Twin Cities Developers Push Back On Mandated Storefronts In Apartment Buildings

[Pedestrian]

Originally Posted by Northern Light

Sincere question, not snark.

Why not prohibit superstores and malls and power centres?

Its been done, and not just in Europe........but in the U.S.

Turlock, CA, prohibits stores over 100,000 square feet that devote more than 5 percent of their space to groceries

Ireland restricts stores in the Dublin area to 3,500 square meters (38,000 sq. ft.) and applies a 3,000 square meter (32,000 sq. ft.) limit to the rest of the country.

Doing that and banning drive-thrus can change the dynamic in favour of 'main street retail' over time.

Similarly, imposing maximum parking on retailers, and requiring it be hidden behind stores that have entrances fronting the main street essentially outlaws the typical power centre or mall.

San Francisco bans "chain stores" in much of the city. It almost completely bans "big box" retailing (I can think of a handful such stores: 1 CostCo, 1 Lowes, a couple of Targets that are of the "city" variety meaning smaller than subiurban Targets). Parking, whether in commercial or residential buildings, is severely discouraged and no longer permitted to be sold as part of new residential units (most new developments have fewer than one space per unit so you buy your unit, rent the right to use a space if you can get one).

Most neighborhoods have a "shopping street" and retail is mostly targetted there but those same places are where height limits are taller and so where midrise development is happening. Hence most multifamily development is on shopping streets and is required to have ground floor retail with residential above and very little, if any, parking (shopping streets are the best served by transit).

[Northern Light]

Originally Posted by Pedestrian

San Francisco bans "chain stores" in much of the city. It almost completely bans "big box" retailing (I can think of a handful such stores: 1 CostCo, 1 Lowes, a couple of Targets that are of the "city" variety meaning smaller than subiurban Targets). Parking, whether in commercial or residential buildings, is severely discouraged and no longer permitted to be sold as part of new residential units (most new developments have fewer than one space per unit so you buy your unit, rent the right to use a space if you can get one).

Most neighborhoods have a "shopping street" and retail is mostly targetted there but those same places are where height limits are taller and so where midrise development is happening. Hence most multifamily development is on shopping streets and is required to have ground floor retail with residential above and very little, if any, parking (shopping streets are the best served by transit).

Sounds pretty sensible to me.

[mhays]

Toronto also benefits from focusing retail on retail strips, and its blocks are often large so there's less frontage anyway. Much of the problem in places like Seattle (where I live) is that retail is required on more streets, and the blocks are smaller.

[Northern Light]

Originally Posted by mhays

Toronto also benefits from focusing retail on retail strips, and its blocks are often large so there's less frontage anyway. Much of the problem in places like Seattle (where I live) is that retail is required on more streets, and the blocks are smaller.

Would it be possible for you to show an example or two of what you mean from Seattle?

I'd be interested to see how that contrasts w/Toronto (or other cities)

[mhays]

Here's an example on Yonge. The block is probably 800 by 300 feet, with retail mostly at one of the short ends. Good example of concentrated vs. dispersed retail. https://www.google.com/maps/@43.6671.../data=!3m1!1e3

An equivalent neighborhood in Seattle, where the blocks are generally 256 by 240 or 256 by 360, and every avenue has retail...the dispersed type, with a lot more street frontage per land area. https://www.google.com/maps/@47.6153.../data=!3m1!1e3

[MPLS_Const_Watch]

Originally Posted by Qubert

What I'm curious about is wither this law applies only on buildings being built along retail corridors or citywide.

Very few locations. Take a look at the City's future land use map here: http://minneapolis2040.com/topics/land-use-built-form/ . Only the areas marked "Destination Mixed Use" on the map require ground floor retail. Areas marked "Community Mixed Use" require ground floor commercial/public use, which doesn't necessarily have to be retail.

[biguc]

Originally Posted by Doady

You Americans think mandated anything is "really stupid". That's why so much sprawl, transit ridership is so low, no universal healthcare, 160,000+ dead from coronavirus. Now even the idea of mixed-use retail is too much for you people. What concept will be next to come under attack? Public public postal service? Just the same old, same old. USA never changes.

Last I heard the postal service is under attack. As a voter suppression tactic.


In most of the world commercial and residential spaces aren't so strictly defined. Nobody would have to mandate commercial spaces if residential spaces weren't mandated as not commercial. In other parts of the world it's normal to see ground floor units change between residential, retail, and office uses, depending on what suits the street and who wants the space (and upstairs there are often doctors snd dentists and whatnot using apartments as offices).

