Saturday, December 29, 2012

Predicting the future by turning back the clocks.

In an essay from the past, I shamelessly stretched the definition of the term “land banking” to suit my own purposes.  How?  By showing two examples of the deliberate assembly of contiguous parcels with the purpose of building something new, but the problem is, neither attempt at parcel assembly consisted of vacant land, as is the customary use of the term.  The land banking was (as I indicated) retroactive, because the parcels themselves already had structures resting on them.   The owners of contiguous buildings had let the buildings remain vacant, long enough that some were falling into disrepair.  But these two examples were in the heart of walkable downtown Bloomington, Indiana and auto-oriented Greenwood, Indiana—economically healthy environments where it made no sense to abandon the real estate, since the landowners could easily find reliable tenants.  In due time, I knew that these dowdy buildings would get demolished, once parcel assembly was complete, and the developer would ideally rebuild something better than was there before, making a higher and better use of this coveted land.

Well, I was wrong.  I guess I learned my lesson in speculation.  Or did I?  The example in urban Bloomington warranted a follow-up essay about five months later, because the developer, who had hoped to build a large condo building on Kirkwood Avenue on the site of multiple smaller structures, ultimately decided simply to upgrade and improve the appearance of the existing structures when the condo market went bust.  In truth, I wasn’t wrong about the land banking process—it just didn’t work out the way the developer had anticipated.  Meanwhile, the suburban Greenwood example simply foretold the replacement of old retail outparcel buildings (mostly drive thru restaurants) with newer, flashier ones, like a contemporary Chick-fil-A.  So I was wrong on that, but maybe the intention was for a larger retail structure that again flopped, since the economy made it harder to secure financing for more ambitious projects.

Either way, I’m at it again, speculating on another land banking initiative, exploiting the term once more.  I may be wrong once more, but I’m more confident than ever about my guesswork because of the setting: this time it’s in densely populated downtown Philadelphia, usually referred to by the locals as Center City.

By most measurements, the squat, nondescript building in the photo above appears to be in good enough condition, but it sure doesn’t seem to have much luck at securing tenants.  It sits at the intersection of South 15th Street and Walnut Street, and its prime storefront is glaringly vacant:
And the first photo was misleading; it revealed the entire frontage along South 15th Street, but despite the various signs for a coffee shop, hair salon, and Korean restaurant, the reality is far less promising:
The Panache salon has vacated the first group of windows on the photo above, while Elixir Coffee House—
Gone as well, relocated a mere half-block to the west.  Finally, it would appear that Miga, the Korean restaurant at the end, has closed altogether.
However, a small sign in the window indicates that the business hopes to reopen soon…presumably in a new location.  Meanwhile the second floor of the building doesn’t look much more active:
The pictures don’t fully capture this, but in the few places where the curtains are drawn, it is clear that the offices are empty, and the thickness of dust across all the windows suggests that they haven’t been used in quite some time.

The frontage on Walnut Street is no better.
Lush, the upscale purveyor of soap and cosmetics, used to occupy that street-level space in the adjacent two-story building, but it has apparently relocated as well.  And a bit further down the street, the furniture rental store has also relocated, in yet another low-rise structure.
The first floor apparently used to contain a Rite Aid Pharmacy, but it too has terminated its lease.  In short, the building appears to be completely vacant.  The absence of pedestrian traffic along 15th Street only confirms the building’s lack of appeal.  An outsider might draw the conclusion that this is succumbing to blight and disinvestment, but anyone remotely familiar with Philly would know otherwise.  15th and Walnut just blocks from the heart of Rittenhouse Square, long Central City’s most vibrant park space and the name of the prestigious surrounding neighborhood.
Meanwhile, Walnut Street is the most heavily-trafficked retail corridor, widely sought after by national upscale brands.  If anything, it seems a bit strange that a low-end furniture rental company would voluntarily pay the exorbitantly high rents along Walnut Street, especially considering that directly across the street from this building is the following tenant:
It’s hard to think of many retailers choosier than Armani Exchange.

In short, this group of three vacant buildings in a posh part of town bespeaks the quiet transfer of titles among speculators who no doubt believe this corner deserves a higher and better use.  The tenants didn’t depart because the location was bad.  A Google Streetview from reveals that both the 15th Street segment and the WalnutStreet cluster of three façades were fully tenanted as recently as August of 2009.  More likely than not, the owner(s) did not allow them to extend their leases into a new term.  In this case, the land speculator has assembled multiple adjacent parcels with the hopes of building something with potential to earn greater income, no doubt benefiting from a higher Floor Area Ratio (FAR) than the meager two and three stories that the current buildings offer.  In order to build anew, this developer will need to demolish the existing structures; in order to demolish, he or she will obviously have to vacate.

I have based this entire essay on a hunch that I barely noticed in passing through the city briefly one afternoon, in which I guessed what was about to happen by peeling back the layers, thereby figuring out the current phase of an ongoing development trajectory.  I was first taken by the conspicuous absence of pedestrian traffic around the building fronting 15th Street—
—particularly in comparison to all the streets around it, or even the opposite side of 15th:
Moments later, it occurred to me that most if not all of the storefronts were vacant, despite the signage.  Then I noticed the architectural details of this building, or the lack thereof.  I’m hardly the most well versed architectural historian, but usually I can at least approximate the date of a building from its appearance.  Not this time.  It almost seemed as though the designer had eschewed any ornamentation (or even a deliberate absence of ornamentation, which can be an enhancement in itself) that could give it away or distinguish it.  The landlord even let Miga, one of the former tenants, paint its section of the façade black.
Ugly ugly ugly.  My suspicion is that this building comes from a time when the economy of urban Philadelphia was so feeble that even Rittenhouse Square was struggling, and the risk-averse developer chose unimaginative and low-slung construction, because that was all the weak market could support.  The 1970s or early 1980s, perhaps?  Since that time, Rittenhouse has reclaimed most if not all of its luster, and the time is right to build bigger and better.  Am I right?  Will these buildings soon face demolition?

