Downtown Raleigh
Retail Market Analysis &
Positioning Strategy
Undertaken on behalf of the
Downtown Raleigh Alliance
MJB Consulting / February 2009
MJB Consulting
Retail Market Analysis - Downtown Raleigh
February 2009
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Table of Contents
Chapter
Page
Introduction
3
Executive Summary
8
Structure
19
Chapter 1: The Daytime Worker
20
Chapter 2: The Event-Goer
31
Chapter 3: The Resident
43
Chapter 4: The Destination Shopper
60
Conclusion (Action Steps)
105
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Introduction
In May 2008, Downtown Raleigh's Business Improvement District (BID), the
Downtown Raleigh Alliance (DRA), having raised the necessary funds from a host
of private sources (see inset box), selected MJB Consulting (MJB), a New York,
NY-based national retail planning and real estate consulting concern, to develop
a Retail Recruitment Strategy and Implementation Program for Downtown
Raleigh.
We would like to thank the following for providing
funding for the Retail Recruitment Strategy and
Implementation Program. Without their commitment
and generosity, this would not have been possible.
Branch Banking and Trust
Charter Square Developers LLC
Cherokee Investment Partners
ColeJenest & Stone, P.A.
Highwoods Properties, Inc.
Greater Raleigh Chamber of Commerce
Jackson Hill & Chapman of Merrill Lynch
Kennedy Advisors, LLC
Kimball & Company
Kimley-Horn and Associates, Inc.
NAI Carolantic Realty, Inc.
The News & Observer
Pearce Brinkley Cease & Lee (PBC+L Architecture)
Poyner Spruill, LLP
Progress Energy
RBC Bank
WEST
York Properties
MJB was asked to focus on the area within BID boundaries, and specifically, on
the Fayetteville Street District, Moore Square, and the Warehouse District (see
map). The Capital District was not included because it contains very little retail
space, and Glenwood South is seen as already having a certain momentum, and
less in need of strategic direction.
The phrase "Downtown core" is used throughout the document: this shall be understood to refer to
the commercial heart, that is, the Fayetteville Street District and Moore Square.
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MJB started on the assignment in August 2008. The first phase involved a
market analysis and positioning strategy, with this report as the final written
product. The scope-of-work consisted of the following:
- Review of previous studies and existing data on Downtown retail
- Creation of Downtown retail database (separate)
- Assessment of general "site-specific" factors that impact on Downtown's retail
potential (e.g. foot traffic, parking, etc.)
- Creation of a Downtown competition database, detailing the other business
districts and shopping centers in the Triangle that vie with the study area for
consumers and tenants (separate)
- Separate interviews/meetings with local retail and residential brokers as well as
numerous other stakeholders (see inset box)
- Assessment of Downtown's retail "brand"
- Delineation of appropriate trade area boundaries
- Analysis of trade area demographic and psychographic profiles
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------------------------------------------------------------------------------------------------------------ Consideration of other relevant "traffic drivers" (e.g.
concentrations, event venues, educational institutions, etc.)
office-worker
As an out-of-town consultant, MJB utilizes an approach of "total immersion",
making sure to spend an extensive amount of time "on site" in order to better
understand the study area and its context. During the course of this first phase
alone, its President, Michael J. Berne, made three separate site visits,
aggregating to more than two weeks and including three weekends. In addition,
he stayed current on newspaper reportage and relevant blogs.
Upon completion, MJB circulated the draft written product to the interviewed
brokers and stakeholders for their review, and met with each of them again to
hear their feedback. In addition, Michael met periodically with a steering
committee -- the DRA's Economic Development Committee -- to provide status
updates and receive direction.
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MJB would like to thank the following individuals for contributing time and input to this effort.
Economic Development Committee members have been indicated with an asterisk.
- David Diaz*, President & CEO, Downtown Raleigh Alliance
- Paul Reimel*, Economic Development Director, Downtown Raleigh Alliance
- Charles Meeker, Mayor, City of Raleigh
- Russell Allen*, City Manager, City of Raleigh
- Mitch Silver*, Director of Planning, City of Raleigh
- Ken Bowers*, Deputy Planning Director, City of Raleigh
- Daniel Douglas*, Executive Director, City of Raleigh Urban Design Center
- Kristopher Larson*, Senior Planner, City of Raleigh Urban Design Center
- Patti Sutton, Hortense Francis and Pat Gilliard*, Progress Energy
- George York* and Boss Poe, York Properties
- Jack Kimball*, Kimball & Company
- Crystal Hall, Ford Griswold and John Brewer, CBRE
- Greg Hatem, Andrew Stewart, Holton Wilkerson and Ben Steel, Empire Properties
- George Richards, Amy Watkins and Shane Bull*, Richards Commercial
- Carter Worthy, Carter Worthy Commercial
- Ty Thomas and Christina Coffey, Hunter & Associates
- Michael Hakan, Hakan Market Partners
- Steven Redling, Laszlo Lukacsi and Adam Mehdi, Hunter Lane
- Harvey Schmitt, Greater Raleigh Chamber of Commerce
- Adrienne Cole, Raleigh Economic Development
- Denny Edwards and Loren Gold, Greater Raleigh Convention & Visitors Bureau
- Dr. Martel Perry, Shaw University
- Ann-Cabell Baum Anderson, Glenwood Agency
- Richard Adams* and Dean Penny*, Kimley-Horn and Associates, Inc.
- Alex B. "Andy" Andrews*, Dominion Realty Partners, LLC
- Francis D. Bisby*, Stantec Consulting
- Don Carter*, Raleigh Development Consulting
- Clymer Cease Jr.*, Peace Brinkley Cease & Lee (PBC+L Architecture)
- Tom Darden*, Cherokee
- Roland Gammon*, White Oak Properties Inc.
- Jim Hansen*, RBC Bank
- Michael Harris* and Thomas Hill*, Highwood Properties
- Guy Harvey*, Jones Lang Lasalle
- Greg Hatem*, Empire Properties
- John J. Healy Jr.*, Hyde Street Holdings, LLC
- Chris Hill*, Jackson Hill & Chapman of Merrill Lynch
- Andy Holland* and John Ward*, Wachovia National Bank
- Robert Hoyt*, Synergy Commercial Advisors
- Loren Kennedy*, Kennedy Advisors, LLC
- William C. Matthews, Jr.*, Womble Carlyle Sandridge & Rice, PLLC
- G. Gray Reed*, Branch Banking & Trust Company
- David Milsaps and Jedidiah Gant, New Raleigh
- Richard Reinhart*, Orage Quarles III* and Sue Stock, News & Observer
- Dan Bowens, WRAL
- Crash Gregg, Raleigh Downtowner
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-----------------------------------------------------------------------------------------------------------Of course, this written product is meant merely as a prelude, to ground the more
implementation-focused and action-oriented later phases in a realistic
understanding of the market potential. Following its submission, in February
2009, MJB proceeded with the following steps, in an effort to generate the
support, develop the infrastructure and craft the tools needed on a practical level
to carry out its recommendations:
- Meetings with landlords, brokers, stakeholders and elected/public officials to
secure "buy-in"
- Creation and distribution of a "Master Marketing Agreement", for signature by
each of the major property owners
- Creation and distribution of a property questionnaire, to gather relevant
information on available and soon-to-be-available spaces
- Assessment of existing retail incentive programs, and composition of a memo
detailing possible new ones that might be considered
- Development of the content for a leasing brochure for the Downtown core as a
whole and for specific types of retail tenants
- Development of the content for advertising placements and trade-show
collateral, and guidance on appropriate media vehicles and trade shows
- Making of a list of fifteen (15) prospective tenants, with "detail sheets" on
each, providing relevant information on creditworthiness, site location criteria,
preferred co-tenancies, etc.
- Placement of "exploratory calls" to prospective tenants, in order to gauge
possible interest, and steering of interested ones to appropriate
landlords/brokers
- Making of a second list of prospective tenants, based on results of the first
round of exploratory calls as well as changing conditions
- Training of an in-house "retail coordinator" to continue with the recruitment
effort once MJB's scope-of-work is finished
- Development of a power-point presentation that the retail coordinator can use
to lobby landlords and brokers in the future
Finally, keep in mind that the research for this written product was undertaken,
the data gathered and the recommendations formulated in a six-month stretch
starting in August 2008 and ending in February 2009. Of course, 2008/2009 is
an extremely volatile time in the national and regional economy, and retail is a
particularly fast-moving property sector in any event. As a result, certain
findings might quickly become out of date: we will make sure to align our
direction with present realities during the later, implementation-oriented phases,
but these adjustments would not necessarily be reflected here.
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Executive Summary
In May 2008, Downtown Raleigh's Business Improvement District (BID), the
Downtown Raleigh Alliance (DRA), having raised the necessary funds from a host
of private sources, selected MJB Consulting (MJB), a New York, NY-based
national retail planning and real estate consulting concern, to develop a Retail
Recruitment Strategy and Implementation Program for Downtown Raleigh.
MJB was asked to focus on the area within BID boundaries, and specifically, on
the Fayetteville Street District, Moore Square, and the Warehouse District. The
Capital District was not included because it contains very little retail space, and
Glenwood South is seen as already having a certain momentum, and less in need
of strategic direction.
The phrase "Downtown core" is used throughout the document: this shall be understood to refer to
the commercial heart, that is, the Fayetteville Street District and Moore Square.
This written product is meant merely as a prelude, to ground the more
implementation-focused and action-oriented later phases in a realistic
understanding of the market potential. Following its submission, in February
2009, MJB proceeded with an effort to generate the support, develop the
infrastructure and craft the tools needed on a practical level to carry out its
recommendations.
Keep in mind that the research for this written product was undertaken, the data
gathered and the recommendations formulated in a six-month stretch starting in
August 2008 and ending in February 2009. Of course, 2008/2009 is an
extremely volatile time in the national and regional economy, and retail is a
particularly fast-moving property sector in any event. As a result, certain
findings might quickly become out of date: we will make sure to align our
direction with present realities during the later, implementation-oriented phases,
but these adjustments would not necessarily be reflected here.
We have concentrated our analysis and recommendations on the four different
"customers" with the most influence on retail in the study area today, rather
than the niches that would need to be created from scratch. This focus is based
on the precept, considered axiomatic in marketing circles, that one should try to
generate more sales from existing customers before endeavoring to attract new
ones.
Rather than a dry, formulaic presentation of the data and the findings, we have
chosen what we feel to be a far more dynamic and readable one, structured on
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-----------------------------------------------------------------------------------------------------------these four customers, with the following four chapters covering each of them in
turn, and each individual chapter synthesizing the various factors impacting on
the retail potential of its respective customer.
Customer #1: The Daytime Worker
- Daytime workers will typically provide support throughout the weekday for
various quick-service food offerings, specialty-beverage purveyors and other
convenience-oriented concepts (e.g. drug store), and the concentration of office
users will also give rise to certain business support functions (e.g. copy shops,
"temp" agencies). In the Downtown core, these will most likely want to locate
on Fayetteville Street, Wilmington Street or intersecting side streets.
- Recruitment efforts should target additional "fast-casual" food purveyors that
do not have to rely heavily on the evening trade. Fast-casual concepts employ
the same service model as more traditional fast-food ones, but at the same time,
they offer healthier and higher-quality ingredients, often in a more up-market
and in some cases stylish setting, and at a slightly higher price-point. Existing
examples in the Downtown core include Café Carolina and Bakery, Spize Café
and Dos Taquitos Centro (for lunch).
- Downtown property owners looking for "signature" high-end dining concepts
should look not to national brands, but rather, to regional chain-lets or, better
yet, proven local restaurateurs, which would not only be more realistic at this
point in time, but also leave business travelers and other visitors with a more
distinct impression of Raleigh. However, the only possibilities are spaces where
the landlord is willing to absorb a greater share of the build-out costs and take a
more accommodating stance in negotiations, or ones that are "secondgeneration" and require far less in tenant improvements.
Customer #2: The Event-Goer
- The direct spin-off from most event venues (e.g. Raleigh Convention Center,
Progress Energy Center for the Performing Arts, Marbles Kids Museum,
amphitheater, etc.) tends to be limited for the most part to food, drink and
entertainment.
- With the opening of the new convention center and the Marriott City Center,
the creation of City Plaza and the addition of new retail space there, the visitororiented traffic is likely to shift away from City Market towards the southern end
of Fayetteville Street, with the former losing its long-time monopoly on that
customer.
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------------------------------------------------------------------------------------------------------------ If City Market is to retain its relevance, it must become a more compelling draw
for the convention and day-tripper submarkets, and/or better integrate itself with
the destination that the Downtown core is becoming for certain psycho-graphic
segments.
One intriguing model, emulating Artspace to some degree, targets entrepreneurs
willing not only, in the style of Holly Aiken, to create and produce in the same
space in which they sell, but also, to do so in at least partial view of the
customer, who, in addition to consuming, can delight in the opportunity to see
and experience these stages in the process.
- In an era of increasing homogeneity, Raleigh should use the imaging/branding
opportunity at the southern end of Fayetteville Street to differentiate itself to a
wider audience, with a focus on offerings that are unique to Raleigh yet
welcoming to outsiders. This is especially advisable in that, with the limited
market for such visitor-driven fare, there will be a need to draw city residents as
well.
Perhaps the only mass-market attraction worth pursuing there is the movie
multiplex, as a guaranteed traffic generator that will ensure a steady flow of city
residents and provide a sense of comfort to operators who would be taking a risk
by locating in a still-sleepy, unproven part of Downtown.
- If the Downtown core is to become a truly alluring and exciting visitor
destination, one that, for example, beckons conventioneers to head northward
on Fayetteville Street, the City Council will need to be willing to accept bolder,
more dynamic signage appropriate to this goal, as proposed in the draft
Comprehensive Plan.
Customer #3: The Resident
- Not just a collection of office buildings and event venues, the Downtown core is
also emerging as a neighborhood in its own right, with local residents who have
their own needs, desires and sensibilities, who move to such a setting partly
because they want for their milk and bread, their coffee and newspaper, their
"Third Place", to be just a short walk away.
A Third Place is one of those informal meeting places, separate from home (the
"first place") and work (the "second"), that anchor community life. In the United
States, it is often a "Cheers"-like neighborhood bar or a coffeehouse, although
different cultures will have their own versions: African-Americans, for example,
gravitate to the barber shop/hair salon.
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-----------------------------------------------------------------------------------------------------------In emerging neighborhoods like Raleigh's Downtown core, the presence of such
Third Places can assume even greater importance, for they serve as central
gathering places that help to forge and cement a sense of community for a
group of trailblazers who might otherwise feel that they are alone on the urban
frontier.
- The makeup of the Downtown neighborhood presents a complex market for
retail, in that, with the exception of certain “cross-over” concepts, the lowerincome, African-American households of East Raleigh/South Park have different
needs and preferences, and different Third Place venues than the more
monetarily-secure, white twenty-somethings, DINK’s ("Dual Income/No Kids")
and empty nesters. If the Downtown core is to fulfill its promise as a true
crossroads, its retail mix will need to speak to each of these sub-markets.
- The prospects for a full-service supermarket are slim. In order to be
successful, one located in the Downtown core would need to be able to draw
from beyond the core itself, which would put it into competition with the Harris
Teeter and Fresh Market at Cameron Village. Perhaps, then, the most promising
grocery-store model at this point is the one that is evolving at Taiseer Zarka's
smaller "Taz" stores (although his execution can no doubt still be improved
upon).
- In terms of other convenience-oriented categories typical of a "24-7"
environment, the Downtown core might have to wait until residential densities
reach critical mass. At that point, CVS would find that the incremental sales to
be generated from extended hours justify the added costs (e.g. labor, electricity,
etc.), the existing restaurants would start delivering, and the day-to-day
conveniences would materialize. In the meantime, however, one might look to
enterprising sorts like Taiseer Zarka, Greg Hatem and Raleigh Rickshaw Co. to fill
the gaps.
- Generally speaking, resident-oriented businesses (e.g. convenience-oriented,
Third Place) should be sited in close proximity to the residents themselves, which
means, in most cases, the outer rim of the Downtown core, not in the
commercial heart. The only exceptions are those concepts, like Taz and CVS,
that rely on their "cross-over" appeal to multiple sub-markets, a wider trade area
(i.e. nearby neighborhoods) and/or other demand segments (e.g. office
workers), and that therefore need to be centrally located, on corridors like
Fayetteville Street, Hargett Street, Wilmington Street, etc.
- To the extent that other sorts of businesses (e.g. boutiques, restaurants, etc.)
are interested in such outer rim locations, they should probably be discouraged,
because, as destination-oriented concepts in need of visibility, they would be
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-----------------------------------------------------------------------------------------------------------more appropriately located in the commercial core, on corridors like Fayetteville
Street, Hargett Street, Wilmington Street, etc.
- Generally speaking, retail square-footage in new mixed-use developments on
the fringes of the Downtown core should at this point probably be limited to
corner locations, where storefronts would enjoy visibility from two streets and
therefore draw the most interest. In-line bays in new construction will be far
more difficult to lease right now; they should be designed as "flex" space, to
accommodate office (or gallery) use in the near term as well as allow for retail
tenancy should that become more feasible.
- Lower-income African-Americans living in the Downtown neighborhood are
understandably wary of the impact that development pressures could have on
their community. In this, the promotion of demographically appropriate retail
can play an important symbolic role, reassuring such residents that they will be
heard going forward.
Visible efforts, then, should be made to help in
identifying/developing convenient locations where their convenience-oriented
and Third Place needs could be met.
Customer #4: The Destination Shopper
- In a number of retail categories, like, for instance, comparison goods (e.g.
clothing, shoes, etc.), concepts able to achieve a destination draw are, with rare
exceptions, the only ones likely to succeed, as the existing combination of the
Downtown core's workers, event-goers and residents represents just a fraction of
what such businesses would need to be viable.
- Destination concepts can be divided into two types: "commodity" and
"specialty". A commodity is defined here as a brand that one can find in virtually
every major retail sub-market in a given metropolitan area. Take, for instance,
the Gap: it operates stores at the city's three enclosed malls, Crabtree Valley
Mall, Triangle Town Center and Cary Towne Center.
With a commodity, because one store within the chain is no different from
another, consumers will typically shop the location that is most convenient to
them. They will not drive across town -- or, more importantly, for our reasons,
to Downtown -- for, say, a Gap, if they can find the same merchandise, at the
same price, at their local mall.
The population within the Downtown core's trade area falls far short of what
most commodity brands require, and the other customer segments -- the
conventioneers, the daytime workers, etc. -- are too modest in size to cover the
difference. Furthermore, as with the Downtown neighborhood, the sub-market
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-----------------------------------------------------------------------------------------------------------is bifurcated, and operators looking to cater to the well-off households would
most likely prefer the guaranteed traffic streams and impressive co-tenancies of
nearby Cameron Village.
- As important as its new condominium towers can be in turning heads and
changing perceptions within the retail tenant community, Downtown Raleigh still
represents just a tiny fraction of any destination retailer's true trade area: it is
the surrounding close-in neighborhoods that account for the lion's share of their
market, and the densities and median incomes there that dictate what will be
viable and sustainable. Higher-density residential development, then, needs also
to be promoted more broadly, within this larger destination trade area, that is,
within a five-minute drive.
- A far more promising direction for the Downtown core is to occupy a specialty
niche, with concepts (or a concentration of such) that cannot be found elsewhere
in the metropolitan area and that are, therefore, able to draw from beyond the
competing commodity-filled shopping centers, perhaps, even, from all of Raleigh.
Examples of such niches include ones that focus on specific cultural or psychographic segments.
As opposed to demographics, which involves quantitative data (e.g. income, age, etc.),
psychographics analyzes markets on the basis of qualitative characteristics, such as lifestyles,
aspirations and sensibilities.
- The Downtown core has been a shopping destination for the African-American
community for a century, but due to development pressures and a possible move
of the Moore Square Transit Station, it is in danger of losing that niche. This is a
matter of concern, inasmuch as downtown is meant to be a reflection of and true
crossroads for the entire city and African-Americans account for roughly 29% of
Raleigh's population. Also, from a planning perspective, the core, with its
superior transit access, is the most logical place for this sort of destination retail.
- One direction, suggested by the example of Zydeco Downtown (at City Market)
and the former Yancey's, is to focus on a different submarket within the AfricanAmerican population, consisting of the well-educated, middle-class AfricanAmericans and the Shaw University professors and students who are looking for
something a bit more sophisticated and mature in their nightlife. Durham, long
known for its large number of middle-class African-Americans, might be an
appropriate starting point for prospecting.
- Yet another possibility is to work with Shaw University to relocate the university
bookstore to a storefront in or closer to the heart of the Downtown core -- on
Fayetteville Street, if possible.
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-----------------------------------------------------------------------------------------------------------Taking this one step further, a Barnes & Noble "hybrid" store, including college
textbooks, general titles and an in-store café, presents an ideal opportunity for
Shaw University and the City to work together for something that both wants but
neither would be able to secure on its own: Shaw can provide the market, and
the City, the funding. Efforts should be made to bring these two parties to the
table and help them to resolve their differences, so that they can move in unison
towards this common goal.
- Another niche, focusing on the "hipster" psychographic, has emerged in recent
years to become a driving force in the Downtown core. Hipsters are defined by
a similar world-view and sensibility, one most closely associated with artists but
also found among those in other "creative class" professions, like architecture,
graphic design, film making and computer programming.
It is defined, in short, by an embrace of authenticity, a love of old things, an
emphasis on creativity and personal expression, an espousal of personalized,
small-scale, "grass-roots" enterprise, an appreciation of irony, an ironic
celebration of kitsch, a regard (at times, ironic) for working-class culture, a belief
that one is special and culturally-superior because he/she knows what is cool
before others do, a comfort level with diversity, and a need for low price points.
One sees these themes in core businesses like The Raleigh Times, Landmark
Tavern, Alibi Bar, Father & Son Antiques / Southern Swank Retro, Slim's
Downtown Distillery, The Pour House, Lump, DesignBox, Stitch and various
others.
Psychographics and Retail Mix: An Added Level of Nuance
In trying to build a retail mix based on psychographics, one needs to apply an added level of nuance
to recruitment efforts, not only selecting targets in categories complementary to the ones already
there, but also, trying to create synergies on the basis of a common worldview or sensibility.
For example, the presence of clothing stores in a given business district might suggest that a shoe
store be recruited. However, it should not just be any shoe store, but rather, one that caters to a
similar psychographic. A shoe store geared towards the North Hills shopper, for example, does little
for a collection of hipster boutiques.
