Retail, REITs and Cannibalization

by Michele Reeves on May 4, 2012

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When he got his start in the grocery business with Fred Meyer decades ago, Gary Slabaugh said he knew EVERY property owner that surrounded the store where he worked. He knew them, their families, their kids’ birthdays. Part of managing the store was participating in, and being a member of, the surrounding community. Smart business if you are a retailer and property owner.

Fast forward a few decades, and contrast that with some of Gary’s more recent experiences as VP of Real Estate for Safeway, where he said some of their leased mall locations have been sold 12 times over the last few years. Each sale of the mall, he said, exchanged hands for more money, selling to another out-of-town Real Estate Investment Trust (REIT).

How did these properties increase in value if rent wasn’t increasing as well? We puzzled over this question as I was moderating a panel at the Portland ICSC Alliance event this year on the subject of Retrofitting Suburbia. (Keynote presentations by Michael Freedman and Ellen Dunham-Jones are available on the right hand navigation bar, if you follow the previous ICSC link.)

The role of retail and restaurants in a city is vitally important. Stores and eateries act as activators. They are entertainers. They are draws. They provide identity. Yet, few cities actually manage this square footage like the precious resource that it is.

In fact, as Gary’s story so beautifully illustrates, the whole nature of retail, particularly along arterials and in suburban communities, has dramatically changed, shifting almost entirely into the hands of institutional investors, out-of-state owners, and large corporations. Accountants are not retailers, as my professional crush Paco Underhill notes in Call of the Mall. (One of the reasons he cites for malls being so ugly!)

This consolidation of properties and development into the hands of absentee number crunchers has not been good for America’s communities. It has led us to us being an utterly and completely over-retailed nation, diluting the positive impact that retail and restaurants can have on our cities and towns. And, it has left us with under invested or abandoned retail infrastructure that drives down property values, invites crime, and creates negative identity, like the arterial pictured above left.

Let’s compare America’s retail spaces to the rest of the world.

In a Costar report from 2010, the real estate database and analytics firm estimated there is at least 56 square feet of retail space per person in the United States. This equates to about 46.6 square feet of total retail space per capita in our country, according to ICSC estimates.

Juxtapose those numbers with retail space in a few other countries. Canada and the UK clock in at around half of the US glut, and places like Mexico and India are closer to 2 square feet of retail space per capita. A fraction of the real estate we have enshrined to consumption!

What do these statistics tell us? The United States has more retail space than it needs…more than it can possibly use.

Every time a city adds retail space, it is cannibalizing its own existing retail infrastructure. This trend gets exacerbated in areas with sales tax, as cities duke it out over who lures Wal-Mart from the next county over.

In a reality where we have a huge oversupply of retail space, why do we keep pretending there are unlimited dollars just waiting to be spent? Why do we think that all we need to do is build the next new mall and everything will be great in our towns, neighborhoods and corridors?

Let’s look at a local example of this from Gresham, Oregon. (Click on the map below for images and more information.)

There is a fabulous little downtown here, that had, and still has, a great street grid, charming buildings, and a nearby park with a Japanese garden that is being renovated. As this suburban downtown started to suffer the inevitable postwar decline that occurred everywhere, what happened?

A strip mall was conceived and built right along the edge of downtown. (Mall #1 on the map.)

Did this help downtown? Of course not.

Since the strip mall was a super block, it ruined grid connectivity, it visually eliminated any connection between downtown and nearby streets, and the mall was oriented so its back faced downtown, doing the strip mall equivalent of mooning this once thriving center in Gresham.

Eventually, this “new” mall became dated. Downtown continued to suffer. So what happened next?

Another mall!! Across the street from Mall #1. Literally. This shopping paradise was larger, newer and lifestyle center-y. (Let’s call it: Mall #2.)

Sadly, with this much retail space stacked on top of each other, this is now an environment that struggles with vacancy and turnover. And, this massive amount of mall space is dwarfing a great downtown, and hindering its revitalization as well.

There are several big lessons for cities in all of this:

  1. Large corporations with no connection to your municipality often don’t care about your city, they are making decisions for their bottom line first and foremost. I would venture to say that nearly every REIT and big box concept has built in places that were clearly bad for the city and the surrounding area. Remember, what may be good for an out-of-town company is not necessarily good for a city as a whole.

  2. Complete, and keep up to date, a retail capacity assessment in your city.

  3. Don’t over zone for retail.

  4. Don’t allow new large retail developments without considering how they impact all retail infrastructure in the city.

  5. Give preference to local developers who have a stake in the community and tend to hold their properties for long periods of time. Real estate is rarely developed optimally, and maintained at its highest and best use for the whole community, if it is owned, controlled, and managed by institutional employees as an accounting exercise in another state.

Map image is courtesy of OpenStreetMap, © OpenStreetMap contributors, CC BY-SA

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Hot Lake Springs…The Arkansas of Oregon?

by Michele Reeves on March 30, 2012

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Earlier this week, I paid a visit to an intriguing place called Hot Lake Springs, which is located in what felt like the middle of nowhere in eastern Oregon. Back in the day, Hot Lake Springs billed itself as the “Arkansas of the West” — after Hot Springs, Arkansas. (The site in its full glory is pictured to the left.)

