Bookstores, cities, and shared streets

For me, a new house or apartment doesn’t truly feel like home until I begin to fill it with books. Books serve as familiars and friends: re-reading an old favourite can bring me back to places, people, and feelings that I had filed away in my memory, while encountering a new book is like befriending an interesting stranger.

Books are also heavy, especially after you’ve filled a few shelves. So they are not suited for a transient lifestyle: they require a stable home (or a strong back).

Just as I associate books with home, I also associate bookstores with cities. I grew up in the low-density suburbs east of San Francisco, around the time when Amazon was undermining the retail model of big bookselling chains. To get to a really excellent bookshop, you had to go to a urban place.

Bookstores play a key role in my first memories of urban places. My dad and I would take periodic trips into Berkeley to get dinner and do a bit of shopping. We’d spend an evening browsing the big bookstores on Telegraph Avenue – the late, lamented Cody’s Books, and the four-storey Moe’s Books, which (for me at least) sets the standard for a great second-hand bookshop.

moes-books-2010-courtesy-moes-books

This was a window into a different world: strangely-drawn comic books filled with odd concepts (not superheroes!); translated versions of obscure Latin American novellists; the cast-offs from hundreds of postgraduate philosophy papers. And the place was different too: shops were open later (and catered to a more diverse range of glass vase enthusiasts); the streets were laid out on a grid; the buildings were set closer to each other. People were around in the evening.

This, too, felt like home, in a different way than the footpathless suburbs did.

Later on, after moving to a city, I discovered that books were a good fit with the two quintessential urban transport modes: walking and public transport. (Especially in the pre-smartphone age.) Having a book takes some of the pain out of an unexpected wait for a bus, and occasionally starts conversations once you’re on the bus. Reading while walking is a bit more challenging but can be done with practice – provided you stop at intersections.

walking-while-reading

Me, basically.

One of the small joys of my current job is that I work on O’Connell St, with two of Auckland’s best bookshops within thirty seconds of my office. Used bookseller Jason Books is next door on O’Connell St, while Unity Books is just down the way on High Street. I visit both on a regular basis. Sometimes I go in to look for a specific book, and find it; other times I leave with an unexpected purchase (or nothing at all).

It wouldn’t be that hard buy books online instead, and it would probably save me money. But I keep coming back because I value bookstores as places. It’s a much richer experience to browse for books laid out on shelves and tables than to search through an online catalogue. A good bookshop will draw your eye towards books that you otherwise wouldn’t have found – “hey, look over here!” They’re also places where you can run into people.

Unfortunately, the streets outside my office also present a major contrast in terms of place quality. The shared space on O’Connell St is a pleasure to walk on: even with a bit of car traffic and delivery vans parked up, it’s spacious and safe for people on foot. And, especially with summer coming on, it’s busy with people walking, talking, or sitting down for a coffee.

High Street, on the other hand, is an abysmal, congested mess. Most of the space on the street is given over to a small number of low-turnover parking spaces, while people on foot must clump together on narrow footpaths and jostle slowly past each other. As the vast majority of the people using the street are walking, this represents a major impediment to efficient transport: we are seemingly sacrificing the needs of the many on foot for a small number of people in cars. (And it makes it hard to read while walking on High Street, as I have to pay too much attention to people in close proximity!)

Due to the pedestrian congestion, I spend less time and money on High Street than I’d like to. Oddly, a lot of the businesses on High Street have apparently campaigned against a shared street, which seems like self-sabotage given the great numbers of people walking up and down the street and the tiny number of people driving or parking.

I would never, ever drive to buy books (or anything else) on High St, but I would walk out the front door and window-shop a lot more often if the environment was better for walking. A great bookshop deserves a great urban street, and vice versa. Get behind it.

City size, variety, and consumer surplus

In the 1990s, in the early years of the information technology revolution, economist Robert Solow famously commented that “you can see the computer age everywhere but in the productivity statistics.” Two decades on, that still rings true. Social life has been profoundly transformed by new technology: It has altered the way we communicate with friends and family, how we entertain ourselves, and even how we date.

how people meet romantic partners chart

When I read Douglas Adams’ Hitchhiker’s Guide to the Galaxy in the early 2000s, the titular device still seemed like a fantastical idea: a handheld device you could use to access information (much of it inaccurate or incomplete) on anything, from anywhere.

Now, we all have smartphones. But productivity growth has stubbornly failed to take off over this period. Does this mean that technological progress has failed to deliver?

Journalist Ezra Klein (Vox) recently reviewed the current debate over technological progress. One perspective he discusses is that the benefits of information and communication technologies (ICTs) have largely accrued to consumers rather than producers:

Measures of productivity are based on the sum total of goods and services the economy produces for sale. But many digital-era products are given away for free, and so never have an opportunity to show themselves in GDP statistics.

