New Reality Requires Fresh Approach
by Larisa Ortiz
We focus on the principles that make great retail environments—so we can help cities with the investments and the policies they need to set the stage for private-sector investment. That might be zoning, it might be regulatory, it might be forming a business improvement district, or it might be helping to create or market programs for pop-up stores. The bulk of our practice is advising public and nonprofit entities, such as business improvement districts, merchants’ associations, chambers of commerce—stewards of places driven by retail. Before joining Streetsense, I ran my own business, and I led large projects for the city of New York. One project included rezoning of 125th Street in Harlem, a retail-driven environment. More recently, I worked with the city of Cambridge, Mass., on a retail strategic plan that included a great food-truck program, technical assistance for small businesses, and vacant storefront activation best practices.
We will see more vacancies, and that’s not just because of COVID-19. We are overbuilt in this country. In the U.S, we have 23.5 square feet of retail space per capita. In European countries, it’s well under 10. We spend a lot, but we still can’t support that much retail.
It’s a conundrum because residential is what’s needed. But nearby residents will scream that they don’t want new residents and their kids going to local schools, and they don’t want the commercial tax base diminished. We need to educate public sector decision-makers and residents that we are facing a new reality. I’m doing work in Santa Monica, Calif., along Third Street Promenade, and I was looking at their zoning code. They restrict residential throughout almost all of downtown, and they restrict schools on the ground floor. They use zoning to curate what happens at the ground floor. Many cities do this, and it’s wishful thinking. By contrast, we recently worked in Midtown Atlanta. There’s a lot of new development there, and the rezoning preceded our work there. I was pleasantly surprised to see an acknowledgment that retail can’t be everywhere and that some streets are residential streets—and it’s OK.
We need to be very, very mindful of how long it’s going to take urban centers to recover, particularly where there are destination drivers—cultural institutions, museums, nonprofit arts organizations—that have been such critical components. For example, the Tenement Museum in Lower Manhattan closed its doors during the pandemic. Will we come together to save these destination drivers? I hope so. That museum attracts something like 200,000 people a year to that neighborhood. For now, those people are gone. What we don’t want is to enter into a downward spiral where one vacancy begets another begets another. We know the impact of blight.
The public sector needs to come in and think about creative ways to hide vacancies. Malls do this all the time. You probably don’t even notice when there’s a vacancy in a mall. They put a billboard on it. Or art. When Hudson Yards (in New York) opened, there were many, many vacant spaces. They created tactile art, so a vacancy became this opportunity to touch something, and it became a fun thing.
COVID-19 is having serious impacts, but it may actually help drive this move toward mixed-use development. In downtowns driven by office-worker demand, businesses are more affected by the pandemic than downtowns that serve residential communities. There was just a New York Times article (Why Some Suburban Businesses Are Thriving During the Pandemic, Feb. 1, 2021) that talked about what I’ve been saying for months—that residents are discovering their own communities in a way they hadn’t previously.
We need creativity, and we also need flexibility so that we can fill spaces with what’s needed. There are often very onerous use restrictions that prevent change of use. Right now, that’s not a barrier we should be putting in the way of building owners.
Larisa Ortiz is managing director of public and non-profit solutions at Streetsense, advising public, private, and non-profit sector clients on retail real estate strategy in urban environments. A resident of New York, she currently serves on the New York City Planning Commission. She’s the author of Improving Tenant Mix, published by the International Council of Shopping Centers.
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