Hot Lake Springs went from spa darling to decrepit building over the last century, facing the same challenges that are found in many rural historical sites around the nation:

What do you do with a huge building steeped in history that is in a very remote location? What if that building is falling apart? Riddled with lawsuits? Has bankrupted previous owners? What if the entire region has given up hope and assumed the building would decay until it could no longer be saved?

The story of this place is an improbable tale of renewal and adaptive reuse. A tale that requires some back story…

These hot springs had long been a neutral gathering place for various Native American tribes in the area, who came to partake of the spring’s healing qualities, according to the present owners, David and Lee Manuel.

In the early 1800s, it was discovered by what were to be Astorians, and by the middle part of the century (and in the midst of a nearby gold rush) Europeans had taken it over and had erected extensive wooden buildings on the site.

With the advent of the railroad in the early 1900s, passenger loads of visitors were shepherded to a station right in front of the hotel three times a day.

According to an article in USA Today,

The Mayo brothers, of Mayo Clinic fame, were frequent visitors.

Vacationers came to relax, patients to shed a variety of ills.

Hospital director Dr. W.T. Phy believed syphilis could not withstand the repeated hot sulfuric baths in the lake water (it survived just fine) and, in those pre-antibiotic days, dosed his patients accordingly. Arthritis patients were placed in a hot mud bog.

Under Dr. Phy’s stewardship, this became an unlikely major worldwide tourist attraction. It was most frequently reached by rail (nearly 300 miles east of Portland). It had a teaching hospital, a post office, a hotel, a spa, a dance hall…it was really like a self contained little town.

Dr. Phy died in 1931. Three years later, most of the wooden structures on the site burned to the ground in a massive fire, leaving just the large colonial-style brick building that remains today (designed by John V. Bennes).

After the fire, the long, slow, inevitable decline of this historic property began. It operated as a resort, then as a hospital. It also served as a flight school and nurses training center during World War II. Later incarnations included a nursing home, an asylum, a restaurant & nightclub, and a bathhouse.

Then, it languished for well over a decade. The place was looted, vandalized, lost most of its windows, rotted, and lost portions of its roof.

In fact, it was so bad, the hotel was featured on the television show The Scariest Places on Earth in 2001.

Enter Lee and David Manuel.

David is a successful bronze sculptor who specializes in Western art. He typically works for a year on his incredibly detailed pieces, and sells out limited edition runs before he ever finishes them. Lee, his wife, is a former restaurant owner who manages the business end of his art.

In 2003, on a trip with their blended family, they decided, on a whim, to purchase the building and bring it back to life. They disposed of their assets in Joseph, Oregon and put their hearts and souls into renovating this place.

Lee said it took 15 months of her coming every night and working a night crew just to get through clean up. She said they dry camped in the building for several years before all the utilities were functioning.

Now, 9 years later, David’s studios are here. They live here. There is a foundry on site. David’s collection of Native American art, war memorabilia, and historic vehicles has found a home here. They have a multitude of antique fire fighting equipment to view. In fact, antiques are placed throughout the hotel. There is a bronze art exhibit. Taxidermy abounds. And, of course you can partake of the 200 plus degree hot mineral water (cooled down, naturally). And now, most recently, they operate a rather rustic bed & breakfast.

The building is heated entirely with the original radiator system that uses water from the springs. Apparently, it is listed as the first building to use geothermal energy for heating in the country. The gentleman who tends to the radiators said he spends several hours a day just trying to keep the temperature at the correct levels throughout the building, something that is a particular challenge in spring, when the weather fluctuates dramatically.

The model the Manuels use for selling David’s art — only to direct buyers whom they meet face-to-face — dovetails perfectly with them being located in a building that is a living monument to the Wild West, filled with items from the Wild West, located in the Wild West.

Not everyone is enamored though. If you read online reviews, you will find many visitors who are less than impressed with the interior renovation work. Poor lighting fixtures…false ceilings…a horrible faux fireplace and mantle in the circular lobby…plastic spa tubs for a soak in the heated mineral water, and unfortunate carpeting choices are all examples cited. And while these comments are most certainly true, it also is fact that without the Manuels, this building would have decayed beyond repair. They employ many in a rural economy that definitely appreciates the jobs. And, the bronze studio provides a focal point for area artists.

As the Manuels have shown, small artisanal businesses, ones that have a wholesale or production component, are often the key to bringing back historic infrastructure. And in the case of Hot Lake Springs, it seems most important that they saved the building structure, brought life and activity back to the old sanitarium, and that the exterior is being preserved. All of this will allow the interior to live to fight another day!

Has the move been worth it for the Manuels?

According to Lee, her husband David, who is in his early 70s, is doing the best work of his life and is seeing an increase in sales, even during this recession.

His latest piece, which he talked with us about on our visit, will be a Native American couple on horseback, looking up at the moon. He said it is his first piece with a touch of romance and that he wants it to project love and peace.