Take Google Maps. I have a crap sense of direction, so it’s no exaggeration to say Google Maps has changed my life. I would pay hundreds of dollars a year for the product. In practice, I pay nothing. In terms of its direct contribution to GDP, Google Maps boosts Google’s advertising business by feeding my data back to the company so they can target ads more effectively, and it probably boosts the amount of money I fork over to Verizon for my data plan. But that’s not worth hundreds of dollars to Google, or to the economy as a whole. The result is that GDP data might undercount the value of Google Maps in a way it didn’t undercount the value of, say, Garmin GPS devices.

As Klein goes on to observe, ICTs have transformed our leisure time more than our work time – in large part, by giving us many more choices about where to dine, what television shows to watch, and who to talk to.

Interestingly, what’s true for technology might also be true for cities. The conventional narrative about agglomeration economies – the economic benefits of scale and density – is that their main effect is to lift productivity. But, as Stu and I have discussed in the past, there’s an increasing body of evidence that suggests that agglomeration also has significant benefits for consumers.

In recent years, economists have used micro-data on household consumption patterns to build a much richer picture of the impact of city size and structure on consumption choices. In short, larger cities don’t always offer lower prices – as you’d expect if higher productivity made it cheaper to produce goods and services. But they do offer a much greater variety of goods and services, which in turn translates into higher wellbeing for households.

A 2015 paper by Jessie Handbury and David Weinstein uses barcode data on retail sales in 49 large US cities to analyse prices and product varieties. They find that:

There are approximately four times more types of grocery products available in New York [metro population 21 million] than in Des Moines [population 456,000].

Because people in larger cities tend to buy a wider range of goods, including more expensive products, a naïve comparison of average retail prices would suggest that larger cities are more expensive. But Handbury and Weinstein’s analysis shows that, after accounting for product variety, prices in large cities are no more expensive than smaller cities. If anything, they tend to be lower:

When we use the data to construct a theoretically rigorous price index that corrects for product, purchaser, and retailer heterogeneity and accounts for variety differences across locations, we find that the price level is actually lower in larger cities. Consumers spend less, on average, to get the same amount of consumption utility in larger cities.

Moreover, what’s true in grocery stores is also true in restaurants. In a 2012 paper, Nathan Schiff took a look at the impact of city size and population density on restaurant markets in 726 urban places in the US. His key finding is that:

For the 182 cities in the top quartile by land area of my data (mean population 331,000), a one standard deviation increase in log population is associated with a 57% increase in the count of unique cuisines. A one standard deviation decrease in log land area–which increases population density without changing the size of the population–is associated with a 10% increase in cuisine count, equivalent to increasing the percentage of the population with a college degree by one standard deviation and larger than the effect of increasing the ethnic population associated with each cuisine by one standard deviation.

In other words, cities that are larger or denser offer people more choices about where and what to eat. Density is especially crucial in large cities, as people generally don’t travel long distances to dine. (Incidentally, relatively open migration policies are also an important enabler of restaurant choice in cities, as migrants bring new cuisines with them.)

Distances travelled to jobs and retail in Auckland

What does this mean for urban policy? I think there are two main lessons.

The first is that although agglomeration economies in production are important to long-run economic outcomes, we might be looking for the benefits of cities in the wrong places. They might not always appear in productivity statistics or price indices, but in the consumption choices that cities offer people. Measuring variety – and how people respond to it – is therefore crucial to understanding agglomeration economies.

The second is that conventional urban policy might be based on false premises. Ever since the “dark Satanic mills” of the Industrial Revolution, policymakers have assumed that cities are good for businesses but bad for people. Accordingly, they designed transport systems and planning policies that aimed to disperse the city and to separate people from their workplaces and from each other.

That made sense when cholera was a major cause of death, but it’s increasingly illogical in today’s world. Urban disamenities such as air quality, crime rates, and infectious diseases are all improving, and the evidence increasingly shows that the consumer choices offered by cities (and dense urban places) have benefits for households. In this context, policies that enable urbanisation are likely to have larger benefits than commonly assumed.

What do you think about the role of consumer choice in cities?

Apartments, proximity, and living space

Housing is a normal good. That is, it’s something that people tend to want more of as their incomes increase.

“More” doesn’t necessarily mean “larger”. People do tend to prefer larger homes as they get wealthier, but that’s not the only thing that matters. They may be willing to compromise on space in exchange for a higher-quality living space – bring on the granite countertops! – or a home in a better location. A “better location” could in turn mean anything from proximity to jobs (resulting in efficient use of valuable time), proximity to shops or cultural amenities, location in a good school zone, or access to parks or beaches.

One interesting phenomenon is that people seem to be willing to travel further to work than to consumption amenities (ranging from retail to concerts). In their fantastic book Cities and the Urban Land Premium, Dutch economist Henri de Groot and several co-authors provide some data that shows that people are, on average, willing to travel considerably further to work than to consume. They show that this results in a higher urban land premium for accessible inner-city areas, as vibrant downtown areas have the most varied and interesting consumption opportunities.

Furthermore, you’d expect this premium to rise as incomes rise, as people with more disposable income will have an increasing preference for close proximity to consumption and cultural amenities.

