Monday, September 25, 2006

Can downtown retail face down the competition?

The Sunday editorial, “Downtown future” is correct that maintaining the status quo isn’t an option. However, the editorial asserts that downtown can compete with developments built elsewhere in town. Evidence from here and throughout the nation suggests that this is not true.

Growth in retail space has outpaced demand for that space.

For years, Lawrence has approved more retail developments than it can absorb. From 1990 through 2005, retail spending grew by only 1.5 percent per year after inflation. During the same years, retail space grew by 4.1 percent per year. This is clear evidence that developers build more space than is needed. The results are empty space blighting parts of the City.

These new centers may enjoy a brief success when they open, but in the long-run they either cause blight in other shopping centers or fail themselves. The empty hulks are seen all over town.

• The Riverfront Mall was promised as the new anchor for downtown. It failed because of too much competition elsewhere. Now it is an uncomfortable mix of office and hotel and very little retail. The chances of it returning to a retail anchor are diminished with each additional development elsewhere.

• The Tanger Mall was promised as the new retail gateway to the City. It failed as well. It now stands largely empty, greeting entrants to the City with a blighted shopping center.

• Many other small strip malls sit empty or only partially occupied and in disrepair, especially along 23rd Street.

• Many shopping centers, including the Southern Hills Mall, 10 Marketplace plus others, have had to lease prime space to office uses because of a lack of demand for retail space. This spreads the problems with a glut of retail space into the office market, hurting it as well.

This overbuilding hurts redevelopment plans for downtown.

• Lawrence partnered with developers to redevelop part of downtown. The City built an $8 million parking garage on the 900 block of New Hampshire Street. In exchange, the developers were to build retail, office and residential space. The tax proceeds from this space were to pay for part of the cost of the garage. The redevelopment plan failed, in large part, because the City permitted and continues to permit too much space to be developed elsewhere.

• The new Hobbs-Taylor development on the 700 block of New Hampshire is having difficulty finding retail tenants because too much space is available.

The City should take steps to prevent the harm from these market failures.

If Lawrence wants its downtown to succeed, it must help the process. If it wants its downtown redevelopment plans to prosper, it cannot depend upon the retail vendors choosing downtown over the many developments in place an planned for West 6th Street. Experience in Lawrence and other cities suggests that new space at the suburban perimeter will be more appealing to the retailers that are being courted. If the City wants downtown to win the competition, it needs to help downtown. The editorial suggests that in the long-term we should let downtown “face down its competition”. In fact, in the long-term, downtown developments have tried to do this and lost.

The damage goes beyond downtown. Lawrence has already become a City pock-marked with deteriorated and empty retail centers, blighting many neighborhoods. If we want new growth to reinvest in the downtown and other older districts of the city, the process must be guided. It cannot be left to the developers and the retailers. We do not have enough demand to support both excessive growth in new shopping districts and redevelopment of our existing shopping centers.

It is long past time to reign in the growth of retail space in this town. Lawrence needs to bring the growth in retail space in line with the growth in spending and direct that growth where it is desired, into a vibrant downtown. Downtown Lawrence is one of the key identifying features of this community; we need it to prosper.

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