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My Secret Garden…of Zen

by Michele Reeves on January 22, 2012

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In the summer of 2011, I found myself mystified as to why, after speaking at the Pacific Intermountain Parking and Transportation Association (PIPTA) conference, I had received a plastic bag of salt, a picture frame, some straws, a few pebbles, a tiny Buddha, and two small mock stone candles.

You see, fairly frequent speaking gigs at land-use conferences garner me a plethora of corporate gift trinkets. They are usually passed down to my daughters, who are still of an age to regard these totes, mugs, water bottles and miscellaneous doohickeys as little treasures. (As a matter of fact, today, my daughter used one of the shoulder bags I received to transport her homework to a coffeeshop so we could work together.)

Anyhow, as I was saying, when I received those strange items from PIPTA, I didn’t give them much thought. In fact, I nearly chucked them. But, with the help of my girls, who wanted to know what this “bag of rocks” was all about, we proceeded to take a closer look.

It turns out that the straws were cradling incense, the Buddha was an incense holder, the salt was white sand, and the rest of it comprised all the elements needed to create a small, desk-sized Zen garden.

My daughters loved the incense, having never experienced it before. They wanted to burn it 24/7, and I was honestly happy when we ran out. Also, it so happened, I adored the Zen Garden. Having worked at it for 6 months though, we have all run out of easy original ideas on what to do next.

We find that inspiration comes in many forms. Contemplatively raking the sand, waiting for genius to strike. (Okay, genius is a bit too strong a word!) Randomly dropping pebbles into the sand and raking around them, hoping something pleasing will emerge. One pattern came to me recently in a dream.

It is strangely compelling…soothing…and addictive.

Now, if we could just get my youngest to stop sloshing the sand over the side, we would be in a truly Zen state!

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There Is No Such Thing as a Rain-Free Downtown Experience

by Michele Reeves on January 1, 2012

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If I were supernatural, I might choose to be an awning fairy. My mission? Roaming the land, eradicating horrible awnings with the touch of my sparkly magic wand. (By roaming, I mean that I would be flying, of course.)

Sadly, I am coming around to the fact that I won’t be manifesting any special powers in the near future. But, I have not let the dream die entirely. No, I try to do the work of the awning fairy without extraordinary skills. In my war against underperforming mixed-use districts, I do battle with over-awninged places using just my voice, a whole lotta pictures, and field trips.

LEVERAGING HISTORIC DOWNTOWN ENVIRONMENTS

To maximize the economic return on historic infrastructure, it must be highlighted in every possible way, particularly for pedestrians. These renovated buildings in Tacoma, Washington, pictured to the left, are a good example. A visitor on the sidewalk should experience the grandeur and unique character of the building stock when looking down the same side of the street on which they stand, or when gazing across the road.

Interconnected and unique buildings are a huge part of what creates a great ambiance in a downtown or Main Street environment.

In a struggling mixed-use district, there are myriad examples of not leveraging historic infrastructure properly. But today, I want to focus on one particular culprit—the awning, something that is often invisible to stakeholders and which can be particularly difficult to eradicate. In a downtown that lacks vitality, it is very common to view a plethora of awnings that are inappropriate architecturally…a sea of moldy awnings…tons of tattered awnings…and awnings that are so large they take up one third to one half of the vertical face of the building.

In the photos below (please click to enlarge), you can see that instead of this district differentiating itself through its superior historic infrastructure, it has instead been turned into a sort of umbrella corridor, where the sidewalk experience is one highlighting unattractive awnings and the metal infrastructure used to hold them up. Or, the awnings block building and storefront visibility from across the street.

DOWNTOWN DISTRICTS WILL NEVER PROVIDE “RAIN FREE” SHOPPING EXPERIENCES

“But what about the rain, Michele?”

I hear this a lot. And okay, I grant you, many of the communities I work with are in the Pacific Northwest. But really, at the end of the day, no one is making a decision about where to shop based upon whether or not a building has an awning.

This desire to create a rain-free shopping environment is a vestige of the postwar abandonment of downtowns and mixed-use districts for the mall. And, it doesn’t work.

An economically successful downtown has striking buildings and vibrant, engaging storefronts with well lit window displays. It should be an environment that entices visitors to stay, to shop, to grab a cup of coffee, to want to discover what is around the next corner. Any shopper that comes to one particular store, becomes a potential shopper for every other store. The pedestrian is king and they are what drive sales per square foot. These browsers have to go to and from their car. They have to cross the street. They cannot be protected from the rain every single moment they are in a downtown district. So don’t even try to provide this service.

The question I always ask property owners and business owners is this: “If a potential shopper is standing across the street from your building, will they make the journey through traffic to walk to your store?” I want to know if they see anything compelling, because a true test of a district’s health is a walker’s willingness to cross the street to sample wares on the other side of the road.

As these owners contemplate their buildings and businesses (I like to do this literally standing outside, gazing at their property), I follow up with these inquiries, “Do shoppers think, ‘Hey, there’s an awning over there, and it’s huge, so I’m going to go to that store!’ Or, is what really grabs their attention the quality of the building, the visibility and attractiveness of the storefront, and how well the products are merchandised?”

