Retention and Attraction Strategies for a Balanced Retail Sector

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This is a recap from Big Ideas for Small Business, NLC’s national peer network helping local governments accelerate effort to support small businesses and encourage entrepreneurship. To learn more, email robbins@nlc.org.

Empress of China SFNeighborhood institutions, such as the Empress of China restaurant in San Francisco, are often forced to close their doors due to escalating rent prices – but city leaders can balance retention and attraction strategies to sustain a healthy and diverse local business community. (Image courtesy reelsf.com)

Small businesses in some San Francisco neighborhoods are “disappearing as fast as an artisanal ice cube in a $14 craft cocktail” because of a development boom that’s turning neighborhood institutions, like the Empress of China and Lombardi Sports, into housing units. In Washington, D.C., local shops like Jak & Co. Hairdressers are closing their doors due to escalating rent prices.

At the same time, though, Cleveland has found it difficult to attract a full-scale grocery store downtown. Fort Worth also recently struggled to attract a retailer to a lower-income and underdeveloped neighborhood of the city.

What’s happening in these scenarios is nothing new. The real estate industry tends to develop where demand and buying power are high enough to create a return on investment. Even though cities don’t have direct control over the private real estate market, there are indeed strategies local governments can implement to create equity across neighborhood retail sectors.

City leaders should find the right balance between retention and attraction strategies to sustain a healthy and diverse local business community across all neighborhoods. Business retention strategies help existing local businesses keep their doors open. Business attraction strategies encourage or promote business growth in areas that wouldn’t otherwise be considered viable options for investment.

Achieving the right balance can undoubtedly be a complicated and ongoing process. Cities from NLC’s Big Ideas for Small Business peer network recently shared some of their local best practices.

Business Retention

 Legislating to preserve legacy businesses.  San Francisco is considering Legacy Business Legislation that would help retain local businesses in their original location by providing incentives to both the business and property owners. The businesses affected by this legislation are mom-and-pop restaurants, bars, and other small retailers operating in the city for at least 30 years. In recent years, these historic retailers have been “swallowed up” by the city’s development boom.

Providing business owners with site relocation assistance. For existing businesses that can no longer afford their leases, the choices are either to close up shop or relocate to a different neighborhood. Retail site selection tools, like the Retail Site Search from the Washington DC Economic Partnership (WDCEP), catalogue all of the available commercial spaces in the city. Every year, the WDCEP works with several business owners to choose a new, more affordable site for their business. The WDCEP tracks data on new business licenses that provides a unique vantage point into areas where businesses are growing and commercial rents are likely to rise.

Business Attraction

Partnering with a public hospital to build a grocery store in a food desert. Grocery stores are one of the more difficult types of retail for cities to attract in underserved areas. A public hospital in Kansas City, Mo., is supporting the construction of a grocery store in a section of the city that is now considered a food desert. The hospital’s vision is to provide access to fresh, affordable produce so that local residents are healthier and need fewer emergency room visits. Once it’s opened, the hospital will take over the management of the grocery store and offer classes on food and nutrition.

Using vacant space for pop-up retail. Temporarily filling vacant commercial corridors with pop-up retail businesses benefits the local economy in two ways. First, it reinvigorates the neighborhood by attracting visitors and customers, and can help reestablish the neighborhood as a “hot spot” for new businesses or development. Additionally, pop-up spaces provide local entrepreneurs the chance to test their products and skills in a low-risk environment. San Antonio’s OPEN initiative provides entrepreneurs with short-term leases in vacant downtown spaces, and aims to “authenticate downtown as a vibrant urban space, ready for long-term investment.” The Pop-Up Project in San Jose also connects retailers to vacant or underutilized downtown space.

A mix of these types of retention and attraction strategies will help ensure that all businesses have the chance to be successful, and that all neighborhoods have affordable goods and services available for residents.

Robbins_small (2)About the author: Emily Robbins is the Senior Associate of Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.