Downtown Economic Development, Part I
by Kennedy Lawson Smith

Over the past half century, a series of seismic shifts have rattled the economic foundation of our downtowns. PCJ columnist Kennedy Smith begins a series on downtown economic development by considering the implications of change.

The Southdale Mall, outside of Minneapolis, one of the nation's first enclosed Malls, touted its air-conditioned environment and huge amount of free parking.

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A Head-On Blow to America's Downtowns

Sixty years ago America's main streets were thriving commercial centers, with hardly a threatening economic cloud in the sky. People could get most of what they needed on a daily basis from their main street's businesses, with occasional shopping trips to a nearby larger community to fill in the gaps.

But a confluence of land use policy decisions, transportation programs, and expanding consumerism had, by the 1960s and 1970s, delivered a head-on blow to America's downtowns.

[article then continues with a look at the impacts of: Euclidean zoning; the GI Bill; the Interstate Highway Act of 1956; expansion of the auto industry; accelerated depreciation; and air conditioning]

... Implications of the Changing Retail Landscape

The seismic shifts I described have rattled main street's economic foundation. And, while they have made some downtown economic development options more difficult, they have also opened some new possibilities for main street's future. Good or bad, the climate for main street revitalization in the 21st century is radically different than that fifty years ago.

For civic leaders such as planning commissioners, these changes have several significant implications.

First, most main streets cannot support the density of retail uses they supported half a century ago. The level of retail spending needed to support all the commercial space, catalog sales, and online shopping outlets that now exist simply isn't sustainable. Main streets will need t a strong anchor of service and institutional uses -- offices, small industries, government agencies, housing -- to augment their retail base. This makes it imperative that zoning and other land use policies encourage mixed uses downtown.

Second, most main streets now have fewer opportunities for "comparison" retail -- things for which people like to compare prices and styles before making a purchase, like clothes and shoes. Shopping malls specialize in comparison retail -- and in apparel, in particular. Malls almost always have several shoe stores and several dozen or more clothing stores, and they claim almost every dollar people are likely to spend on apparel within the region.

What this means is that it is now very difficult for apparel stores and other comparison retailers to gain traction in most downtowns. In order for them to succeed, there needs to be enough unmet market demand in the community or region to support a cluster of several related stores, not just one. Unless a community's population or affluence are rapidly growing, it is unlikely that a downtown main street will be able to create such a cluster (unless it already has a strong core of apparel businesses in place). Instead, main street retailing will need to focus on the development of "convenience" retail (the kinds of things for which people don't like to travel long distances, like groceries) and "destination" retail (specialized stores which draw people from the region and beyond).

The shift towards convenience and destination has important planning-related implications. Convenience retail, for example, depends on having a critical mass of workers and residents in and near the district. This means planning and zoning policies should be encouraging -- not impeding -- mixed uses, upper-floor development, and walkability. Destination retail, which attracts customers from greater distances, raises other planning issues, such as how to deal with increased pressure on parking, transportation, and other visitor infrastructure. ... article continues

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