FORM SHOULD FOLLOW FUNCTION—AWNINGS THAT CONTRIBUTE TO ECONOMIC SUCCESS

In a district where all of the buildings have had awnings forever, it is very difficult to get people to change their approach to building and storefront design. They tend to assume the awning will be kept and that all decisions related to appearance will stem from there. This is designing from the awning inward. Instead, owners should be designing from the building/store outward. First, make the building as appealing as possible. Second, draw attention to the storefront and merchandise. Third, come up with an attractive sign and lighting scheme. Then and only then should you contemplate an awning. I can’t tell you how often I have to stress that an awning is an accessory, not the main attraction, and it should be considered last in the design process, not first.

My general rule of thumb is that awnings are useful when they:

  • Do not dominate the vertical facade of a building; and
  • Are defining an outdoor room that is an extension of the storefront, bringing the business out to the sidewalk, engaging pedestrians in street level dialog.

But remember, awnings are difficult to light appropriately, often detract from building appeal, invariably block transom windows, and create dark caves that decrease storefront visibility. So, unless a business is going to aggressively make the area under their awning part of their store or restaurant, then lose it. Just forget about it.

Good examples of awnings that create positive, engaging ground floor environments are shown in the photographs below (please click to enlarge).

A final note on the role of the public sector in regards to awnings: cities should not be in the business of requiring awnings, especially as they are often temporary finishes on existing buildings. Making structures host an awning unnecessarily constrains architectural design for new buildings and puts a huge burden on existing buildings, which must shoulder these appendages even when they literally have no use. Stipulating awnings also has the unintended consequence of ensuring that there will be a plethora of canopies in poor condition because those who don’t really want an awning will refuse to incur the expense of replacing it, so tired old awnings will become the norm.

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Post image for Second Largest Waterfall in the US is at Blue Heron Paper Mill

The second largest waterfall in the United States is located between West Linn and Oregon City, Oregon (pictured here circa 1918). The spectacular horseshoe-shaped cascade of water is called Willamette Falls, and it’s pretty inaccessible, hidden from public view by mills on both sides of the Willamette River.

In fact, the base of the falls has been cut off from the public for more than a century.

The owner of the site adjacent to the falls on the Oregon City side of the river, the Blue Heron Paper Company, has gone out of business and the valuable acreage is now in bankruptcy proceedings, to be auctioned off later this month.

This industrial parcel has the potential to be a game changer for the area, becoming a huge tourist destination as well as a park amenity for Oregon City residents. If it were successfully repurposed, it would further catalyze the rapid improvement that has been happening in the historic core of downtown Oregon City, one of the West’s oldest cities.

I recently had the pleasure of touring the site and was surprised to learn several things.

  1. Downtown used to extend 4 blocks into the existing mill acerage. As the core of Oregon City declined, the mill began taking over the downtown, block after block. I shudder to think of the amazing buildings that were lost in the mill expansion over the years.

  2. There are old basalt foundations that date back to the original uses on the site, perhaps from the mid to late 1800s. It has the feel of archeological ruins with the vestiges of these buildings besprinkled around the site. It is entrancing. These stone fragments are shown in the first row of photos at the bottom of this page. (Please click to enlarge.)

  3. Some of the site is on pilings. It will certainly make developing the old mill more complex, as no one specifically knows how healthy the pilings are. This is added to the more traditional waterfront redevelopment hurdles of multi-jurisdictional involvement from federal, state, and local government agencies. And the industrial hurdles, such as environmental abatement. Throw in the fact that you have PGE-owned electricity generation and, yowza, you’ve got a big mess that will require patience, capital, and a deft touch to sort through.

During our walkabout of the site, I was particularly enthralled with a huge paper machine that was built-in-place by a Wisconsin firm in the 1920s. It was used to produce extremely large rolls of low quality newsprint. It is gigantic and mesmerizing, with analog controls that practically itched to be twisted, flipped, and turned. The drums were gorgeous.

Metro, a regional governing entity, will be putting in a bid for the site, which delights me tremendously because I believe they would have the ability to balance private development goals with appropriate public stewardship of access to the falls. It is a rare gem of a site that abuts a natural water feature that should be a national treasure, open to everyone. It is fascinating to me that so few people in the region even know that we are sitting on such a rare and valuable natural resource.

This is definitely an auction to watch. Many are eagerly awaiting to see what unfolds, including me!

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First Create the Parking Problem, then Solve It!

by Michele Reeves on September 28, 2011

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Recently, the blog Reinventing Parking was pondering the fact that many cities are getting excited about Shoup’s call for parking meter dynamic pricing (like the program in San Francisco), but are virtually ignoring the case he makes for abolishing parking minimums.

Who is Donald Shoup, you ask? Before launching into a discussion on parking minimums, let me explain. Donald Shoup wrote a book called, “The High Cost of Free Parking.” Suffice to say, I believe this is one of the most well written tomes (and it is a tome), on any subject, that I have ever read. (Adding my two cents to the montón of raves that he has received over the years.)

Surprisingly, the book manages to be as in-depth and numbers-focused as a transportation and parking geek would require; but it is equally accessible to the lay person, as well.

