Tag Archives: shopping centers

The Coronavirus and Commercial Real Estate: Can Urban Retail and Shopping Centers be Re-Occupied Yet Again?

Compared with other types of commercial real estate, brick and mortar retail had been in crisis for years even before the coronavirus hit.   The average compensation of most U.S. workers has been falling for decades, offset by rising public and private debt, and after 2008 consumer spending finally began to follow, as those debts no longer covered the difference.   Dollar stores became one of the few sources of retail growth.  Then e-commerce started taking a rising share of whatever consumer buying power was left.  But even before that suburban and Sunbelt America, built after WWII, were thought to be “overstored” as a result of decades of local zoning policies that favored commercial tax “ratables” that provide property and sales tax revenues, but sought to exclude multifamily housing that might attract less-well-off people, whose local service needs exceeded the local taxes they paid.

How much could US retail shrink? And where?

The national average is about 46 square feet of retail space per capita, with most metropolitan areas having between 40 and 55 square feet per capita…By global standards, the U.S. has much more space devoted to retailing than anyone else: comparable estimates for other countries include: 23 square feet per capita in the United Kingdom, 13 square feet per capita in Canada, and 6.5 square feet per capita in Australia. If the experience of these countries is any indication, it’s a good bet that there’s lots there’s still lots of room for downsizing in the U.S. retail sector.

Before the virus hit the real estate industry was responding with a burst of innovation, shifting space from retail stores selling goods to service establishments selling health care, entertainment, dining, and exercise.  Along with housing, where permitted.  Then the coronavirus shut down many of these alternatives. So now what?

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Brooklyn’s Business Boom: Retail and Other Consumer-Driven Sectors

In the previous post, which should be read first, I chronicled the location of and trends in Brooklyn’s office-based businesses. This post is about consumer-driven businesses. How hard is it to know the future? Consider the 1958 report from consulting firm Voorhees Walker Smith & Smith, Zoning New York City, which formed the basis of New York City’s current zoning resolution, passed in 1961.

https://archive.org/details/zoningnewyorkcit00voor

Page 11. The growth of the supermarket has plainly reduced the role of the neighborhood food store. The efficiency of the large supermarket is such that a given volume of sales can be handled with sharply lower frontage requirements and, even allowing for parking areas, with appreciably lower land requirements…Simultaneously with the growth of the supermarket has appeared the integrated shopping center, ranging in scale from neighborhood units of ten stores to gigantic complexes with department stores and chain store branches. Since the main attribute of the shopping center is one-stop shopping for the automobile customer, the radius of retail trade areas has dramatically increased.

It is now a commonplace that both the downtown shopping district and the local string street have been adversely affected by these innovations in retail trade (resulting in) the excessive amount of retail frontage in the numerous strip developments of the city. A survey of frontages in sixteen shopping districts in widely scattered parts of the city indicated an average retail vacancy rate of nine percent, with an additional six percent of store frontage occupied by non-retail uses.

It is now 59 years later, and as a result of additional innovations in retail trade, the entire economic structure described by Voorhees Walker Smith & Smith is collapsing in suburban and Sunbelt America, as the strip districts of Brooklyn boom.

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