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Downtowns & Main Streets

Sizing Up Downtown

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How do you size up your downtown? A good way to start is with an honest, objective assessment of its current condition.

When I assess a downtown, I focus on three broad categories: its economic shape, its physical condition, and the effectiveness of its management. While there are dozens of indicators that can tell you something about a downtown’s health and opportunities, allow me to provide an overview of some key points.

A community’s decisions about whether to attract community-serving businesses (like the small market, above) has significant implications for its planning & land use policies.
In many communities, downtown design guidelines inadvertently discourage creative storefront and building design. Would you want to preclude a storefront as interesting as Jim’s Steaks in Philadelphia?

1. Composition of the downtown district’s uses. What percent of the downtown’s space is used for retail, professional offices, personal services, government, entertainment, housing, industry, and other activities?

There is no ideal formula, of course; downtowns have numerous economic possibilities. One district might choose to focus on entertainment (perhaps with a cluster of restaurants, a movie theatre, and some specialty shops open in the evening), while another might decide to concentrate on meeting the needs of daytime downtown office workers. Both strategies (and many others) could be equally successful. Analyzing the percentages of space used for different economic activities gives a quick sense of whether a district has a deliberate focus — and, if so, what it is.

2. Market segments. Is the downtown a “community-serving” district? In other words, does it offer services meeting the needs of local residents. Or is it a destination shopping area? Many downtowns are a little of both. There’s no right or wrong answer here, but these alternatives have different implications for the district’s needs and opportunities.

Speaking of market segments, smaller communities with big box stores on the periphery of town often have little choice except to become more destination-oriented, as the big boxes drain away sales from existing community-serving businesses. To survive, downtown businesses usually need to offer more specialized products and services and to expand their geographic reach — and that exacerbates parking and traffic problems. As I’ll return to in future columns, retail development decisions can have unexpected planning complications.

3. Vacancy/occupancy rates. Generally speaking, downtown districts with a total vacancy rate (ground floor and upper floors) of no more than five percent are doing very well. If the vacancy rate is higher than that there may be some problems.

High downtown vacancy rates aren’t necessarily a bad thing for a district in the early stages of revitalization, as the vacancies can help provide an opportunity to create dynamic business clusters. But, after three years or so of revitalization activity, a persistently high vacancy rate suggests the downtown’s economic development plan, marketing strategy, management, or regulatory environment need some help. …

Note: the article then continues with a look at the following factors:

4. Percentage of gross sales spent on rent.
5. Cohesive core of older and/or historic commercial buildings.
6. Retail continuity.
7. Store hours — or, rather, the connection between store hours and market segments.
8. Downtown economic development strategy.
9. Downtown organizations.
10. Resources in place to support business development.
11. Planning commitment to downtown.

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