Two Key Shoup Findings:

  • In places where on-street parking spaces are in high demand, they should be regulated via meters with pricing that fluctuates so that there are always a few spaces available on the street. In other words, prices are higher when demand is higher, and pricing is lower, when demand is lower. Additionally, parking revenue generated by these meters should be returned, in whole or in part, to the surrounding community.

  • Cities should not be in the business of determining how much parking various types of building uses require. They invariably overestimate, creating great places for cars and not so great places for people. (I am heavily paraphrasing here!)

Favorite Shoup Fun Facts:

  • “For a downtown concert hall, Los Angeles requires, as the minimum, 50 times more parking spaces than San Francisco allows as the maximum.” Louise Davies Hall in San Francisco has no parking garage, while Disney Hall in Los Angeles has a $110 million parking garage that nearly bankrupted the entire development. “Disney Hall’s garage almost never fills, even when Disney Hall is sold out, and it is almost empty for the rest of the year.”

  • In Oakland, where they require one parking space per living unit, the cost to build rental housing “per apartment increased by 18 percent and the number of apartments built on a typical lot fell by 30 percent.” The parking requirements also triggered another effect. Because the required parking increased development costs and reduced feasible density, land values fell by 33 percent.” Later in the book, he has great quote: “Zoning requires a home for every car, but ignores homeless people.”

  • In Westwood, a Los Angeles neighborhood, a study of cars cruising for an open onstreet parking space yielded these results: “In a day, cruising for parking created 3,600 excess Vehicle Miles Traveled, which is greater than the distance across the United States.” Just one neighborhood in California. They also found that the amount of cruising increased when curb parking was free.

  • In Westwood, a Los Angeles neighborhood, a study of cars cruising for an open onstreet parking space yielded these results: “In a day, cruising for parking created 3,600 excess Vehicle Miles Traveled, which is greater than the distance across the United States.” Just one neighborhood in California. They also found that the amount of cruising increased when curb parking was free.

  • The Institute of Transportation Engineers (ITE) parking generation report is the typical reference for planners selecting minimum parking ratios. As Shoup notes, “Half of the 101 parking generation rates [in the ITE report] are based on four or fewer studies, and 22 percent are based on a single study. [ITE] parking generation rates measure the peak parking demand observed at a few suburban sites with ample free parking and no public transit. As a result, urban planners who use these parking generates rates to set minimum parking requirements” are shaping the form of a city so that everyone will have to drive wherever they want to go.

Okay, so what about parking minimums? Why aren’t they being abolished en masse around the country?

I come at the question of parking from the perspective of revitalizing downtowns and Main Street commercial districts. Not surprisingly, one of the first things I hear from stakeholders when I arrive in an underperforming downtown is “We have to solve the parking problem.” The irony being that they believe their troubled commercial district has a shortage of parking; when, in fact, they usually have difficulties due to a surplus of parking.

This drive to increase parking supply to mirror arterial style development parking ratios is a deeply ingrained response from communities and business owners that have been watching their downtown or Main Street environment degrade over a period of decades, as all of the businesses in town left for the mall.

A commercial community’s desire for more parking is a formidable obstacle for planners to overcome because they often lack the real world development and retail experience to explain to property owners and business owners why adding parking will further depress commerce.

Downtowns and neighborhood commercial environments do not function like arterial style development. They are successful when they are fabulous walking districts. If they try and compete with auto-centric parking ratios, then a sort of in-between place is created — something that is not quite a downtown and not quite a strip mall, but is one hundred percent unsuccessful.

Another thing I often hear from planners is this: “We are a suburban community and we cannot have the same kind of parking ratios and development in our downtown that you have in bigger cities.” To this I usually reply with a Shoupesque observation, “Eliminating parking minimums does not mean developers stop creating product with parking, but it does mean that they won’t create any EXTRA parking.”

There is no universal, one-size fits all formula that accurately reflects how much parking various businesses and uses actually need, as if these things are independent of context. A fast food restaurant, such as Little Big Burger, in the middle of the Pearl District in Portland on the streetcar line easily gets away without needing parking, while the same restaurant located on a lonely stretch of road only accessible by car would obviously require some place for vehicle storage while people are eating.

Essentially, in getting rid of parking minimums, we are asking planners to let the market decide. To allow developers and businesses, with a lot of cash on the line, to figure out what minimum amount of parking they will need to be successful, within a given environment. The institutions that finance renovation and new construction projects also look very closely at parking to make sure it is adequate so that a development can be resold in the future.

I typically recommend downtown and Main Street districts think of cars this way: YOU WANT TO CREATE A PARKING PROBLEM! It is an indicator of success, not failure.

A lagging district must first focus all of its efforts on making itself thrive. Then, from a position of strength, figure out how to best solve the parking problem, when and if one develops. It’s much easier to tackle the issue of car storage when rents are high and business is booming, because you can pay for solutions that don’t damage the pedestrian environment, such as structured parking that is entirely surrounded by office/retail/residential uses, or by burying parking.

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Call of the Mall, a Review

by Michele Reeves on May 20, 2011

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I should preface this review by saying that I have a total and unabashed professional crush on Paco Underhill. There. I said it. It’s out there. Objectivity compromised.