In urban settings today, consumers and prospective tenants often gravitate to those business districts
that express how they conceive of themselves in psychographic terms. So, the more than a district's
retail mix reflects the mindset of a certain psychographic, the more appealing it is likely to become,
in a self-selecting sort of way, to individuals and entrepreneurs who share that mindset.
- Like the businesses oriented towards the African-American submarket, the ones
catering to this psychographic are not always considered the highest-and-best
uses of their respective spaces/properties, leaving them vulnerable to
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-----------------------------------------------------------------------------------------------------------displacement, either by high rents or outright demolition (to wit: the fate of
Kings Barcade).
For a more detailed description, please refer to p. 71.
- The preeminence of the hipster in the Downtown core is also endangered by
the influx of the related but subtly different "yup-ster" psycho-graphic. The yupster, representing a hybrid of "yuppie" and "hipster", can be defined as a
mainstream young professional who earns a decent salary and prefers to live in a
relatively established, comfortable and affluent part of town, but who has
integrated creative and alternative sensibilities into her lifestyle and consumer
preferences.
For a more detailed description of the yup-ster, please refer to p. 84.
- Yup-ster dining/nightlife is an area in which the Downtown core could take
market share from Glenwood South. Indeed, with the last couple of years
witnessing the opening of Poole's Downtown Diner, Dos Taquitos Centro, Sitti,
etc., the former is building towards a critical mass of yup-ster offerings, while the
latter, with Tobacco Road Sports Café, Carolina Ale House, Natty Greene's, etc.,
appears for the most part to be moving in a more mainstream direction.
- Also, the low vacancy rates, high rent levels and increasing number of national
brands at Cameron Village might steer yup-ster soft goods entrepreneurs in the
direction of the Downtown core.
- Recruitment efforts should focus largely on small-scale operators who have
been successful with yup-ster concepts elsewhere in the Triangle or in other
markets in the larger region (like, for instance, Charlotte, the Triad, Richmond,
etc.), and who might be willing to consider an additional location or a new
concept in the Downtown core. Hargett Street, Wilmington Street and City
Market would seem to be the most appropriate settings for such entrepreneurs.
- These operators will require some sort of financial assistance, given that most
property owners in the Downtown core are small and do not have the incentive
(nor the financial wherewithal, for that matter) to offer more generous terms to
such pioneers. Also, it will be critically important, especially when optimism is
high, to manage landlord expectations, so as to limit the sort of rent
speculation/inflation that results in displacement and vacancy.
- Yup-sters are often seen as agents of displacement, their growing presence in
a hipster enclave provoking anxiety and resentment.
Interestingly, such
sentiment does not seem as prevalent here. Indeed, the Downtown core boasts
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-----------------------------------------------------------------------------------------------------------a collection of unique "cross-over" or "hybrid" concepts that successfully cater to
both sensibilities.
This equilibrium, however, may only exist because Downtown Raleigh's evolution
is still in its early stages. Once the economy starts to recover, additional
residential complexes will materialize, pushing the yup-ster presence past the
tipping point. New development could also claim additional hipster standbys, as
it did with Kings Barcade, and generate upward pressure on retail rents.
As a result, hipsters, feeling that Downtown Raleigh is less and less a place for
them, could flee to other parts of the Triangle which they find more welcoming,
like, say, Downtown Durham.
- One response to this might be, so? Why, it might be asked, does the hipster
deserve any special protection or attention in this process? Because:
1) While his income might not be high, he will clearly spend, in particular subcategories and on certain brands that resonate with him on a deeper, more
psycho-graphic level;
2) He can help with brand identity, inasmuch as an association with artistic and
creative types tends to be perceived more favorably than one with yup-sters,
who are often linked, somewhat inaccurately and, often, pejoratively, with
yuppies;
3) He is central to the live-music scene that not only draws hundreds of
thousands to the core every year, but also, given the region's reputation, puts
Raleigh on a national stage and positions it as a larger destination; and
4) He remains the one most willing to pioneer forgotten, even foreboding, parts
of town, and in this respect, there is still much work to be done in the core and
adjacent neighborhoods (e.g. Warehouse District).
- The city of Austin, TX offers a model worth considering: its efforts have focused
largely on the music scene -- a critical component of the Downtown core -- but
also, its approach could be generalized, it seems, to support the hipster psychographic more generally.
This approach includes: 1) the commissioning of a study that details the hipster's
bottom-line impact in terms of economic activity, jobs and tax revenue; 2)
financial assistance for hipster entrepreneurs (see below); and 3) the creation of
a position of "Creative Industries Liaison" within the City bureaucracy.
- Anchors are also important in keeping this hipster psycho-graphic. In addition
to the new amphitheater, efforts should also be made to secure a new location
and engineer a new business model for Kings Barcade, as well as attract another
live-music venue on the scale of the Pour House.
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-----------------------------------------------------------------------------------------------------------Also, the Contemporary Arts Museum (CAM) could have a catalytic effect,
spurring interest in the sorts of artist studios and live/work spaces that the
Warehouse District has thus far failed to attract in large numbers. CAM has
actually made significant progress towards its fundraising goals, and getting it to
the proverbial finish line should be a top priority.
In order for the artists to materialize, however, the Triangle Transit Authority
(TTA) will need to be lobbied to activate and hold a certain percentage of their
extensive holdings there to such purpose, on the grounds that a fledgling arts
scene and vibe will enhance the area's appeal as a residential and office address
if/when the multi-modal center and light-rail station arrive. As part of this effort,
a cultural-planning consultant should be retained to assess the current situation
and advise on strategy.
- The tenant recruitment effort should also target entrepreneurs who have been
successful with either hipster-oriented or "cross-over" hipster/yup-ster
businesses elsewhere in the Triangle or in other nearby cities, and who might be
willing to consider an additional location or a new concept in the Downtown core.
Again, Hargett Street, Wilmington Street and City Market would seem to be the
most appropriate settings for such operators.
- These entrepreneurs will also require some sort of financial assistance, given,
again, that most property owners in the Downtown core are small and do not
have the incentive (nor the financial wherewithal, for that matter) to offer more
generous terms to such pioneers. And again, it will be critically important,
especially when optimism is high, to manage landlord expectations, so as to limit
the sort of rent speculation/inflation that results in displacement and vacancy.
- Although technically outside the scope-of-work for this assignment, the creation
and retention of affordable housing will be critical to the effort to retain the
hipster flavor of the Downtown core. One possibility worth exploring is to offer
density or other bonuses to developers of new residential or mixed-use projects
within a five-minute drive who are willing to preserve a certain percentage of
affordably priced units for artists, musicians and other creative types.
- Outreach to this psycho-graphic must also include a marketing component,
focusing, for example, on establishing a presence for and building the hipster
brand of the Downtown core in various alternative media vehicles, like, for
instance, the Independent, www.newraleigh.com and even N.C. State's
Technician, as well as ones in other Triangle communities with large hipster
contingents, such as Durham.
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-----------------------------------------------------------------------------------------------------------Also, efforts should be made to work with local club owners, managers,
promoters and the bands themselves in the Downtown core and the rest of the
metro on developing a larger national profile for the Triangle's music scene.
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Structure
We have concentrated our analysis and recommendations on the four different
"customers" with the most influence on retail in the study area today, rather
than the niches that would need to be created from scratch. This focus is based
on the precept, considered axiomatic in marketing circles, that one should try to
generate more sales from existing customers before endeavoring to attract new
ones.
Rather than a dry, formulaic presentation of the data and the findings, we have
chosen what we feel to be a far more dynamic and readable one, structured on
these four customers, with the following four chapters covering each of them in
turn, and each individual chapter synthesizing the various factors impacting on
the retail potential of its respective customer.
In other words, while many reports will start with a review of the data gathered,
proceed with an analysis of that data and then close with recommendations, in
this format the data, analysis and recommendations relevant to a particular
customer will be detailed in the chapter for that customer, which seems like a
more natural way to discuss the subject matter.
For example, figures on the number of daytime workers, and the kinds of retail
which that sub-market suggests, will appear in the chapter devoted to that
customer. Of course, there will be overlap: daytime workers are not the only
ones, for example, who would patronize quick-service food and drink purveyors.
But in the case of Downtown Raleigh, they do represent the primary customer
base for that category, so it has been included in that chapter.
Following these four chapters, a conclusion has been provided. But rather than
serving merely as a reiteration of the executive summary, it consists of a
"roadmap" for implementation going forward. Six different strategic action areas
are discussed in turn, with specific, concrete steps recommended for each.
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Chapter 1: The Daytime Worker
Downtown Raleigh boasts roughly 40,000
office workers, less than the 70,500 in
Charlotte Center City1, the 60,000 in
Downtown Columbia2, the 48,000 in
Nashville3, but significantly more than the
31,500 in Richmond4, the 30,000 in
Norfolk5.
Office Workers in Peer Downtowns
City
Number
Charlotte
70,500
Columbia
60,000
Nashville
48,000
Raleigh
40,000
Richmond
31,500
Norfolk
30,000
Office workers will typically provide support throughout the weekday for various
quick-service food concepts6, specialty-beverage purveyors7 and other
convenience-oriented businesses8, thus explaining the presence of operators
such as Chick-Fil-A, Quiznos Sub, Sam & Wally's, Manhattan Cafe, Port City Java,
CVS and the UPS Store on the streets of Downtown Raleigh (as well as, of
course, the State Soda Shop and Fast Break, recently forced to close because
their building will be demolished to make way for an expanded Wake County
Courthouse).
Concentrations of office users also support the presence of
certain business support functions, like copy shops and
temp agencies.
However, this report focuses on the
opportunities for those sorts of concepts with the greatest
potential for generating excitement or changing the existing
dynamic. While the Downtown core has apparently received
interest from Cartridge World (left) as well as an unnamed
temp agency, these possibilities did not, it was felt, seem to
warrant such attention.
1
According to the "Fast Facts" section of the Charlotte Center City Partners web-site.
According to the Downtown Retail Strategy prepared by Economics Research Associates, March 2008.
3
According to the 2008 Business Recruitment Brochure developed by the Nashville Downtown
Partnership.
4
Based on Grubb & Ellis' Third Quarter 2008 Office Market Snapshot, which indicates 6,295,754 sq.ft. of
occupied office space in the CBD. Using a rule-of-thumb of 200 sq.ft. per employee, that translates to
roughly 31,500 office workers.
5
According to the "Downtown Indicators" section of the Downtown Norfolk Council web-site.
6
A quick-service food concept is one where diners submit, pay for and receive their order at a counter (as
opposed to a sit-down, waiter/waitress format).
7
A specialty-beverage purveyor is a quick-service drink concept, like, say, a Starbucks Coffee or a Booster
Juice.
8
A convenience-oriented business is one that sells a commodity, and so, as a result, the consumer decides
which store to patronize on the basis of convenience alone. Examples include Shoppers Drug Mart or Perth
Cleaners.
2
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-----------------------------------------------------------------------------------------------------------As such workers tend not to wander far for lunch, caffeine or other
conveniences, these sorts of businesses are usually clustered in close proximity
to large concentrations of office towers. Indeed, the latest rule-of-thumb is that
the typical office employee will not walk further than six minutes for his/her midday meal.
For example, it is not surprising that, in Downtown Raleigh, such businesses
have collected in the Fayetteville Street District, which includes the 30-story
Wachovia Capitol Center, the 29-story Two Hannover Square, the 21-story One
Progress Plaza, the 19-story Two Progress Plaza, the 17-story One Bank of
America Square, the 15-story Capital Bank Plaza, the 15-story Wake County
Office Building, and now, the 33-story RBC Plaza.
The assemblage of eight towers with 15 floors or more in the Fayetteville Street District explains the
proliferation of worker-oriented businesses there.
The Capital District would offer similar amenities, but it was never designed to
include retail space. And given the distance of its office buildings from the
worker-oriented businesses in the Fayetteville Street District, and the cheaplypriced reserved parking spaces for State office workers, it is faster for employees
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-----------------------------------------------------------------------------------------------------------there to drive to lunch or for other errands, and so they will head to the
automobile-friendly Cameron Village for such purposes, or perhaps Sunflowers
Sandwich Shoppe on Peace Street, Seaboard Café at Seaboard Station, etc.9
Cameron Village, For Lunch
Although it requires a short drive, Cameron Village presents formidable
competition for the lunch-time dollar of Downtown workers: in addition to
Café Carolina and Bakery, Quiznos Sub and Chick Fil-A (all of which are
already in Downtown), it boasts the ever-busy Village Deli, "fast-casual"
concepts (see below) like Noodles & Company and Moe's Southwest Grill,
as well as a K&W Cafeteria.
This points to a limitation on worker-oriented retail in Downtown Raleigh: while
there is, theoretically, a market of roughly 40,000, the customer base is, in
actuality, far smaller than that because those 40,000 are spread across such a
large area. Indeed, operators considering a location in the Fayetteville Street
District are really looking at a number like, say, 20,000.
More Workers in the Downtown Core?
The number of workers in the Fayetteville District was expected to rise in the coming years as new
projects materialized, like The L Building (110,000 sq.ft. of office space, translating to roughly 550
jobs), Charter Square (300,000 sq.ft., 1,500) and The Edison (576,000 sq.ft., 2,880). According to a
local economic development recruiter, it might still be possible to find the sort of large users needed
to secure construction financing: banks and financial institutions might not be interested at the
moment, but there are others, particularly in the "creative class" industries, which are not publiclytraded, have strong balance sheets, are looking to position themselves for the recovery, and drawn to
Raleigh for its talent pool and cost advantages. The bigger challenge, however, might be in finding
lenders that are willing to provide the financing for new construction. Edison Land LLC is not
expecting to be able to obtain the loans with which to start building The Edison until 2010 at the
earliest. And as for Charter Square, TMC Associates is not sure that the credit markets will be ready
even if it does find an anchor tenant.
One project sure to materialize is the new home of Campbell University's Norman Adrian
Wiggins School of Law, at Hillsborough Street and Dawson Street, which will welcome roughly 500
students in fall 2009. Without a built-in residential component, these students can be expected to
behave -- as consumers -- like daytime workers, primarily interested in quick-service food and
beverage offerings and perhaps adding to "Happy Hour" demand. Indeed, the Second Empire's
decision to open a small café and market next to its Hillsborough Street restaurant was in direct
response to the arrival of the new law school. Having said that, a percentage might also choose to
live in the core, and demand the basics and amenities of a residential neighborhood (see chapter 3).
9
Additional lunch venues could one day materialize in the ground-floor retail space of Person's Corner, a
five-story, mixed-use building envisioned for the corner of Peace Street and Person Street as part of the
now-delayed Blount Street Commons. However, given the location, most Downtown workers would have
to drive, and might feel inconvenienced by the lack of surface parking.
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-----------------------------------------------------------------------------------------------------------With the recently announced Downtown Raleigh Circulator/"The R Line", their
potential reach could be widened. Indeed, anecdotal evidence suggests that the
service enjoys "decent" ridership during the weekday lunch hour. However, with
just two buses plying the roughly twenty-minute route at any one time, it can
only operate on headways of ten minutes, and could easily veer off schedule.
Workers on break do not have a moment to waste, and such issues of frequency
and reliability would likely minimize its use for this purpose.
Workers on lunch break
cannot afford to waste
time lounging in wait for
a late bus
A further limitation on worker-oriented retail in the Fayetteville District is the
available real estate. These sorts of businesses would ideally prefer to locate on
Fayetteville Street, and, in particular, the stretch between the Convention Center
and Martin Street, where most of the aforementioned office towers are clustered
(see above map), or even on the next block to the north, with CVS as a pull at
Hargett Street and the 30-story Wachovia Capitol Center sitting just beyond.
However, one broker active with this sort of tenant bemoaned the lack of 1,2001,400 sq.ft. spaces with appropriate dimensions on Fayetteville Street, with the
excessive depths resulting in several cases in unusable square-footage in the
back. He added that landlords are hesitant to split those bays because they are
not confident that the levels of foot traffic on the parallel streets -- Wilmington
Street and Salisbury Street -- would be sufficient to attract interest.
In the name of calming the automobile traffic, creating more of a mellow, "strolling" ambiance and
thereby increasing pedestrian counts and improving retail-leasing potential, Wilmington Street and
Salisbury Street should be considered for conversion from one- to two-way traffic (while
retaining the two lanes of on-street parking on each).
Additionally, brokers have complained about the City Plan Review and permitting
process, describing how property owners and possible tenants must deal with a
seemingly endless number of departments, contend with onerous requirements,
and sort through inconsistent responses from a bureaucracy that does not
include as part of its mandate the goal of helping businesses and districts to
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-----------------------------------------------------------------------------------------------------------succeed. This has proven especially challenging in the leasing of the pavilion
spaces on City Plaza to quick-service food purveyors.
Speaking generally, and not only with regard to worker-oriented businesses, there seems to be a need
to work with the public sector in streamlining the bureaucratic process for new retailers in
Downtown Raleigh. One possibility might be to reshuffle the responsibilities of an existing manager
and designate him/her as the "point person", with accountability for all of the review and permitting
functions.
Finally, offerings for the worker are also limited, ironically, by Downtown
Raleigh's still relatively small residential population. Many types of businesses
struggle to survive on just Downtown's weekday-lunch trade alone, and yet, they
do not see the number of rooftops that would justify later opening hours. This
hinders, for example, efforts to attract the newest wave of quick-service food
concepts, the "fast-casual" restaurants.
Fast-casual operators employ the same service model as more traditional fastfood purveyors, with the customer submitting, paying for and receiving his order
at a counter. But at the same time, they offer healthier and higher-quality
ingredients, often in a more up-market and in some cases stylish setting, and at
a slightly higher price-point. Some of the larger national fast-casual brands
include Panera Bread, Chipotle Mexican Grill and Noodles & Company.
There is clearly demand for this sort of concept among Downtown Raleigh's
daytime workers. Take, for instance, the long lines at the Café Carolina and
Bakery and the recently opened Spize Cafe on Fayetteville Street, or the
popularity of Dos Taquitos' Wilmington Street outpost for lunch, when it employs
a quick-service, "walk-up-to-the-counter" model for the time-starved worker.
Aioli, Portabella and Boursin: You Won't Find That At Subway…
"You order in a line, then wait in another one for your food. I ordered a
Charleston Club I think it was called with some tasty turkey, bacon,
tomato, and red pepper aioli on wheat bread. The bread was incredibly
fresh, and it came with pretzels or chips. My meal was about $10, which
is a little pricey for a sandwich and self-service! Hubby got a portabella
panini with boursin and pesto."
- Yelp.com blog entry on Café Carolina and Bakery
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A Step Up From Taco Bell…
" Dos Taquitos Centro’s Lunch was designed
with freshness and speed in mind…ándale,
ándale, ‘manito!!!! Our lunch business is set
up as a grab-and-go place offering high
quality Mexican food. We use as many
fresh, organic and local ingredients as
possible to provide the best TACO for you, sí
señor!!"
- Downtown fast-casual purveyor,
Dos Taquitos Centro
However, the lack of sufficient residential density in Downtown Raleigh
discourages those fast-casual brands that also rely on quick-service evening
trade. For instance, Chipotle Mexican Grill felt that Downtown was "not yet
ready", while Noodles & Company might not have even considered the
opportunity before deciding on Cameron Village.
Furthermore, many fast-casual brands, which typically target highlyeducated/well-paid white-collar workers, might be deterred by perceptions of
Downtown Raleigh as a government center, with a worker population consisting
primarily of civil servants. Anywhere from 30-50% of the 40,000 can be
characterized as such, and even in the Fayetteville District, a sizable number is
employed by the public sector, leaving what these operators see as a limited
daytime market for their concepts.
With brands like Moe's Southwest Grill and Noodles & Company, Cameron Village
has become the preferred choice for the fast-casual segment, as operators there
know that they can still tap the Downtown worker market from such locations
while also drawing from the surrounding residential neighborhoods, the N.C.
State community as well as the cross-traffic from the shopping center's sizable
retail component.
On the level of large nationals, then, the Fayetteville District is still eliciting
interest primarily from traditional fast-food players oriented towards lunch, like,
for instance, Jimmy John's, the sub-shop franchise that will be opening in one of
the new pavilion spaces on City Plaza. In the near future, efforts to lure fastcasual offerings to the core should focus primarily on concepts and brands that
do not have to rely heavily on the evening trade.
Scope-of-Work Reminder
Identification of specific national, regional and local operators in "fast-casual dining" or other
categories that might be targeted for Downtown Raleigh will take place later in this process, during
the "Implementation" phase; the market analysis, on the other hand, is only meant to discuss
tenanting on a general level, as in "what kinds of tenants" would be appropriate to pursue.
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-----------------------------------------------------------------------------------------------------------With the high incomes of the bankers, lawyers, accountants and lobbyists who
work in its office towers, the Downtown core would also seem to be well-suited
for certain types of high-end dining and entertainment establishments,
specifically, ones where clients are wined and dined, deals are consummated,
and expense accounts cover the bill.
Furthermore, supplemental demand for such traditional upscale food and drink
offerings is generated by the "high culture" performances and shows at the
Progress Energy Center for the Performing Arts (see section below on "Event
Goers"). This audience can make even more of a contribution now with the new
Downtown circulator, which will have a stop at the Center.
Generally speaking, to the extent that suitable real estate is available, these sorts
of high-end concepts are most appropriately steered towards Fayetteville Street,
given that it is the Downtown core's high-profile "showcase" street, boasts most
of its corporate office employment, its convention center, its two business hotels
and its performing arts center, and contains its most expensive retail space.
Sullivan's chose Glenwood South, but its real
estate strategy is an exception to the general
rule: most high-end restaurant brands are more
accustomed to locating in the heart of the
traditional downtown, surrounded by large
office-worker populations, near convention
centers, business hotels, etc. For example,
while Sullivan's is in Charlotte's South End,
Ruth's Chris Steak House, Mortons The
Steakhouse, Capitol Grille and McCormick &
Schmick's are all in Uptown.
However, sit-down dining establishments with high price points in the Downtown
core, like Fins and The Mint, appear to struggle, while ones offering better value
and less flamboyance, such as Caffe Luna and The Raleigh Times, thrive.
Entrees in the low $20's seem to be the ceiling. Of course, this might be a
function of the poor economy of 2008/2009, or, perhaps, the restaurants
themselves.
Indeed, market is just one of many possible reasons why a restaurant could fail
or struggle. Take Fins, for example: due to an off-center location and poor
signage, a visitor might not even know that it is there. Even so, when a tenant
flounders in Downtown, the problem is presumed to lie with Downtown and not
the operator (even though this conclusion is not necessarily drawn when the
same happens at a suburban shopping center).
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One might draw the mistaken assumption,
from the failure of competitors like Nana's
Chophouse and Prime Only, that the
Downtown sub-market could only support
one high-end steakhouse (Sullivan's). But,
in the cases of these restaurants, was the
problem with the market, or with the food,
the management, the space, the visibility,
etc.?
