Current Trends in Downtowns: Question and Answer
Downtown Real Estate
From the Downtown Trends webinar hosted in January 2023, community leaders asked questions specifically about downtown real estate. This “Q and A” article highlights answers from our director of real estate, Elliott Cook.
Table of Contents
- Diversity strategies for downtown
- Difficult or absentee property owners
- How does the “last mile” affect downtown
- Suggestions for incentive programs
- Hot businesses for downtown
- The next big thing
- Charging for boarded-up windows
- Retail spaces below with lofts above
- Business expansion and retention plans
- National chains downtown
Q&A about Downtown Real Estate
Q1
What are the best diversity strategies to take to your downtown?
DEI is a major focus of the real estate and downtown worlds. Many first-generation Americans with an entrepreneurial spirit, who might not be the most capitalized individuals, can find opportunities in downtowns that other higher credit tenants overlook. Try creating a program that focuses on those individuals to incentive them to open space downtown.
Q&A about Downtown Real Estate
Q2
Property owners in our community can be difficult or absentee. What should we do?
Inventory each property, color code each by level of severity, attention toward incentives, and code enforcement. The ultimate goal is compliance not fines for the property owner.
Q&A about Downtown Real Estate
Q3
How does last mile affect downtowns?
Last mile presents a lot of opportunity in downtown, large square footage vacancy, deep box, former grocery stores or department stores are being demised with small square footage retail in the front and distribution centers, last mile, and ghost kitchens in the back of the space.
Q&A about Downtown Real Estate
Q4
What are suggestions for incentive programs?
Anything you can do to make a business owner successful in the first 90-100 days of being open is helpful. Rent concessions on the front end, grants to help with early overhead costs, or terms that will help the tenant be successful early, will increase the odds that the tenant can last long-term.
Q&A about Downtown Real Estate
Q5
What types of businesses will be “hot” for downtowns in 2023?
The hottest types of retail are all great fits for downtown vacancies. Grocery, Home and Garden, Pet, Hair and Nail Salons, and Fitness are all business types ideal for downtown. Coffee Shops, Bars, places with seamless carry out, and outdoor dining spaces are also good fits.
Q&A about Downtown Real Estate
Q6
What is the next big thing that we will use to drive the downtown market?
The big thing is the renewed appreciation toward downtown, authentic spaces, and small-scale developments in a long-term hold strategy. We will see investors not just buying buildings and flipping them, but holding onto those buildings.
Incremental development will save downtowns – a lot of time it is someone locally or who has moved back to town who rehabs one building.
Q&A about Downtown Real Estate
Q7
Can you charge fees for boarded-up windows?
Code enforcement is the key. First, you must adopt a code, register each property, and then hold the property owner to a standard. Vacant storefront signage, artwork, and things that make the vacancy and the area around it more appealing are the priorities. You have to protect the businesses around the vacant buildings.
Look at what shopping centers or malls do. They actively market the space, clearly print contact information, and use window clings and treatments to show what could be in the space. This is also an opportunity for temporary art installations or murals.
Q&A about Downtown Real Estate
Q8
Do you see retail spaces on the ground floor with lofts above them as a current trend?
That’s a huge thing for downtowns. The goal is to create an 18-hour downtown or a 24-hour downtown. Challenges with upper floor spaces are often with ADA compliance and renovation, but there are plenty of grants and strategies to help offset remediation costs.
No one proves a downtown or tells its story better than those that live there.
Q&A about Downtown Real Estate
Q9
What is the best advice for creating a business expansion and retention plan?
Start by learning the data behind the market and where the opportunities are. Where are people leaving your community to shop elsewhere? What categories (e.g. apparel, hardware, home goods) do people have to leave town to buy?
Look for stores or restaurants in neighboring markets with one or two locations and see if they want to open a new location in your community. What real estate do you have that could house the tenants you want to see in your downtown?
Q&A about Downtown Real Estate
Q10
Is there interest in national chains downtown?
Downtowns are traditionally independent or mom-and-pop stores and restaurants. Franchise-driven chains typically have a strict site criteria, and often downtown real estate isn’t a fit.
Many national restaurants now require a drive-through, and that is a challenge for a lot of properties downtown. Also, the lease structure and co-tenancy required to satisfy the potential tenant aren’t satisfied by downtown property owners. National retail wants to be visible from the area where the highest number of vehicles drive by every day.
Do you have specific questions about real estate in your downtown?
Let’s talk!
Elliott Cook
elliott@retailstrategies.com
205-616-2818