A modest bit of internet research vindicated my suspicions: all those other tenants left because these buildings will soon come down.  The replacement?  A four-story mega-structure, with each floor devoted to a separate retail tenant.  The buzz on the Naked Philly website reveals, not surprisingly, a fair amount of disappointment: a premier corner such as 15th and Walnut could easily support a 16-story mixed-use building, octupling the FAR rather than merely doubling it.  But we are still in the midst of lean economic times, forcing developers and their equity partners into far more modest decisions than they otherwise would make.  At the very least, this latest example of “retroactive land banking” demonstrates that the machinations of a relatively unregulated land market are helping new construction to chug along, against all odds.  If a blighted blemish sits squarely in a sheet of polished platinum, rest assured that someone with deep pockets has already pounced on the disparity, ready to invest in a way that could level the playing field…even if only aesthetically.

Wednesday, December 26, 2012

It may take a village, but what if the village is the taker?

Virtually every metropolitan area in America, both large and small, consists of more than one incorporated municipality, usually with a shared boundary.  Typically the “core” city after which the Metropolitan Statistical Area (MSA) is named is the oldest, most industrialized, and the most populous city.  The surrounding, contiguous cities—the suburbs—are the inverse: newer, lower population, less of an industrial heritage. Beyond this dichotomy, the relationship between the core city and its suburbs will probably vary greatly from metro to metro.
Lest I insult the intelligence of my readers, I won’t belabor the obvious any further.  The municipalities in an MSA will differ greatly, like the variegated colors in a mosaic, and not just because they comprise discrete planes.  Ideally, they offer varying approaches to self-governance that directly reflect the wills of their electorates.  No two municipalities in a metro area are likely to adopt quite the same approach to the financing of various core services—police, fire, public works, and so forth.  It is for this reason that we might witness core differences between in infrastructure between two adjacent municipalities: they choose different street signs, lighting, or even paving surfaces, let alone the tax structures used to finance them.  I observed an example of this in a recent blog post in which a road that formed the boundary between two Cleveland suburbs.  Meanwhile, most constituents will assess the aptitude of their executives through two basic means: the election process at a microcosmic level, and maintaining a residence in the municipality over the years, at the macrocosmic level.  This duality provides the chief incentive for a mayor and his staff to perform their duties capably: if they want to keep their jobs, they will strive to perform well enough to get elected, and a well-managed city is far more likely remain desirable enough to keep its tax base than one that is not.

But what happens when a town’s leadership chooses an ethically or legally dubious management practice?  One Cleveland suburb in particular has acquired a certain reputation over the years:
East Cleveland abuts the core city to the west and the north, and parts of this suburb are older than certain neighborhoods in Cleveland proper.  In terms of the built environment, the boundary between the core city and its suburb is indistinct: the historic “millionaire’s row” stretched along Euclid Avenue in both municipalities, with little regard for where one began and the other ended.  A century ago, the City of Cleveland unsuccessfully attempted to annex East Cleveland on two occasions; these days, Cleveland is not likely to perceive its eastern neighbor as much of a prize.  East Cleveland fell on hard times during the widespread deindustrialization that took place throughout the Cuyahoga Valley in the second half of the twentieth century: since 1970, it has lost more than half of its population.  What was once a predominantly white suburb is now almost exclusively black, with only about 6% claiming any other race in the 2010 Census and nearly 40% of the population falling below the poverty level.

Not surprisingly, East Cleveland’s impecunious population does not offer the sort of taxable income with which the City can provide fundamental services.  So what does the City do?
It shifts the burden to motorists passing through by tackling them with hefty speeding tickets.  While visiting Cleveland, friends had warned me that the 2.5 mile stretch of Euclid Avenue that passes through East Cleveland was a fierce speed trap—even a few miles per hour over the limit will result in a ticket.  Now this sign on the sidewalk confirms it.  The City no doubt decided to deploy cameras in order to preclude law enforcement officers from squandering time on petty moving violations, especially considering East Cleveland’s traditionally high rate of violent crime.  A few blocks away, an unusually large sign announces the approaching school zone, which no doubt has even more onerous speeding restrictions—and steeper fines.

At least the City of East Cleveland is candid about its method of generating revenue.  The same can’t be said about another Ohio municipality: New Rome, a suburb of Columbus.  This tiny village comprises only about nine city blocks (approximately twelve acres), and even at its peak, no more than 150 people called it home; the 2000 Census estimated its population at 60.  It would probably occupy little more than a footnote in Columbus’ cultural history if it weren’t for a 4-block stretch of U.S. Route 40 (West Broad Street in Columbus city limits) that falls within the corporate limits.  I don’t have any firsthand photographs, but this Google Streetview captures the essence of New Rome well enough.  This 1000-foot segment of one of America’s oldest highways is a notorious trap, where the speed limits drop from 45 miles per hour to 35.