Is the same thing likely to be true in Auckland? Nobody’s done a survey, but we’ve got some data on the distance that people actually travel to access jobs and retail.

In a paper two years ago, I analysed Census data on commuting distances in order to understand what Auckland households spend on housing and transport. I went back and re-analysed that data to get an estimate of the distribution of commuting distances in Auckland. This data suggests that 50% of Aucklanders commute less than 9km, while less than 2% are super-commuters travelling longer than 50km.

As a point of comparison, I used data on retail spending patterns compiled by economist Susan Fairgray in a 2013 report on the Auckland retail sector. Based on electronic card spending data, Fairgray estimates that 50% of Auckland retail spending is done within 5km of people’s homes. (See Table 3 on page 58 of her report.)

Here’s the chart. As in the Netherlands, distances travelled to consume drop off more rapidly than distances travelled to produce.

Distances travelled to jobs and retail in Auckland

There are several implications for how we build cities. The first is that we should expect retail, personal services, and recreation to be widely distributed throughout the city. Large tracts of houses without good access to shops and recreation are not likely to be awesome in the future. There are various ways to cater to these needs, ranging from mixed-use zoning that allows retail and housing to colocate to distributing small retail centres throughout suburbs (a la Auckland’s tramway suburbs).

The second thing is that we should think more carefully about how preferences for centrality are changing. The consumption amenities that cities offer play an increasing role in their success or failure. Some important consumer amenities tend to be located centrally. For example, nightlife and entertainment districts are almost always located near the city centre – think of Ponsonby or K Road in Auckland. Likewise, museums and public art galleries are usually located downtown – e.g. Te Papa in Wellington or the Auckland Art Gallery – to maximise the number of people that can access them.

Auckland Art Gallery

Auckland Art Gallery

As demand for consumer amenities will tend to increase with rising incomes, we’d expect demand to live close to them to increase in the future. Meeting this demand in a growing city will, in turn, mean building more apartments.

But wait! If people also want more living area as they get wealthier, doesn’t that mean that they’ll reject apartment living? Won’t apartments simply be too small to meet their needs, even after taking location into account?

Interesting question.

It is the case that new apartments tend to be smaller than new standalone houses in New Zealand. Over the last five years, the average standalone house consented in Auckland was about twice as large as the average apartment consented in Auckland.

However, there’s no universal law that says that apartments have to be small. Policy can play a big role in keeping apartment sizes down, or enabling them to be more spacious. As LSE economist Paul Cheshire observes, planning policies (and other things like tax policies) can have the unintended consequence of discouraging adequately-sized housing:

If you really want to plan to protect and provide better access to green space and open countryside without artificially constraining land supply and forcing up house prices, then Green Fingers (or Green Wedges) would seem to be the best solution. That is what more egalitarian Scandinavians have. Copenhagen has its Green Fingers – really brown urbanisation along the radial routes out of the city with protected countryside each side. Denmark has not just got cheaper housing: according to the Dallas Fed’s data, the real house price has increased by a factor of 1.6 in Denmark compared to 3.4 in the UK since 1975 but new houses in Denmark are a lot bigger: 80% bigger in fact.

As Cheshire’s example of Copenhagen shows, it’s possible to build dwellings that meet people’s needs for living space and preserve usable open space around cities. You just need to be willing to build intensively where you do build – and integrate it with rapid transit.

copenhagen finger plan

Source: Living Rail

For a less anecdotal look at the issue, I used Eurostat data to measure the relationship between dwelling size and dwelling type in 29 European countries. Here’s a scatterplot showing the relationship between the share of dwellings that are detached houses (X axis) and average dwelling size (Y axis). Observe how there is almost no relationship whatsoever. If anything, there’s a slight negative relationship – countries with more standalone houses may have slightly smaller dwellings, on average. (There’s probably an income effect in there that I haven’t controlled for – richer countries tend to be more urbanised, which will tend to mean more apartments, and also have larger dwellings.)

Eurostat detached houses and average dwelling size chart

But basically, there doesn’t seem to be an inescapable trade-off between dwelling type and size. Apartments can be small… but they can also be large. And cities that are willing to let people more apartments get built will, in addition to being more affordable, give people more opportunities to realise their demands for both space and proximity.

What do you think of this data?

Do parking minimums restrict competition?

During the Unitary Plan submissions process, a number of retailers and shopping centre owners took a pretty conservative stance on transport. They argued for maintaining parking minimums, replacing maximums with minimums in some areas, and so on. Some argued that cars would always be the main way of getting to shops, and this should be written into the Unitary Plan. I’ll tackle that in another post, but for now, let’s talk about parking minimums and competition.

Raising the barriers to entry?

Among their other faults, parking minimums can actually be quite anti-competitive. Looking at supermarkets, for example, reviews both here and in Australia have shown that the biggest “barrier to entry” for new competitors is the difficulty in acquiring suitable sites.