But even in more prosperous times, the number of Downtown workers drawn to
and able to afford the high end might simply be too limited. "We don't have
hedge funds here," said one local restaurant broker in trying to explain why such
concepts seem to struggle.
Furthermore, new State laws passed in 2007 have increased the scrutiny on
lobbyists, requiring them to report (and forcing them to reduce) restaurant
spending on behalf of State legislators, with attendant impacts on the higher-end
dining establishments that they would have otherwise patronized. Lawmakers
are now spotted at lower-priced eateries like K&W Cafeteria and Roast Grill.
And finally, even though it has booked a handful of conferences (e.g. the
American Chamber of Commerce Executives, the National Agents Alliance, etc.)
that would seem likely to generate demand for such concepts, one local
restaurant broker has said that the new Raleigh Convention Center has not
helped much in making the case for the Downtown core.
This puts developers like Highwoods Properties in a bit of a bind. In building
signature projects like RBC Plaza, they would ideally prefer to fill their prime
ground-floor space with a high-profile, high-end dining brand, like, for example,
Ruth's Chris Steak House, Capitol Grille, The Palm or McCormick & Schmick's, but
such operators do not seem to feel that the Downtown core is ready yet.
Partly this is a function of having alternatives. Raleigh has long been a city
where the center of gravity falls not in Downtown, but along the Beltline, and
particularly, along its northwesterly stretch, close to its most affluent
neighborhoods and largest employment base (Research Triangle Park). It is
therefore not surprising that these kinds of operators tend to first look to
suburban centers like Crabtree Valley Mall.
Traditional High-End Restaurant Brands Already On The I-440 Beltline…
Crabtree Valley Mall: McCormick & Schmick's, Fleming's Prime Steakhouse
North Hills: Ruth's Chris Steak House
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-----------------------------------------------------------------------------------------------------------In this context, the decision by Sullivan's to open in 1999 in the early stages of
Glenwood South's revival was a bold one, but now that it has firmly established
itself -- at one point, it was the fourth-highest grossing restaurant in the entire
chain -- competitors are hesitant to take a chance on the limited Downtown submarket where they would be outflanked.
Finally, these sorts of operators might not even be looking (or looking further) at
Raleigh at all. In trying to lure such names (or entice them to open a second
restaurant), Raleigh is competing with other opportunities across the U.S., and it
does not always fare especially well in that competition, with national brands
historically enjoying higher sales at their locations in the Northeast and in Florida
and therefore focusing more heavily on those markets.
High-End Dining Brands: A Comparative Analysis
In looking at comparable downtowns, Richmond's has no
high-end dining brands. Norfolk's boasts a Kincaid's, but
at least partly because it was able to land the region's most
up-market mall, the Nordstrom-anchored MacArthur
Center, which is where the upscale fish, chop and steak
house opened.
As mentioned earlier, Charlotte's includes a Ruth's Chris
Steak House, Morton's The Steakhouse, Capitol Grille and
McCormick & Schmick's, but it can point to 70,000 office
workers and with the corporate headquarters of Bank of
America (and formerly, Wachovia), a reputation as a
banking center.
Columbia's recently welcomed a Ruth's Chris Steak House
as part of the new Hilton Columbia Center (left), the hotel
for its Columbia Metropolitan Convention Center
(CMCC). However, it was the chain's first in that region,
whereas it already has two locations in Raleigh (North
Hills, Cary), not to mention that there are 50% more
daytime workers in Columbia's downtown.
Perhaps most importantly, the assumption is that the
developer there "bought" the Ruth's Chris by agreeing to
the chain's rather demanding terms, whereby the landlord
must pay the chain a set amount up front (e.g. $1 million),
allow it the freedom to break the lease and stop paying
rent at any time, etc.
Of course, the economy will ultimately recover, Raleigh will likely continue to
grow (and perhaps become more appealing vis-à-vis one-dimensional markets
like Florida that have been pummeled in this recession), and the larger brands
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-----------------------------------------------------------------------------------------------------------will look closer at a first or second location. But in the meantime, landlords
might look instead to regional chain-lets or, better yet, proven local
restaurateurs, like Jason Smith, the chef/proprietor of 18 Seaboard or Jim Anile,
the chef/proprietor at Revolution, in Downtown Durham.
In the end, such local concepts might be better for the city's overall image. In
choosing where to eat, business travelers and other visitors might not be looking
for something unique -- indeed, they might want a known brand -- but if they
have no choice but to experience something they have not seen before, they
would probably leave with a more positive impression of Raleigh (and relay the
same to others).
If a business traveler enjoys a meal at a
Ruth's Chris, that reflects on the Ruth's
Chris brand.
If he has a positive
experience at a local restaurant, that
reflects on the restaurant itself, but also, on
Raleigh as a whole.
Of course, such operators might themselves be deterred by the struggles of
locals that have already opened in Downtown, like Fins and The Mint, or of the
state of the economy more generally. Furthermore, given the current condition
of the credit markets, it has become far more difficult for them to secure
financing.
The only possibilities, then, are spaces where the landlord is willing to take a
absorb a greater share of the build-out costs and take a more accommodating
stance in negotiations, or ones which are "second-generation" and require far
less in tenant improvements. Admittedly, both are rare commodities these days
in the Downtown core.
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Growing the Restaurant Base in the Downtown Core
Speaking more generally (with regards to both high-end and moderately-priced concepts), the
Downtown core is emerging as a regional dining destination. Indeed, with notable exceptions, many
of the openings there in the last couple of years (e.g. Dos Taquitos Centro, Poole's Downtown Diner,
Sitti, Gravy, etc.) are for restaurants, whereas, in Glenwood South, the newer arrivals seem more
likely to be bars and nightspots (e.g. Solas, Tobacco Road Sports Café, Carolina Ale House, Natty
Greene's Pub & Brewing Co., etc.).
With the daytime-worker population, the Progress Energy Center for the Performing Arts and the
Raleigh Convention Center, dining is one of the core's competitive advantages, vis-à-vis, for instance,
Glenwood South. Indeed, food/drink concepts there have to be focused to a greater extent on the
food, given the latter's more late-night/alcohol-fueled draw.
Some, however, have suggested that Downtown Raleigh is already saturated with restaurants, and
have advised against adding more. The core still does not seem as if it has reached critical mass in
this category, and would appear to have further room to grow. Yet one must keep in mind that
demand is also absorbed by Glenwood South and the Warehouse District, and taken together, the
number of dining establishments is not small. There is no doubt a ceiling to the market, and
furthermore, current economic conditions might serve to lower that ceiling in the near term.
However, the population of the city and the Downtown continues to increase. Furthermore, there is
reason to believe that if the core defines its niche in clearer and more specific terms and if it
effectively draws the contrast between itself and Glenwood South, it could take market share in the
category from its chief competitor and expand its draw more generally. That definition and contrast,
which positions the former as the preferred choice of so-called "hipsters" and "yup-sters", and the
latter as appealing to a more mainstream sensibility, is discussed in extensive detail in Chapter 4, on
"The Destination Shopper".
Finally, large worker populations also suggest demand for "Happy Hour" venues
where one can unwind after a long day, meet with friends, etc., but the office
buildings in the Downtown core do not present an overly large market for such
places, with single young professionals accounting for only a small percentage of
what is already a small number. According to one broker, 75% are estimated to
be 30 or over, and many of them have kids at home: even if they do head to The
Raleigh Times, Tir Na Nog or The Oxford (and not one of the several popular
after-work spots on Glenwood South), they stay for one drink and then leave.
Again, the convention traffic could provide a helpful supplement, but bars and
nightspots in the Downtown core will be hard-pressed to survive on these two
sub-markets alone; they also need to appeal to Raleighites as "destinations" in
their own right (see Chapter 2 on "The Event-Goer" and Chapter 4 on "The
Destination Shopper").
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Chapter 2: The Event-Goer
Downtown Raleigh also contains five key "event venues" that generate potential
customers for its various businesses.
The one receiving the most attention as of late is the new, sparkling Raleigh
Convention Center, a three-level, 500,000 sq.ft. facility, which opened in
September of this past year, complete with a 150,000 sq.ft. exhibit hall, a 32,000
sq.ft. grand ballroom, 19 meeting rooms and a 9,284 sq.ft. "Shimmer Wall", and
capable of accommodating groups as large as 5,000 people.
In its first year, as the national economy teetered on the brink of disaster, this
new center was still able to attract 273 events, roughly 6% more than projected,
and welcome a total of 353,041 attendees, approximately 56% more than the
226,400 expected.
Furthermore, while state associations account for the majority of the conventions
(53%) booked thus far at the new facility, the share of regional, national and
international events (24%) was impressive, given that the city, as a meeting
destination, has never had a reputation on these levels. And that percentage is
expected to grow.
Lodging options have improved dramatically with
the opening of the new, 400-room Marriott City
Center (left), and will be further enhanced by a
much-needed renovation at the 355-room Raleigh
Sheraton. However, Downtown is still far short
of the 5,000 rooms that the new Convention
Center would need at capacity, at a time when
credit for new hotels is difficult to secure. It is
hard to see how this would not hinder the center's
marketing efforts.
There is also the Progress Energy Center for the Performing Arts, the city's
premier "high-culture" showcase, which drew 757,500 people for roughly 800
performances of symphony, opera, ballet, musicals, experimental theatre, even
rock music. The complex includes the 2,277-seat, '30's-era Memorial Auditorium,
as well as four newer spaces that opened in 2001, the 1,700-seat Meymandi
Concert Hall, the 600-seat Fletcher Opera Theater, the 170-seat Kennedy
Theatre and the 2-acre Lichtin Plaza.
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-----------------------------------------------------------------------------------------------------------Meanwhile, the Burning Coal Theatre, previously at the Progress Energy Center,
recently debuted its new 175-seat facility, the Meymandi Theatre at the Murphey
School, in the renovated Murphey Street Auditorium on Polk Street. A fixture on
the Raleigh arts scene since its inaugural performance in 1996, Burning Coal
stages six shows per year, in a wide variety of genres.
In addition, Downtown Raleigh features three major museums. The Marbles Kids
Museum drew 283,908 visitors to its hands-on, interactive exhibits in its initial
year of operation (2007-2008), roughly 62% more than the "stretch" goal of
175,000 when it first opened in late 2007 as a merger of Playspace and the
struggling Exploris, and 77% more than the combined 160,000 that those two
attracted in their final years. And attendance has continued to climb still further,
with a count of 368,685 for its first full calendar year (2008). In addition to the
museum itself, Marbles also boasts one of just two (and the only 3D-capable)
IMAX theaters in the state, which a capacity of 271.
The North Carolina Museum of History welcomed 327,425 visitors in 2008,
representing a 2.3% increase from 2007 levels, while the North Carolina Museum
of Natural Sciences, the largest museum of its kind in the southeastern U.S. and
the most popular tourist attraction in the state, drew 760,188 in 2008, jumping
9.4% from the previous year. Furthermore, on a site adjacent to the latter,
construction has already started on "Green Square", a project that includes an
80,000 sq.ft. addition for a Nature Research Center, which will introduce the
public to the world of scientific research.
Also, while the North Carolina Museum of Art sits beyond the Beltline on Blue
Ridge Road, Downtown Raleigh boasts Artspace, a visual arts center that drew
113,000 in 2008 with its three exhibition spaces as well as dozens of "open"
studios where visitors can observe and interact with artists as they are working.
The organization is currently raising money for a renovation and redesign
intended to enhance its appeal and increase its draw. Its offerings can in theory
be combined with several smaller Downtown galleries for an afternoon of
"gallery-hopping", and, perhaps one day, with a permanent home for the
Contemporary Arts Museum (see inset box).
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------------------------------------------------------------------------------------------------------------
The Contemporary Arts Museum (CAM) has
struggled to achieve liftoff on its plans for a
permanent home since buying a Warehouse
District warehouse for the purpose in 1997.
Its current plans, far less ambitious than
earlier ground-up, mixed-use iterations,
involve a retrofit of the existing building
exclusively for an 20,000 sq.ft. arts/learning
venue. So far, $3 million in funds have been
raised, with $2 million to go. Construction
could, in theory, begin in 2010.
Finally, the City of Raleigh is planning on building a 5,000-seat amphitheater that
would open in 2010 on the block immediately west of the new Convention
Center. This will provide a much-needed, large-scale venue for outdoor
entertainment in Downtown Raleigh that can allow for ticketed concerts by even
bigger-name bands than would be possible at Moore Square. Live Nation, the
promoter that books acts for the Time Warner Cable Music Pavilion at Walnut
Creek expects to partner for roughly 25 headliners per summer, with the City
holding events there throughout the year.
There is also the possibility of a new African-American cultural destination on the
site just east of Charter Square, providing a common, synergistic location for
three existing institutions (the African-American Cultural Complex, the Martin
Luther King Jr. Resource Center and the Pope House Museum), including one
(the Cultural Complex) that would be relocating to the Downtown core. This
would no doubt carry symbolic import (see p. 69) and draw a modest number of
local and regional visitors.
Keep in mind that this detailing of event venues is not meant to be exhaustive. Rather, it focuses on
only the largest traffic generators, the ones likely to have the greatest impact on Downtown retail.
This is why, for example, attractions like the Raleigh City Museum, which attracted just 17,356
visitors in 2008, has not been discussed, or why events like Artsplosure, which happen only once a
year, have not been included.
The problem with certain event venues as traffic drivers is that they often do not
want visitors to leave. For example, an organization holding a convention might
use the host city as a lure to attract attendees, but it is hoped that, once there,
they will focus on the conference itself, the sessions, the luncheons, the
receptions, etc.
Furthermore, attendees to theater performances might arrive early to catch
dinner or stay later for a drink or more live-music, but they typically do not
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-----------------------------------------------------------------------------------------------------------include shopping in their itineraries. And parents taking their kids to a museum
are unlikely to lengthen their visit beyond a side trip to a fast food or family
restaurant.
Of course, a "gallery-hopping" destination could lend itself to other types of
spending, as might an African-American cultural compound. And businesses
could also benefit from visibility to event-goers, who might return on another day
to peruse and/or to buy, particularly if they have to be in Downtown regularly,
say, for work. But having said that, the spin-off from such anchors tends to be
limited for the most part to food, drink and entertainment.
Like in casinos, the absence of
windows in a typical convention
center keeps attendees focused on
the meeting itself, undistracted by
the world beyond.
In providing food, drink and fun to such event-goers, the Downtown core has an
important advantage over Glenwood South, in that it is closer. Even with the
presence of the R line, visibility and proximity remain the most important factors
in drawing conventioneers. And one would think that restaurateurs looking to
attract attendees of high culture at the Progress Energy Center would ideally
want to be nearer to it.
The first offerings that conventioneers see -like Sam & Wally's new bar, Global Toast
(left), diagonally across from the meeting
facility, on Salisbury Street -- have a decided
advantage in competing for this sub-market.
City Market
At the moment, the attraction most clearly positioned to draw conventioneers as
well as suburban/exurban day-trippers is City Market, with its high visibility in the
visitor infrastructure and its established brand within the Triangle, its historic
ambiance (e.g. narrow, cobblestone streets), its dining/entertainment draws
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-----------------------------------------------------------------------------------------------------------(e.g. Big Ed's City Market Restaurant, Vic's Ristorante Italiano, Woody's@City
Market, Zydeco Downtown, etc.), and its adjacency to Artspace.
If they are at City Market during the day, such visitors might also explore the
small selection of boutiques and galleries.
The in-line space has been
undergoing some transition of late, with certain tenants leaving -- Peche
Chocolates, Conn-signment Music and American Indian Company -- but that has
been balanced by the arrival of Epona & Oak and Edelweiss Café & Bakery, and
the expansion of Knockabout.
Furthermore, the prospects for City Market would seem to be brighter now, with
the return of convention business after four years without any. (The impact of
the new "Cobblestone Hall", a special-events facility for weddings, corporate
functions, convention-related affairs, etc., is less clear). Also, the landlord,
Hakan Market Partners, is utilizing City façade grants to remodel the complex's
storefronts and improve its cosmetics.
However, it is important that Hakan, and Downtown boosters more generally,
understand what is truly at stake. With the opening of the new convention
center and the Marriott City Center, the creation of City Plaza and the addition of
new retail space there, the visitor-oriented traffic is likely to shift away from City
Market towards the southern end of Fayetteville Street, with the former losing its
long-time monopoly on that customer.
Indeed, Collectors Gallery, a longtime City Market tenant featuring North Carolina
arts and crafts, is moving its craft offerings to one of the Pavilions on City Plaza,
and has already opened "The Mahler" in a Fayetteville Street storefront to
showcase its fine art. And there is a push for other such craft and N.C.-themed
concepts at the Farmers Market that will be relocating from Moore Square.
The relocation of The Collectors Gallery
from City Market to the Pavilions and
Fayetteville Street serves as a potent symbol
of how Downtown's visitor-oriented retail
dynamics are changing.
Furthermore, City Market remains somewhat sleepy in the evenings when
conventioneers are at their most adventurous. And even if they decide on it as
the destination (versus, say, Glenwood South), new dining and entertainment
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-----------------------------------------------------------------------------------------------------------offerings, on Fayetteville Street -- or, in the future, in new projects like Charter
Square and The Edison -- could distract their attention before they even reach
there.
The City's Planning Department is pushing
the developers of Charter Square to include
as much retail space as possible, but it should
understand that this new "competitor" could
negatively impact City Market as a visitor
destination.
City Market might yet be able to maintain its current tenant mix because of the
rent differential: that is, most businesses heavily reliant on Downtown's relatively
modest visitor volumes will probably not be able to afford the expensive spaces
in the Pavilions ($35/sq.ft.) or on Fayetteville Street (low to mid $20's/sq.ft., but
larger), or, for that matter, in new projects like Charter Square or the Edison.
In Savannah's City Market (left),
businesses can rely more exclusively
on the visitor market, owing to that
city's draw as a tourist destination. In
Raleigh, however, that trade is far less
lucrative, and merchants dependent on
it cannot generate the same sorts of
sales volumes or afford the same rent
levels.
Yet even if it does, the traffic levels are likely to decline, with the attention of the
visitor soon to be at least partly absorbed by the City Plaza area. If, then, City
Market is to retain its relevance, it must become a more compelling draw for the
convention and day-tripper submarkets, and/or better integrate itself with the
destination that Downtown is becoming for certain psychographic segments (see
chapter 4, on the "Destination Shopper").
One intriguing model, emulating Artspace to some degree, targets entrepreneurs
willing not only, in the style of Holly Aiken, to create and produce in the same
space in which they sell, but also, to do so in at least partial view of the
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-----------------------------------------------------------------------------------------------------------customer, who, in addition to consuming, can delight in the opportunity to see
and experience these stages in the process.
This concept also dovetails with the incubator role that Artspace has long
exemplified and that the landlord himself has been exploring, in that the
combining of all of these stages in the same physical space allows the
entrepreneur to save on real estate and transportation costs. And in its
celebration of the creative process, it would also appeal to Downtown's growing
destination trade (again, see chapter 4).
Chelsea Market (left) is a wildly-popular indoor market in
an old Nabisco factory complex in Manhattan's Chelsea
neighborhood. It is anchored by high-profile restaurants and
office tenants (including The Food Network), but also
features a number of vendors, primarily food-related, that
have combined the manufacturing and retail functions in the
same space. In a bakery, for example, the baking area will
be situated either behind the sales counter or to its side, in
both cases allowing the customer to view the processes of
creation and production and thus adding an entertainment
dimension to what is otherwise a buying and consuming trip.
This is admittedly an ambitious model, requiring that the landlord be willing to
share in the cost of necessary infrastructure upgrades and perhaps take more
risk than he has previously. However, something dramatic might be needed,
given Downtown's changing dynamics, to retain City Market's relevance in the
longer term, and to return it to a place that reflects its symbolic relevance to the
city.
Perhaps DesignBox, with its co-operative model
combining office units for creative businesses
with a retail gallery for showcasing their wares
(left), could be called upon to assist in City
Market's transformation into a unique sort of
space merging the creative, production and
consumption processes.
One final point. City Market needs for Artspace to more fully embrace its role as
the effective anchor. The organization should, for its own purposes, undertake a
study to better understand the market that it draws, and enforce term limits on
its existing artists, both of which would help City Market, in providing a sense of
the traffic that its anchor generates, and in creating a crop of possible tenants.
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-----------------------------------------------------------------------------------------------------------But also, Artspace could place a greater emphasis on its Blake Street
entrance/exit as a feeder of potential customers to that street's in-line
businesses. This might require a contribution from City Market's landlord, similar
in principle to the sorts of concessions that shopping center owners routinely
make to their traffic-generating anchors.
City Plaza / Fayetteville Street
For this new locus of visitor-driven activity, some in Raleigh might still be
envisioning the "urban entertainment center" (UEC) concept, with its high-octane
mix of nightspots, restaurants and evening-oriented retailers, like, for instance,
Fourth Street Live! in Downtown Louisville. However, the City is not prepared to
offer the kinds of assistance that the more experienced developers of such
projects tend to be require: indeed, Cordish Companies, perhaps the nation's
most prominent, dropped its interest in Raleigh for this reason.
Yet the City's refusal to incentivize Cordish was partly rooted in the belief that,
one, a local developer would be equally qualified to realize such a vision, and
two, Raleigh as a city should not just content itself with the same project that so
many other cities have. Even if this is not necessarily a fair criticism of Cordish's
projects10, the stance should be applauded: in an era of increasing homogeneity,
Raleigh should use this imaging/branding opportunity to differentiate itself to a
wider audience.
Visitors might flock to Lucky Strike Lanes, Have A Nice Day Café, Coyote Ugly,
Cadillac Ranch, Maker's Mark Bourbon House & Lounge, Joe's Crab Shack, etc.,
but these offerings say nothing specific about the city that they are visiting.
Conventioneers will typically take what is in front of them: they will not concern
themselves with finding the "real" Raleigh. But if authenticity is made easy for
them, if it is offered just across the street, that is what they will experience, and
that is how they will remember the place.
10
Cordish Companies, through its Entertainment Concepts Investors affiliate, partners with and invests in
promising entrepreneurs to create or expand dining/nightlife concepts. "We encourage strong local
operators… that want to grow but may need a little help in doing so to come to us and tell us about their
concept, said Reed Cordish, Vice President of Cordish Companies, as quoted in a March 9, 2007 Kansas
City Business Journal piece by Suzanna Stagemayer entitled "Cordish wears chef's hat, too"
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------------------------------------------------------------------------------------------------------------
The Case of "India-NO-place"
Indianapolis is thought to have a successful downtown, but it is dominated by national brands, which,
while undoubtedly popular among the large number of conventioneers and tourists, do little to
distinguish the city from any other, reinforcing the unfortunate nickname of "India-NO-place".