The New Rome Police Department unapologetically issues $90 to motorists going 42 mph within this speed zone; since this is a clear violation, it is entirely within the department’s right to do so.  But, according to an April 2003 issue of Car and Driver magazine, speeding tickets only account for about 12% of New Rome’s citations on U.S. 40.  The citations for the remaining tickets explain why the village has achieved such notoriety: fines for cracked or excessively tinted windshields, dirt on the license plate, chipped taillights, faulty mufflers, no front license plates, tailgating, and driving too slowly, among others.  Officers routinely ask stopped motorists where they work, and failure to pay in time may result in an arrest at the workplace.  This village of approximately a dozen ramshackle houses, three apartment buildings, and a handful of small businesses earns nearly all its revenue (nearly $400,000 in those last few years) from traffic citations.  Since the town has no other real amenities (a fire department, library, or parks) all of this money pays for the police force—an operation that exists to fund itself and the village council.  The municipal building is a double-wide trailer.

New Rome’s command over its speed trap helped it achieve a reputation far more insidious than anything the much larger East Cleveland could muster.  Motorists had started using alternate routes in order to avoid the gauntlet, often traveling through residential neighborhoods unequipped to handle the traffic in terms of road width.  Businesses in the area actively voiced concern that their enterprises were suffering as motorists consciously circumvented New Rome.  A few neighbors eventually grew so frustrated about the situation that they launched the website New Rome Sucks in order to let more people voice their Tales of Woe.  Further research on the village’s internal operations revealed that the speed trap was just the tip of a relentlessly corrupt iceberg.  City leaders inappropriately used a federal grant from 1996 intended to fight burglaries and vandalism to fund yet more traffic enforcement.  This police force has at times employed as many as 14 people (almost one quarter of the 2000 population), all for the sole purpose of citing motorists and collecting the fees.  Furthermore, the village didn’t even abide by its own standards for its executive and legislative branch: it had not held elections for the village council since 1979, and it went seven years without mayoral elections.  Past audits revealed multiple instances of embezzlement by various council members, virtually all of whom are related to one another.  The State Highway Department claimed that the Village’s sudden speed limit drop on U.S. 40 from 45 to 35 is unjustified.

At last, in 2002, a neighboring business owner, angered by New Rome’s influence on the driving culture of Columbus’ west side, moved to an apartment building in New Rome and successfully ran for mayor, winning with 6 votes against zero.  However, the town council refused to recognize his victory, with one member calling him a carpetbagger.  This controversy, well chronicled like so many others on the New Rome Sucks website, eventually attracted the attention of the Franklin County Prosecutor and Ohio Attorney General Jim Petro, who determined that, after decades of corruption and incompetent management, New Rome should be abolished.  Not surprisingly, the village’s constituents voted against dissolution.  By the end of the year, Petro convinced the Ohio General Assembly to pass a law that allowed the state to seek dissolution of a village under 150 people if the State Auditor found that it provided fewer public services and demonstrated a pattern of wrongdoing.  When village officials challenged the dissolution statute as contrary to the home rule provisions of the Ohio Constitution, a judge ruled in favor of the State in July of 2004 that the New Rome electorate had allowed key offices to remain vacant for such long periods of time that the village had effectively dissolved itself.  By September of that year, the Village of New Rome had ceased to exist, irrevocably absorbed into Prairie Township of Franklin County, Ohio.

[While the New Rome incident originally earned national media attention, the majority of coverage today comes from the Columbus Dispatch newspaper and has reverted to archives, so the Wikipedia article (never a preferred source of mine) offers the most detailed chronology of events.] 

New Rome provides an interesting contrast to most other representatives of the multifaceted suburban mosaic referenced at the beginning of this essay.  In most municipalities, good governance is a selling point, and the election process allows constituents to transmit their will onto their representatives by either voting the preferred candidate or voting with their feet.  However, New Rome’s incompetence and malfeasance was equally a reflection of the will of its constituents: they got exactly the sort of racket that an ostensible majority of them wanted.  And eventually the village forfeited its very existence.

If the story of New Rome sounds just a few tweaks away from an episode of The Twilight Zone, the sad reality is that similar communities sit scattered across the country.  New Rome may be extreme, but the New Rome Sucks website allows commenters to recognize other tiny municipalities with similar reputations for speed traps.  Most of the listed towns are nothing more than hearsay, but the American Automobile Association does designate the title “Traffic Traps” to two other communities (both in Florida) that it believes specifically employ enforcement measures with the purpose of raising revenue rather than promoting road safety.  And the USA Today article recognized that a number of states have defined speed traps as towns that generate more than 30% of revenue from traffic fines.

The suburb of East Cleveland is a struggling “Community of Strict Enforcement” that may not have quantitatively high road fatalities, but the existing conditions of the city give it few other options to generate the revenue it needs.  I am by no means claiming that it approaches anything near the corruption of New Rome, but I have no doubt that the placard on the sidewalk owes its existence to the debacle that brought about the demise to that inconsequential suburb of Columbus.  The Ohio Attorney General no doubt eyes the practices of communities like East Cleveland with suspicion, in light of what happened with New Rome.  A brighter future for East Cleveland could involve a certain rediscovery of its walkable streets and venerable historic housing stock (at least what survives of it), but the crime rate and conditions of its public schools do not augur well for this happening soon.  In the meantime, the struggling municipality needs to fund its very busy police department.   The combination of school zones and cameras are a good start, and candor about this questionable process may be the most satisfactory conclusion.

Tuesday, December 18, 2012

Shopping for the masses—the haves and have-nots.