Parking minimums make it even harder to get sites which are large enough. If you want a 3,000 square metre supermarket, say, and the rules say you need to have 1 carpark per 25 square metres of space, then that’s 120 carparks you’ll need. Those will take up about 3,600 square metres, so overall you need to find a site which is 6,600 square metres in size and meets your other location criteria. Not an easy task. If not for the parking minimums, you might decide you’re happy with 60 parks instead, for example. That’d shave 1,800 square metres off the size of the site you’d need. That’s a hypothetical example, and you could make the same argument for department stores, hardware stores, shopping centres, or really any kind of retail development, large or small.

BOTANY

Botany Downs: a popular retail node, but very car-centric

The extra competition from removing parking minimums can mean lower prices at the shops, but it’s not just about that. It also means lower time and travel costs for consumers. If you live 10 km from the nearest supermarket, but then one opens up just 5 km away, you’re better off, even if the prices are the same.

Or making it easier for freeloaders?

Most of these submitters were concerned about freeloading, and they argued for minimums to remain to prevent this. The argument is that another developer could come along, build a store or shopping centre, and not provide enough carparks. Their shoppers would then overflow into other areas, parking in existing carparks on the street or (more relevantly) by existing stores. Those carparks would then become unavailable to the existing stores’ customers.

This is a “negative externality” in economics jargon, and it’s legitimate for retailers to be concerned about it. We’ve probably all been guilty of using one of those carparks when dashing to another store, the post office etc. But the argument is also one which can restrict competition. Parking minimums are often arbitrary – quite ridiculously so for taverns – and different retailers will have very different requirements based on their business model, location, availability of driving alternatives and so on. Generally, those retailers or shopping centres have a good idea of how many parks they will need, and should be free to provide as many or as few as they like, with the costs internalised (more jargon).

What’s the way forward?

The Unitary Plan has to find a balance between two sides. On the one hand, you have retailers who don’t want their carparks being used by freeloaders, with new competitors having an unfair advantage if they don’t have the same requirement to provide parking. On the other hand, parking minimums have their own problems – they can encourage undue reliance on cars, a larger-than-optimal amount of parking, more pressure on the road network, and so on. These are externalities too. Plus, as I’ve argued above, there’s the externality of reducing competition.

We need to be careful with whether we let the car-dependent business models of today to be enshrined into the future; retail should be free to adapt and change. It’s the nature of the beast. The Unitary Plan will last for ten years. A decade is a long time in retail, and the new shops that we build in the Unitary Plan’s lifetime will be around for much longer.

If you want more consumption choices, live near lots of other people

One of the many reasons that people choose to live in cities is that cities offer variety. As Stu Donovan has argued before, being around more people sometimes seems inconvenient, but it also exposes you to new ideas, new people, and new consumption choices.

I’ve previously written about the value that people place on choices in housing and transport markets, and how having more choices is particularly valuable for people on low incomes. This week, I want to look at how cities provide us with choice in the retail and restaurant markets.

My hypothesis is that there are economies of scale in the provision of both public and private goods. In more straightforward terms, that means that if you live closer to more people, you can have more public transport, more parks, more good restaurants, more shops, and so on and so forth. If this intuition is true, the best way to obtain variety at an affordable price is to live in a dense area of the city.

In order to test this hypothesis, I took a look at Statistics New Zealand’s Business Demography statistics, which provide information on the number of businesses (“geographic units”) and employment within particular industries. Very helpfully, Stats NZ publishes this data at a suburb level (“area units”, in Stats-speak).

I’ve focused on two particular types of businesses that serve households’ daily needs:

  • ANZSIC industry H45, which includes restaurants, bars, and clubs
  • ANZSIC industry G41, food retail, which includes supermarkets and other small-scale food retailers.

I mapped the density of these businesses throughout different Auckland suburbs. Blue colours show higher densities of restaurants/bars or food retailers; yellow colours show lower densities. A few clear patterns emerge. First, densities tend to be highest in inner city suburbs, and even more so in the city centre. Second, there are also pockets of higher density around satellite centres like Takapuna and New Lynn. Third, the density of retail and restaurants tends to be much lower on the fringe of the city.

Auckland restaurant and food retail density maps v1

How can we explain these patterns? Why are some areas so much better supplied with retail and dining options than others?

We can get some insights by looking at the built form retail and restaurants areas in different areas of the city.

Here’s what a retail street looks like in the city centre, where high residential and employment density sustain a lot of activity both day and night. This is O’Connell St before and after its shared space transformation. Notice how people are just walking up:

O'Connell Before and After 4

Here’s what retail looks like in an inner-city shopping and dining district, Ponsonby Road, which is surrounded by old suburbs of medium population density. It has lots of shops right on the street, plus a bit of parking tucked around the back:

Ponsonby Rd St Johns

And here’s what retail looks like in a newer suburb at the edge of town – Albany centre. It’s physically separated from nearby residential areas, highly car-dependent, and as a result, it requires large swathes of parking to support each shop or restaurant:

Albany Mall - Aucklands most modern Metropolitan Centre...