Indianapolis is not a "NO-place", and its residents certainly would not want to think of their city in
that way. And while one might argue that such self-perceptions do not ride on the presence of a few
ubiquitous restaurant chains in a tourist-heavy downtown, there is little doubt that a city's sense of
itself is built and fortified by its local success stories.
A focus on unique offerings is especially advisable in this case because even with
the new convention center, the market for such visitor-driven fare is limited, and
in certain categories, there will be a need to draw from city residents as well,
which calls for operators that choose the Downtown core for a new concept or
for an existing, relocated one. (Incidentally, this might preclude particular area
chain-lets, which, while perhaps new for visitors, would not be especially
compelling for locals who can find branches closer to home).
In fact, the concepts that tend to reflect best on a host city are often the ones
driven by the tastes and sensibilities of its residents, like, in Raleigh's case, Big
Ed's, Clyde Cooper's, The Raleigh Times, etc. Indeed, these are the sorts of
places that many outsiders, perhaps at the behest of their guidebooks, will make
sure to seek out (the reverse, on the other hand -- locals hunting for the visitor
haunts -- rarely happens). (For more on what attracts Raleighites to Downtown
Raleigh, see Chapter 4).
When in Downtown Raleigh, outsiders
head to The Raleigh Times, as that is
where they can find the locals.
Draws that are Raleigh-focused but visitor-friendly, then, should be the focus for
the southern end of Fayetteville Street, in projects like Charter Square, and
heading north from there. Perhaps the only mass-market attraction worth
pursuing is the movie multiplex, as a guaranteed traffic generator that will
ensure a steady flow of city residents and provide a sense of comfort to
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-----------------------------------------------------------------------------------------------------------operators who would be taking a risk by locating in a still-sleepy, unproven part
of Downtown.
Of course, this is not the first time that a movie theater has been proposed.
However, attracting one to the Downtown core does not seem wildly unrealistic,
given the locations of existing competitors (see map below), and especially given
the absence of a more modern facility (with, for example, stadium-style seating)
showing first-run films to the west.
Map of the nearest multiplex competitors to the Downtown core. The Rialto has not been included because it is just a
two-screen cinema, and would therefore not be considered true competition by the larger exhibitor chains.
Perhaps, with the nearby Mission Valley Cinema and the Rialto likely to be
affected (see inset box), Ambassador Entertainment, the Raleigh-based owner of
both, should be given first crack at such an opportunity. But also, as the
multiplex would likely draw from some of the rougher parts of town, it will be
important that the operator have a track record of dealing effectively with
troublemaking patrons while at the same time showing consideration for cultural
differences and sensitivities.
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------------------------------------------------------------------------------------------------------------
The Rialto (left), in Five Points, focuses on foreign and
independent films, but it could still be impacted by a new
multiplex in the Downtown core because the makeup of the
trade area for a Downtown movie theater would seem to
demand more elevated and alternative fare, plus the line
between 'independent' and 'mainstream' has become
increasingly blurred in recent years.
Finally, many have suggested N.C.-themed concepts (e.g. crafts, giftware, wines,
etc.) for the Pavilions and for Fayetteville Street, given the presence of the
convention center. However, with so many state and regional conferences,
many of the visitors already live in North Carolina, diminishing the novelty value.
And as discussed earlier, most such businesses would likely struggle to sustain
the high rent levels.
The best-case scenario, then, involves concepts that are unique to and say
something specific about the Triangle (and not just the state), capable of
attracting high sales volumes (like, for example, local sports paraphernalia)
and/or appealing to other existing sub-markets, such as office workers and city
residents (like, for instance, a "Taste! A Southern Season" satellite location, or an
iconic local fast-casual food purveyor).
The Chapel Hill institution, A Southern Season,
partners with Paradies Shops, an operator of
airport and hotel concessions across North
America, on two smaller "Taste! A Southern
Season" satellite locations (left) at RaleighDurham International Airport (RDU). It is not
clear if Paradies would consider the Pavilions,
since it has traditionally stuck to airports and
hotels, but if so, another possibility is its
"Hometown Favorites" concept, which features
a wide variety of merchandise for the local
sports teams.
Signage
One final point. If the Downtown core is to become a truly alluring and exciting
visitor destination, one that, for example, beckons conventioneers to head
northward on Fayetteville Street, the City Council will need to be willing to accept
bolder, more dynamic signage appropriate to this goal, as recommend in the
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-----------------------------------------------------------------------------------------------------------Comprehensive Plan. Indeed, this will be critical to the fate of Fayetteville Street
as a retail location, which rests partly on its ability to lure conference attendees
and daytime workers from its southern end.
In order to promote this cause, the Downtown Raleigh Alliance should work with
the City of Raleigh's Urban Design Center to develop and disseminate general
models for such bolder, more dynamic signage as part of a new "Signage Vision"
for the Downtown core (varying, perhaps, by sub-district and block), and lobby
for the conditioning of Façade Grant Program assistance on the adoption of one
of those models.
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Chapter 3: The Resident
Not just a collection of office buildings and event venues, Downtown Raleigh is
also emerging as a neighborhood in its own right, with local residents who have
their own needs, desires and sensibilities, who move to such a setting partly
because they want for their milk and bread, their coffee and newspaper, their
"Third Place" (see below), to be just a short walk away.
In order to better understand the population of this emerging Downtown
neighborhood, we have analyzed its demographic and psychographic profile,
based on data retrieved from Nielsen Claritas, one of the large data-mining
outfits that is typically used by retailers, brokers and developers in trying to
determine appropriate locations and sites.
The neighborhood's boundaries have been determined to correspond roughly to
a 0.5-mile radius from the intersection of Fayetteville Street and Martin Street
(see map below). This, of course, largely excludes Glenwood South and the
Seaboard Station area, which have their own commercial corridors/nodes -Glenwood Avenue and Seaboard Station, respectively -- and therefore constitute
separate sub-markets for the purposes of analyzing neighborhood-level retail.
For the purposes of this
analysis,
the
Downtown
Raleigh
"neighborhood"
excludes the Glenwood South
area because a convenienceoriented retailer or service
provider seeking to tap that
market would, one assumes,
look first to Glenwood Avenue
rather than, say, Fayetteville
Street or Wilmington Street.
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-----------------------------------------------------------------------------------------------------------The resulting profile is predictable in certain respects, at least in relation to the
image of Downtown Raleigh, often disseminated by mainstream media, as an
increasingly popular residential address for upwardly mobile, often young singles
seeking the trendy urban lifestyle. Some of the highlights:
- The population, estimated at 3,293 (with another 1,187 in "Group Quarters",
e.g. students living in dormitories) in 2008, has grown at a 19.43% per-decade
clip since 2000, and is projected to increase at a 17.18% per-decade rate over
the next five years, to 3,576 in 2013.
- 27.17% of the housing units have been built since 1999, and the average
length of residence is just five years, versus seven for Wake County.
- Only 4.8% of the housing units are single-family homes, while 30.74% are in
large apartment buildings with twenty or more.
- The median value for owner-occupied homes is $219,685, higher than Wake
County's $205,915.
- The median age, at 30.71, is relatively young, compared, for example, to 35.14
for Wake County.
- Only 12.90% are married and living with their spouses, versus 54.36%
countywide; 34.73% are separated (as opposed to just 5.57%). Non-family
households account for 63.85% (34.41%), and 54.09% of the households
consist of just one person (25.33%). Just 19.69% of the households have
children (36.62%).
- 32.81% of the households do not have a car (versus 4.72% countywide), and
19.45% of the employed population walks to work.
The psychographic profile confirms the presence of the sorts of well-educated,
well-off (primarily white) professionals that one would expect, with, for example,
the young twenty-something singles of Up-and-Comers (12.73%) and the
“DINK”11 couples of Brite Lites, Li’l City (7.81%). Surprisingly, however, the
largest segment in the neighborhood is Middleburg Managers (18.87%), empty
nesters who are solidly middle-class yet have not necessarily graduated from
college and manifest rather provincial sensibilities.
11
“DINK” stands for Dual Income, No Kids.
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------------------------------------------------------------------------------------------------------------
Keep in mind that this is just the demographic and psychographic profile for the Downtown
"neighborhood", and not for the trade area that utilizes Downtown as a "destination". For many retail
categories, the latter is more relevant: it will be discussed later -- its precise boundaries delineated
and demographic and psychographic profile summarized -- in Chapter 4, on "The Destination
Shopper".
In other respects, the demographic profile presents a very different
neighborhood from the one portrayed in media accounts and marketing
materials. Largely this is because the 0.5-mile radius encompasses East RaleighSouth Park to the east, a heavily African-American area of modest incomes.
Take, for example, the following statistics:
- 64% of the population is African-American.
- The median household income is just $33,804, versus $63,312 for Wake
County, and it is even lower when one considers that the Shaw University
students living in the on-campus dormitories are not included in the calculation
of this average. Furthermore, the unemployment rate is high, at 20.5%.
- 70.26% of the occupied housing units are rented.
- 25% of the population aged 25 or older has a B.A. degree or more, as opposed
to 44% countywide.
- 45.89% of the employed population aged 16 and over works in blue-collar,
low-level service or agricultural jobs, compared to 26.62% for Wake County.
In psychographic terms, the neighborhood also contains high percentages of
segments like Park Bench Seniors (13.83%), Family Thrifts (9.85%) and Mobility
Blues (6.23%), all three of which consist primarily of lower-income AfricanAmericans, differentiated only by their life-stages (with Park Bench Seniors as
sedentary retirees, Family Thrifts as young parents, and Mobility Blues as young
singles).
This study draws on Nielsen Claritas’ PRIZM NE psychographic scheme, which, like the ones
developed by the other large data-mining outfits, divides the U.S. population into 60+ different
“segments” or “clusters”, as defined by their demographic characteristics, buying patterns, leisure
pursuits, media preferences, etc. The purpose is to shed light on their lifestyles, aspirations and
sensibilities, and to develop a deeper and more nuanced sense, beyond just basic demographic data,
of who they are as consumers. Some find it offensive, African-Americans and hipsters in particular.
And arguably, for good reason. However, it must remain in our analytical toolbox, if for no other
reason than that it is increasingly utilized by the retailers themselves in deciding on new store
locations, and in certain cases (see discussion of "hipsters" and "yup-sters" in the section on "The
Destination Shopper"), it is critical to understanding how businesses and business districts today
define and differentiate themselves in the minds of consumers and prospective tenants.
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-----------------------------------------------------------------------------------------------------------Finally, the neighborhood’s second-largest cluster is City Startups (17.47%), also
consisting primarily of low-income African-Americans, but ones attending Shaw
University. And this percentage underestimates the student population, in that
psychographic data also does not include those living in "Group Quarters" (e.g.
dorms), which number 1,187 in the Downtown neighborhood. Indeed, Shaw has
the capacity for 1,250 in its on-campus housing, equal to almost half of its total
enrollment of 2,880.
Most of the students at Shaw -- 88% -- study there on a full-time basis. In
demographic terms, 91% are African-American, and 93% receive some form of
financial aid. Yet although they could be generalized as lower-income AfricanAmericans, one can assume that they behave somewhat differently as
consumers than their contemporaries in Mobility Blues and Family Thrifts, a
reminder that demand can vary, and in some cases, vary widely, within individual
ethnicities.
Peace College (left) is not discussed here
because it sits directly adjacent to the
Seaboard Station shopping center, and does
not fall within the boundaries of the
Downtown "neighborhood". Roughly 40%
of the student body of 692 lives off-campus,
with some, perhaps, in residences within
those boundaries, but the demographic and
psychographic profile would already have
accounted for them.
The makeup of the neighborhood, then, presents a complex market for retail, in
that, with the exception of certain “cross-over” concepts, the lower-income,
African-American households of East Raleigh/South Park have different needs
and preferences, and different “Third Place” venues (see below), than the
students at Shaw University and the more monetarily-secure, white twentysomethings, DINK’s and empty nesters.
If Downtown Raleigh is to fulfill its promise as a true crossroads, its retail mix will
need to speak to each of these sub-markets, with places like, for example,
Capitol City Barber Shop. A 71-year-old business owned by and catering to
African-Americans (and still in the same space that it has occupied since the
1920's), Capitol both provides a neighborhood service and acts as a “Third Place”
for that community (see inset box below). And other hair salons along
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-----------------------------------------------------------------------------------------------------------Wilmington and Hargett Streets, while seemingly redundant, might be playing a
similar socio-cultural role.
The "Third Place" is a phrase coined
by sociologist Ray Oldenburg to refer
to those informal meeting places,
separate from home (the "first place")
and work (the "second"), that anchor
community life. Every culture has its
own version: in Britain, it is the pub,
in Germany the beer garden, Japan the
teahouse.
In the United States, it is often a
"Cheers"-like neighborhood bar or a
coffeehouse -- indeed, the owners of
The Third Place, in Raleigh's Five
Points, were inspired by Oldenburg's
conception -- but different cultures
will have their own versions: AfricanAmericans, for example, gravitate to
the barber shop/hair salon, as
exemplified by the films, Barbershop
and Barbershop 2: Back In Business.
In emerging neighborhoods, the
presence of such a "Third Place"
assumes even greater importance, as a
central gathering place that helps to
forge and cement a sense of
community for a group of trailblazers
who might otherwise feel that they are
alone on the urban frontier.
Having said that, it is the young professionals, child-less couples and empty
nesters driving the growth and generating the momentum in Downtown Raleigh.
These are the people who are moving, or considering a move to, the new
residential developments, and for this reason alone, what they need and want
demands special attention.
Indeed, the above figures are somewhat skewed because a number of the larger
high-end projects are still not fully absorbed or even built. For instance, The Hue
will add 207 for-sale units to the mix, Charter Square 154 and The Edison 640,
aggregating to 1,001 condos, which, using a rule-of-thumb of 1.75 persons per
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-----------------------------------------------------------------------------------------------------------household12, translates to 1,752 new residents, likely with significant percentages
from psychographic segments such as Up-and-Comers and Brite Lites, Li’l City.
The Uncertainty of the Condo Pipeline in Downtown Raleigh
Although the condominium market in Downtown Raleigh has been impacted by the credit crunch,
there is reason to be confident of its longer-term health. However, according to one prominent
residential broker active in Downtown Raleigh, the pipeline is running dry. Existing developments
like Hue might take some time to sell out, but once they do, new product -- in mixed-use schemes
such as Charter Square and the Edison -- might not materialize for a few years, possibly resulting in a
loss of momentum and an increase in price point. Of course, if absorption of the current stock takes
longer due to the difficulty in obtaining mortgages, the demand and supply could realign, although
that assumes that large residential projects in the pre-development phase right now are themselves
able to secure financing.
These newer arrivals manifest slightly different demographic characteristics than
the cadre of well-educated, well-off (primarily white) professionals in the above
profile. Whereas Middleburg Managers accounted for roughly half of the latter,
one prominent residential broker active in Downtown Raleigh estimated that
roughly 60-70% of today's condo-buyers are young singles in their 20's and 30's,
only 15% were empty-nester couples and another 15% DINK's.
12
The neighborhood’s average household size is 1.96, but newer condo dwellers are less likely to have
kids than the existing population, given, for example, the large families of the Family Thrifts segment, so
1.75 seemed an appropriate rule-of-thumb.
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-----------------------------------------------------------------------------------------------------------The impending arrival of Campbell University's
Norman Adrian Wiggins School of Law is not
specifically mentioned in this chapter, since no
dormitory space is planned. However, even though,
as consumers, "commuters" behave much like
office workers, one might expect a percentage of
the students -- likely a higher percentage than that
for Downtown's office workers -- to live in the
Downtown core, near their "place of work" (for
example, in the buildings along Dawson Street),
thus reinforcing this demographic skew towards
young singles in their 20's and 30's.
For all of these groups, there needs to be a "there, there". Many cities made the
mistake in the last decade of assuming that, in revitalizing a downtown, the
housing can come first, before a cluster of coffeehouses, bars and restaurants
had emerged. However, it is the energy and excitement generated by these
sorts of places that drives interest in moving there.
Downtown Raleigh is in the process of developing this cluster: it boasts a clutch
of nightclubs, live-music venues and bars, all just a conveniently short walk away
from home for hard-partying young professionals who otherwise would have to
limit their alcoholic intake or find a designated driver. In addition, it offers the
Progress Energy Center for the Performing Arts and a growing collection of upmarket restaurants, for the more mature and refined set.
This is also, however, partly a matter of having "Third Place" venues. In
Downtown Raleigh, spots like The Raleigh Times / Morning Times and The
Borough have developed undeniable "Third Place" status. Indeed, Greg Hatem's
plans for a second Morning Times cafe in the L Building, on the other side of
Downtown, suggests an ongoing need for additional such establishments.
The Borough Bar & Restaurant has
established itself as a "Third Place" for
Downtown's growing population of
young professionals
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-----------------------------------------------------------------------------------------------------------Those living in or considering a move to a downtown setting also want certain
services and amenities within a short walk. The most important of these is often
considered to be the grocery store, largely due of the significance that it
assumes as a symbol of a neighborhood's basic "livability". (Indeed, assuming
that Downtown Raleigh does not become Manhattan overnight, a supermarket
there would only be within walking distance for a small fraction of its customers.
And furthermore, given how often condo-dwellers eat at restaurants, they have
relatively little need for cooking ingredients anyway. "I never been asked [in a
showing] how far away the grocery store is," says one prominent residential
broker active in Downtown Raleigh. "For half [of our showings], the stove
doesn't even need to be clean.")
The challenge is that with 2.5 square feet per capita as the rule-of-thumb,
Downtown Raleigh's 3,293 residents can only support a roughly 8,250 store, far
smaller than the average size for a full-service supermarket (see inset box).
Supermarket Square Footages
- Harris Teeter: 63,000 sq.ft. at Cameron Village
- Kroger: 58,000 sq.ft. on Martin Luther King Jr. Boulevard
- Food Lion: 25,000 sq.ft. on Raleigh Boulevard
- Aldi: 20,388 sq.ft. on Wake Forest Road
- Fresh Market: 16,830 sq.ft. at Cameron Village
- Capital City Grocery (closed); 14,000 sq.ft.
- Store supportable by Downtown residents: 8,250 sq.ft.
Furthermore, that resident base is not homogeneous, with only a minority likely
to prefer the above model, and a higher percentage looking for a lower-priced,
basics-oriented grocer like, say, Food Lion or Aldi. And the former, while
perhaps seeing the presence of a supermarket as symbolically relevant, will likely
spend below-average amounts there, since, as mentioned above, they tend not
to cook.
In order to be successful, then, a supermarket located in Downtown would need
to be able to draw from far beyond Downtown itself (which would, incidentally,
necessitate convenient off-street parking). And its ability to do so depends
largely on the locations and draws of competitors in the areas surrounding
Downtown.
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Grocery Stores Near Downtown Raleigh
- Fresh Market (Cameron Village): 1.35 miles "as the crow flies"
- Harris Teeter (Cameron Village): 1.58 miles
- Kroger (Martin Luther King Jr. Boulevard): 1.59 miles
- Food Lion (Raleigh Boulevard): 1.84 miles
- Lowes Foods (Wake Forest Road): 2.98 miles
- Whole Foods (Wade Avenue): 3.13 miles
- Trader Joe's (Wake Forest Road): 3.26 miles
- Aldi (Wake Forest Road): 4.19 miles
- Wal-Mart Supercenter (New Bern Avenue): 4.72 miles
- Aldi (Louisburg Road): 5.63 miles
These competitors (see map and inset box above) "cover" much of the existing
market, leaving little support for an additional operator. Affluent households to
the northwest and north can shop at the Harris Teeter and Fresh Market at
Cameron Village (see inset box), while most of the lower-income concentration
to the east and southeast is within a mile of either the Food Lion on Raleigh
Boulevard or the Kroger on Martin Luther King Jr. Boulevard.
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-----------------------------------------------------------------------------------------------------------The sophisticated, busy young professionals and
"DINK's" moving to Downtown Raleigh would
ideally want a specialized grocer merchandised so
as to cater to their lifestyles and sensibilities,
with, for example, a selection of prepared foods
and "heat-and-eat" options for stressed working
professionals, small package sizes for small
households, gourmet offerings and large wine
selection for more refined palates, etc., as well as
late hours, home delivery and bike racks.
However, such an upscale concept would likely
struggle to grab a sufficient share of the submarket due to the presence of both Fresh Market
and Harris Teeter at Cameron Village. Indeed,
such formidable competition might have been the
chief reason for Capital City Grocery's
struggles and ultimate closure (left).
Perhaps the only model that can steal market share from the existing
competition is the deep-discount, "limited-assortment" one embraced by Aldi and
Save-A-Lot (see inset box below), which can draw lower-income households by
undercutting traditional full-service grocers like Food Lion and Kroger (and
perhaps even lure N.C. State students from the west). However, such operators
would not appeal to affluent condo-dwellers nor provide the sort of symbol that
would attract more of them.
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A "limited-assortment" grocer is characterized by the following:
- A relatively small floor-plate (e.g. 15,000 sq.ft.)
- An edited selection of fast-moving basic foodstuffs, with an emphasis on private-label brands
- Few "perimeter" departments or additional services (e.g. no bakeries, no pharmacies)
- "No-frills" shopping experience (e.g. products displayed on pallets, customers required to park their
own groceries and charged for bags, etc.)
- Extremely low prices (i.e. lower than the traditional full-service supermarket, even than Wal-Mart)
- A policy of accepting food stamps
Perhaps the most appropriate model for Downtown Raleigh at this point, given
the limited residential population, bifurcated demographic profile and existing
competition, is the one currently employed by Taiseer Zarka and his wife, Jehan.
Feeling that the market cannot yet justify the rent on one larger space in a new
development, Taiseer has opted instead for several smaller concepts, each with
different emphases, and all in still affordable, older buildings. Four are already
open, as "Taz" stores, with a fifth, "The Tazmahal", coming soon.
Rather than catering exclusively to one type of grocery shopper, Taiseer aims to
appeal to Downtown's different sub-markets, commenting that "it's like being
between East and West Germany and trying to satisfy both crowds"13. For
example, the location just south of Hargett Street includes both basic beer
brands as well as an impressive selection of gourmet brews and wines for the
Raleigh Times set and the condo-dwellers. Furthermore, his stores, sited within
walking distance of East Raleigh/South Park, are heavily patronized by the Park
Bench Seniors psychographic ("I get hugs and kisses from the older people for
13
As quoted in a June 29, 2008 entry on the New Raleigh blog, entitled "Taz's Downtown Market Opens".