It seems like I can hardly go more than two months without drumming up a blog article coming from a mall.  Even as enclosed malls have plunged from the popularity peak in the 1970s and early 1980s (a point in time when American downtowns were lifeless almost across the map), they still remain a formidable retail presence across most metropolitan areas.  Malls continue to offer a consolidated laboratory for observing consumers’ idiosyncrasies.  But they are in serious trouble.  Hardly a week goes by when a mall somewhere isn’t losing a key anchor tenant.   And, at the height of the Great Recession, an average of four malls closed every week.  Nonetheless, plenty others remain that don’t show even a hint of fading.  The Greenwood Park Mall outside Indianapolis, the one closest to where I grew up, is probably stronger than ever, with more upper-middle retailers than it had in the 1990s.  I even blogged about it a while ago.  Conversely, two other malls on Indianapolis’ east and west sides of town remain on life support.

Then there are the dozens of malls that fall somewhere between these two extremes: not really likely to collapse any time soon, but certainly not flourishing. These malls have ostensibly lost their market share to other retail typologies: big boxes, lifestyle centers, power-strip clusters (not really sure what else to call them), and even sometimes to traditional town centers lucrative enough to attract major national brands.  Such malls might still expire, however, and the biggest threat is the terminally sleeping giant of online retail.  Before it’s fair to investigate what will happen to them, it’s best to first gauge what they look like now.

The first is the Oxford Valley Mall, in the lower portion of Bucks County, Pennsylvania, a suburban area northeast of Philadelphia.  The mall has sat at this location since 1973, at a time when Lower Bucks County was booming with new suburbanites (and, simultaneously, huge portions of north Philadephia city limits were hemorrhaging white middle class families).  It understandably seemed like a wise decision for the Kravco Company at the time: locate just off a major highway (US Route 1) in a rapidly growing area, where the land was still cheap enough to assemble a huge parcel for all the parking necessary in a corner of the metro with limited public transit access.  The model had worked in dozens of similar locations.  Why should it fail for Oxford Valley?

And the truth is, it didn’t.  It hasn’t—40 years later, the mall is up and running.  Oxford Valley Mall, on an early Saturday evening during the Christmas season, still looks like a lively place.  But closer scrutiny will reveal serious weaknesses that would not have been reflective of such confidently situated suburban real estate even a decade ago.  The community of Langhorne remains resolutely middle class, perhaps even upper-middle.  Though the area is likely far more ethnically diverse than it was in 1975, poverty rates remain quite low.  So what’s the problem with this particular mall?

At any rate, it’s a big one, at over 1.3 million square feet and two floors.

From a superficial scan of the interior, it doesn’t look particularly outdated; it has obviously undergone an extensive interior renovation at least once since its 1973 construction.  While one would expect a mall food court to be busy at a conventional dinnertime, the fact that Oxford Valley has a number of people milling around the eateries indicates that people are at least lingering enough at the mall to justify staying around for a meal.  It’s fairly busy.

Apparently, visiting the mall remains a popular pastime on Saturday evenings during the holidays.  But the first sign of weakness remains visible in the above photo: a vacant restaurant space between the Master Wok and Chicken Now.  And that’s not the only one.

Two more at another section of the food court.  The co-existence of three vacant restaurants is far more indicative of a trend.  Is the rest of the mall riddled with vacancies?  Generally speaking, no: the two-story central spine of the mall still looks pretty solid, with shuttered storefronts few and far between.

And Oxford Valley Mall still commands some discriminating tenants:

Swarovski, Coach, Williams-Sonoma, and Banana Republic may not be Gucci or Prada, but they are solidly upper-middle performers, and they won’t just hop into any mall’s leasable space.  The fact that Oxford Valley is about to welcome a Sephora indicates that choosy brands are still absorbing mall space; the four pictured above aren’t necessarily the last of a dying breed.

But what about the other tenants?  It has its fair share of ubiquitous inline stores, like Claire’s, Kay Jewelers, Foot Locker, Sunglass Hut, the titanic Forever 21, and so forth.  But it also has places like this:

According to its Tumblr-supported website, Never Too Spoiled apparently has one other branch, at the Hamilton Mall in New Jersey.  I’m hardly trying to fault an fledgling entrepreneur for making a go of things—which the proprietor of this store clearly is doing—but it’s a bit surprising to see a local tenant in a mall that clearly aspires to fairly high-end national and international brands.  And this little storefront is hardly alone:

I can’t find a website on Twinkle.  It appears to be the only one of its kind.  I commend a business like this for trying its luck in a large mall, but such entrepreneurs typically don’t have as deep of pockets as the national brands; the presence of Sparkle in this mall suggests that the leasing rates aren’t so high.  Here are a few more:

XO is a formal apparel store with two locations in the Philadelphia metro—nowhere else.

Suit Mart also lacks a website—at least one that is referring to the store with this name at Oxford Valley.  And the cluster of stores in the photos below (on both floors) is a real mystery:

None of them—East Meets West, Shinee, or George’s Cards and Collectibles--even get mentioned in the directory for the mall.  Only the last of the three has a website (which I linked), but it, too, is a regional business with no more than a few locations.

Obviously Oxford Valley Mall has a lot of these mom-and-pop stores.  It is with no small amount of irony that I recognize that many of these locally-owned boutiques are the exact sort of tenants that our historic small-town main streets would kill for—as a sign that they are thriving—yet when they proliferate in a suburban, auto-oriented mall, they almost always indicate that the management company is lowering its leasing costs just to attract new tenants.  With too many mom-and-pops, a mall nearly always gets branded as declining.  Yet this mall in Bucks County can claim both the highly coveted national brands as well as regional small businesses.

