Retail expert sees a shift back to main street

NUN: What, in your opinion, are the most important trends in retail at the moment, and which of those have a particular impact on new urbanist retail? Gibbs: The hottest trend in retailing now is to build what the chains call lifestyle shopping centers, which are basically New Urbanism kinds of outside shopping centers. They are mixed use and include housing, hotel, office, entertainment, and retail. There are about 25 of those projects currently under construction or in final approval. NUN: Any other trends that have a particular impact? Gibbs: Yes, the other big impact is that retailers are wanting to locate back down on main street. That’s happening very quickly. They see two things: First of all, that you can fit their standard formats in existing, old buildings. For example, they realize now they can build a two-story building and still have it work for them. The other thing is that they realize that they can make money downtown, and in some cases they are finding that it is more profitable to open a store downtown rather than in an enclosed shopping center. NUN: What are some basic guidelines for new urbanist retail that may guide designers and developers? Gibbs: The first principle is to keep the buildings and the plans authentic to the region in which you’re located. That’ll help the center to position itself as unique in contrast to new, conventional shopping centers. The second, and probably most important thing, is to make sure that there is a consumer market that will support what you are proposing. A lot of the new urbanist proposed towns are built in locations that won’t support any retail at all, or very little. The next important thing is to make sure that the plan itself is realistic for today’s modern retail concepts. You have to maintain lots of parking for the retailer, 5 cars per 1,000 square feet of building, for example. You have to allow consumers to park in front of the building and use the front of the building. It’s essential that you have on-street parking for the street retail. We get into that problem in many cities right now, where the city planning departments want on-street retail, but the city engineers do not allow us to have on-street car parking. It’s important to have one or more large anchors in your shopping district. Many new urbanist planners that we work with try to develop shopping centers that are what we call anchor-less centers, where they just have high-end boutique shops, but they don’t want the big discount store or the big anchor. And you can’t really support retail without an anchor. The anchor may have to be a supermarket; it may have to be a small department store; it may have to be a discount store. I think a lot of the new urbanist planners are unrealistic about what kinds of tenants are working today. Last year 65 percent of all sales were in discount department stores. And that means letting a Wal-Mart or somebody like that come in. There are dozens and dozens of retailing rules that you have to follow. You have to realize that people won’t walk more than a thousand feet, usually, in a shopping district. You have to realize that people won’t walk past the same store fronts twice. So we like to create retail loops, so that you can walk in a circle-eight, or a counterclockwise kind of movement. It’s important to maintain at least 70 percent glass on the first level of the building, so that shoppers can see into the stores. It’s important that the stores’ windows be clear, and that the store lights be left on late at night, so you get additional light into the street of the shopping district. A lot of new urbanists think they can break those rules and compensate for basic market rules with aesthetics. And that doesn’t work. NUN: Any other common mistakes you see in new urbanist retail developments? Gibbs: Yes, I forgot to mention that you really have to have a lot of traffic, vehicular traffic, going past your store front unless you are in a major city like New York City. Generally you need at least 25,000 cars per day driving past your store fronts. It’s important not to put the center where no cars drive by. A lot of the new urbanists were building their town centers completely in the middle of the project, away from the highway. They saw the highway and traffic as something bad. We actually pull the road right through there as much as possible, try to pull the traffic right through the town center. It’s a very high-risk game. One of the things we have noticed, is that so many developers are building new urbanist projects right now, that there has been a very fast evolution and learning curve about what works and what doesn’t work. And the first centers that came out of the ground a few years ago are now becoming obsolete, because we’ve learned new things about how people shop. So [retail developers] have to be flexible to change and to learn. NUN: Can you point to particular new urbanist projects that have been successful in their retail development? And why are they successful? Gibbs: I think that Phillips Place in Charlotte has been one of the most successful ones, because [the developer] created a unique shopping environment, an urban shopping environment, that doesn’t exist in Charlotte. Most of Charlotte is a suburban sprawl hell; it’s like Atlanta. And this developer created a very nice urban place where he doesn’t have any competition for people who want an urban experience. He’s going to get more competition because a lot of people are copying what he did. One of the first and most successful ones is Mizner Park in Boca Raton. That’s doing extremely well and it really told everybody how to do it in a good way. The project on Mashpee Commons in Cape Cod also has recently been extremely successful, and they are actually bringing in a lot of tenants that wouldn’t have gone there a few years ago. There is sort of a gravitational pull to these centers once they become successful. Or just the