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-----------------------------------------------------------------------------------------------------------providing a service no one else is"14). And Taiseer, a 1987 graduate of Shaw
University, offers students there a 10% discount on all purchases.
Taz keeps resident hours, remaining open until midnight from Sunday to
Wednesday and until 3 a.m. on Thursday, Friday and Saturday. And not only is
his northernmost outpost on Wilmington Street the only location for buying beer
in the Downtown core, but also, Taiseer's fifth store, "The Tazmahal", will
include a butcher shop as well as fresh produce (although this concept is not
without risk, as discussed in the inset box below).
A Word of Caution…
Taiseer Zarka is excited to be including a butcher
shop and produce department in his fourth store, but
it is a bit of a gamble: "The Tazmahal" would offer
more convenient hours than City Market Produce or
the Moore Square (soon to be, City Plaza) Farmers
Market, but still, fresh perishables require high
shopper volumes, and unless he is able to use them
for the accompanying grill, any un-sold meat, fruit
and veggies will be wasted, the money lost.
One area of needed improvement, however, would be aesthetics.
The
northernmost outpost (pictured above) is easily the most attractive Taz's, with,
for example, gooseneck down-lighting and a bright and tidy interior. The two
other stores further south on Wilmington Street, on the other hand, appear
darker, less welcoming and more like a typical inner-city convenience store,
precluding the same sort of cross-over appeal.
Another type of retailer that a Downtown resident would want nearby is a largeformat drug store15, given its pharmacy counter and, more importantly, its wide
range of merchandise categories. Of course, Downtown Raleigh boasts a CVS on
Fayetteville Street, yet not only is its space in need of re-freshening, but also, its
hours -- closing at 6 p.m. on weekdays, 1 p.m. on Saturdays and all day on
Sundays -- are not geared towards residents.
14
As quoted in a November 12, 2008 entry on Goodnight, Raleigh, entitled "Taz and the Tazmahal".
A large-format drug store is a store, typically between 10,000 and 15,000 sq.ft., that carries, in addition
to prescription pharmaceuticals, a variety of goods not normally found in traditional pharmacies, including
convenience food and household items, cosmetics, etc. Examples include Walgreens and CVS.
15
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-----------------------------------------------------------------------------------------------------------While such closing times have subjected CVS to some strongly-worded criticism
in the blogo-sphere, it probably makes sense from a strictly bottom-line
perspective, with the incremental sales to be generated from extended hours not
at this point justifying the added costs (e.g. labor, electricity, etc.), and unlikely
to do so until the Downtown residential population grows further. Of course,
there are other reasons to remain open -- as an investment in the
neighborhood's future, for example -- but as a publicly-traded, shareholderdriven company, CVS might not be able to act solely on the basis of such
arguments.
In the meantime, Downtown residents will have to content themselves with the
Rite Aid store at Cameron Village, which is open seven days a week, until
midnight (7:00 p.m. on Sunday). And one might also expect (and should
encourage) enterprising entrepreneurs like Taiseer Zarka and Greg Hatem to
seize the initiative and sell in as many of CVS' non-pharmacy categories at their
existing businesses as they are able.
Efforts should be made to ensure the continued
presence of Hamlin Drug (left), a fixture on E.
Hargett Street for over 100 years and an institution
in the local African-American community.
Although it closes even earlier than CVS (at 5 pm
on weekdays, 1:30 pm on Saturday and all day on
Sunday), as Downtown's lone independent
pharmacy it provides the sort of customer service
often lacking at larger chain drugstores.
In addition to grocery and drug stores, other indicators of the emergence of a
more urban, "24-7" lifestyle would include: 1) convenience-oriented businesses
like dry cleaners and fitness clubs, within walking distance and with residentfriendly hours; 2) restaurants with food-delivery options, other than, say,
Domino's Pizza; and 3) an all-night diner.
Obviously, "24-7" is still very much a work-in-progress in the Downtown core. A
dry cleaner has thus far proved elusive: the closest ones, Rollins Economy
Cleaners and Dry Clean City, are on Peace Street. Fitness clubs surround the
study area, with Seaboard Fitness & Wellness, Rapid Fitness, Powerhouse Fitness
Center, etc. The existing restaurants do not deliver, and pizza is the only cuisine
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-----------------------------------------------------------------------------------------------------------delivered more generally. And there is no all-night diner: the nearest 24-hour
option is the Hillsborough Street IHOP.
In most cases, residential density is the issue: operators will materialize in the
Downtown core, and existing businesses will start to offer higher levels of service
and convenience, when the demand there approaches the necessary critical
mass. In this respect, reaching 10,000 residents is often seen as an important
milestone.
Food delivery is a given in a "24-7" city, but in the
case of the Downtown core, it will have to wait for
critical mass. In the meantime, however, perhaps the
Raleigh Rickshaw Co. could play a role (and thereby
provide its drivers with another way of earning tips)?
Finally, there is the matter of where, in terms of location, these sorts of residentdriven businesses make the most sense. Generally speaking, they should be
sited in close proximity to the residents themselves, which means, in most cases,
the outer rim of the Downtown, not the commercial core, as centered on
Fayetteville Street, Wilmington Street, etc.
Take, for example, the concentration of high-end projects built on and near
Dawson Street (The Dawson, Park Devereaux, Martin Place and Hue),
aggregating to roughly 330 condos and 580 residents. Businesses catering to
this population -- like, for instance, daily conveniences or "Third Place" venues -should be steered towards the ground-floor retail space in projects like Hue
(7,500 sq.ft.).
To the extent that other sorts of businesses (e.g. boutiques, restaurants, etc.)
are interested in such outer rim locations, they should probably be discouraged,
because, as destination-oriented concepts in need of visibility, they would be
more appropriately located in the commercial core, on corridors like Fayetteville
Street, Hargett Street, Wilmington Street, etc. (see Chapter 4, on "The
Destination Shopper").
Generally speaking, retail square-footage in new mixed-use developments on the
fringes of the Downtown core should at this point probably be limited to corner
locations, where storefronts would enjoy visibility from two streets and therefore
draw the most interest. In-line bays in new construction will be far more difficult
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-----------------------------------------------------------------------------------------------------------to lease right now; they should be designed as "flex" space, to accommodate
office (or gallery) use in the near term as well as allow for retail tenancy should
that become more feasible.
The still-vacant 1,560 sq.ft., $21/sq.ft.
space next to The Borough on the
Morgan Street frontage of The Dawson
points to the difficulty of attracting
operators at this point to new,
expensively-priced in-line space on the
outer rim of the Downtown.
The same holds for new, mixed-use projects in the Person Street business
district in the Oakwood/Mordecai neighborhood, like Person's Corner and Franklin
Street Plaza (if it ever happens). Ideally, no in-line space would be included in
either: not only would these bays struggle to compete for resident-oriented
tenants with the face-lifted 111 Seaboard, but, with the latter, given its proximity
to The Shops at Seaboard Station, likely winning such battles, they would then
be vying for lower-rent operators that might otherwise have occupied the
"second-generation" storefronts of existing buildings in the business district.
Even with the closure of Capital City
Grocery, The Shops at Seaboard
Station is still the premier location for
a resident-oriented business that wants
to tap the Oakwood/Mordecai market,
and drives the leasing dynamics of
retail space nearby.
For businesses catering primarily to the African-American market in East
Raleigh/South Park, the possibilities on the outer rim are more limited, due to
the small number of existing storefronts and the absence of new mixed-use
projects in that part of Downtown.
Lower-income African-Americans living on the edges of the Downtown core are
understandably wary of the impact that development pressures could have on
their community. In this, the promotion of demographically appropriate retail
can play an important symbolic role, reassuring such residents that they will be
heard going forward.
Visible efforts, then, should be made to help in
identifying/developing convenient locations where their neighborhood-level and
"Third Place" needs could be met.
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-----------------------------------------------------------------------------------------------------------One possibility is the under-utilized strip mall at the intersection of Martin Street
and Camden Street, where efforts to work with the landlord to improve the
property, but in a demographically-appropriate manner, would send just such a
signal. Of course, this requires that the City make progress in redeveloping the
surrounding Martin-Haywood neighborhood and in combating the drug-dealing
and associated violence that has long plagued the area and the center itself.
Although it sits outside the 0.5mile radius, the strip mall at the
intersection of Martin Street and
Camden Street could in theory be
the neighborhood shopping center
for African-American residents in
the Downtown core.
There is also the row of storefronts on South Street just west of its intersection
with South Saunders Street, in the more diverse section of the Boylan Heights
neighborhood, where support for certain long-time, well-established, blackowned businesses would suggest an interest in retaining at least some of that
area's existing African-American flavor in the face of development pressures (e.g.
Richard Johnson's City Space project).
Given its location on the edge of the
gentrified
Boylan
Heights
neighborhood, the South Saunders
Street area might be even more
vulnerable to development pressures
than East Martin Street (above). An
effort to attract additional businesses
for the African-American sub-market
might, then, be flying in the face of
market forces.
Working to fortify
existing ones, however, would be
appropriate, in the name of fostering a
mixed-income,
mixed-race
community.
On the other hand, despite the historic role that Hargett Street and Wilmington
Street have played in this community and notwithstanding the re-leasing to
Capitol City Barber Shop, new operators focused on the nearby African-American
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-----------------------------------------------------------------------------------------------------------residential base should be steered away from those two corridors, simply
because they would be exposed to development pressures there once the
economy starts to rebound (see section on "The Destination Shopper").
Generally speaking, the only resident-oriented concepts that should be sited in
the Downtown core are the ones that, like Taz and CVS, rely on their "crossover" appeal to multiple sub-markets, a wider trade area (i.e. nearby
neighborhoods) and/or other demand segments (e.g. office workers), and that
therefore need to be centrally located, on corridors like Fayetteville Street or
Wilmington Street.
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Chapter 4: The Destination Shopper
In contrast to businesses that derive much of their sales from people who are in
Downtown Raleigh primarily for other reasons (e.g. work, home, conventions,
events, museums, etc.), destination-oriented concepts are ones able to draw
shoppers on their own, without "help" from other uses. Their customer base
lives elsewhere, but it is willing to make the trip just for them.
In a number of retail categories, like, for instance, comparison goods16, concepts
able to achieve a destination draw are, with rare exceptions, the only ones likely
to succeed, as the existing combination of Downtown workers, residents and
event-goers represents just a fraction of what such businesses would need to be
viable.
Commodity Retail
Destination concepts can be divided into two types: "commodity" and "specialty".
A commodity is defined for the purposes of this discussion as a brand that one
can find in virtually every major retail sub-market in a given metropolitan area.
Take, for instance, the Gap: it operates stores at the city's three enclosed malls,
Crabtree Valley Mall, Triangle Town Center and Cary Towne Center.
With a commodity, because one store within the chain is no different from
another, consumers will typically shop the location that is most convenient to
them. They will not drive across town -- or, more importantly, for our reasons,
to Downtown -- for, say, a Gap, if they can find one at their local mall.
The "trade area" for such brands, then, can be defined as that area within which
Downtown would be the most convenient option. Given the estimated drive
times and the locations of the major competitors, one could (very) roughly
assume a polygon corresponding to a five-minute drive from the intersection of
Fayetteville Street and Hargett Street.
16
A comparison good is a good for which one "comparison shops" on the basis of style, quality and price.
Examples include clothing, shoes and furniture.
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The polygon corresponding to a five-minute drive from the intersection of Fayetteville Street and Hargett Street in
Downtown Raleigh.
As of 2008, the population of this polygon is estimated at 35,123, and growing.
After an 0.85% decline in the 1990's, the trade area expanded by a per-decade
rate of 18.1% between 2000 and 2008, and is projected to climb at an 18.6%
per-decade clip over the next five years, to 38,395, which would represent a
25.1% increase in just thirteen years.
Even, however, with this growth, the number falls far short of what most
commodity brands require -- the U.S. has historically averaged one mall for every
250,000 people, for example. And the other submarkets in the Downtown core -
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------------------------------------------------------------------------------------------------------------ the conventioneers, the daytime workers, etc. -- are too modest in size to cover
the difference.
When assessing the retail potential in reemerging downtowns, many will point to the growth of the
residential population in downtown proper. But as important as its new condominium towers can be
in turning heads and changing perceptions within the tenant community, downtown proper still
represents just a small fraction of the destination retailer's true trade area: it is the surrounding closein neighborhoods that account for the lion's share of their market, and the densities and median
incomes there that dictate what will be viable and sustainable. In order, then, for the Downtown core
to be able to support destination brands and destination concepts more generally, higher-density
residential development needs to be promoted not just within its confines, but also, within the
corresponding trade area -- in the case of Downtown Raleigh, within a five-minute drive.
Also, as with the Downtown neighborhood (see Chapter 3, on "The Resident"),
the market is bifurcated. 48.6% of the population is black, 42.3% white (and
another 10.5% Hispanic). 32.9% of the households earn more than $50,000,
while 38.9% make less than $25,000, resulting in a low median household
income of just $33,626 (versus $63,312 for Wake County).
Of course, the density of urban settings often translates to a better comparison
on purchasing power. For instance, total retail spending by households living
within a 2.5-mile radius of the Downtown core equals $1,022,538,485, not all
that much less than the $1,118,921,338 for the same ring surrounding Crabtree
Valley Mall.
But density also often means that, although the median income might be low in
comparison to suburban trade areas, the absolute number of well-off households
can be far closer. However, in this case, there are just 10,200 households
earning at or above the $50,000 mark within a 2.5-mile radius of the core,
versus 16,072 for Crabtree Valley Mall.
Downtown (2.5-Mile Ring)
Crabtree Valley Mall (2.5-Mile Ring)
Population
74,553
57,559
Retail Spending
$1,022,538,485
$1,118,921,338
# of $50K+ HH's
10,200
16,072
Furthermore, a portion of the demand for commodity retail among these well-off
households is absorbed by the Cameron Village shopping center, which, in
addition to its sizable collection of boutiques, contains a handful of up-market
national chains, including Ann Taylor, Talbots and Jos. A. Bank Clothiers, as well
as some mass-market ones, like Victoria's Secret and Athlete's Foot.
An additional challenge is one of co-tenancy. These sorts of commodity brands
typically travel in packs; subscribing to the "safety-in-numbers" philosophy, they
tend not to pioneer. And one considering an ITB location is more likely to prefer
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-----------------------------------------------------------------------------------------------------------the guaranteed traffic streams at Cameron Village to a far riskier proposition in
the Downtown core.
Cameron Village does not have many vacancies to offer to
commodity brands interested in an ITB location. However,
many occupied storefronts could be upgraded to more
desirable tenancies. These include the ones currently taken
by boutiques: while such operators provide an important
point of differentiation for the center, the owner, Regency
Centers, appears to be moving in that direction (see p. 92).
For these reasons, even with the growth levels, such operators are very unlikely
at this stage of the Downtown core's evolution to consider the possibility,
excepting, perhaps, a small subset of evening-oriented concepts that might be
drawn to a large, catalytic, high-energy, visitor-driven, UEC-like project, which
was deemed undesirable for a couple of reasons (see Chapter 2, on the "The
Event-Goer").
Specialty Retail
The second type of destination is one that focuses on a "specialty" niche, with
concepts (or a concentration of such) that cannot be found elsewhere in the
metropolitan area and that are, therefore, able to draw from beyond the
competing commodity-filled shopping centers, perhaps, even, from all of Raleigh.
An existing example would be Glenwood South, with its high-octane nightlife.
One approach to developing such specialty appeal is to lure a "one-per-market"
brand that typically opens just a single location within a given region. The
sporting goods mega-stores are a particularly popular target: Buffalo, N.Y., for
instance, has successfully wooed a Bass Pro Shops to its long-beleaguered
downtown. Efforts to attract such large-scale concepts, however, typically
require massive public-sector subsidies.
Furthermore, one-per-market brands could find other alternatives in the
metropolitan area more compelling. Centers like Crabtree Valley Mall, for
instance, offer better anchors/co-tenancies and more cross-traffic, higher income
levels, superior growth rates, greater centrality to desirable sub-markets, etc.,
not to mention owners that are willing to do whatever it takes to attract such
operators.
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-----------------------------------------------------------------------------------------------------------For example, the five-minute drive time from Crabtree Valley Mall boasts a
median household income more than double that for the Downtown core
($68,165, as opposed to $33,626), and while the latter is growing, the former is
growing still faster (at per-decade clips of 31.1% from 2000 to 2008, and
27.70% for 2008 to 2013 (versus 18.1% and 18.6%).
Popular restaurant brands like Cheesecake
Factory that might open just one location
in a market of Raleigh's size gravitate to
Crabtree Valley Mall.
Specialty Retail: African-American
The more promising specialty niches are ones that focus on specific cultural or
psychographic segments. The Downtown core, for instance, has always been a
shopping destination for the African-American community, with East Hargett
Street having thrived in that role from the 1910's until as late as the 1960's, and
earning, in the phraseology of respected Shaw University Professor Wilmoth
Carter, the nickname of "Raleigh's Negro Main Street"17.
In more recent decades, the sub-market has expanded to nearby Wilmington
Street. Indeed, Wilmington, while barely a shadow of what East Hargett once
was, has become Downtown's primary shopping street for the lower-income,
African-American consumer, and has boasted some of the city's premier
destinations for the latest urban-sportswear styles and labels.
Urban sportswear refers, on the most general
level, to the fashions that emerge from "hip-hop"
culture, with well-known brands including Phat
Farm, Enyce and Apple Bottoms.
17
As gathered from an October 15, 2008 blog entry in Goodnight, Raleigh, entitled "Take an Aspirin and
Call Me in the Morning".
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-----------------------------------------------------------------------------------------------------------The presence of this niche on Wilmington/Hargett can be explained by the
demographics. 48.6% of the population within a five-minute drive is AfricanAmerican. And in a polygon encompassing the neighborhoods abutting the
Downtown core to the east, southeast, south and southwest (see map below),
the percentage rises to 75.4%, with a median household income of just $20,711
(which is even lower when one considers that the Shaw University students living
in on-campus dorms are not included in the calculation of the average).
The niche is also advantaged by the relative lack of nearby competition. With a
couple of exceptions, like the Food Lion-anchored Raleigh Boulevard Plaza at
Raleigh Boulevard and Glascock Street, which includes stores like Citi Trends and
Mr. Freeze, most of the shopping centers with destination retailers that attract
this demographic sit at, near or beyond the I-440 Beltline, on the arterial roads
leading outward from the city's African-American neighborhoods.
Shopping Center
Raleigh Plaza Boulevard
Location
Anchors
Other Destination Retailers
Raleigh
Blvd
and Food Lion, Family Citi Trends, Messiah Fashions,
Glascock St
Dollar
City Trends
Un-named strip mall
Poole Rd and Cooke St Maxway
Urban Flava
Shoppes at Pinehill
Raleigh
Blvd
and Kroger
None
Martin Luther King Jr.
Blvd
Major shopping centers in the heavily African-American ITB neighborhoods to the east and southeast of Downtown.
An example is the Tower Shopping Center, a 152,273 sq.ft. strip located just
beyond the I-440 Beltline, on New Bern Avenue, accessible by the 15/15C
(Monday to Saturday) or 31 (Sunday) bus routes. In addition to a Food Lion, its
tenant mix includes such draws as Big Lots and Conway Stores, as well as Simply
Fashions (which just relocated from Raleigh Boulevard Plaza), Urban Flava and
Rent-n-Roll Custom Wheels And Tires.
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Tower Shopping Center,
at the intersection of the I440 Beltline and New Bern
Avenue,
which
leads
outward from the heavily
African-American
areas
east of Downtown Raleigh.
Another is Triangle Town Center, located on Capital Boulevard just south of I540, well beyond the I-440 Beltline, which also draws the African-American
market, with urban-sportswear purveyors like Casanova and CHOsen Image, as
well as mass-market, moderately-priced commodity brands like New York &
Company, The Children's Place, Payless ShoeSource, Bath & Body Works, etc.
Inasmuch as the bulk of Raleigh's African-American population lives to the east
and southeast and does not have its own department store-anchored mall, and
given that the location of Triangle Town Center is not particularly convenient,
Wilmington/Hargett does not have to contend with an especially powerful lure,
with greater selection than, say, a strip mall like Tower Shopping Center, that
can draw residents in that quadrant outward.
While Capital Boulevard is flanked by some
African-American neighborhoods, the absence of
a department store-anchored mall in the city's
east/southeast quadrant might also partly explain
why Triangle Town Center draws this
demographic to the extent that it does.
Indeed, given the existing competition, Downtown largely has the closer-in,
African-American market all to itself. And while the suburban shopping centers
are typically reachable by bus, the Downtown core is an arguably even more
appealing spot for retailers looking to tap this market because, with the Moore
Square Transit Station, the main transfer point for the Capital Area Transit's
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-----------------------------------------------------------------------------------------------------------(CAT) bus network, it is more conveniently accessed by a larger number of riders
(see map below).
Suburban shopping centers might be accessible by bus, but with such a "hub-and-spoke" network, if one does not live
near that route, he/she would have to transfer at least once, probably in Downtown, whereas a trip to Wilmington
Street/Hargett Street would likely be a one-seat ride.
This is not an insignificant consideration, for even though 93.3% of the
households in Raleigh own a vehicle, 22.0% within a five-minute drive time do
not (and 45.7% just have one), and for that heavily African-American polygon
encompassing the neighborhoods abutting the Downtown core to the east,
southeast, south and southwest (see map above), the percentage rises to
37.5%.
However, if the Moore Square Transit Station were to be moved to the new
multi-modal facility under consideration in the Warehouse District, the Downtown
core's destination status within the African-American community would be in
jeopardy, as such retailers would probably not be able to afford the retail space
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-----------------------------------------------------------------------------------------------------------that would be built near the new hub, let alone re-establish the synergies that
they currently enjoy on Wilmington/Hargett.
And even if that were not to happen, Wilmington/Hargett is experiencing
development pressures, sitting, as it does, at the vortex of the Downtown
juggernaut. Indeed, not only might landlords have been starting to think, with
all of the new high-end condos throughout Downtown, that they could do better,
but also, on Wilmington Street itself, there are the hugely ambitious plans for
The Edison, and, as discussed later in this section, the hipster and yup-ster
niches are likely to gravitate to this corridor next.