Do the demographics of the area indicate anything about the direction the mall might be headed?  Not really.  Oxford Valley Mall sits just south of U.S. Route 1, at this point a limited access highway linking northeast Philadelphia to Trenton.  South of Route 1 sits the sprawling expanse of Levittown, among the first post-war middle class suburban developments in America and worth of a blog post of its own (or two, or three).  Levittown, now approaching 60 years old, is no longer a bastion of enforced racial homogeneity.  Though still mostly white, the titles of these modest, aging homes are rapidly shifting to Lower Bucks County’s immigrant newcomers, resulting in a far more ethnically diverse population patronizing the mall—but still one with low poverty rates.  On the northern side of Route 1 stretch many of Bucks County’s smaller boroughs and nascent exurbs, nearly all of which are mostly white and generally affluent—wealthy enough to keep Bucks County consistently among the top 100 highest-income counties in the country.

So what’s inducing this discernible weakness in the retail landscape at Oxford Valley?  I haven’t entirely been fair in my presentation of the evidence, because I’ve left out the biggest factor: one of the four department stores is vacant.

This wing of the building apparently with the large "Court Shops" sign used to host Boscov’s, among the last of the surviving family-run department stores, with approximately 40 locations throughout the Mid-Atlantic states.  Boscov’s fell into dire financial straits in 2008, forcing it to file Chapter 11 Bankruptcy Protection and close a number of underperforming stores.  It has re-emerged successfully from bankruptcy, even to the point of re-opening some of its previously shuttered locations…but not at Oxford Valley Mall.  Thus, this wing of the mall has been without an anchor tenant for over four years.

And it shows.  It has the highest concentration of low-end or mom-and-pop tenants, none of which would lease space at this mall if it were thriving.

The Jova School of Dance may very well be expensive, but it’s not the type of tenant mall management vigorously pursues, unless its desperate.  Why?  For-profit instructional schools keep unconventional hours and don’t really attract passive visitors, as evidenced by the fact that it’s already closed in the early evening on a Saturday.  Dollar Hut is a budget retailer, but not even a nationally known one (like Dollar Tree or Dollar General).  As far as I can tell, this is the only branch.  Elsewhere in this struggling wing of the mall, one encounters a local photography gallery:

An indoor golf course:

USA Blues, a regional budget apparel company:

And—coming soon—an H&R Block tax preparer, which is mostly likely a seasonal tenant that will close shortly after April 15.

The only two national chains in this wing are Five Below and Radio Shack, two common budget retailers.  These are the type of tenants one expects to see in seriously struggling or dying malls.  Not one that has a Williams Sonoma one thousand feet away.

Given that this former Boscov’s has been vacant for so long, it is probable that leasing rates are lower than elsewhere in the mall.  After all, without a big-ticket destination like a department store, this wing is essentially a long dead end.  But why has it been so hard for the property managers to find a replacement?  Sure, the economy has been bad, but we’re talking about Simon Property Group, the Indianapolis-based mall manager extraordinaire—the largest Real Estate Investment Trust in the country.  The folks running Oxford Valley are hardly amateurs, yet this wing of the mall has languished.  The “dead wing”, in turn, has clearly impeded the foot traffic in the rest of the mall, resulting in a commercial property that, in aggregate, struggles to attract a preponderance of big-name national tenants.

I suspect that, in large extent, Simon Property Group is struggling with a fundamental design problem.  Over the last decade, mall management has turned “daylighting” of dying wings into a common practice.  That is, the owners or managers significantly modify a long-vacant department store, which has struggled largely because, after so many mergers and acquisitions, department store companies are simply fewer in number.  Usually the daylighting process involves transforming the shuttered store into a small, outdoor-oriented “lifestyle center” section, complete with elaborate landscape and fountains.  Simon successfully daylighted the old L.S. Ayres building at Greenwood Park Mall; as mentioned earlier, it continues its successful track record, with occupancy persistently above 95% and virtually nothing but big-name national brands.  But Oxford Valley is a two-story mall in its entirety.  Converting that already large department store (in which the size probably makes it less attractive in this sour economy) into an inevitably one-story lifestyle center would be analogous to a square peg in a round hole.  It would be hard to support a compatible design that links some one-story outdoor shops to a two-story mall, and presumably it isn’t worth the investment risk in an already uncertain climate for commercial real estate.  As a result, even though the interior is nice enough, Oxford Valley seems comparatively old-fashioned in the fact that it lacks any real visually stimulating storefronts when viewed from the outside parking lot.  It’s hardly a trailblazer among malls.

So this wing of Oxford Valley flounders, and the rest of the mall remains in flux, simultaneously catering to two ends of the economic spectrum.  Aside from its architectural hurdles, one could infer other socioeconomic explanations for this strange predicament.  Perhaps the problem is that Bucks County, Pennsylvania—particularly the northwestern half—is dotted with a number of fully successful historic main streets, which have successfully lured the most affluent demographic away from the malls.  Communities like Newtown, Doylestown, and New Hope are shopping destinations in themselves, offering a mix of local boutiques and widely known national brands, all in what most would perceive to be a much more “authentic” and aesthetically stimulating setting.  Why should Talbott’s locate in a mall when it can occupy a 200-year-old Federal building in a vibrant, rich suburban town?  Enclosed malls don’t just have to compete with the phalanx of big boxes along the busy highways, now they have those other aforementioned retail typologies, like factory outlets and town centers (both historic and faux historic) as fierce competition.  It also can’t help that the Neshaminy Mall (also enclosed) competes with Oxford Valley from just six miles away in Bensalem, PA. 