opposite. If you start a center off slowly and it doesn’t come out of the shoot with high sales, it will retain that reputation for a long time. Centers have to open successfully and strong, otherwise it’s hard to recover. NUN: What about projects that are conceived less as retail centers from the start, where the focus has been on building homes first? Gibbs: I think the best new one is the new Kentlands model in Maryland. Phase two of the Kentlands was planned in a nice urban way, and it had existing homes around it. As a matter of fact, I understand the homeowners wanted that new retail to come there. Usually when people build homes they fight retail development, and we’re finding that in New Urbanism communities they want it – they go out and lobby for it. NUN: In the New Urbanism, one of the important selling points is the proximity to retail, but often retail centers can’t be built until the later phases of the project when you have enough households. How can a developer deal with this dilemma, and are there effective strategies to make retail work early in a project? Gibbs: That’s a very good question. We don’t think that you should build a retail center that needs the surrounding houses in your development to work. We think that you have to be conservative in your site selection and find a location that will work without your project being constructed. For example, it takes 5,000 houses to support one supermarket. But you’re not going to be able to develop 5,000 houses. So we master-plan retail where it’s supportable without any households being sold, so that the developer can build the town center first, limit his risk, and then use the town center as an amenity to sell houses. The worst thing that we can do as new urbanists is to build a number of town centers that fail and that don’t make money. For then nobody will want to copy the model. NUN: Can you go into more depth about the arguments for bringing big box stores into new urbanist retail? What are the challenges involved in that and are some developers overcoming these challenges? Gibbs: It takes new planning models to do so. It’s hard to get communities to approve new urbanist projects with big boxes, because they’ve been sold the idea that New Urbanism town centers are quaint little Nantucket walkable streets with no stores bigger than 1,000 square feet. The size of the store is irrelevant. It’s how the store handles the street, how the building and the urbanism interrelate, whether the store has windows on the first level and how it’s sited. We think big boxes are essential for competitive retail shopping streets. We bring them in, use a model that we’ve invented, called “the double reverse L” shopping center model, where we create a spine of retail streets, anchored by big box retail. NUN: Some developers are creating main streets lined by single-use buildings. Do you think it is important to always mix retail and residential in main street groupings and why? Gibbs: No, I don’t think it’s important to always mix them though I think it’s important to have residential nearby. In fact, I think it is very risky for the retailer to have residential above, because you can’t control how that resident maintains his unit. It helps the commercial a little bit to have people living above it, but 400-500 people living above a shopping districts isn’t going to make a lot of difference. You need people in the thousands. I think it’s more the other way; the housing benefits from the shopping, the housing becomes more valuable. NUN: What about the role of the corner store? Should it be viewed as a developer subsidized entity? Gibbs: I don’t think so. I think the corner store is essential, but I don’t think the developer should subsidize the store. I think they could slightly discount the rent, but I don’t recommend the corner store be built unless the owner of the store is going to make enough money to make a good income. I don’t like the idea of paying people to pretend that they are selling things. I think that’s very counterproductive. In our residential town plans we put our corner store on the highway where we have everybody driving past it on their way into the neighborhood. If you really want a corner store at the center of the neighborhood, we’ve recommended sometimes that it just be a vending machine store, where you have a cute building and put vending machines and stuff like that in it, or newspaper stands. We think you need at least 1,500 households to support a neighborhood store. That’s at a minimum. NUN: Anything you would like to add about the state of new urbanist retail? Gibbs: It’s very exciting. I was just at the national shopping center conference this spring, and about 30 percent of the proposed shopping centers were New Urbanism-based centers. Last year only five percent of them were. And there was a buzz around all those booths that had New Urbanism projects. They were swamped with national tenants who wanted to lease their space. Everybody was talking about how exciting this New Urbanism model is. Except, in the shopping center industry they don’t like to use the words New Urbanism. Shopping center developers don’t like anything new or urban, so they call them “village centers,” or “lifestyle centers,” but it’s the same thing. The last thing is to watch out, because at least half the centers we see have major fundamental mistakes that will put them out of business. They won’t be around five years from now. They are missing basic, fundamental retail rules for parking, market demand, visibility, signage, and layout. Right at the beginning the developer should find out from a market analyst what’s supportable, how many square feet, and believe what he says. And they should listen to the planner about where it should be located. Very often we get site plans sent to us, where they’ve already decided that it’s going to be too big or it’s going to be in the middle of a place where it’s not supportable. And it’s too late to make any changes.