In the breezy Call of the Mall, published in 2004, Paco takes the reader on a personal tour of the mall…top to bottom. At various points, different shoppers and experts join you on the tour, but Paco is the master of ceremonies and the reader is along for the ride to observe and learn.

The book flows quickly and easily, so much so that one could make the mistake of thinking it too frothy, but, as usual with Mr. Underhill, there is much to digest about the strengths and weaknesses of the enclosed mall: the horrible exterior architecture, the lack of activation in the sea of parking, the store mix and how it has changed over time, how the mall is laid out and the subsequent challenges to merchandising, the rise of entertainment in the mall, the demographic draw of the mall, how other countries put their cultural stamp on the enclosed mall…it’s all there.

Although this edition was published some time ago, it is still very topical, with the exception perhaps on trends regarding mall relevancy. For instance, the recent recession has hit strip malls more heavily than enclosed malls, on average, which is a bit counter to the conclusions of this book. I also found myself wanting to dig more…wanting more in depth analysis on the future of the mall, and a clearer idea of where exactly the enclosed mall still thrives, where it does not, and why. These are important questions because we’ve had a roughly ten-fold increase in the amount of retail space in the US since 1960, and as a result, I don’t believe it likely that we’re going to be absorbing a lot of new shop square footage without cannibalizing existing malls. Where is this abandonment likely to happen, how do we prevent it, in what ways can we mitigate the effects?

In fairness to Mr. Underhill, a lot of my aformentioned questions were not really within the scope of Call of the Mall to answer.

Highlights for me included:

  1. His observation that enclosed malls are built by real estate people, not by merchants, and that this is evidenced by their design: walled fortresses ringed by a sea of unattractive parking that no retailer in his right mind would create as an enticing entrance to a shopping experience.

  2. The dramatic shift in how we demonstrate our wealth, a casualty of which is the jewelry store. In the past, successful men descended into the guarded inner sanctum of a jewelry store to discreetly purchase baubles for their women — wives and mistresses — who proudly wore these very public symbols of their man’s success. In this day and age, it’s hard to picture someone like Mark Zuckerberg dipping into high-end jewelry stores with regularity to buy outrageously expensive items for his girlfriend, a la Richard Burton and Elizabeth Taylor. In fact, the idea just seems silly. The other change impacting the jewelry biz is that women actually buy their own pretty bangles now, and they have vastly different expectations about store environment, product selection, and pricing than the model that has worked for generations.

  3. The way other countries put their own cultural stamp on the enclosed mall, particularly with the incorporation of fine dining, healthy dining, and/or high-end grocery stores. I remember when I lived in Taiwan, I would shop at the Japanese Sogo department store, which occupied a huge multi-story building. The basement was a wonderful supermarket and the ground floor had fresh bakeries, amazing prepared food and small restaurants. It put an American food court to shame! (I am swooning at the memory.)

  4. I learned that fragrance being located near the front door of department stores is a holdover from the days when the main entrance would open to a street filled with horse manure. Fascinating!

  5. His insights about how teenagers use the mall, particularly girls, were riveting.

    Teenage girls love malls best, I think — and here, according to a survey, is what they say they want in malls: a hangout-type Internet café-coffee shop (the kind of slacker paradise you find in cities, usually peopled with unemployed dot-commers); movies theaters; big seating/socializing areas; places that boys might like; amusements, such as Ferris wheels and so on; and sports, including bowling alleys, batting cages, miniature golf, tennis. It’s a long list.

    One teenage girl tried to describe what would be in her perfect mall.

    “I don’t know if you’ve ever been to Washington Square in New York,” she began, “but it’s this park, and they have these tables with like built-in checkerboards on top?”

    These kids crave cities — they want to be a part of the human spectacle that exists whenever people come together. Sadly, what we’ve given them instead is malls.

Photo by Flickr user Christopher Woo used under a Creative Commons license.

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So, You Wanna Open a Restaurant in Portland…

by Michele Reeves on April 13, 2011

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Portland, Oregon is a foodie mecca these days, luring chefs and inspiring restaurateurs with our unbeatable access to an incredible array of locally grown produce and meat. (And when I say “local,” I mean practically a stone’s throw from the city.)

If you count yourself among the intrepid souls who want to make their culinary mark in Stumptown, then read on because this is what you need to know…

We keep senior hours. Portland is a tough town if you plan on completing two full turns a night for a sit-down restaurant, because everyone in this city wants to eat between 6:30 pm and 7:00 pm. That’s it. Not before. Not after. And we don’t do late night en masse. 8:45 pm is late night here. Really late. (Tony Ten01 closes January 2011.)

There are five people with money to burn in Bridge City. We just don’t have the wage base to support a lot of high-end restaurants…so we don’t. They come, and, unfortunately, they go. If your entree items are all consistently over $25, you are going to have a tough time making it. Successful restaurants that do well in good times and bad usually are perceived to be a good value (large portions, for instance) or carry a perception of value (tapas, for instance, something you could order a few wee bites of and leave with a small check. You never do, but you could…). (Lucier lasted approximately seven months).