One other, more cynical conclusion I could draw from the polarized retail at Oxford Valley is that it is reflective of an ever-widening gap between the rich and poor.  Here, in an otherwise low-poverty area, a Banana Republic, Sephora, Dollar Hut, and H&R Block sit under the same roof.  The middle-class stronghold of Levittown, sprawling across several square miles to the south, is not dying but certainly appears faded, as the nouveau bourgeois aspires to larger lots and fancier two-story homes in the exurbs.  The new generation of Levittown belongs increasingly to blue-collar families or recent immigrants who lack the purchasing power to sprawl into the tony verdure of Upper Bucks County.  I’m not bold enough to draw glib conclusions about escalating social stratification from simply walking around a conventional shopping mall (and I’d like to think I’m not that gormless either), but I’m just brave enough to put that postulate on the table.  Maybe the middle class really is shrinking in what was once a supremely middle-class stretch of metro Philadelphia.  Or maybe the demographics feeding into this mall are just so diverse and so atypical that national retailers don’t know what to think of it…so all too often they just don’t risk it.  Oxford Valley isn’t likely to get boarded up any time soon, but its future sure seems murky—regardless of what the optimistic folks at Sephora think.

Thursday, December 13, 2012

City Market repurposed: in with the new, but what about the old?

Three years ago, I surveyed the Indianapolis City Market through this blog, in an exhaustive three-part series.  The venerable old building was in decent enough condition.  But judging from the activity inside, the place was languishing, with less than 50% occupancy, persistent mechanical problems, and a frequently shifting leadership structure.  Through my written analysis and extensive array of photographs, I tried to determine what it was about both the spatial arrangement and the building’s management would explain why it persistently failed to attract much of a clientele.  I could have said that in 2009, when I wrote the article, the Market was at its nadir, but that would imply a contrast with prior successful periods of operation.  But the market was never successful, at least in my memory growing up in the city.  It has always suffered high vacancy levels and constantly shifting tenants due to a lack of patronage.  If it weren’t for large City subsidies, the Market most likely would have closed years ago.  At the time that I wrote this article, City leadership and City Market management were considering a number of options: introducing national chains like McDonald’s and Starbucks to the Market, tearing down the two wings that were added in the 1970s, and even potentially closing the entire building down altogether.  During the course of my writing the three sections of that analysis, a dispute between one of the tenants and management resulted in another glaring vacancy.  The City Market was in dire straits, even while, by most metrics, the retail forecast for the rest of the city was strong. 

As recently as fall of 2009, I visited the Market during the main lunchtime hour (between noon and one) and this is what I saw:

How are businesses expected to survive when a place looks like this during its peak hour?  The situation looked pretty dire.  I interviewed a few local food vendors at the time, all of which had consciously decided not to locate in the City Market for precisely the reasons evidenced in these photos.  Despite the handsome setting, the place never felt vibrant and thus didn’t have the character of an urban market.  It felt more like an alternative food court, with five times the seating that it needed for the meager customer support it typically received.

And yet, these days, I have positive news to report: the City Market has enjoyed a turnaround unlike anything before.  It has a higher occupancy rate than it ever did while I was growing up, and, in my highly subjective opinion, a feeling of optimism about the setting pervades.  It seems unthinkable when, just three years ago, both management and city leadership were seriously considering shutting the entire building down.  No one would ever claim that this metamorphosis has happened organically though.  Management strategically concentrated the businesses into the historic structure, by vacating the few businesses in the two wings constructed in the 1970s to the east and west of the building.  This shift didn’t occur without its share of wrinkles: one long-term tenant, Enzo Pizza (the only tenant in the eastern wing back in 2009), filed a lawsuit against management and had to be evicted.  But, over a two-year renovation that has just reached full completion, the management seems to have lined its cards up correctly: the east wing is now a fully operational Indy Bike Hub, with a YMCA fitness center, a bike retail/repair shop, and offices for IndyCog and Bicycle Indiana.
The west wing, just completed within the past few weeks, hosts the offices of Indy’s Local Initiatives Support Corporation (LISC); it will also feature bookable meeting space for other nonprofits, along with the Winter Farmers’ Market during the cold months.
And on the mezzanine of the historical central building, in a space that used to host row upon row of (mostly) empty chairs and tables but nothing else, the southwest corner now offers the Tomlinson Tap Room, a bar featuring 16 taps of continuously rotating local craft beers.  Essentially, these reconfigurations have consolidated the energy of the City Market exclusively into its original structure, while transforming the wings into disparate uses that broaden the overall visibility of the facility and the aggregate density of businesses in operation.  The result is obvious to anyone who has patronized the Market in the last year.

As mediocre as many of these individual prints are, the photo series below is crucial because it takes place around the noon hour almost exactly three years since my previous article on the City Market.  The difference is manifest: during the peak lunch hour, the Market not only has a fair number of people, most of the leasable space is full.  Obviously occupancy levels and the density of customers go hand-in-hand, and the Market is likely to be at its most vibrant during the lunch hour.  But the Market wouldn’t remain at 90% occupancy if it didn’t attract consistent patronage at other times as well.  Notice one of the vendors’ recent decisions:
This is an expansion from its previous hours.  Just three years ago, vendors complained because the Market was urging them to stay open until 6 pm, and most of them could not justify it because they never received any customers by mid-afternoon.  Now a pizzeria has decided to remain open, most likely to cater to those who choose to imbibe at the Tomlinson Tap Room on the mezzanine.
And Tomlinson from another angle:
The Tap Room wouldn’t officially open for another 90 minutes from the time I took this photo, but people were already milling around it.  And elsewhere, the mezzanine finally seems to be able to justify all of its seating:
Even at the noon hour, these chairs would have been less than half full three years ago.

