordinances contain provisions to allow productive adjacencies of complementary uses or restrict potentially disruptive ones. Adult movie establishments and concrete plants are traditionally separated from healthy, mixed-use neighborhoods due to their negative effects on a pedestrian environment. While the cozy vestibule protecting a string of corporate ATMs is not the same as a strip club, there is an argument to be made that their contribution to a walkable environment is limited. En masse, they are probably detrimental.
The zoning code could easily be changed in order to create a new use group of establishments that operate under the umbrella of national corporations. After that, limitations to tweak their rate of propagation could include variables like size, frequency or proximity to other uses.
San Francisco’s “Formula Business Ordinance” presents itself as a reassuring pilot for a mechanism that gives a degree of control back to the local community for determining the face of its own future. The policy move requires “formula” business with over 11 stores worldwide to file for a special use permit in order to get permit approval from the Planning Commission. The criteria for consideration include the existing concentration of other chain retail in the area, the prevalence of similar goods and services already in the area, neighborhood compatibility and retail vacancy rates–all important metrics for how a new generation of tenants will affect the futures of the ones already there.
Can I See Your License Please?
Another option could be creating license requirements for national brands with a certain amount of them allocated out to neighborhoods depending on their size. Most municipalities, and sometimes their individual neighborhoods, require license approval for the sale of alcohol. This allows places to control how much booze is being poured within town limits as well its effects on the dynamic and feel of the neighborhood.
National chains could fall into a similar category. By requiring licenses to be obtained for nodes of a larger conglomerate, the metrics for attracting, starting and maintaining those businesses change. By only having a fixed number of licenses per neighborhood, the percentage of business taken by certain types of corporations becomes limited–promoting competition between other large companies that can afford the battle rather than steamrolling smaller operations.
Ground Floor Retail Needs Curating
The design and planning communities often talk about creating “places” in lieu of simply infilling with space. Though I am not particularly a fan of the term “placemaking,” the goal of making authentic, unique and walkable environments that are inherently linked to their locale is a good one. When it comes to ground floor retail though, an increasingly important component is changing the mentality of how and why those spaces are filled.
Cultivating a successful streetscape should be a full-contact sport and one should assume it takes more than simply building a space and handing it over to who can pay the most rent the fastest. Andres Duany, Jeff Speck and Michael Lydon hit the topic home succinctly in what I think is one of the stronger points made in their book The Smart Growth Manual:
“Main streets often exist in direct competition with malls, shopping centers, and other centrally managed retail agglomerates. To hold their own, they must incorporate certain design and management techniques applied to the best retailers… leasing must be coordinated and proactive, the right mix of shops–useful, competently run, and mutually supportive–will not occur by chance.”
I could not agree more. Examples of what happens when failing to operate by this mantra are literally everywhere, both inside and outside of urban areas. The state of affairs at Westwood’s University Station complex says it all. What was meant to be a progressive example of Transit Oriented Development with unique retail shops under apartments turned into a strip mall of chains with standardized apartment blocks around it.
In order to achieve or maintain the memorable street experiences that people love, the landlords, businesses, municipalities and the residents must all stop assuming that the market will manage the space into success. These constructs need to be carefully monitored and the means for keeping them vibrant need to evolve in response to the times and changing market forces.
April 29, 2016 at 9:18 am
Although I could not agree more with the tone of this post, we must acknowledge that policies in place right now have done everything possible to promote the growth of corporations. I have had the good fortune to visit I’l Bambino, and it is a shame that such an establishment of quality food and beautifully designed space is not instantly recognized. One can only hope that greed will not completely devouter NYC.
May 17, 2016 at 10:14 am
I think it is clear that throughout the country, and especially within major cities, starting and operating any small business has become increasingly difficult. However, I think you are talking about two separate arguments within this post. First is the rising cost of rent within major cities, which can be felt by commercial and residential tenants throughout the country. I don’t think limiting the number of “national” retailers able to operate in the city will actually make a difference here. The market is simply going to have to reach some level of equilibrium in terms of rent vs. economic benefit of the space. While this waiting time will likely mean empty store fronts for some amount of time, eventually a landlord needs to fill a space and will lower the cost of rent. The second argument (and more important one, in my mind) is the belief that large “national” companies and corporations are shoving out small businesses. This argument is better made in suburban and rural locations than in major cities. The only reason big retailers thrive in major cities is because the citizens of those cities shop there. People shop there because the prices are lower and there is a wider selection of goods available. No one makes people shop at Walmart or eat at Vapianos over going to a local small business. They go there naturally. I don’t think New Yorkers have the right to demonize the very locations they are choosing to go to. If enough New Yorkers are unhappy with the big retailers and restaurants, then just don’t go.