The Neighborhood Has Gentrified, But Where’s the Grocery Store?

[M II A II R II K]

The Neighborhood Has Gentrified, But Where’s the Grocery Store?


FEBRUARY 2015

By SCOTT BEYER

Read More: http://www.governing.com/topics/mgmt...on-series.html

If you’re an urban pioneer who settled in downtown Cleveland sometime in the past decade, you’re probably happy with the neighborhood’s progress. Even as the city as a whole has continued to lose population, the central area has revived thanks to an influx of young and educated newcomers.

- Downtown Cleveland right now has its highest-ever population, with more than 13,000 residents and lots of new housing developments on the way. There are more than 4,000 hotel rooms, with another thousand expected by 2016. And residents today enjoy a more walkable neighborhood, as new restaurants and bars open around old cultural institutions like the theater district. If you are looking for a large grocery store, however, you’re still out of luck.

- The first one, Heinen’s Fine Foods, is set to open soon, but residents so far have had to make do with quick marts and gourmet prepared-food delis. Even following the opening of Heinen’s, downtown Cleveland still will not have many of the amenities found in denser areas: Neither Target nor Walmart has launched one of its urban-style branches here. There’s no large office supply or electronic retailer. And the many empty storefronts remind passersby of the basic amenities they are still missing, such as a hardware shop.

- A similar pattern has occurred in other traditionally declining cities with emerging downtowns, like Baltimore, Detroit and Pittsburgh. While they have enjoyed growing residential populations alongside high-profile new projects like stadiums and malls, they have had trouble attracting the critical mass of retail that actually helps residents on a day-to-day basis. The fact is that for fast-changing neighborhoods -- especially in cities that have suffered hard times -- retail often lags far behind office and housing growth in the gentrification process.

- This is not a new phenomenon. The real estate industry has long known that “retail follows rooftops.” Businesses don’t want to open in areas where there aren’t very many people. But when a neighborhood is undergoing rapid gentrification changes, the retail lag can be particularly challenging. “Retailers are going to often wait until they see who’s living there,” says Rachel Meltzer, an expert on retail gentrification at the New School in New York City. “Particularly in these neighborhoods that are changing, it’s very hard to predict what that consumer base is actually going to look like.”

- The retail lag is especially true for national chains, which take fewer risks, says Ed McMahon of the Urban Land Institute. “It’s the locally owned business that will take a chance on the neighborhood first,” he says. They will “show that the neighborhood can support retail, and that’s when the national chains have the confidence to move in.” --- Michael Deemer, a development official for the Downtown Cleveland Alliance, says that many chains have told him that they want to see about 20,000 residents before they locate downtown. The area isn’t projected to reach that figure until late in this decade, and in the meantime has relied on a mix of smaller chain stores and local entrepreneurs.

- In attempting to solve the retail problem, many cities have implemented subsidies for anchor businesses, mainly through tax increment financing, or TIF. This strategy, which has greatly expanded since the 1970s, enables officials to draw boundaries around targeted redevelopment areas, borrow to help subsidize key projects within them, and then use the tax revenue generated from the areas to pay the debt. --- Cleveland used that strategy to finance the Rock and Roll Hall of Fame, while it’s given other subsidies to developers of downtown stadiums, hotels and condos. Washington, D.C., has used TIF revenue to finance downtown apparel stores, while Chicago has used it for an extensive range of retail, including adding a Whole Foods.

- Cities can also draw retail by tapping into state and federal tax credits. Cleveland, for example, attracted Heinen’s through both federal new market tax credits, which are reserved for low-income areas, and Ohio’s historic rehabilitation tax credits, which the grocer used to locate into the historic Cleveland Trust Rotunda building. Heinen’s also received $3.3 million in city TIF money. --- But if cities like Cleveland can only attract large retailers through subsidies, then it calls into question whether their gentrification process is authentic and occurring equitably.

- Critics of TIF say that the approach favors certain businesses -- usually major chains -- by taxing the very competitors who fall within their boundaries. And they note that revenue for TIF and other incentives often comes either from property or sales taxes that would otherwise go toward core city services. --- Twenty years ago, Harvard University economist Michael Porter’s landmark report The Competitive Advantage of the Inner City suggested that government subsidies were ineffectual in achieving the desired mix of urban-core retail, often at great public expense.

- Instead, Porter proposed that cities improve their business climates by reducing regulations, cleaning up vacant lots and repairing infrastructure. McMahon of the Urban Land Institute agrees. Rather than targeted handouts, he says, cities should focus on “setting the table” for broader retail investment by improving streets and public safety. Business improvement districts (BID) have been formed by governments to provide better services for retail areas. Unlike with TIF, businesses in BID areas voluntarily agree to pay a special tax that is used solely for improvements.

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When a Heinen’s Fine Foods store opens in the former Ameritrust bank building later this spring, it will be a boon for downtown Cleveland residents. But the area still has lots of empty storefronts waiting to be filed. (Shutterstock)







Cleveland has attracted plenty of chic cafés and wine bars to its downtown. But retail shops have been slower to arrive. Shutterstock

[HowardL]

True. Neighborhood markets are vital, but in Cleveland you are one subway stop away from the West Side Market, which is one of the most perfect places in all of North America.

[mhays]

If a corner store sells stuff like dry pasta, canned food, milk, and any kind of fresh vegetable at all, it's a grocery store. Is there anything like that? I'd imagine there is. If so, you can live off that, along with takeout and maybe occasional trips further away.

And many people do. That's a problem for a supermarket in a walkable area of that size (how large is the 13,000 area, two square miles, i.e. low density?), because people who prefer to walk will often stay close to home. A supermarket needs to serve thousands of people, not counting the one living off ramen and day-old bread. If 1/4 of the money heads to Costco or another chain, 1/3 heads to corner stores, and 1/4 gets takeout, you're left with a smaller percentage than might happen for most supermarkets.