By most metrics, the City Market has evolved from a perpetual underachiever to a resounding success—all amidst a terrible national economy.  My timing in 2009 was uncanny: as I was gathering both the photographs and the research for my own series of articles, management at City Market was devising most of the proposals that they have since implemented.  Articles from the Indianapolis Star alternated with my own, demonstrating that, even as I was offering my own recommendations for how to stimulate life in a long stagnant civic building, the leadership at the City recognized the shortcomings.  I’m not going to take credit for the happy results, because the city leadership largely made decisions without my instigation.  But, intentional or not, management implemented my recommendation of recentralizing activity by closing off those two superfluous wings, forcing all vendors back into the central space while attracting new tenants in much of the vacant area that had previously been wasted as unnecessary first-floor seating.

The City Market is doing quite well.  But has it reached its apex?  In a city with a culture that is notorious for contentment with mediocrity, the City Market could easily meet the “good enough” standards of management at this point, so that the biggest stakeholders wash their hands of it and seek no further improvement.  I hope this isn’t the case.  The few remaining soft spots in the Market’s city building are just that—flex space that reveals opportunity for further improvement in the future.  Spaces like the one below are few and far between, but they remain in limbo:
This tiny space wedged between two vendors, Just Cookies and Chocolate For the Spirit, remains impromptu seating—spaces for people who don’t want to head upstairs to eat their meals.  Too bad.  It wasn’t intended that way.  It has utility hook-ups that would allow for some sort of vendor, if an inchoate kitchenette.  Here’s another, immediately adjacent to the east entrance:
Again, it’s small.  But surely some enterprising vendor could make better use of it than its current function as unsightly storage.  And the Market still has a few of these movable kiosks standing around:
And another on the mezzanine.

In each case, the spaces prove a challenge: they might have some, but not all, of the electric and gas hookups necessary for food preparation, and, after installing the necessary equipment, space for display, for transactions, for basic operations—all of it is very small.  I’d love to be proven wrong, but I don’t see these spaces getting put to any other use for a while.  Most vendors at the Indianapolis City Market would prefer a bit more space.

Was this situation preventable?  I think it may have been, but it would have required prescience.  A look at some of the other tenants can shed light on how these pieces of the commercial canvas remain unpainted.  I have been waiting to publish this article for several weeks, hoping that the City Market management would reactivate its floor plan map on its website, but it remains unavailable, and I didn’t want to wait any longer.  My crummy photographs will have to suffice for now.  At any rate, the spatial layout of the existing tenants reveals a recurring predicament.  For example, Jumbo’s at the Market is a purveyor of comfort foods that has endured through the building’s many ups and downs.
Notice that little blackboard sign in the second photo.  They’ve been here since 1973—an institution of sorts. But look at the space around it.  Jumbo indeed.  Their kitchen is huge, with ample room for its two employees to maneuver.  Now compare that to the other, much newer vendors on the other side of this quadrilateral.  Three Days in Paris gets just one corner:
And behind it, Natural Born Juicers, another newbie, has the same amount of space.
My suspicion is that Jumbo’s claims quite a bit more square footage than the other two.  This photo from the mezzanine better illustrates the spatial distribution of the tenants:
I have traced the space occupied by Jumbo’s in orange; the space for Three Days in Paris has a green outline; Natural Born Juicers is in blue.  The skew of the perspective notwithstanding, Jumbo’s at the Market clearly occupies about the same space as the other two tenants combined.

This spatial dichotomy between old (Jumbo’s) and new (Natural Born Juicers/Three Days in Paris) occurs throughout the market.  Just take a look at northeast quadrant of the Market for a similar situation, where Just Cookies is the veteran, a tenant who has survived from the Market’s dog days to its salad days.
I hate to cavil, but for a vendor that limits its offerings to Just Cookies, it sure requires a lot of space for its bakery—pretty much all the floor space within the boundaries of the photo above.   Conversely, the considerably newer tenant, Chocolate for the Spirit, occupies a much smaller space.  I don’t have a good ground level photo of this later tenant, but a mezzanine angle demonstrates this disparity adequately.
In this case, the perspective undoubtedly skews the differences in leasable area among the different vendors, but it doesn’t take much discernment to figure out Just Cookies—outlined in purple—is much, much larger than the two other featured tenants, Chocolate for the Spirit (outlined in red), and Cath Inc (outlined in yellow).  Meanwhile, the small quadrilateral in the grey outline, wedged between Just Cookies and Chocolate for the Spirit, is a no man’s land; it’s the same little unclaimed area featured in an earlier photo that just seems to have lapsed to overflow seating.  Here’s another view of it, where I was standing in front of Chocolate for the Soul.
It’s more space than the neighboring vendors need, yet not enough to attract a tenant of its own, so it remains in permanent limbo.