We’re a one horse city. I mean that affectionately, and love everything that it implies. Unfortunately, for restaurateurs, that means our people to restaurant ratio is low. So, unless you sell massive amounts of really cheap food along with a low-margin item that you produce yourself (beer, for instance), don’t even think about opening a restaurant much bigger than about 1,500 SF. If you do, I can guarantee (okay, almost guarantee) that you won’t fill it and you won’t make it. (12,000 SF Todai closes in January 2011).

Don’t recreate the Taj Mahal. Many a great restaurant has been felled by ambitious buildouts in this town. For all of the previously-mentioned reasons, you have to keep your establishment nimble. Tenant improvements should be simple and cheap and square footage (and therefore requisite staffing) minimized as much as possible so that you have manageable overhead expenses. If you don’t, you will be treading water and losing money until you close. The smartest operators are very savvy about finding spots with landlords willing to do a lot of tenant improvement work, taking over existing restaurant space, or buying a failing restaurant that they can rebrand. (Fenouil Falls in April 2011).

The food press/blogs have their favorites! They adore their native sons here — not necessarily homegrown talent, but people who have worked their way up through the ranks in well regarded local establishments. Like all cities, there are incredibly mediocre restaurants that get great press, and there are gems that get no lovin’. Just remember, if you are a hotshot chef from another city, don’t expect to ride into Portland and be greeted with fanfare. (Kin Restaurant Review).

Location, location, location. Portland has a ton of retail options, which is great…and not so great. We have neighborhood commercial, downtown, and dense mid-rise and high-rise districts. And, within these, are a million micro markets with very powerful and distinct identities. On top of all of that, we are loathe to leave the little quadrant of the city we call home (N/NE, SE, SW, and NW). You can be a great eatery, but if you are mismatched with your neighborhood, you are going to have to work harder, much harder, to lure people in your doors. (Belly says Bon Voyage in April 2011).

UPDATE: Kin has closed its doors. The Portland Mercury said it better than I could:

In a perfect world, the culinary community would have been proud enough of chef Kevin Shikami’s assertive yet delicate flavors and superior technique to support his admittedly shitty location and relatively high price points. The restaurant is beautiful, cozy, and serves great food. It’s a damn shame when that’s not enough.

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On Switch, Sandpaper Letters, and How We Learn

by Michele Reeves on March 20, 2011

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What do elephants, riders, and paths have to do with change?

Emotion = elephant, intellect = rider, and path = environment, route, or context. These are the metaphors Chip and Dan Heath use in their book, Switch: How to Change Things When Change is Hard. Their basic premise is this: you cannot get your elephant to go anywhere if rider and beast do not have aligned motivations.

The case studies on change cited in Switch were besprinkled with examples of written reports and spreadsheets that contained vital information, but were totally ignored by organizations and companies. The conclusion the Heath brothers draw in their book is that dry facts presented in writing do not engage people’s emotions, therefore, they usually fail to influence behavior all by themselves.

While the importance of engaging both heart and mind rings absolutely true, I think the authors missed an important point about how people absorb information effectively. Namely, if you use only a single channel, such as writing a report, to engage your audience about complicated issues, then the intended beneficiaries of your knowledge may be digesting very little of your message, regardless of emotional involvement. I see this in my consulting practice with cities of all sizes. Municipalities that want to revitalize a downtown or commercial corridor usually have an impressive array of reports on the subject already filed away somewhere gathering dust. And therein lies the problem, ALL of this information is contained in a report!

Over the years, I have learned that there are very few people who truly process written information efficiently. And this is particularly true of busy property owners and business owners, who don’t have time to read consultants’ tomes. Since a downtown tells its story through its infrastructure (how it looks), and its ground floor uses (they need to be active), cities must meaningfully captivate and motivate property owners and business owners to initiate renewal, or it will be stopped before it ever starts.

To effect change, cities must engage their constituents, face to face, with voices…with hands-on experiences…with images, in order for people to really learn and connect with information. As in the case of my work, I try to take the rather dry subject of land-use and bring it alive. And, if I do my job well, then a lot of excitement is generated just by bringing focus to people’s intuitions about their downtown environments and how they function optimally.

This idea of engaging all of the senses for learning reminds me of one of the methods that Montessori preschools use for teaching the alphabet: sandpaper letters. The name for the work really does represent exactly what you would think: each letter is cut from fine grain sandpaper and is individually mounted on a hard square backing. Children watch the teacher trace the letter using her index finger (mirroring the same motion you would use to write the letter), while they hear the teacher says the sound the letter makes (not its name). Then, the student copies the teacher’s actions.

This work stimulates a preschooler’s hearing (the sound of the letter), sense of touch (feeling the sandpaper under the finger), and vision (seeing the letter and watching the teacher model the movement of writing it). It is very effective. Montessori preschool students learn to read before kindergarten not because their emotions are engaged, but because all of their senses are engaged.

So, while I am in agreement with the Switch authors that motivating change is much easier when our feelings and thoughts are united behind a goal, I also believe that there are many ways to captivate our thinking selves. And sometimes, as in the case with the sandpaper letters, enthusiasm and animation–our emotions–can be triggered just by neurons connecting and blazing new trails. Thinking begets feeling.

Hear…see…touch…experience…not just read.