Shalom Rokach, owner of Isaac's, a Wilmington Street clothing store geared towards the African-American market, is
not confident that his store will be a part of the corridor's future. "They may build retail over here, but it's going to be
all high-end," he opines. "There won't be room for the mom-and-pop businesses." 18
Of course, the east side of Wilmington Street between Hargett Street and Martin
Street lies within the Moore Square Historic District, so those buildings cannot be
demolished. Furthermore, the developers of The Edison do not see construction
starting until 2010 at the earliest, and the current economic climate could help to
moderate landlord expectations for the time being. In theory, then, rents might
remain relatively affordable in the short-term, preventing rapid-fire displacement.
Having said that, 2009 has already seen the closing of two more stores on
Wilmington Street, Images of New York and Looking Good. And it is difficult to
see how other merchants will be able to survive the development pressures,
rent increases and property-tax hikes (if they also own their buildings) once the
economy rebounds.
18
As quoted from a March 15, 2006 IndyWeek.com piece by Bob Geary, entitled "Digging downtown?".
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Given the level of uncertainty in the corridor, one should not expect improvements to Wilmington
Street's cosmetics, not only due to belt-tightening, but also because, speaking more generally, tenants
and landlords that might be leaving or selling in the not-too-distant future have little incentive to
focus on aesthetics. (Indeed, it is in the context of such uncertainty-- and, perhaps, the historicallyrooted assumption of eventual displacement -- that one might try to understand the reluctance to
make such investments).
If Wilmington/Hargett does ultimately lose its distinctly African-American flavor,
there is no obvious alternative elsewhere in the Downtown core to which such
businesses could relocate. This is a matter of concern, inasmuch as downtown is
meant to be a reflection of and true crossroads for the entire city and AfricanAmericans account for roughly 29% of Raleigh's population. And from a
planning perspective, the core, with its superior transit access, is the most logical
place for this sort of destination retail.
There is, of course, the possibility of a new AfricanAmerican cultural destination on the site behind Charter
Square, providing a common, synergistic location for
three existing institutions -- the African-American
Cultural Complex, the Martin Luther King Jr. Resource
Center and the Pope House Museum (left), including
one (the Cultural Complex) that will be relocating to the
Downtown core. Yet while this would no doubt carry
symbolic import, the visitor counts for such an attraction
are unlikely to be sufficient to alter the retail trajectory
of Wilmington/Hargett.
One possibility, which would signal that this niche is not simply being ignored
and forgotten (see the quote above from Shalom Rokach, owner of Isaac's), is to
work with businesses that might have the potential to expand their revenue
streams by developing a cross-over appeal similar to what Taiseer Zarka has
been able to achieve with his Taz convenience store at 207 Wilmington Street.
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-----------------------------------------------------------------------------------------------------------This would, of course, involve radical transformations in aesthetics,
merchandising and marketing, and require technical assistance and funding
support from the façade-improvement grants as well as new programs that have
yet to be created. And it would only be appropriate for merchants who also own
their buildings and would not be subject to the whims of landlords.
The Taz at 207 Wilmington Street,
with its attractive down-lighting,
bright and spotless interiors, friendly
service and selection of high-end
brews, has been able to develop crossover appeal.
Of course, this possibility exists only for a few select businesses. With the other
ones, efforts might be made to relocate them to available storefronts either in
the vicinity of Shaw University or in the other more neighborhood-oriented
pockets on the edges of the Downtown core that were discussed in detail in
Chapter 2 (e.g. Martin-Camden strip mall, South Street node, etc.).
Another direction for the Downtown core, suggested by the example of Zydeco
Downtown (at City Market) and the former Yancey's, is to focus on a different
submarket within the African-American population, consisting of the welleducated, middle-class African-Americans and the Shaw University professors
and students who are looking for something a bit more sophisticated and mature
in their nightlife.
The Shaw University community
feels
so
underserved
by
Downtown's existing retail mix
that it buses students to the
suburbs for shopping and
entertainment.
Efforts might be made to pursue successful operators of such concepts in
Durham, long known for its large number of middle-class African-Americans. Of
course, one should not overestimate the potential of this market. Indeed, given
its modest size, such operators could also be vulnerable to development
pressures and rent increases, once the economy rebounds.
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-----------------------------------------------------------------------------------------------------------Another possibility is to work with Shaw University to relocate the university
bookstore, currently in the Willie E. Gary Center at 118 E. South Street, to a
storefront in or closer to the heart of the Downtown core -- on Fayetteville
Street, if possible -- where it could generate more spin-off, as has been done in
downtowns elsewhere (see inset box).
In Wilkes-Barre, PA, Barnes & Noble College
Booksellers, the college-bookstore division of Barnes
& Noble, consolidated the on-campus bookstores for
two separate downtown institutions of higher learning,
Wilkes University (roughly 4,500 students) and King's
College (roughly 2,200), into one larger, 20,000 sq.ft.
location, complete with a full selection of general
trade books, a local authors section and a full-service
Starbucks café, in a former Woolworth's on Main
Street in the heart of downtown.
Of course, Shaw University, with its financial struggles, is not in a position to
contribute funding to such an enterprise, and the working relationship between
the University and the City appears strained at the moment. But a Barnes &
Noble "hybrid" store, including both college textbooks, general titles and an instore cafe (see inset box), presents an ideal opportunity for the two to work
together for something that both wants but neither would be able to secure on
its own: Shaw can provide the market, and the City, the funding. Efforts should
be made to bring these two parties to the table and help them to resolve their
differences, so that they can move in unison towards this common goal.
In support of these efforts, the Downtown Raleigh Alliance should introduce the idea, through
marketing and public-relations channels, that the Downtown core is meant to be a reflection of and
the social and cultural crossroads for the entire city, and that the reinforcement of the AfricanAmerican presence there, through the recruitment of new businesses or the strengthening of existing
ones, is a critical component of that vision.
Specialty Retail: The "Hipster"
As this niche faces an uncertain future, another one, focusing on the "hipster",
has emerged in recent years to become a driving force in Downtown retail.
Nielsen Claritas' PRIZM NE scheme does not dedicate a segment exclusively to
this psychographic, but MJB Consulting has developed its own proprietary
categorization.
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-----------------------------------------------------------------------------------------------------------Hipsters are defined by a similar world-view and sensibility, one most closely
associated with artists but also found among those in other "creative class"
professions, like architecture, graphic design, film making and computer
programming, as well as college/university students (in a somewhat less refined
form). This mindset can be identified by the following characteristics:
- An embrace of authenticity, of places that remain "real" and un-scrubbed, with
a corresponding distrust of anything that feels overly polished or packaged;
- A love of old things, and a talent for finding pragmatic ways of instilling such
things with new meaning while retaining their original character;
- An emphasis on creativity and personal expression, with an associated disdain
for homogenization, mass market and the single-minded pursuit of profit.
- An espousal of personalized, small-scale "grass-roots" enterprise, in opposition
to the hegemony of faceless corporate behemoths and other entrenched forces.
- An appreciation of irony, with the self-awareness of irony -- of how incongruent
something is with what is expected -- considered the barometer of "cool".
- An (ironic) celebration of kitsch (i.e. once-popular products and ideas that are
now widely mocked by mainstream culture as tasteless and tacky).
The Hipster Sensibility
"Much as a sugary grape juice, given time and bacteria, can
become a fine wine, a popular idea allowed to wallow in
obscurity can become rich in ironic energy. Much as a trained
pig can find truffles, a hipster can smell irony in an old thing and
make it cool. For example, Thundercats was popular in 1983.
By 1988, they were passé. By 1994 virtually unknown. By 2004
obscure enough that wearing a Thundercats printed tee is ironic
and hence 'cool'."
- Encyclopedia Drammatica entry of "Hipster Irony"
(For the uneducated, Thundercats was an '80's-era animated television series in
the United States).
- A regard (at times, ironic) for working-class culture.
A hipster wearing a "Thundercats" T-shirt would be an example
of "hipster irony", as in "isn't it ironic that someone as cool as me
would wear such a cheesy T-shirt?" Thundercats, for the
uneducated, was an animated TV series in the U.S. in the 1980's.
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Hipsters and Pabst Blue Ribbon
Pabst Blue Ribbon, or “PBR”, as it has become known, was until
the early 2000’s a tired and declining blue-collar brand, but it was
adopted by the rebellious sub-cultures of bike messengers and
snowboarders, and has since emerged as a hipster icon. Why?
Because 1) it is cheap; 2) with virtually no marketing/advertising
presence, and a comeback initiated at the grass-roots level, its
popularity is perceived as the result of individual choice, rather
than corporate manipulation; and 3) it implies a sort of spiritual
solidarity with, and at the same time an ironic embrace of, the
“old-school” working-class heartland.
- A belief that one is special and culturally-superior because he/she knows what
is cool before others do;
- A comfort level with ethnic, cultural and socioeconomic diversity; and
- A need for low price-points.
A Film About Hipsters…
High Fidelity, the 2000 film based on the
Hornsby novel, stars John Cusack, Jack Black
and Todd Louiso as prototypical hipsters
operate a record store in Chicago's Wicker
neighborhood.
Nick
(left)
who
Park
It is because of these values that hipsters are often drawn to raw, gritty,
forgotten neighborhoods and nightspots. Such places still seem "real", full of
history, not yet homogenized, and, at the same time, brimming with potential.
And inasmuch as they have yet to be re-discovered by the mainstream, they
remain secrets, making those who know of them feel special, part of an exclusive
club. Most importantly, they offer cheap places in which to live and work.
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This sign for a hipster bar in the Philadelphia
neighborhood of East Passyunk covers
several of the themes presented here…
Physically and visually speaking, the Downtown core itself might lack the
edginess of the typical hipster enclave, yet it is indeed seen by its devotees as
the less obvious, alternative choice, the one for those truly in the know, versus
the more mainstream option of Glenwood South.
The latter is described, in pejorative terms, as the nightlife destination for "urban
wannabes" from North Raleigh dressed up for a "big-city" night out in a "seeand-be-seen" environment -- they are even tarred with the dreaded "yuppie"
label -- whereas the core is defined in contrast as a sane refuge for those ITB'ers
who actually live in a city and want something far less pretentious and more
down-to-earth. Indeed, a number of the nightspots there -- The Raleigh Times,
Landmark Tavern, Alibi Bar, etc. -- are often described in such terms.
The Raleigh Hipster
According to Greg Hatem, his typical customer is
a ITB'er who has made a lifestyle choice to live
where he does (as opposed to, say, North
Raleigh) -- Oakwood is about as suburban as he
would be willing to get.
One might dispute the accuracy of these characterizations, but that is almost
beside the point. With psychographics, such depictions can become selffulfilling: if an area is perceived as attracting a certain type of person, it will, in a
self-selecting way, draw more of the same over time (and repel its opposite),
until that initial perception becomes reality -- "birds of a feather flock together",
as is said.
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"Our (Raleigh Times) customers would get pointed at
in Solas", says one Empire Properties executive. And
he meant it as a compliment.
The above value system also explains the hipster's affection for vintage clothing
and retro furnishings. Such pieces are old, and yet, can be re-invented, in an
outfit or a room, in a creative and uniquely personal way. They can also
manifest an ironic affection for kitsch. And again, inasmuch as they are used
and no longer in fashion, these items are priced inexpensively.
This psychographic is drawn, for example, to Downtown's Father & Son Antiques
/ Southern Swank Retro, with its "mid-century modern" furniture, inexpensive
vintage clothing and various other cheap, kitschy items. But also, in the realm
of marketing, the retro aesthetic on say, the exterior of Slim's registers on a subconscious level that this is a hipster-friendly part of town.
Retro styling = hipsters are
welcome here
Indeed, Empire Properties' painstaking efforts to relate the history and telling the
"story" of its spaces through the concepts and tenants that operate within them - best realized at The Raleigh Times, but also, in its treatment of the Capitol City
Barber Shop (see caption below) -- also reflect the hipster's affinity for taking
something that is old and re-imaging it in a way that connects with modern
needs yet retains an authentic tie to the past.
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Keeping History Alive. According to the Raleigh Chronicle19, Greg Hatem, after his Empire Properties completed the
renovation of an East Hargett Street building, allowed a previous tenant, Capitol City Barber Shop, to return at the
same rent, so that it could stay in the same space that it had occupied since the early 1920's.
The antipathy towards the mass market, prevailing orthodoxy and bottom-line
thinking, and the preference for small-scale, "grass-roots" enterprises, helps to
explain the hipster embrace of independent ("indie") cultural forms -- in art,
music, films, etc. -- that were never or have yet to be corrupted or co-opted, as
well as a related preference for locally-owned businesses and new/"emerging"
artists.
"Thank You, Taz, for investing in our city from the ground up! I will lay down in the street before I
let Harris Teeter in here…they had their chance to invest in this city, even though the risk for them
would have been so little. Men make cities, not corporations. This is Taz’s market."
- July 1, 2008 comment by Sam on the New Raleigh blog, in response to an entry
entitled "Taz's Downtown Market Opens"
-
For example, hipsters are drawn to the sort of small-scale, live-music venue
where they can hear a new sound or band before it hits the mainstream. And
part of what lures them to Downtown Raleigh is that, even with recent closures
(see below), it still boasts the Triangle's largest concentration of these clubs,
with The Pour House, Lincoln Theater, Slim's, The Berkeley Café, Vintage 21, etc.
Hipsters are prime supporters of "D.I.Y." ("Do-It-Yourself")
bands, which, because they struggle to get noticed by entrenched
promoters and labels, instead try to build a following by making
their own fliers, promoting their own shows, etc.
Downtown is also where visual artists and assorted designers of the homegrown
and/or emerging variety can find visibility, via the "First Friday" events and the
various galleries, like Lump or DesignBox (also with Brand Fandango, its holiday-
19
As based on a May 25, 2007 Raleigh Chronicle piece by R. Gregg, entitled "Mr. Downtown Raleigh:
Greg Hatem".
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-----------------------------------------------------------------------------------------------------------season "pop-up" shop). Indeed, certain food/drink businesses, like The Morning
Times and Alibi Bar, even double as showroom space.
Finally, the celebration of Holly Aiken's arrival in Downtown Raleigh among
hipsters is rooted at least partly in her success story as a local entrepreneur and
grass-roots enterprise, one that has grown in popularity as a result of creative
inspiration and word-of-mouth, without the help of (or tarnish of) some larger
corporate infrastructure or marketing campaign.
One never forgets that Holly Aiken's Stitch is a small-scale, grass-roots creative enterprise, as her design/production
studio is upstairs from and in the same building as her retail store, and she opens it to the public. 20
The Hipster Under Threat?
As a business district that plays to this sensibility, Downtown Raleigh faces
relatively little competition. Laid-back Five Points draws hipsters with the Rialto
Theatre, Lilly's Pizza and Third Place Coffeehouse, but as a relatively small
neighborhood node surrounded by residential blocks, space is limited and
expansion potential is constrained, with any new, larger-scale projects likely to
elicit neighborhood opposition. And with property values as high as they are,
this psychographic is not likely to account for a large percentage of the
neighborhood itself.
Neighborhood opposition was one
of the chief reasons why Raleigh
Development Co. was forced to
withdraw plans for a four-story,
mixed-use
development
on
Fairview Road that would have
added to Five Points' limited
supply of retail space.
With notable exceptions like The Rockford and Harry's Guitar Shop, Glenwood
South offers relatively little for this psychographic, and the corridor's alcoholfueled rents in the $20's/sq.ft. are too expensive for most of the entrepreneurs
20
Image taken from the www.hollyaiken.com website.
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-----------------------------------------------------------------------------------------------------------who cater to it, and especially unjustifiable for soft goods concepts (e.g. the
former Firefly) that need daytime traffic and co-tenancies.
As a sign of how outnumbered it feels on
Glenwood South, the Rockford keeps its entrance
largely hidden (see left), so as to avoid, in the
paraphrased words of the owner, "meatheads in
visors shouting at me for Jager bombs".
The West Street corridor and light-industrial area to the east is actually more of a
threat, in that the rents there are lower, and the number of residents (to
complain about loud music) fewer. Yet while this might be appealing to bars and
clubs, the lack of visibility and foot traffic would present a challenge for many
soft goods concepts.
Furthermore, a prominent residential broker sees West Street as one of the next
frontiers for Downtown Raleigh condominium development, with two to three
complexes projected to follow the "West at North" project over the coming
decade, suggesting that hipster-oriented fare might only be safe there in the
short term.
Another formidable competitor for this psychographic is the stretch of
Hillsborough Street between Oberlin Road and Shepherd Street, centered on N.C.
State. While the corridor's brand has suffered mightily in the 2000's, and while
its present aesthetic represents an unappealing blend of college-drag seediness
and auto-strip ugliness, it is in precisely this sort of gritty, lower-rent setting that
the hipster niche can thrive.
Rents on Hillsborough Street
(left) are reportedly in the midteens per sq.ft., although they are
undoubtedly lower in some parts,
especially as one moves further
west.
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-----------------------------------------------------------------------------------------------------------Indeed, Hillsborough Street, while no longer the heart of the city's live-music
scene, still boasts The Brewery, Sadlack's Heroes and Schoolkids Records, in
addition to a number of other hipster concepts, like Jackpot, Cup A Joe and Nice
Price Books, with more recent arrivals including Locopops and Guru Guitars.
Furthermore, The Alley (f.k.a. Western Lanes Bowling Center), recently
modernized but still retaining its retro feel, has the potential to become a major
draw for this psychographic.21
A retro bowling alley can serve as a hipster
anchor. The '60's-era Arsenal Bowling Lanes
(left), with its diverse crowd, live bands and
DJ's, irony-laced event nights (e.g. '80's Night),
above-level saloon and cheap pricing, plays
this very role in Pittsburgh's Lawrenceville
neighborhood.
In N.C. State, the corridor has a built-in hipster generator: university
communities often consist of large numbers who embrace such a worldview
(although, with most undergraduates, in a somewhat diluted and less mature
form), and they have few options elsewhere, in, say, the Mission Valley Shopping
Center (see inset box). Furthermore, enrollment is expected to grow from its
present 33,000 to 40,000 by 2017.22
21
This assumes that the Theresa Fenner storyline does not devastate marketing efforts. Theresa Fenner is a
long-time bartender at the old Western Lanes, known for sliding (or "slinging") beers to customers along a
formica bar top, who was able to keep her job under the new ownership but lost her health insurance, as a
result of which she stopped taking diabetes medication, suffered a ruptured kidney and incurred medical
costs of roughly $100,000. The new ownership, for its part, has since held a benefit concert to raise money
to pay those bills.
22
According to a October 1, 2008 News & Observer article by David Bracken entitled "Council To Vote
On Housing".
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While the Mission Valley Shopping
Center's anchor cinema, with its local
ownership, cheap tickets and beer
concessions, could be deemed hipsterfriendly, and other offerings there might
also appeal to the sub-market (e.g.
Abyssinia Ethiopian Restaurant, Ruckus
Pizza & Bar, etc.), the strip mall is largely
geared towards a more mainstream student,
and its space does not appear to be priced
affordably either.
Furthermore, as Western Boulevard is
more central to the university's on- and offcampus population, the center absorbs a
considerable amount of the demand for
basic college-town retail, meaning that, in
theory, hipster-oriented entrepreneurs have
less competition for space on Hillsborough
Street, reinforcing that corridor as the more
formidable foe.
Moreover, the City Council's recent approval of a new Business Improvement
District (BID) as well as a new pedestrian-oriented street re-design might help to
build some positive momentum and prompt entrepreneurs to give Hillsborough
Street a second look, as should the decision by Bob Young, the founder of Red
Hat, to move the headquarters of his Web-based publishing company, LuLu,
from Morrisville to the former N.C. Equipment Co. building (and keep the kitschy
yellow bulldozer on its roof).
However, the construction work associated with the street re-design will cause
considerable disruption and deter prospective tenants in the near term. And it is
very possible that, with the renewed optimism about the corridor's future,
property owners will ultimately pursue redevelopment schemes that require the
demolition of lower-rent buildings, create higher-priced spaces in their stead and
lead to higher rents more generally.
Indeed, the structures slated for demolition as part of Hillsborough
Ventures/Capstone Development's plans for the later phases of the Stanhope
Village project include the one that houses The Brewery. In certain respects,
then, the corridor might be most formidable as a competitor for the hipster
psychographic in its existing, at times dilapidated, condition.
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Hillsborough Street has no shortage of
vacant and under-utilized space for hipster
entrepreneurs, especially further west,
although redevelopment efforts could
ultimately claim these sorts of buildings.
Indeed, this is part of the reason why the
rents for such storefronts are, at the
moment, so affordable and hipsterfriendly. These one-story structures (left)
are planned for demolition as part of the
Stanhope Village project.
Perhaps the biggest threat that hipsters face, however, is from within. Like the
businesses oriented towards the African-American submarket (see above), the
ones catering to this psychographic are not always considered the highest-andbest uses of their respective spaces/properties, leaving them vulnerable to
displacement, either by high rents or outright demolition.
The highest-profile case of this is Kings Barcade, considered by many to be the
"epicenter" of the Raleigh music scene and a rival of Carrboro's Cat's Cradle for
region's top rock venue before its building was razed in '07 so that the lot could
serve as a construction staging area for the L Building's Wake County parking
deck. Although Downtown still boasts a number of other venues, the closure of
Kings has prompted no small amount of hand-wringing on the subject.
"They paved paradise and put up a parking lot"
Kings Barcade was a classic hipster venue: in
addition to its "old-school" arcade games, '70's-era
vintage lighting fixtures, yard-sale furnishings,
kitschy wall decorations, cheap beer specials and
unpretentious vibe, and aside from providing a
space for expressing one's ironic love for roller
derby, it was, most importantly, an incubator for
new bands and sounds -- both local acts as well as
national ones trying to build a following -- as well
as a "Third Place" for area musicians.
At bottom, the issue is one of occupancy costs, which are too high in much of
the Downtown core for the sorts of grass-roots businesses that appeal to this
psychographic. Development economics are such that neither new construction
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-----------------------------------------------------------------------------------------------------------(as discussed earlier) nor rehabbed buildings can be priced cheaply, leaving few
options for such entrepreneurs besides old, run-down space that is vulnerable to
demolition.
Holly Aiken was able to clinch a "plug-and-play" space on a relatively highvisibility corner, for a low base rent (in the high single-digits per square foot) and
a percentage rent. However, Empire Properties, the building's owner, was only
willing to consider this because, with such a large portfolio in Downtown, it could
justify the risk as a loss-leader. Other smaller landlords, however, would not
have the same incentive (nor, for that matter, the financial wherewithal).
Retail Rents in Downtown Raleigh (on a per sq.ft. basis)
Fayetteville Street: low to mid $20's
Glenwood South: low to mid $20's
City Market: mid-teens plus $4-5 CAM
Wilmington Street: mid-teens
Hargett Street: mid-teens
* Could be higher, depending on level of T.I. provided
The Warehouse District would seem to offer the most affordable option for such
businesses, as well as the one that best matches the hipster sensibility (see inset
box below). It might not make sense for concepts that need visibility and foot
traffic, but it would be especially appropriate for ones that cannot be near
residential uses, like live-music venues.