The southwest quadrant of the market offers ne other particularly glaring example of the spatial disparity between old and new tenants.  Grecian Garden, a veteran of the market, stretches from one aisle to the next.
By doing so, it reverts its back-of-the-house kitchen space into an unengaged blank wall, so the other side of Grecian Garden looks like this:
Nothing to look at here.  If this long-term purveyor of hot Greek meals had consolidated to the front half of its space, this dull backside could host a different vendor.   Maybe Grecian Garden genuinely needs two storefront blocks for its operations, but bear in mind that the newer tenants seem to make do in their cramped quarters.  Taste of Philly, for example, takes full advantage of its frontage:
One might argue that a pretzel bakery does not need as much space as a vendor offering a variety of hot meals, and that may very well be true.  But a number of other vendors at the Market offer full meals as well, but with noticeably less floor space, such as Café Olivia and Tommy’s, to the left of the aisle in the photo below:
Or Asiana and Papa Roux, the central and left-hand vendors in the photo below:

If it isn’t obvious already, the bifurcation that permeates the City Market is quite simple: the older vendors (from before the revitalization) have some of the most generous space, while the vendors from the last year or two are comparatively cramped.  I could be going out on a limb with this, but the correlation between age of a tenant and its leasable space does suggest a certain evolution in the leases over the years.  That is, places like Jumbo’s and Just Cookies had little incentive to be conservative with the amount of space they claimed for their booths.  Why?  They began their leases at a point when costs were rock-bottom because the City Market as a whole was not a terribly desirable venue.  Meanwhile, as customer traffic increased, demand for vendor space grew, and the availability of this space diminished, leasing rates for newcomers like Taste of Philly and Natural Born Juicers has become comparatively pricey.  Thus, the older tenants are probably paying considerably lower rates per square foot, thanks to their mature leases which, depending on how long they are, helped grandfather them in and shield them through the Market’s metamorphosis.

The next five to ten years could prove even more critical for the market as those leases terminate.  How the management treats its more established tenants will visibly influence the viability of this aged building as a legitimate agora and place of commerce.  The property management at Indianapolis City Market has two obvious options: it can either cut the older vendors like Jumbo’s some slack in respect for having “stuck through the hard times”, or it can let market economics take its course by eventually synchronizing the leasing rates with the escalating desirability of the place.  My suspicion is that only the latter of these two decisions will effect much further change in the vitality of the City Market.

Ultimately, this dichotomy raises the critical question: should the City Market aim for further vitality?  Should it strive to become such a coveted destination that even those neglected little postage stamp spaces find a creative tenant who can make something out of them?  What if the market were so popular that even those wheelbarrow kiosks could command a hefty price for a year-long lease?

The details like these are what distinguish an aspiring market like the one in Indianapolis from a truly great one like Philadelphia’s incomparable Reading Terminal Market.  I referenced Philly a few years ago, and it remains hard for me to set aside.  Despite the great strides Indy’s historic market has made, it still remains more or less an eatery—a non-corporate take alternative of the mall food court.  Conversely, Philly’s market thrives from a teeming mass of food explorers who rarely sit still, not only because they can’t—only a fraction of the space is devoted to seating—but because the commodities don’t really accommodate sit-down consumption.  Reading Terminal Market offers plenty of ready-to-eat selections, but it is mostly finger-food, consumed immediately without a tray, without a Styrofoam clamshell, without a trio of plastic utensils.  Beyond those commodities, the rest of Philly’s converted train terminal primarily sells foreign herbs, exotic fruits, international cheeses, and uncannily highbrow vegetables (such as mushrooms that cost over $100 for a quarter-pound).  Relatively few of these vendors can claim dual sinks, industrial ovens, fountain soda dispensers, or room for a table and chairs.  Some of the stalls are so small that the proprietors can’t walk around; they just pivot or swivel on their stools.  Why would they force themselves into such tiny stalls?  Chances are the per-square-foot costs for a lease give them little choice.  And since space is at a premium, the vendors must find innovative ways to catch the dozens of eyes that pass by every minute.  The solution is creative merchandise, and when competition is so cutthroat, the quality standard for everyone at the Philadelphia market raises exponentially.

I’m hardly the most well traveled individual, but in my opinion the Philadelphia example still ranks as thriving as the great urban markets of Europe (many of which are, incidentally, government subsidized).  Both it and Pike Place Market may set the golden standard in the US, but the spatial configuration of Seattle’s biggest attraction is too idiosyncratic to earn many comparisons to Indianapolis.  And Reading Terminal is a much larger commercial space than City Market—then again, Philadelphia is a considerably larger city than Indianapolis.  Nonetheless, nothing should stop smaller cities from achieving lively central market places.  After all, Little Rock’s downtown market was far better than Indy’s, at least when I visited back in 2010.  Therefore, if Reading Terminal Market gets graded an A-plus, Indy’s City Market post-revitalization is currently quite comfortably hovering around a B-minus or maybe even a B.

I hate to denigrate the older tenants like Jumbo’s or Grecian Garden or Just Cookies, but at the same time I have to wonder how well they’d last if growing popularity and ensuing market forces pushed City Market to the level of intense competition that Reading Terminal has earned.  These older tenants would certainly have to cut back on the size of their stalls, if they didn’t close and relocate altogether.  The reality is that these newcomers to the City Market—crepes, pretzels, juices, chocolates—maneuver creatively within smaller booths and proffer finger food rather than sit-down meals.  And in doing so, they come closer to fostering the spirit of perpetual motion that has elevated Reading Terminal Market’s merchandise into the stratosphere.  Will Indy’s market ever get to that level?  Many might argue that it lacks the population density downtown at this juncture, and that could be true.  But a more compelling prognosis would come from those leasing agreements: if City Market management goes soft and perpetuates leases at dirt cheap rates to the spatially inefficient tenants, Indy will demonstrate once again a contentment with the B Honor Roll.  Maybe that’s okay.  I’m revealing my obvious prejudices in terms of what I’d like to see, but I also know where the market was way back in 2009, when it barely eked out with a D-minus.  The spirit of aspiration that got the City Market where it is today could—and should—help propel it to a brighter long-term future.