[Jasonhouse]

The article sounds like DT Tampa. Something like 8-10,000 people have moved in over the past several years, and there's still no grocery store or general merchandise retailer. (just a couple of small quickie marts and one gourmet deli/produce/treehugger food type place. And it's just 2.5k sqft.)

[MayDay]

I wish I had a job where I didn't have to care about accuracy, context or history.

Here is a map to show some context - I didn't include corner store/bodegas or the year-round farmers markets for lack of time.

Constantino's Market - Full service grocery, first opened in 2004 with 9,500 square feet, expanded in 2010 to 14,000 square feet. Located in the Bingham Building in the Warehouse District.

Dave's Market - Full service grocery, open since 1997, 35,000 square feet. One block away is the West Side Market, open since 1912, 75,000 square feet. Located adjacent to Red Line Rapid station (one stop from downtown), and on multiple bus lines. Additional Dave's Markets located at East 40th and Woodland and East 33rd and Payne (not in the CBD but adjacent neighborhood)

Simply Food - Limited service grocery, opened in 1969, at one time 22,000 square feet, reduced to 6,000 square feet (reconfiguration of Reserve Square complex into all-apartments). Reserve Square was one of the largest residential projects in downtown Cleveland when it opened but the grocery component was ahead of its time, imho.



That said, no - downtown Cleveland doesn't have a "large" grocery store or a City Target or whatever Wal-Mart's urban format is. The development of the latter is hampered because in 2007, the 'power center' Steelyard Commons opened with both a Target and Walmart Supercenter, approximately three miles due south of downtown Cleveland. Steelyard Commons was built on the site of the former LTV Westside Works steel mill - unfortunately not a pedestrian-friendly format and not the most easily accessible by transit, although there are rumors of that changing in the future.

[ardecila]

Good for Cleveland. Heinen's is quite nice, they've been confined to the suburbs thus far. It's awesome they are taking over the old bank for their downtown flagship.

[mhays]

Those stores sound like plenty! Great info Mayday.

[Eightball]

Originally Posted by Jasonhouse

The article sounds like DT Tampa. Something like 8-10,000 people have moved in over the past several years, and there's still no grocery store or general merchandise retailer. (just a couple of small quickie marts and one gourmet deli/produce/treehugger food type place. And it's just 2.5k sqft.)

Please provide further detail. Are the new residents primarily living in new mid-rise construction or high rise? Or historic rehabs?

The Duckweed Urban Grocery looks pretty cool.

[MolsonExport]

Originally Posted by HowardL

True. Neighborhood markets are vital, but in Cleveland you are one subway stop away from the West Side Market, which is one of the most perfect places in all of North America.

yeah, this was my thought as well. I think MayDay had some great shots from the market in other threads.

Here is what I found on Google:

criswellphotography.com

Looks fantastic.

[north 42]

^^^. I would kill for one of those in my city's DT, so beautiful!

[chris08876]

Thats a really nice market. Almost looks like a fancy train station concourse.

[jg6544]

This is a problem for most "gentrified" or "gentrifying" neighborhoods - necessary merchants moved to the 'burbs along with everyone else and are slow to invest the $ to move back downtown. Former public markets (Grand Central Market here in L. A.; Eastern Market in DC) are often the only places to find raw materials.

[10023]

Originally Posted by mhays

If a corner store sells stuff like dry pasta, canned food, milk, and any kind of fresh vegetable at all, it's a grocery store. Is there anything like that? I'd imagine there is. If so, you can live off that, along with takeout and maybe occasional trips further away.

Some people may be able to live on that. I certainly could not. A bodega is not a grocery store.

[Evergrey]

The problem with Cleveland and many other US major cities is that their gentrifying downtowns are surrounded by moats of blight/highways/parking lots. There is limited-to-no integration with surrounding residential neighborhoods... the downtown residential population is insufficient on its own for the site selection analysts at grocery chains and other retailers.

[emathias]

If all the new residents have cars, they can and will drive outside the area to get groceries. Outside the central area is likely a lot cheaper, so what incentive does a grocery store have to locate in an areas where it's expensive to be and you don't have a captive customer base?

[mhays]

Originally Posted by 10023

Some people may be able to live on that. I certainly could not. A bodega is not a grocery store.

Whether you could live like that or not, or whether it sells 10 kinds of apples or 1, a place that sells groceries is a grocery store.

[10023]

Originally Posted by mhays

Whether you could live like that or not, or whether it sells 10 kinds of apples or 1, a place that sells groceries is a grocery store.

Really? So a 7-11 that has sells basics like milk and orange juice is a grocery store?

No, it is not, and they wouldn't call themselves one either.

[mhays]

There's a cutoff somewhere that's completely subjective, but if they sell lettuce I'd say yes. Not junk food emporiums.

[10023]

Originally Posted by mhays

There's a cutoff somewhere that's completely subjective, but if they sell lettuce I'd say yes. Not junk food emporiums.

Fine, that's your take on it. I would say it needs things like a bakery, butcher and fresh fish. And also barely consider iceberg lettuce "produce".

[fflint]

In light of what MayDay has written, this may be less germane--but what about grocery delivery services? A lot of grocery stores will deliver for free or a low fee, let alone the grocery delivery apps. It might be just as convenient for a downtown Clevelander to order groceries and just take delivery as it would be to walk a few blocks to a major grocery store, no?

Indeed, in all the cities mentioned it would appear there is quite the opportunity for an enterprising young company to deliver a lot of groceries and make a lot of money doing so.