In the even longer term, a new Multi-Modal Transportation Center and/or lightrail station would threaten most hipster-oriented tenancies, as the resulting
"transit-oriented" developments would require the demolition of existing, lowerrent buildings and/or charge more expensive rates for their ground-floor space.
However, perhaps the Triangle Transit Authority (TTA) could be lobbied on
strategic grounds to reserve a certain percentage of its holdings there for such
purpose (for more on this idea, see p. 100).
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The Warehouse District would seem to
appeal to the hipster sensibility because
its trademark building form, the
warehouse, embodies not just history,
but an often-overlooked part of it.
Furthermore, little attempt has been
made to keep things tidy and polished,
and the feel is very much "off-thebeaten-track".
Not surprisingly, artists and other
creative types have been drawn to this
part of town since the '70's. In the '80's,
it welcomed Paper Plant, the then-"Third
Place" for the arts crowd, as well as the
Berkeley Café, an early pioneer in
Downtown's live-music scene.
And
today it boasts a small number of
studio/gallery spaces, including the
collaborative model at DesignBox and
the unconventional mix at Vintage 21.
Having said that, one cannot help but
feel that the Warehouse District should
at this point have a larger number of
studios and live/work spaces, and more
of an arts scene and vibe. A full-on
analysis of the possible reasons,
however, is beyond the scope of this
assignment. As discussed later on p. 101,
a cultural-planning consultant should be
hired to study the matter, and to devise a
strategy going forward.
The Hargett Street and Wilmington Street corridors enjoy higher levels of
visibility and foot traffic at the moment, and would therefore be more suitable in
the near term for, say, hipster-oriented boutiques. However, development
pressures (see above, on the African-American sub-market) will be felt even
sooner there, once the economy starts to rebound, plus these sorts of
entrepreneurs tend not to be especially well-capitalized. They will therefore
require some sort of financial assistance. This will be discussed in greater detail
on p. 101.
One other possibility is City Market, where, as discussed earlier, the shifting of
visitor-driven trade to the southern end of Fayetteville Street will ultimately
necessitate some sort of re-positioning, and where, with the existing creative
component (e.g. Artspace, Visual Art Exchange, etc.) and the possible
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-----------------------------------------------------------------------------------------------------------manufacturing/retailing model (see chapter 2), additional hipster concepts would
be a logical fit. Of course, such tenants might first need Hakan Market Partners
to lower the occupancy costs somewhat.
Psychographics and Retail Mix: An Added Level of Nuance
In trying to build a retail mix based on psychographics, one needs to apply an added level of nuance
to recruitment efforts, not only selecting targets in categories complementary to the ones already
there, but also, trying to create synergies on the basis of common worldviews or sensibilities.
For example, the presence of clothing stores in a given business district might suggest that a shoe
store be recruited. However, it should not just be any shoe store, but rather, one that caters to a
similar psychographic. A shoe store geared towards the North Hills shopper, for example, does little
for a collection of hipster boutiques.
Again, in urban settings today, consumers and prospective tenants often gravitate to those business
districts that express how they conceive of themselves in psychographic terms. So, the more than a
district's retail mix reflects the mindset of a certain psychographic, the more appealing it is likely to
become, in a self-selecting sort of way, to individuals and entrepreneurs who share that mindset.
Specialty Retail: The "Yup-ster"
The preeminence of the hipster in Downtown Raleigh might also be endangered
by the influx of the related but subtly different "yup-ster" psychographic. The
yup-ster, representing a hybrid of "yuppie" and "hipster", can be defined as a
mainstream young professional who earns a decent salary and prefers to live in a
relatively established, comfortable and affluent part of town, but who has
integrated creative and alternative sensibilities into her lifestyle and consumer
preferences.
For any student of modern urban development, the arrival of the yup-ster in
Downtown Raleigh comes as no surprise. In cities across North America, those
belonging to this psychographic have gravitated to neighborhoods that were
initially re-discovered and revitalized by hipsters, drawn inexorably to the
creative vibe there, partly because such areas reflect their own aspirations, how
they want to see themselves and be seen by others.
What does this psychographic mean for Downtown retail? Firstly, the yup-ster
tends to be attracted to spaces that celebrate the creative impulse -- with, for
example, a gallery atmosphere showcasing pieces on the walls, an "industrialchic" décor (e.g. high ceilings, exposed ductwork) referencing the loft-like
environments with which artists are so closely associated -- while at the same
time incorporating a finish and a flourish that would seem overly polished for
hipster settings.
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Humble Pie celebrates the creative impulse
with its artsy, loft-like feel, yet retains a
certain polish.
The yup-ster is also drawn to retro, “old-school” and kitschy cultural forms, but
only after all of the warts have been removed, and sense of danger attenuated.
Take, for example, the classic dive bar. It must appear sanitary and safe,
removed of its scarier patrons, and finished with a reassuring polish; for the
hipster, on the other hand, the seediness, the fact that it is still in its pristine
state, untouched by modern marketing, is half the point.
"A
renewed
simplicity
and
professionalism can be found in the space.
Gone are the kitschy patterns and found
objects. New equipment lines the right
wall and the diner feels like a well-oiled
machine-anticipating the responsibility of
serving Raleigh's most hip crowd."
- December 10, 2007 New Raleigh blog
entry, entitled "Ashley Christensen's
Poole's: Open Thursday"
Indeed, yup-sters have also been known to patronize "faux-retro" restaurants
and nightspots developed from scratch to evoke an entirely different era. For
this psychographic, the authenticity of the space is not paramount; in contrast to
say, The Raleigh Times or Clyde Cooper's, the "history" can be fabricated and
highly stylized (although not, it must be said, to the point of chain-like
clownishness).
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The ersatz, '50's-era diner is one of the more
common "throw-back" archetypes utilized to
appeal to the yup-ster's faux-retro impulses.
In a similar vein, the yup-ster will also willingly pay more for fashions and
furnishings that appear old, sometimes because they were deliberately made to
look that way. She is drawn, for instance, to "shabby chic" pieces designed and
constructed to look as if they came straight from an antique store. One also
sees this in the rise of expensive "distressed" denim, as well as the marketing of
"vintage-inspired" apparel.
The appeal of Holly Aiken's bags to the yupster shopper, with their use of vintage-inspired
vinyl and their retro color palette, points to that
psychographic's inner-hipster.
The yup-ster has also developed a hipster-like appreciation for working-class
culture, but cannot help but adapt such fare to its more up-market, refined
tastes. Indeed, this is partly responsible for the rise of the "fast-casual"
restaurants (see section on "Daytime Workers"), with their up-scaling of
traditional fast-food concepts. But one also sees it at higher-end, "foodie"
establishments, where diners can now order hamburgers made with organic beef
and topped with Portobello mushrooms or goat cheese (and, of course, costing
twice as much).
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-----------------------------------------------------------------------------------------------------------At her Poole's Downtown Diner, Ashley
Christensen offers, along with French
Countryside fare, upscale takes on a number
of comfort-food standards, including the
extremely popular "macaroni au gratin" and
the "Royale" burger (10 oz of Prime, topped
with a gourmet cheese and set on a slice of
brioche French toast). Favorites at Enoteca
Vin, her earlier triumph, included deviled
eggs with smoked paprika and barbecue
Niman Ranch pork-shoulder tacos with
charred chili crème and lime.
Finally, this psychographic is also drawn to slickly-designed, expensively-priced
"yuppie" nightspots, but ones with hidden, impossible-to-find (often sign-less)
locations far removed from the main drag. The yup-ster is intrigued by these
partly because they confer a sense that one is part of a small, special, exclusive
group, aware -- like a hipster -- of places that others do not even know even
exist.
Similarly, this sensibility gives rise to boutiques that might be priced, and their
facades and interiors styled, for the yuppie, but that appeal directly to the yupster's "inner hipster" with their promise of the newest styles, hard-to-find lines,
limited collections and customized pieces, which make the buyer/wearer feel
unique within the larger mass market and special for having known where such
rarities could be unearthed.
Mosquito is an example of
a nightspot playing to the
yup-ster's "inner-hipster"
desire to feel special for
being "in the know" and
aware of a secret
The yup-ster contingent in Downtown Raleigh can be expected to grow because
it is among the prime targets for the up-market residential developments
materializing there. This psychographic tends to be especially drawn to urban
lofts -- to the rawness, the real-ness, the adaptability and the bohemian vibe -but to higher-end, often newly-constructed ones, also offering modern comforts
and conveniences.
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The newly-developed loft: tall
ceilings, without the grit
Even now, before a number of these projects arrive on the market, one of the
larger segments in Nielsen Claritas' PRIZM NE distributions for the Downtown
Raleigh neighborhood (see section on "Residential" above), is "Brite Lites, Li'l
City" (7.81%), which, while traditionally upscale for the most part, will also
reveal a more creative and alternative side that suggests the yup-ster
characterization.
Brite Lites, Li'l City consists largely of working couples in the 18-to-34 and 45-54
age ranges who do not have children at the moment (i.e. "DINK's", or "Dual
Income, No Kids"), who are earning more than $75,000 a year in "creative class"
or
more
traditional
professions
(e.g.
computer
technology,
architecture/engineering, law, etc.) and who own residences valued between
$150,000 and $500,000.
Such households will shop at high-end department stores like Neiman Marcus
and Saks Fifth Avenue, drive a Mercedes or Lexus, and read The Wall Street
Journal and Forbes. Yet at the same time, they will indulge their "inner-hipster"
by listening to alternative rock, going snow-boarding and watching The X Games,
and drinking vaguely-alternative beers like Samuel Adams and Guinness Stout.
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Samuel Adams might not have the hipster cachet
of, say, Pabst Blue Ribbon or some little-known
microbrew, yet as a relatively small-scale,
independently-owned, "craft" brewer known for
its attention to quality, its brand appeals to the
drinker who wishes to differentiate himself from
(and elevate himself above) the mass market of
Budweiser, Miller, Coors, etc.
One can expect the percentages of this segment in the Downtown core to
continue to rise as new condominium product is absorbed. Furthermore, Brite
Lites, Li'l City accounts for 9.90% of the households within a five-minute drive
time, and its share of that larger trade area will likely increase with similar
residential developments in, for example, the Glenwood South sub-market,
where a prominent local residential broker sees an additional three to four
projects in the next decade.
According to a prominent local residential broker, the
typical condo-buyer in the Downtown core and
Glenwood South sub-markets manifests a hipster-like
aversion to large chains and preference for unique,
independently-owned businesses.
In addition, they are typically moving to Raleigh from
larger, more cosmopolitan metro areas like Chicago,
Seattle and San Francisco (or attended N.C. State, left
and are now returning). And they are coming for jobs
in "creative class" industries, rather than, say,
banking.
Another psychographic segment with yup-ster inflections is Up-and-Comers.
These are young singles and child-less couples who have recently graduated
from college and are now working in relatively well-paid, "creative class" jobs
(e.g. bio-tech, information technology, etc). And while their median household
income approaches $50,000, they own $250+ business suits, and they read
Forbes as well as mainstream fare like Maxim and Cosmopolitan, they also enjoy
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-----------------------------------------------------------------------------------------------------------painting and drawing, watch Independent Film Channel and Sundance Channel
and don Puma footwear.
As renters, these households are not directly targeted by most of these new
condominium developments. However, they currently represent 12.73% of the
Downtown neighborhood, and 20.73% within a five-minute drive time -- the
highest percentage in that larger trade area. And with the market forcing
projects like The Tucker to convert from for-sale to for-rent, they might find ever
more opportunities going forward.
Puma offers a classic example of a consumer megabrand leveraging its hipster cachet to drive broader
appeal among the more alternatively-minded, "yup-ster"
segment of the mass market.
On one hand, the sensibilities of these two psychographic segments can be
decidedly conventional and mainstream, and in this respect, Glenwood South's
dining/nightlife selection offers precisely what they would be looking for, with,
for example, offerings like Sullivan's Steakhouse and Amra's for Bright Lites, Li'l
City, and Solas, Hibernian, Stool Pigeons, etc. for Up-and-Comers.
A Trade Area Built For Nightlife…
The demographic profile within a five-minute drive time suggests a population with strong demand
for nightlife, and specifically, venues where one can find possible romantic companions. For
example, 43.8% of the 15+ population has never been married, and another 18.0% is married but not
living with the spouse; only 21.6% is married and living with the spouse. This contrasts sharply with
Wake County, where more than half of the population, 54.4%, is married and living with their
spouse, versus just 5.6% living without, and 28.0% never having been married.
On the other hand, both of these segments also manifest certain yup-ster tastes
that are not satisfied by that corridor: while a handful of such concepts, like
Mosaic Wine et Lounge, Sushi Blues, Zely & Ritz, Tasca Brava and Turkish
Delights might qualify, Glenwood South's brand is not one that attracts the more
creatively- and alternatively-minded.
This is an area in which the Downtown core could gain market share from its
chief competitor: it is arguably better-positioned for the yup-ster sensibility,
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-----------------------------------------------------------------------------------------------------------partly because it is not Glenwood South, and such concepts are not so easily
overwhelmed by the larger mix and identity, but also, it offers closer proximity to
traffic drivers like the Progress Energy Center for the Performing Arts.
Indeed, with the last couple of years witnessing the opening of Poole's
Downtown Diner, Dos Taquitos Centro, Sitti, etc., the core is building towards a
critical mass of yup-ster offerings, while Glenwood South, with Solas, Tobacco
Road Sports Café, Carolina Ale House, Natty Greene's, etc., appears for the most
part to be moving in a more mainstream direction.
According to a prominent local recruiter of office and
industrial employers, the possible "anchor" tenants for
large-scale projects in the Downtown core are primarily
in "creative class" fields, and would add further to the
base of yup-sters there.
Recruitment efforts should target yup-ster
cuisines, which, as described earlier, typically
involve the elevation of what were humdrum,
even working-class foods to trendy, haute-cuisine
status. An example is ramen (left), a Japanese
noodle dish served in a meat-based broth and
with toppings like sliced pork. In Japan, "ramenya" restaurants are tiny, modest affairs where
patrons will often stand as they slurp. In large
metro areas like New York, however, "noodle
bars" present stylish interiors, earn plaudits from
food critics, and turn yup-sters giddy.
With notable exceptions like Catch 22, Glenwood South offers even less to the
yup-ster on the soft goods front, and this is unlikely to change anytime soon.
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-----------------------------------------------------------------------------------------------------------Operators might be first drawn there due to its high profile, but they soon find,
as Holly Aiken did, that the daytime foot traffic is simply too light. Furthermore,
the alcohol-fueled rent levels, in the low- to mid-$20's per sq.ft., are high in
comparison to, say, Hargett Street, Wilmington Street or City Market.
A greater (though still not large) number of yup-ster boutiques can be found at
nearby Cameron Village, with, for instance, Fleur Boutique, SoHo, Fab'rik and
Ten Thousand Villages. Even though this psychographic might not be the
center's primary focus, such concepts are still drawn there because it is so wellestablished and offers a guaranteed stream of shopper traffic. Indeed, for this
reason, it is the most logical spot for operators in suburban centers (e.g. North
Hills) that are interested in opening an ITB location.
Of course, Cameron Village has few vacancies and is extremely expensive:
independents pay dearly for the co-tenancies and traffic levels. Even if one
could afford such unforgiving rents, there is precious little margin for error, and
given the demand for space there, the center's owner probably does not feel the
same need to nurture a less established entrepreneur as, say, a landlord in the
Downtown core with far fewer alternatives.
Indeed, the presence of national chains at Cameron Village has continued to
grow, again, a function of the owner -- Regency Centers, a large REIT that
specializes in chain-filled strip malls -- as well as the high price that Regency
paid, as the third purchaser of the center this decade, and the high rents thus
dictated by its pro forma.
With few vacancies and an impressive
tenant roster, the landlords of Cameron
Village can afford to be choosy and
demanding.
Furthermore, there are many entrepreneurs, including even some chains, which
do not want to be in a shopping center and prefer a more urban setting, perhaps
because that is who they are as individuals, and/or that is how they want to
position their brand. Others might feel that they would be able to develop more
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-----------------------------------------------------------------------------------------------------------of a profile as a pioneer in an emerging downtown than as just another tenant in
a large center. Or they might simply long to be a part of something growing, to
derive energy from the camaraderie that develops when a bunch of start-ups
work together to build anew.
North Hills also has its share of boutiques, yet the center, like others on or beyond the I-440 Beltline,
is not considered a primary competitor for the purposes of this analysis, given that it is nearly 4 ½
miles from Downtown (as the crow flies) and would be considered by most retailers an entirely
separate sub-market.
With this competitive landscape, yup-ster entrepreneurs, especially early-stage
ones that are not especially well-capitalized, could be willing to look more
seriously at the Downtown core, where they would see new condo towers as
foreshadowing a growing market for their concepts, where they sense the
excitement of a new part of town emerging, and where, in contrast to Glenwood
South and Cameron Village, the landlords would be more willing to partner in the
risk.
Recruitment efforts should focus largely on small-scale operators who have been
successful with yup-ster concepts elsewhere in the Triangle or in other markets
in the larger region (like, for instance, Charlotte, the Triad, Richmond, etc.), and
who might be willing to consider an additional location or a new concept in the
Downtown core.
Given their relatively moderate rents, Hargett Street and Wilmington Street
would seem to be the most appropriate for such entrepreneurs. Yet, as in the
earlier discussion about hipster-oriented businesses, these operators will still
require some sort of financial assistance, given that they are, as mentioned
above, less likely to be well-established or deep-pocketed, and could easily fall
victim to development pressures and rent increases once the economy rebounds.
And again, Empire Properties can only sign so many sweetheart deals, and smallscale landlords do not have the incentive (nor, necessarily, the financial
wherewithal) to offer such terms.
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Some draw the conclusion that the inability of an
aspiring entrepreneur to raise sufficient capital on
his own speaks to the likelihood of ultimate
success, and suggests a risky investment.
However, Holly Aiken is an example of a very
talented designer who would not have been able
to afford the build-out if the space had demanded
it.
Such entrepreneurs will need help with initial build-out costs, and in the case of
soft goods concepts, would require some on-going operating support (e.g. rent
subsidies in the early years) until a larger cluster of complementary co-tenants
materializes. And it will be critically important, especially when optimism is high,
to manage landlord expectations, so as to limit the sort of rent
speculation/inflation that results in displacement and vacancy.
As part of its scope-of-work for this assignment, MJB Consulting
has also composed a detailed memo (left) discussing retail
incentive programs that have been implemented in the downtowns
of other U.S. cities, analyzing what went right and what went
wrong, and offering the general outlines of one for Downtown
Raleigh that would promote the kinds of retail recommended in this
report.
Another possibility is City Market. Again, with the likely shift of visitor-oriented
trade to the southern end of Fayetteville Street, City Market will soon be in need
of a repositioning, and with its existing creative component (i.e. Artspace, Visual
Arts Exchange) and the possible manufacturing/retailing model (see chapter 2),
yup-ster entrepreneurs would be logical targets. Once more, however, such
tenants might need for Hakan Market Partners to lower its rents somewhat.
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Coming at a bookend of the Hargett
Street-Blount Street evening "circuit",
the 5,000 sq.ft. still available in the
front portion of the central market
building at City Market is meant for
some sort of food, drink and/or
entertainment concept that plays to the
hipsters and yup-sters who fill
Downtown's streets in the evenings.
Yup-sters and Hipsters
Yup-sters are often seen as agents of displacement, their growing presence in a
hipster enclave provoking anxiety and resentment. One would not be surprised
to see such tensions in this case, with the Downtown Raleigh and many of its
surrounding neighborhoods (e.g. Oakwood, Boylan Heights) having gentrified
over the last decade, and with others (e.g. Mordecai) moving in a similar
direction, thus forcing hipsters to settle in more affordable areas further afield
(e.g. East Raleigh).
Interestingly, such sentiment does not seem as prevalent here. Indeed, the
Downtown core boasts a collection of unique "cross-over" or "hybrid" concepts
that successfully cater to both sensibilities, like Stitch and the Raleigh Times.
Perhaps this is because the hipsters themselves appear to be somewhat older
and more mature -- in their thirties and not their twenties -- and therefore less
prone to the sort of knee-jerk disdain found elsewhere. Or maybe it can be
attributed to a more laid-back, Southern or Sun Belt version of hipsterdom.
Or perhaps it has to do with the realities of smaller markets. That is, operators
of concepts with overtly yup-ster characteristics have no choice but to stick to a
relatively accessible price-point, given the still modest number of yup-ster
consumers in the trade area. And similarly, hipsters realize that their favorite
haunts would likely not survive without yup-ster patronage.23
This equilibrium, however, may only exist because Downtown Raleigh's evolution
is still in its early stages. Once the economy starts to recover, additional
residential complexes could materialize, pushing the yup-ster presence past the
tipping point (although this might take some time, as discussed in the inset box
on p. 48). New development could also claim additional hipster standbys, as it
did with Kings Barcade, and generate upward pressure on retail rents. And it
23
According to Ken Bowers, the City's Deputy Planning Director and a longtime hipster.
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-----------------------------------------------------------------------------------------------------------does not help that both will be competing for the same turf, that is, for spaces
along Hargett Street and Wilmington Street.
The implications of this trend are troubling. One, the resulting resentment and
surliness: hipsters have often been criticized as "reverse" snobs, with a sense of
cultural superiority and a willingness to communicate that openly. And as Greg
Hatem learned in his first year with The Raleigh Times, "cooler-than-thou" waitstaff will deter repeat traffic from other demographic segments that are also
needed for viability. (It was only when Hatem found friendlier, more welcoming
replacements that sales rebounded).
Again, given the limited size of any one sub-market in the Downtown core, the
concepts most likely to be successful are the ones that pitch themselves most
broadly and that enjoy patronage and support from hipsters, yup-sters and
others: operators who narrow their draw, whether socio-economically,
psychographically or otherwise, do so at their peril.
High Fidelity and Hipster Snobbery
Customer: Hi, do you have the song "I Just Called To Say I
Love You?" It's for my daughter's birthday.
Barry: Yea we have it.
Customer: Great great... Well, can I have it?
Barry: No, you can't.
Customer: Why not?!
Barry: Because it's sentimental tacky crap that's why. Do we
look like a store that sells "I Just Called to Say I Love You"?
Go to the mall!
Customer: What's your problem?!
Barry: Do you even know your daughter? There's no way she
likes that song! Oh oh oh wait! Is she in a coma?