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A Tale of Two Hospitals: The Institutional Effect

by Michele Reeves on January 19, 2011

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If an event center, or hospital, or college plunks down in your neighborhood, does it inevitably create a crater of blight and low property values? Or, is it possible to weave large institutions into the fabric of an urban community? Right here in Portland, two major in-city hospitals provide a stark contrast in success at integrating into their surroundings, giving us a great window into what works and what doesn’t.

Legacy Good Samaritan was founded in 1875 in Northwest Portland. Its roots were firmly planted in a pre-automobile era of urban planning when streetcars were king and pedestrianism was recognized as a viable form of transportation. And, luckily for the neighborhood, that history still shines through to this day.

In the modern era, the hospital has continued to adapt to its environment in two important ways. First, they have mirrored the character of the neighborhood with the choice of brick as a facade for their buildings. Second, as they have expanded into other buildings and parts of the neighborhood, the street grid structure has been maintained, with employees and patients using sky-bridges and city sidewalks to travel from place to place rather than vacating streets to build super block sites that would create a walled-off medical campus. The preservation of the grid has allowed the neighborhood to flow through the hospital structures instead of around them, which has led to this vast medical complex successfully being absorbed into the community instead of becoming a single-use crater in the center of it.

It is no accident that the successful absorption of Good Samaritan is directly linked to the fact that it is located in one of Portland’s most dense districts, which has been able to support its presence and still maintain a diversity of interests in the immediate surrounding neighborhood, including multifamily residential, retail, office, public school, religious, and medical uses.

This variety of uses coupled with the open grid also encourages this large medical institution to open up to the neighborhood. When a walled-off campus is created, the people within the campus are less likely to leave it and mingle with, and become a part of, the social fabric immediately outside their door.

However, to say that Good Samaritan has no negative impact on its surroundings would be an overstatement. Although NW 23d Ave, along which the hospital is located, is one of Portland’s strongest neighborhood commercial retail districts, it has developed more completely in the areas to the north and south of the hospital’s only super block site, shown in the photo to the left. As you can plainly see, this particular medical building was designed in such a way that it a) does not interact with the streetscape in the least, and b) it creates a two-block blank, which can be a death blow to a retail district, disturbing shopping continuity and becoming a border, beyond which visitors prefer not to venture.

Ideally, along this NW 23rd Ave frontage, Good Samaritan would have integrated active retail storefronts that could have contributed to a more intense street level experience, in character with the surrounding commercial buildings. It is no surprise that the buildings near the super block (pictured left) have been slow to renovate.

As a counterpoint to fairly successful integration, I offer you the Legacy Emanuel campus, pictured to the right, which is a prime example of an institution that has walled itself off after razing the surrounding neighborhood so that no trace of its original character remains. Founded in 1912, this medical center underwent major expansion in the 70s that dovetailed with other disastrous postwar urban renewal projects—specifically Memorial Coliseum and Interstate 5—that decimated the minority mixed-use commercial districts in the Albina neighborhood.

When driving south along N Vancouver Ave, as you near the hospital the entire feel on the one way couplet changes. You almost feel as if you could be in a suburban office park. Incredibly, the city’s largest trauma hospital is not even visible from the street. Only a sign informs you that you are in the vicinity of a medical facility. Instead of being lined with the streetcar-era mixed-use buildings and warehouses that are more typical of this area, near Legacy Emanuel, N Vancouver Ave is lined with parking structures that continue for blocks and blocks. True, they are nicely landscaped, but they act as a wall nonetheless. Pictured below are these barriers.

Behind the greened parking edifices sits the hospital. The physical impression that Legacy Emanuel is “other” is made loud and clear. It is a citadel of medicine that does not articulate or interact with the vestiges of the commercial and residential uses that still exist in the area. (Unfortunately, the stock of buildings that dotted this formerly vibrant district are long gone.)

Other problems in this area include a disconnected grid with one-way streets as well as the deep canyon that Interstate 5 creates to the west of the hospital, further reducing connectivity to other parts of the city. Additionally, Legacy Emanuel controls much of the undeveloped land surrounding the hospital, creating an even larger dead zone of surface parking and empty lots.

Essentially, they have successfully designed a single-use medical district that is, as a result, unsafe and unsightly. The hospital’s very presence impedes revitalization on its back doorstep, even though renewal is happening nearby on N Williams Ave, N Mississippi Ave and NE Martin Luther King Jr. Blvd.

The impact of this lack of diversity of use and functioning grid is keenly felt in Dawson City Park located across from the hospital, shown here. It is a public gathering place whose biggest constituents, on a per square foot basis, are a two-story low-rise office building with mirrored windows and a series of parking garages. It’s no wonder that its success as a public amenity is now mixed, at best.

This tale of two hospitals is an oft-told story that emerged from many city centers during the early days of urban renewal. The dense district with political clout staved off construction projects that would have destroyed the tight knit network of blocks, and in so doing, ultimately saved the neighborhood. The vibrant minority district, without the political clout, absorbed the full impact of nearly every large new public works project post World War II — Memorial Coliseum, Interstate 5, and the expansion of Legacy Emanuel Hospital.

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