Albany Mall – Aucklands most modern Metropolitan Centre…

In other words, less parking is required to get shoppers to the door in densely populated areas – which should make it easier to sustain more shopping and dining options per square kilometre.

A simple econometric analysis seems to support this view. I attempted to explain the density of restaurants and food retailers in suburbs in terms of the population density and employment density of those areas. (Using Census and Business Demography data from Stats NZ.) As I hypothesised, there is a statistically significant, positive relationship between higher population and employment densities and the density of restaurants and food retailers. These two factors predict roughly 85% of the variation in restaurant and retail density in Auckland suburbs.

Regression results are reported in the table below, for anyone who’s interested. These aren’t perfect models – I suspect that it would be worth testing some spatial regression models, as retailers often attract customers from a wider catchment than a single suburb. Furthermore, we’d have to analyse changes over time in order to establish that increasing population density in an area will in turn increase retail diversity. But these results do provide a reasonable indication of the underlying relationships.

OLS regression models for restaurant and retail density
Dependent variable:
log(restaurant_bar_density) log(food_retail_density)
(1) (2)
log(pop_density) 0.464*** 0.597***
(0.031) (0.033)
log(emp_density) 0.620*** 0.486***
(0.026) (0.027)
Constant -5.531*** -6.290***
(0.182) (0.191)
Observations 342 342
R2 0.856 0.835
Adjusted R2 0.856 0.834
Residual Std. Error (df = 339) 0.632 0.664
F Statistic (df = 2; 339) 1,011.219*** 860.694***
Note: *p<0.1; **p<0.05; ***p<0.01

What do these figures mean? The coefficients from the model – highlighted in bold – display the relationship (or “elasticity”) between population or employment density and density of restaurants or food retailers. They show that:

  • Areas with 10% higher population density have, on average, 4.6% more restaurants/bars and 6.0% more food retailers (including supermarkets)
  • Areas with 10% higher employment density have, on average, 6.2% more restaurants/bars and 4.9% more food retailers.

In short: Higher density can benefit people by giving them more choice in restaurant and retail markets. Having a mix of residential and commercial uses around is even better, as it can sustain activity throughout the entire day rather than just in the evenings or at lunchtime.

Stats NZ’s data isn’t granular enough to say, but I suspect that denser areas also have a greater diversity of dining and retail options. (This is intuitively obvious – if there are already two fish-and-chip shops in the neighbourhood, why would anyone choose to open up a third?)

What do you make of this data on density and retail choices?

Sunday reading 11 January 2015

Every week we read more than we can write about on the blog. To avoid letting good commentary and research fall by the wayside, we’re going to publish weekly excerpts from what we’ve been reading.

McKenzie Funk, “The Wreck of the Kulluk“, New York Times:

The Arctic was a long-term investment — Shell would not start production on such a big project in such a distant place until at least a decade after it found oil — but the future is always getting closer, and by 2010 the company was anxious. It took out ads in newspapers, hoping to pressure the Obama administration into opening the Arctic. One pictured a little girl reading in bed, a figurine of a polar bear next to the lamp on her nightstand. “What sort of world will this little girl grow up in?” it asked. If “we’re going to keep the lights on for her, we will need to look at every possible energy source. . . . Let’s go.”

Even with permission, getting to the oil would not be easy. The Alaskan Arctic has no deepwater port. The closest is in the Aleutian Islands at Dutch Harbor, a thousand miles to the south through the Bering Strait. In the Inupiat whaling villages dotting the Chukchi coast, only a handful of airstrips are long enough for anything other than a prop plane. There are few roads; human residents get around in summer by boat, foot or all-terrain vehicle. Shell was trying the logistical equivalent of a mission to the moon.

The Economist, “Nimble Opposition: A new study confirms suspicions about what drives planning decisions“:

Local opposition to new housing developments is common across Britain. It has long been argued that such opposition—NIMBYism to its critics—is linked to home ownership. Homeowners, unlike distant landlords, vote in local elections and receive planning consultations in their postboxes. They lose out from development in multiple ways. Loss of green space reduces their quality of life and increased supply of housing suppresses prices. Landlords managing diversified portfolios are less exposed to the value of one property. The idea that planning decisions are driven by the desire of homeowners to maximise house prices is known as the “home-voter hypothesis”.

On October 24th the Institute for Government, a think-tank, released a study supporting this theory with data. It looked at English local planning authorities (LAs) between 2001 and 2011 and found that for every additional ten percentage points in the proportion of homes that are owner-occupied, 1.2 percentage points were knocked off growth in the housing stock. Average growth was 8.8%, so the effect was marked. The authors are cautious about making a causal claim, but the correlation was observed after controlling for the number of planning applications and the amount of available land. A rough calculation suggests that, without the NIMBY effect, one million more homes would have been built during the period.