Customer: Oh, okay buddy. I didn't know it was Pick on the
Middle-Aged Square Guy Day. My apologies. I'll be on my
way.
Barry: [sarcastically] Ta-ta!
Customer: &%$! you!
Two, hipsters, feeling that Downtown Raleigh is less and less a place for them,
could flee to other parts of the Triangle which they find more welcoming, like,
say, Downtown Durham, which offers the grittiness and authenticity, the sense
of untapped possibility, the D.I.Y./co-operative spirit, the irony-laced appeal, the
cheap pricing, etc. to which this psychographic is drawn. And once there, they
will be loath to make the 25-minute drive on I-40 to, say, watch a band.
One response to this might be, so? Why, it might be asked, does the hipster
deserve any special protection or attention in this process? Why should he not
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-----------------------------------------------------------------------------------------------------------be subject to the same market forces as everyone else? Why should an analysis
focused on improving retail see such relevance in a downwardly-mobile
population that has little money to spend?
Because one, while their incomes might not be high, they will clearly spend, in
particular sub-categories, like footwear, and on certain brands, such as Apple.
Indeed, the willingness of such downwardly-mobile consumers to pay premium
prices for Macs, iPods and iPhones illustrates how hipsters will support concepts
and operators that resonate with them on a deeper, more psychographic level.
Would the hipster buy
one of these, too?
Two, hipsters help with brand identity, inasmuch as an association with artistic
and creative types tends to be perceived more favorably than one with yup-sters,
who are often linked, somewhat inaccurately and, often, pejoratively, with
yuppies. Indeed, even some yup-sters who prefer to think of themselves as
hipsters would be repelled, even if (or perhaps because) it is what they would
see in the mirror.
Three, hipsters are central to the live-music scene that not only draws hundreds
of thousands to Downtown every year, but also, given the region's reputation,
puts Raleigh on a national stage and positions it as a larger destination. "Austin,
Texas exploded," says Mikey Ross, Manager at Slim's, "because people who love
music will fly from all over the world just to go there for the weekend."24
And four, the hipster remains the one most willing to pioneer forgotten, even
foreboding, parts of town (and, in so doing, increase their appeal for highervalue development later on). And in this respect, there is still much work to be
done in the Downtown core and adjacent neighborhoods.
Indeed, the
Warehouse District, while not lacking successful niches (see below, on clubbers
24
As quoted from a May 3, 2006 IndyWeek piece by Fiona Morgan, entitled "Raleigh rockonomics: Keep
the beat".
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-----------------------------------------------------------------------------------------------------------and gays), could use more of the trail-blazing vitality that this psychographic can
bring.
They might not look like engines of
growth, but in the long view, hipsters
translate into big bucks.
How, then, can the hipster's place in the Downtown core be preserved in the
face of such challenges? The city of Austin, Texas offers a model worth
considering: its efforts have focused largely on the music scene (see inset box) -a critical component of the Downtown core -- but also, its approach could be
generalized, it seems, to support this psychographic more generally.
Austin, TX and Music
Although many organizations deserve credit, the City of Austin has played a major role in supporting
the music industry. It commissioned a study in 2003 to analyze the impact of music on the city's
economy, which concluded that the sector generated more than $616 million in activity per year,
nearly 11,200 jobs and more than $11 million in City tax revenue. It has created the position of
"Creative Industries Development Manager", which plays the role of intermediary between livemusic venues and city government. And it has developed the Creative Industries Loan Guarantee
Program that guarantees 50% of loans to creative businesses, non-profits and individuals for building
improvements, fixtures/equipment and working capital (assuming that, with such investments, they
are able to create new jobs).
What in the Austin example would make sense in this case? First, while certain
politicians, public officials and stakeholders in Raleigh clearly see the importance
of this psychographic, there needs to be broader recognition of its value, perhaps
with some sort of commissioned study detailing its bottom-line impact in terms
of economic activity, jobs and tax revenue. The case could then be made via
direct lobbying, using the results of this study as well as the other arguments
presented above.
Second, with an economic-impact study as justification (and political cover), the
City could consider reductions of various taxes and fees for these kinds of
businesses, and perhaps some sort of financial assistance to help such
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-----------------------------------------------------------------------------------------------------------entrepreneurs in improving their spaces, meeting code requirements,
establishing themselves in the early years, etc. (as discussed below, on p. 101).
Third, the City should create a position of "Creative Industries Liaison" (or,
perhaps more appropriately in the current fiscal climate, add this to the list of
responsibilities for an existing staffer) that would work directly with such
entrepreneurs on the challenges that they face (e.g. with parking, codes, etc.
etc.) and ensure that their needs are represented in larger policy discussions.
Especially with the large investment made
in the Raleigh Convention Center, it is
important symbolically for politicians and
public officials to show that they also
value the live-music scene and its critical
importance to the future of the Downtown
core.
Anchors are also important in keeping this psychographic. For example, the livemusic scene will receive a boost in 2010 with the opening of the amphitheater.
With the law requiring outdoor concerts to end by 11:00 p.m., there will no
doubt be a percentage of attendees interested in heading to other, smaller-scale
venues after the performance, like The Pour House, The Lincoln Theater, Slim's
Downtown Distillery, The Berkeley Café, Tir Na Nog, etc. Indeed, the arrival of
such a higher-capacity setting, rather than competing with these existing spaces,
could help to generate more traffic for them.
The "Stevie Wonder" Crowd at Slim's?
The wide range of acts at the new
amphitheater will cater to a wide variety of
sensibilities -- even some Stevie Wonder
fans (see inset box above, quoting High
Fidelity) -- but no doubt some of the shows
will be complementary with the kinds of
music on offer at the Downtown core's
more alternative live-music venues.
Efforts might also be made to secure a new location for Kings Barcade. The
return of this iconic venue would not only help to restore the live-music scene to
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-----------------------------------------------------------------------------------------------------------its previous level of vitality, but also give hipsters renewed confidence in the
Downtown core's future. And the trio that operated Kings has even talked about
re-opening.
However, as they are not especially well-capitalized and would not run Kings as a
full-time endeavor, they tend to be risk-averse: they will not buy, and will only
accept an extremely cheap space (i.e. rent/sq.ft. in the mid single digits) in a
part of town far removed from residential uses. While this suggests the
Warehouse District, even the rents there might be too high, besides which, such
a location, given all of the uncertainty, would only be secure in the longer term if
purchased and owned.
Perhaps the solution lies in some sort of joint venture, whereby the Kings
Barcade trio handles concept and programming while a patron -- perhaps the
public sector or a non-profit entity -- assumes the risk and provides the capital,
or a private partner adds another large-scale revenue generator to the mix, like,
for instance, an after-hours bar that can draw on its own and not just during
shows.
Hipsters are losing faith in
Downtown Raleigh, partly
due to the closing of Kings
Barcade: a new location for
the iconic venue would help
to return them to the fold.
In addition to the possible return of Kings Barcade, local live-music experts
suggest that Downtown Raleigh could support another venue on the scale of a
Pour House or a Lincoln Theatre, as the Triangle market is considered to be large
enough to support another show by the same group (after it performs at the
Cat's Cradle in Carrboro).
Also, the Contemporary Arts Museum (CAM), widespread skepticism
notwithstanding, could have a catalytic effect, spurring interest in the sorts of
artist studios and live/work spaces that the Warehouse District has thus far failed
to attract in large numbers. CAM has actually made significant progress towards
its fundraising goals, and getting it to the proverbial finish line should be a top
priority for the City and other stakeholders.
In order for the artists to materialize, however, the Triangle Transit Authority
(TTA) will need to be lobbied to activate and hold a certain percentage of their
extensive holdings there to such purpose, on the grounds that a fledgling arts
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-----------------------------------------------------------------------------------------------------------scene and vibe will enhance the area's appeal as a residential and office address
if/when the multi-modal center and light-rail station arrive. As part of this effort,
a cultural-planning consultant should be retained to assess the current situation
and advise on strategy.
DesignBox would be interested in expanding its
footprint in the Warehouse District if it could find a
nearby landlord who is willing to talk.
Aside from these anchors, the recruitment effort might also target entrepreneurs
who have been successful with either hipster-oriented or "cross-over"
hipster/yup-ster businesses elsewhere in the Triangle or in other nearby cities,
and who might be willing to consider an additional location or a new concept in
the Downtown core.
But as discussed earlier, Empire Properties can only sign so many sweetheart
deals, and small-scale landlords do not have the incentive (nor, necessarily, the
financial wherewithal) to offer such terms. And while it might be possible to find
an affordable rent on Wilmington Street right now, these sorts of operators,
unless they can clinch a favorable long-term lease or are exceptionally wellcapitalized, could easily fall victim to development pressures and rent increases
once the economy rebounds.
The City of Raleigh, with the spaces that it controls
in the ground floors of its parking decks (left), is
another landlord with both the incentive and the
wherewithal to think more broadly about tenanting
potential and consider favorable deals for hipster or
cross-over entrepreneurs.
They would, then, need financial assistance as well, again, with the initial buildout costs, and in the case of soft goods concepts, with some on-going operating
support (e.g. rent subsidies in the early years) until a larger cluster of
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-----------------------------------------------------------------------------------------------------------complementary co-tenants materializes. And again, it will be critically important,
especially when optimism is high, to manage landlord expectations, so as to limit
the sort of rent speculation/inflation that results in displacement and vacancy.
Another model for preserving the hipster and
yup-ster components of the retail mix is the one
perfected by Greg Hatem (left, with his fellow
co-owners of Gravy), whereby the landlord not
only leases to but partners with and invests in the
tenant, thus creating a built-in incentive for the
former to work towards the latter's continued
success.
Finally, given that historic retail and mixed-use buildings are the most likely to
provide inexpensive retail space, it might also be worth exploring the mandated
preservation of those structures in need of only limited renovation, so as to
protect the stock of affordable ground-floor bays for these sorts of operators in
the longer term.
Although technically outside the scope-of-work for this assignment, the creation and retention of
affordable housing will be critical to the effort to retain the hipster flavor of the Downtown core.
Inexpensive housing is one of the chief reasons why hipsters are drawn to Durham. All of
Downtown Raleigh's new condominiums and nearby gentrifying neighborhoods not only push them
further outward, they also reinforce the perception of Raleigh as a place not for them, whereas in
Durham, they can still find something affordable within a relatively short distance from the core.
One possibility worth exploring is to offer density or other bonuses to developers of new residential
or mixed-use projects within a five-minute drive who are willing to preserve a certain percentage of
affordably priced units for artists, musicians and other creative types, and then, to heavily publicize
such projects in the appropriate media vehicles.
Also, in the name of augmenting the hipster presence, the Greater Raleigh Chamber of Commerce
and Raleigh Economic Development, in addition to recruiting large-scale "creative class"
employers, should embark on a special effort to attract smaller ones to Downtown Raleigh that might
prefer less conventional office space. An example would have been Bob Young's latest venture, the
self-publishing website, LuLu, which now occupies the iconic North Carolina Equipment Company
building on Hillsborough Street.
In addition to the recruitment of possible operators, outreach to this
psychographic must include a marketing component, focusing, for example, on
establishing a presence for and building the hipster brand of the Downtown core
in various alternative media vehicles, like, for instance, the Independent,
www.newraleigh.com and even N.C. State's Technician, as well as ones in other
Triangle communities with large hipster contingents, such as Durham.
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------------------------------------------------------------------------------------------------------------
The direct-marketing campaign might also
include "viral marketing", which refers to
deliberate efforts to use word-of-mouth in preexisting social networks to build brand
awareness. It can be particularly effective with
hipsters due to their mistrust of larger advertising
media and their willingness to believe only those
whom they know to be like-minded. However,
the tactic is a controversial one, and should only
be adopted if the "spreaders" of the virus truly
believe in and want to promote the "product",
without compensation.
Also, in addition to reviving Kings Barcade and attracting another venue, efforts
should be made to work with local club owners, managers, promoters and the
bands themselves in the Downtown core and the rest of the metro on developing
a larger national profile for the Triangle's music scene. The first step might be
the creation of some sort of task force focused specifically on this goal and
including all of these stakeholders.
Finally, the Warehouse District in particular has become a destination for two
other regional niches. One, with its large warehouse spaces and relative
absence of nearby residents, this area is a logical location for dance clubs, and
boasts the city's largest concentration of upscale, swanky spaces, like Ess
Lounge & Nightclub, White Collar Crime, The Office, Mosquito and Sin City.
As a clubbing destination, however, the Warehouse District has lost some of its
edge with this past year's opening of Solas in Glenwood South, and could be
vulnerable if light-industrial spaces to the east of that corridor start to be
converted for such purposes. However, there is no sign yet of this happening,
and even if it did, with new developments like West at North, as well as
additional projects expected over the next decade, it is unlikely to be sustainable.
Not surprisingly, given its anonymity, the Warehouse District is also the center
for gay culture in Raleigh. Indeed, two West Hargett Street clubs catering to this
submarket, Capital Corral (a.k.a. C.C.'s) and Legends, were among the area's
initial pioneers, with the former dating from the '70's. They have since been
joined by other nightspots, including Flex and The View, as well as retailers, such
as Stuff Consignment Boutique, White Rabbit and Our Place.
While market demand will probably not be an issue for either of these niches,
their long-term futures in the Warehouse District will depend on whether other
large-scale initiatives proceed (e.g. the Multimodal Transportation Center,
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-----------------------------------------------------------------------------------------------------------possible light-rail station) and whether pressure for additional housing
development moves west from Dawson Street -- both of which would ultimately
bring a new residential constituency that might not want to live in a nightclub
zone -- and of course, whether existing proprietors own or rent their spaces.
However, in the meantime, amidst such uncertainty, their position is unlikely to
be threatened.
As this map from the New Raleigh blog
indicates, virtually all of the Warehouse
District sits within the "Downtown West
Gateway Small Area Plan", where planners
envision
high-intensity,
mixed-use
redevelopment and large numbers of new
residents.
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------------------------------------------------------------------------------------------------------------
Conclusion
Based on this retail market analysis and positioning strategy, the Downtown
Raleigh Alliance should use the following six strategies with specific action steps
as a "roadmap" for going forward.
Strategy 1 – Establish Strategic Alliances
- Work with MJB to secure "buy-in" from the following recruitment partners
proposed in this report: 1) landlords of retail space in the Downtown core; 2)
retail brokers active in the Downtown core; 3) key elected and public officials;
and 4) other major stakeholders in the Downtown core (e.g. universities,
economic development groups, etc.)
- Serve as intermediary between the recruitment targets intrigued by MJB's initial
outreach efforts and the landlords/brokers of the spaces for which they would be
most appropriate.
- Work with Downtown's most enterprising entrepreneurs to fill the current gaps
in the Downtown core's provision of everyday goods and services until the
residential population reaches the necessary thresholds to support freestanding
operators in such categories.
Strategy 2: Create a Retail Recruitment Kit
- Using the template provided by MJB (provided separately), forward a "Property
Questionnaire" to each of these landlords, asking for information on their
available or soon-to-be-available retail spaces relevant to the task of marketing
those spaces to prospective tenants.
- Using the template provided by MJB (provided separately), present a "Master
Marketing Agreement" to landlords of retail space in the Downtown core for their
review and signature, formalizing the Downtown Raleigh Alliance's role as a
"proxy" recruiter of prospective tenants, including the stipulation that it will work
in partnership with, and not as a replacement for, the Downtown retail brokerage
community.
- Using content provided by MJB (provided separately), design and produce a
leasing brochure that can be used in the outreach to prospective tenants, with
inserts for specific sub-markets as delineated in this report, and update on an
annual basis or sooner if appropriate.
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------------------------------------------------------------------------------------------------------------ Using content provided by MJB (provided separately), design and produce
advertisements for placement in publications geared towards the sorts of
entrepreneurs targeted for the Downtown core (see below). Also, continue to
attend regional and local retail industry conferences, but also consider securing a
booth at -- and thus, designing and producing displays -- for their trade-show
components.
- Develop a link in the DRA website entitled, Retail Recruitment Kit, containing
the leasing brochure and all related retail-recruiting publications and forms.
Step 3: Follow a Targeted Approach to Recruitment of Retailers
- Focus "destination" retail concepts in the Downtown commercial core. This
includes the modern movie multiplex (at the southern end of Fayetteville Street),
upscale restaurants (on Fayetteville Street), as well as dining/entertainment and
soft goods geared towards the hipster, yup-ster, combined hipster/yup-ster
and/or African-American submarkets (on Hargett Street and Wilmington Street
and at City Market).
- Spearhead the development of an effective partnership between Shaw
University, the City of Raleigh and an interested landlord to relocate the
university bookstore -- perhaps as a Barnes & Noble hybrid format -- to a
suitable Fayetteville Street storefront.
- Steer quick-service food purveyors towards the Downtown commercial core,
and Fayetteville Street in particular, with its centrality to the daytime-worker
population.
- Steer convenience-oriented businesses and "Third Place" venues towards the
residential periphery, except for ones that need a central location in order to
reach multiple sub-markets, a wider trade area or other demand segments.
- Advise developers to limit retail square-footage in new developments on the
residential periphery to corner locations, and to design "in-line" bays as "flex"
space that can accommodate office use in the near term as well as retail tenancy
should that become more feasible.
- Work with the landlord and broker of City Market to reposition the development
not only to cater to the hipster and yup-ster submarkets, but also, to serve as an
Artspace-like incubator for vertically-integrated entrepreneurs willing to create
and produce in the same space as they sell, and to attract consumers interested
in observing and experiencing those stages in the process. Also, work with
Artspace to more fully embrace its role as the effective anchor of City Market.
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------------------------------------------------------------------------------------------------------------ Publicize the major themes of this report -- specifically, the unlikelihood of
commodity retail in the Downtown core, the most promising retail sub-markets,
the importance of preserving the hipster presence and the need for direct
incentives -- in mainstream media vehicles, so as to build support within the
larger Raleigh community.
Step 4: Advocate for Government Policies that Support Existing & New Retailers
- Explore the possibility of offering density or other bonuses to developers of new
residential or mixed-use projects within a five-minute drive that are willing to
reserve a certain percentage of affordably-priced units for artists, musicians and
other creative types.
- Work with the public sector to streamline the bureaucratic process for new
retailers in Downtown Raleigh, perhaps exploring the possibility of reshuffling the
responsibilities of an existing manager and designating him/her as a "point
person" with accountability for all of the review and permitting functions.
- In concert with the City of Raleigh's Urban Design Center, develop and
disseminate models for bolder, more dynamic signage as part of a new "Signage
Vision" for the Downtown core, and push for the conditioning of Façade Grant
Program assistance on the adoption of one of those models.
- Explore the possibility of converting Wilmington Street and Salisbury Street
from one- to two-way (while retaining two lanes of on-street parking), so as to
calm traffic on those corridors and create a more pedestrian-welcoming
environment.
- Advocate for additional higher-density residential development not just in the
Downtown core, but also, in the nearby close-in neighborhoods that provide the
lion's share of its retail market.
Accelerate efforts to resolve the longer-term future of the Warehouse
District and its major projects (i.e. multi-modal transportation center, light-rail
station and associated development), and work with the Triangle Transit
Authority (TTA) on reusing a certain percentage of their holdings there for
studios, live/work spaces and hipster-oriented businesses. In connection with
this, retain a cultural-planning consultant to assess the feasibility of a live/work
project in proximity to CAM, and to devise a strategy for how the District can
develop more of an arts scene and vibe.
Step 5: Monitor and Evaluate Performance of Retail Market
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------------------------------------------------------------------------------------------------------------ Using the table provided by MJB (provided separately), maintain a database of
targeted tenants, including all of the information from the detail sheets (provided
separately, including site/market requirements, expansion plans, contact info,
etc.) as well as dates and content of previous conversations.
- Using the
maintain a
core, with
occupancy,
basis.
inventory provided by MJB as a starting point (provided separately),
database of all of the ground-floor retail spaces in the Downtown
relevant information on square-footage and dimensions, current
lease term, landlord preferences, etc., and update on a quarterly
- Schedule conference calls with MJB at the six-, twelve-, eighteen- and twenty
four-month marks to review the results of the above tenant-recruitment program
thus far, and to make adjustments if necessary.
Step 6: Explore Implementation of Long-Term Recommendations
Drawing on MJB's memo (provided separately), devise, preferably in
partnership with the City but independently if necessary, a retail incentive and
technical assistance program aimed at attracting and sustaining
dining/entertainment and soft goods tenants that cater to the following submarkets: middle class African-Americans, hipsters and yup-sters (see above).
- Work with the Greater Raleigh Chamber of Commerce and Raleigh Economic
Development to develop a recruitment strategy to attract "creative class"
employers to the Downtown core, focusing on less conventional office spaces in,
say, the Warehouse District.
- Establish a presence for and building the hipster brand of the Downtown core
in alternative media vehicles, like, for instance, the Independent,
www.newraleigh.com and even N.C. State's Technician, as well as ones in other
Triangle communities with large hipster contingents, such as Durham. Also,
work with local club owners, managers and promoters to develop a larger
national profile for the Raleigh music scene.
- Advocate on behalf of preserving the place of hipsters in the Downtown core in
the face of development pressures and retail gentrification, and make the case
for their special importance in marketing and public relations materials. As part
of this campaign, commission a study detailing their bottom-line economic
impact.
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------------------------------------------------------------------------------------------------------------ Include hipster-oriented businesses in the list of ones eligible for retail
incentives (see above), and work with the City to reduce taxes and fees for
hipster entrepreneurs.
- Endeavor to secure a joint-venture partner and new location for Kings Barcade,
and to attract another live-music venue on the scale of a Lincoln Theater or a
Pour House.
- Encourage both hipster and yup-ster businesses to retain a "cross-over"
hipster/yup-ster appeal (perhaps with the assistance of existing cross-over
entrepreneurs like Greg Hatem and Holly Aiken), especially with regard to price
point, wait-staff attitude and general vibe.
- Work with the City on the creation of a "Creative Industries Liaison" position in
the City bureaucracy or inside DRA.
- Include businesses oriented towards middle class African-Americans and the
Shaw University community in the list of ones eligible for retail incentives (see
above), and work with a few select merchants on the historically AfricanAmerican commercial corridors of Wilmington Street and Hargett Street to
expand their revenue streams by developing "cross-over" appeal.
- Identify developers interested in creating affordably-priced retail space, away
from the ever more expensive Downtown core, where the neighborhood-level
and "Third Place" needs of the lower-income African-Americans living on the
residential periphery could be met.
- Introduce the idea in marketing and public relations materials that a downtown
is meant to be a reflection of and the social and cultural "crossroads" for an
entire city, and that the preservation of the African-American presence in
Downtown Raleigh is critical to that.
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