A benefit of finer-grained development: Nobody is stuck waiting for a CVS/Weston lease because banks don't understand what ground-floor rents are worth. You could argue that they're missing the bigger picture and ultimately hurting themselves. And you'd be right.

[Don't Be That Guy]

Originally Posted by Commentariat

Dunno how it works in America but here in Australia we have the same issue and it’s all about cap rates/multiples.

Let’s say a store typically brings in a 6% yield. The capitalized value is then about 16 times the rent. So if the store is renting for $100k pa, the value is $1.6 million.

Now let’s say it’s vacant, and the landlord decides to reduce the rent to $75k to get a tenant. The capitalized value is now 16 times $75k or $1.2 million. That’s a (paper) loss of $400k. The owner would be better off keeping the property vacant for years to find a tenant who will pay $100k instead of $75k.

The loss in value also has financing implications, eg the bank might lend up to 75% of the value of the property, so if the new valuation is $400k less then you are going to have to to stump up more equity. If you are forced to sell, then there might not be any equity left.

It’s probably a bit different in the US where you have more institutional ownership of large portfolios of properties (as compared to Australia, where the individual stores would usually be sold to small investors). But the same underlying concepts will be relevant to some extent.

It works the same way in the US. A real estate firm could be in big legal trouble with investors if they took actions that reduced returns or the amount of available equity in a property. It's one thing to pro forma renting space for below market value, but it's another to just let any small business to take the space after the fact.

Additionally, renting new retail space to a local coffee shop is a massive risk. Without proper credit-worthiness, the property owner could be left with hundreds of thousands in losses if the business folds and breaks their lease.

[Pedestrian]

Originally Posted by biguc

Last I heard the postal service is under attack. As a voter suppression tactic.


In most of the world commercial and residential spaces aren't so strictly defined. Nobody would have to mandate commercial spaces if residential spaces weren't mandated as not commercial. In other parts of the world it's normal to see ground floor units change between residential, retail, and office uses, depending on what suits the street and who wants the space (and upstairs there are often doctors snd dentists and whatnot using apartments as offices).

A benefit of finer-grained development: Nobody is stuck waiting for a CVS/Weston lease because banks don't understand what ground-floor rents are worth. You could argue that they're missing the bigger picture and ultimately hurting themselves. And you'd be right.

You don't sound like a "pinko". You sound like a libertarian. Libertarian/conservative Houston may be the closest thing in the US to your description. "Pinko" places like where I live tend to have the strictest zoning which specifies allowable uses in a very "fine-grained" way.

[Chef]

To add some perspective, the development that set off the debate in the article in the OP is in the heart of a retail district. This is the lot where they want to build a seven story building with no retail:

https://www.google.com/maps/@44.9885...7i16384!8i8192

I think you can make an argument that too many building are forced to add retail where it isn't necessary but a building without storefront retail on a busy street in the middle of a commercial district is entirely inappropriate. As recently as the late '90s that area was a mess with strip malls and car dealerships mixed in with a few orphan stretches of 19th century storefronts. The city is trying to stitch it back together to make it a cohesive urban area. The new developments on the edges of the neighborhood have been built largely without retail, which is fine, but this one in the center of the neighborhood should absolutely have it. This is just an attempt by the developer to maximize revenue on a development in an in demand area and ignore the consequences on the public sphere.

[C.]

Originally Posted by Chef

To add some perspective, the development that set off the debate in the article in the OP is in the heart of a retail district. This is the lot where they want to build a seven story building with no retail:

https://www.google.com/maps/@44.9885...7i16384!8i8192

I think you can make an argument that too many building are forced to add retail where it isn't necessary but a building without storefront retail on a busy street in the middle of a commercial district is entirely inappropriate. As recently as the late '90s that area was a mess with strip malls and car dealerships mixed in with a few orphan stretches of 19th century storefronts. The city is trying to stitch it back together to make it a cohesive urban area. The new developments on the edges of the neighborhood have been built largely without retail, which is fine, but this one in the center of the neighborhood should absolutely have it. This is just an attempt by the developer to maximize revenue on a development in an in demand area and ignore the consequences on the public sphere.

"While planning departments try to make cities more livable with such mixed-use projects, developers argue vacant commercial space increases rents at a time when renters can least afford it. Plus lenders are less willing to finance such projects."

These are all true statements, however.