Brad Plumer, “Driving in the US has been declining for years. Will cheap gas change that?“, Vox:

The key concept here is price elasticity — how much the demand for gasoline changes in response to changes in price. The EIA estimates that, in the very short run, Americans’ demand for gasoline is fairly inelastic. The price of gas would have to fall 25 to 50 percent for US driving to rise by just 1 percent. (That is, the elasticity is -0.02 to -0.04.) …

Driving is on the downswing for a few reasons: 1) The US population is getting older, and retirees tend to drive less. 2) More and more young people are moving to cities, where there are better transit options. 3) It’s become much harder for teenagers to acquire drivers’ licenses. 4) Young people may be driving less for cultural reasons (possibly they prefer to hang out with their friends on Facebook than piling into a car and driving around aimlessly).

That may explain why American driving habits today seem to be less responsive to changes in gas prices than they were in the 1990s. Back then, the EIA estimates, it only took a 12 percent drop in gas prices to boost driving by 1 percent (elasticity was -0.08). Nowadays it takes a 25 to 50 percent drop.

Emily Badger, “Why no one likes indoor malls any more“, Wonkblog:

The mall that’s dying is, in fact, a specific kind of mall: It’s enclosed, with an anonymous, windowless exterior, wrapped in yards of parking, located off a highway interchange. It’s the kind of place where you easily lose track of time and all connection to the outside world, where you could once go to experience air conditioning if you didn’t have it at home…

The death of old-fashioned indoor malls is also the rebirth of shopping hubs that feel more like Main Street.

Warehouse’s plans for Balmoral

Interesting news about the Warehouse’s future plans for their site in Balmoral

Say goodbye to the big red box on Balmoral Rd.

A cafe and apartments are included in The Warehouse’s plans for a major redevelopment on the site.

A two-building, 7130 square metre complex including The Warehouse, 34 apartments, and 234 car parking spaces will be built if the retail giant’s property company, Eldamos Investments, is granted resource consent by Auckland Council.

The Balmoral Warehouse is due to close this month and would be demolished along with a fruit and vegetable store and coffee shop, the Balmoral Rd BP service station, and a house at 16 Rocklands Ave to make way for the complex.

The Warehouse is working through a nationwide programme to review and modernise its stores.

“It will enhance the environment of the site considerably,” a spokesperson for the retailer says.

The company is working through a consultation process with stakeholders.

An application has also been made to rezone part of the site from residential to business.

This application was first notified in 2010 and 106 submissions were made asking that it be declined. Six were in support.

It was put on hold until the council received a traffic report in November and is now being renotified.

What I find interesting about this is we are once again seeing a traditional big box retailer starting to get into residential development. The other major one being Progressive (Countdown) and the Vinegar Lane development. I’m guessing a large part of it is about making better use of the land these companies own as well as possibly helping to offset some of the costs of their new stores. I suspect there are a heap of sites all around the city where something similar could be done in coming years. It is probably also something that would be helped as minimum parking requirements get eased as part of the unitary plan – although sadly not completely removed.

On the issue of parking there are 234 car parks in total, 200 of those are for the retail development at a rate of 1 space per 36m². As a comparison, for retail in town centres the proposed unitary plan sets a maximum of 1 space per 20m² so it is well below that and is also below the minimum set for retail outside towncentre which is 1 space per 25m². Most of the carparking will be underground. That leaves parking for the apartment development at 1 space per apartment.

Here is what is planned for the site. Building A is the proposed new warehouse building which would also contain a few ground floor retail sites that face out on to a new street. Building B is will have the 34 apartments and also have ground floor retail.

Warehouse Balmoral

Here are some images of what the development is meant to look like. The first one showing what it would look like if you were driving past on Balmoral Rd. It’s certainly better than the look of an open car park but does present a large blank wall to the street. While that road is fairly inhuman at the moment, clawing back that free left hand turn lane could make a significant difference and so it would be nice to have that edge of the building activated.

Warehouse Balmoral Store 1

And here is an image of the proposed street and apartments.

Warehouse Balmoral Apartments

Lastly here are some before and afters, this one from the corner of the intersection with Dominion Rd.

Balmoral Warehouse before and after 1

And from straight across the road at the bus stop by Potters Park

Balmoral Warehouse before and after 2

I’m sure there will be some locals bound to complain about the height but to me it seems about right and doesn’t dwarf the town centre. I would also imagine that for those residents, they will be spending a lot of their time and their money in the Balmoral Town Centre which is great for the retailers.

You can see the planning application here.

A new form of station retailing?

Transport for London have announced that next year they will shut down the ticket offices at Tube stations.  However while its partly a cost saving measure – as staffing costs are one of the most expensive parts of running a PT system – it also creates opportunities to raise revenue from the freed up space and TfL are already considering how they may do  that. The leading thought appears to be that the space will be use them for shopping spaces. That in itself isn’t particularly revolutionary or newsworthy as many places overseas combine retail with the PT systems but the part that is interesting is that it may not be a physical shop but an outlet for a virtual one. This from The Atlantic Cities.

Both Amazon and food and clothing chain Marks and Spencer’s have been exploring using them as pick-up points for online shopping. And supermarket chain Asda has already announced a pilot for something similar: a plan to use a handful of suburban station car parks in North London as rendezvous points for “click-and-collect” deliveries. Users would make their purchases online then pick them up at their convenience, either from staff at a window, or from electronic lockers for which they have been sent a code via email.  It’s easy to see the attraction of this model for retailers, who will get highly visible shop windows for online businesses and simultaneously reduce their delivery costs.

There are logistical hurdles to overcome – no one wants already congested rush hour stations clogged further by lines of people waiting to pick up their pre-bagged dinner. Still, the revenue benefits for TFL are obvious. Currently, the network makes £25 million annually from renting out shop spaces. Many stations have small kiosks, while central stations have other small outlets (such as key cutters and heel bars) and a few stations even open directly into shopping malls. Renting out old ticket offices in prime sites could double this amount, helping TFL towards its goal of being financially self-sustaining by the end of the decade.

We don’t have a heap of space tied up in ticket offices and are actually putting some in at major interchanges (like soon at Panmure and in the future at Otahuhu and Manukau) but this doesn’t mean that there’s no space at all stations. In particular stations with extensive Park n rides are potentially a huge opportunity to add different forms of retailing to the mix. All of this is no real substitute for developing proper walkable neighbourhoods but some suburbs could take decades to fix while this potentially provides a shorter term solution.

The thing that interests me about this idea of a shopping pick-up point – at least from a local context – is what it might do to make public transport a more attractive option for people by removing one more barrier to using PT. It could help boost patronage and provide additional income both of which are very positive things when there is so much focus on reducing subsidies.

Now I realise that many people already shop online for all sorts of things but that Amazon are exploring it as an option is surely an indication they see this as a potentially useful service. I’m guessing this could perhaps sit somewhere in between a traditional store and home deliveries. For example instead of having to have couriers run around each suburb making a heap of individual deliveries they could do just one and serve multiple customers at the same time. That might allow for more frequent delivery times or cheaper delivery options so for example you could order something online at midday and pick it up from your local station on your way home from work.

Of course it would be nice just to have some retail of any form at stations. Why is it AT haven’t put out or level allowed I’ve heard that private companies want to do it). Longer term, stations with extensive park n rides are prime candidates for some more permanent retail developments – not that this is a justification for building more park n rides.

So what do you think, is it an idea you think could be worthwhile? Do you think AT should be doing more to provide a form of retail service to customers which could also raise additional revenue to help pay for the system?

Economic benefits of sustainable streets

Courtesy of Atlantic Cities, it’s explained how New York City’s Department of Transportation has done some pretty detailed analysis of the economic impacts of many of the changes they’ve been making to the layout of streets over the past few years.

Using tax data from the New York City Department of Finance, the DOT analyzed the impact of street re-design and transportation enhancements on retail businesses. Laid out in “The Economic Benefits of Sustainable Streets” [PDF], the data show encouraging results in seven test cases taken from three of the city’s boroughs, representing a wide range of neighborhood types.

The DOT compared sites where a variety of improvements had been implemented by the DOT to spots nearby and with the borough as a whole.

Overall, the numbers revealed broad economic benefits for the streets that had been changed. One example was Columbus Avenue, a busy shopping boulevard on the city’s affluent Upper West Side. There, the DOT had built a protected bike lane and pedestrian safety islands while narrowing travel lanes for motor vehicles. According to the tax data, revenue was up 20 percent over the baseline in the second year after bike lanes were implemented in the area.

In the comparison area immediately to the south without bike lanes, revenue was up 9 percent. The results are particularly interesting because a handful of vocal shopkeepers in the affected area had reported sales were down, leading to media reports that the lanes were bad for business.

This wasn’t just an isolated case either:

Another test case was the Hub, a congested and chaotic intersection in a working-class neighborhood of the South Bronx, where several subway and bus lines come together. DOT’s main improvements here were changing traffic patterns and improving transit connections, along with better pedestrian signals, crosswalks and shade trees.

Retail sales were up 50 percent by the end of the study period, compared with 18 percent in the borough as a whole, “all while area injuries were reduced and vehicle travel times and volumes were maintained.”

And even where parking was removed to improve bus reliability and travel times, there was also an improvement of economic activity:

On Fordham Road in the Bronx, where the implementation of a “Select Bus Service” express route and dedicated bus lane raised concerns among local merchants about lost parking spaces, sales increased 71 percent over the baseline, far better than the numbers for all but one of the comparison areas.

The DOT report acknowledges that it’s difficult to tease out all the different factors that contribute to a street’s economic health. In at least one of the test areas, a beautified Vanderbilt Avenue, overall gentrification – with all of its collateral damage to less affluent residents and business owners — was doubtless a contributor to a steep rise in sales numbers. But the NYC DOT’s data-driven approach is as valuable when it comes to money as it is when it comes to safety.

Business owners in a tough economy are often wary of any kind of change, especially when it reduces parking or changes their customers’ travel patterns in any way. Numbers like these provide yet another powerful rational argument for street design that puts people above cars.

This last point is key (and perhaps some business owners are starting to realise the value of high quality pedestrian environments). Changes to street layout that puts people above cars provides a valuable economic return – over and above what is often expected by business owners and the organisations that often represent them.

We’ve seen the same change happen in Auckland, with the introduction of a shared space in Fort Street leading to massive increases in sales and economic performance of the area. Conversely, High Street seems to be in terminal decline because retailers there have hung onto their pitiful on-street parking and the terribly narrow footpaths it creates, fighting attempts at creating a shared space.

Lower Queen St the place to be for retailers

An interesting article yesterday on what is happening in the retail building market in central Auckland.

Cruise ship passengers and Auckland shoppers are providing the impetus for the redevelopment and popularity of the lower Queen St retail area, says Nilesh Patel, associate director of retail services at CBRE.

Following AMP Capital’s announced refurbishment of the lobby and ground floor level of its 15-storey tower building at 45 Queen St, to be occupied by international brands Christian Dior, Prada and Swarovski as well as ANZ bank, two new high-profile retailers are moving into the area.

Patel says that Johnstons of Elgin, a high-quality British brand noted for fine woollen and cashmere cloth, clothing and accessories will open its doors at 90 Queen St in October.

“This will be its first store in the New Zealand market, which is a strong indicator of the attractive nature of Auckland’s retail sector,” Patel says.

“We’re also going to see T2, the boutique tea shop, open at 87-93 Queen St right next to the existing Mont Blanc store, which will add to the increased quality of tenants in the lower part of Auckland’s main street.

It seems that the lower part of Queen St and some of its surrounds are really becoming the hub of high end retail in Auckland. Other big name brands already in the short section of Queen St between Fort and Customs St include Louis Vuitton and Gucci and Mont Blanc. Along with this there has also been some pretty stunning other changes like the upgrade of Fort St and neighbouring streets which has been a massive success on every level, particularly in hospitality which is up 400% on what it was before the upgrade. Some other awesome developments include the likes of Imperial Lane which links Queen St to Fort Lane.

The Imperial by Fearon Hay Architects

The Imperial by Fearon Hay Architects

So what’s causing all of these high end retailers to move to this location, why not instead be located further up Queen St, on High, in Newmarket or even out in a mall in the suburbs?

“The most recent pedestrian count data from the Property Institute show a healthy foot traffic picture, with numbers increasing to multi-years peaks at the lower end of Queen St and at their highest levels since 2009,” he says.

“It’s been a good five to six years since we’ve seen activity of this level in Auckland’s retail property sector. There was strong activity before the global financial crisis but we certainly haven’t seen the market behave like this since at least 2008.”

Patel says changes to pedestrian and vehicular traffic mean there are more shoppers on foot, and more people in the downtown area, including in Fort St where the streetscape has been redeveloped to make it more pedestrian friendly.

So the simple answer is people, and lots of them. Make it nicer and easier for people to walk and around the city and they will do so – who knows, they may even buy stuff. Wow, who would have thought that.

The article also notes that another aspect that is helping this area of town are the cruise ship passengers visiting the city with numbers increasing from 19,400 in 1996-97 to 214,000 in 2011-12 although considering about 50,000 people walk past here every weekday, the cruise passengers are a likely to be a very small number overall. Of course one of the biggest aspects that would have helped in increasing the number of people walking in the city centre, but one that isn’t mentioned in the article has been the increase in the use of public transport. We know that in the morning peak alone there are now over 34,000 people getting off buses, trains or ferries somewhere in the CBD which is up from about 21,000 in 2001. At the same time the number of vehicles entering the CBD has decreased by about 6,000.

Now it won’t just be PT that has driven this change, the revitalisation of other areas including the Britomart precinct, the other shared spaces, the viaduct and a little further away Wynyard have all helped to start making the city more attractive and inviting. All of this doesn’t help building rental prices though.

Patel says the redevelopment of lower Queen St is also driven by the popularity of the harbour area including the Britomart precinct and pedestrian access to the ferry terminal and Britomart Transport Centre.

“All these factors are having an impact on retail rents,” he says. “It’s noteworthy that the collective shift towards the bottom of the city isn’t necessarily being pushed by retailer capital or the Kiwi economy – it’s more about the lack of availability of properties. As a result we are seeing rents being forced up, with lease terms typically six years or more, incentives dropping and core vacancy levels dropping.”

Patel says there are also some clear and noteworthy rent distinctions appearing along Queen St: “Between Fort St and Customs St we are seeing rents average between $2500 to $3500 per sq m; from Victoria St down to the eastern end of Fort St we are seeing around $2000 to $2500 per sq m; and from Victoria St to Wellesley St it comes down to $1500-$2000 per sq m.”

With Electrification, the new bus network and other PT developments that are all meant to dramatically increase patronage I imagine the current trends will only continue. I guess if you are a building owner in lower Queen St you will be very happy with what is happening.