Welcome to a fresh week on the blog. If you have been following the real life soap opera that is the Trump administration, you probably know more than you need to about the abrupt dismissal of Federal Bureau of Investigation Deputy Director Andrew McCabe and the lawsuit filed by the president's lawyers, against Stormy Daniels, claiming she violated the non-disclosure agreement. Ick overload if you ask Blogger, who shared the current events, over dinner, with Blogger Mum. Of course there was the expected weekend presidential Twitter rant. Really, POTUS's lawyers should finally take away his phone, smashed, and toss into The Potomac River. Alright, enough about that. Shall we move on to something more constructive?
Since 1957, Toy "R" Us has been a part of American childhood. Its familiar tag line, "I wanna be a Toys 'R' Us kid and its mascot Geoffrey the giraffe, were familiar to children everywhere. Toys "R" Us has been a ubiquitous part of the American retail landscape like Macy's department store and Best Buy. Laura Bliss writes in her CityLab article "The Ticking Time Bomb for Suburban Retail,"Thanks largely to the rise of e-commerce, chains like Macy's, Toys 'R' Us, and Best Buy are shuttering faster than analysts predicted even a year ago (bloomberg.com; date accessed Mar. 19, 2018) with at least 24 major retailers (foxbusinesses.com; Mar. 14, 2018; date accessed Mar.19, 2018) planning store closures in 2018 (clark.com; date accessed Mar. 19, 2018)."
According to some forecasters, there is a looming retail apocalypse looming in the horizon. It is not just the fault of e-commerce. Rick Stein, the founder of the Columbus, Ohio-based planning consulting firm Urban Decision Group, told Ms. Bliss, "As overbuilt malls, corporate mergers, and autonomous vehicles converge," the ingredients are in place for a major disruption.
Speaking at March 5th panel in Portland , Oregon, Mr. Stein laid out the circumstances for which commercial areas wil be hardest hit by new consumer habits combined with technology: suburban car-oriented retail.
Here is a real fact, "American retail is overbuilt by about 50 percent, according to Stein. With about 24 square feet per capita, the U.S. has by far the most retail space of any country in the world, with about 25 percent more than the next closest country, Canada." This is according to the information from the publicly traded real-estate group GGP and the financial blog Zero Hedge. In Blogger's own neighborhood, there are two major malls within two miles of each other.
By contrast, megamalls, like Costa Mesa, California's South Coast Plaza, and luxury shopping centers in more affluent areas have been more successful, mid-sized to large "regional" retail hubs and strip malls (there 7,500) around the United States, are struggling with vacanies and decreasing profits (icsc.org; date accessed Mar. 19, 2018). Ms. Bliss reports, "States like Nevada, Arizona, Vrginia, Ohio, and New Jersey have some of the most over abundant big box and strip mall properties, and they're increasingly overexposed as more Americans shop online and take advantage of fast delivery speeds."
Online retailers recognize "the need for speed." Amazon offers "Prime Now," a two-hour delivery service on about 25,000 items to Prime members in at least 30 American cities. Laura Bliss elaborates, "In some of them, including Colmbus, customers can pay for delivery speeds of one hour and faster" (myfox28columbus.com; date accessed Mar. 19, 2018). Rick Stein conceded, One-hour delivery, for every U.S. market is inevitable. Perhaps,within the next few years.
Will Amazon be the first online retailer to make one-hour or less delivery the standard? Maybe. Given its recent acquisition of grocery chain Whole Foods, Amazon has "a real-estat foothold in nearly 500 locations near affluent households. Or maybe it's Walmart, with its 5,000 locations and strong presence in more rural communities." Speaking at Urbanism Next, a conference dedicated to autonomous vehicles, e-commerce, and the sharing economy hosted by the University of Oregon, Mtr. Stein commented, Their reach is absolutely insane.
Maybe pharmacy chain CVS will beat out Amazon and Walmart. "Some 82 percent of the U.S. population lives within a 15-minute drive of its 11,000 locations." Yours Truly lives within a short walk to two CVS stores. At the current pace of corporate mergers and acquisition (businessinsider.com; Aug. 25, 2018; date accessed Mar. 19, 2018), real estate footholds at advancing at a rapid clip. Imagine if Amazon absorbed CVS, as its widely speculated move into the drugstore business (qz.com; Dec. , 2017; date accessed Mar. 19, 2018)? This prize would establish the e-commerce behemoth with "a convenient 'hub and spoke' network for snap-of-the-finger deliveries in virtually every U.S.market." If you go to citylab.com; Mar. 8, 2018, you can view the map generated by Mr. Stein which illustrates the hub-and-spoke concept in the Columbus region.
It is theoretical, when you come to think of it. Regardless which corporate giant starts one-hour deliver or when, brick and mortar retail will likely suffer a serious blow, once it becomes easier to shop from the comfort of your own home. Working with Jason Sudy and Justin Robbins, consultants at Side Street Plann OHM Advisors respectively, Mr. Stein developed a tool for predicting which developed commercial property is most vulnerable to financial losses and closures. They used data from InfoGroup, Price Waterhouse Coopers, and Forbes, to create a model that takes into account several determinants: location, the mix of retail in a given area, population density, homeownership rates, income, the age of the structure, parking, and household spending in metropolitans around the U.S.
Laura Bliss writes, "Different development patterns are more susceptible to vacanies and flipping than others, the model shows--especially when layering on the eventual arrival of autonomous vehicles." Self-driving technology holds the potential to dramatically reduce parking needs, reduce the cost of delivery, and easily carry shoppers to more desirable locations, like a walkable downtown area, where shopping is more of "experience." However, the first thing makers of self-driving technology will have to do is get over users' queasiness about autonomous vehicles and make them safer. Be that as it may, the more desirable retail locations will be in a better position to withstand the coming retail-pocalypse, based on the template's projections. Suburban strip malls and big-box stores with acreage dedicated to parking, could end up worse off.
Jason Sudy, a panel co-presenter, said,
In markets like Columbus, which are already ready to deliver tons of stuff fast, overbuilt retail space might not die out in slow atrophy.... It could be a calamitous collapse.
This could result a lot of very visible retail blight dotting the suburban highway corridors. Most important, it creates a troubling financial picture for communities that rely on retail for much needed tax dollars (theatlantic.com; May 23, 2017; date accessed Mar. 19, 2018)--"not only from the lost stores themselves but also from the potential devaluation of surrounding properties." The Columbus, Ohio metropolitan regions has about four percent of gross leasable area in the "most vulnerable" category, according to Messr. Stein, Sudy, and Robbin's estimates. Go to the map at citylab.com; March 8, 2018 where you can see the areas in red indicate the most susceptible while the green areas are the least. Consider this, "If all of those properties flooded the real estate market at once, land values would flipped on their heads." Mr. Sudy said,
Already, we don't collect enough taxes to pay for fire services., the infrastructure, and all the stuff we have to do.
Using the city of Atlanta, Georgia as an example, "six percent of GLA is ripe to flip."
The Stein, Sudy, Robbins presentation focused on the Columbus area, where they are based. Their model is just a model. "It's based on an imperfect mix of data, and a number of assumptions about the future--for example, that AVs will be uniformly adopted at all, without other interventions from transit agencies or other technologies." Drones are an example of equally disruptive forces as autonomous vehicles. Further, one-hour or less delivery may not be as close as Rick Stien would like to believe. Panel co-presenter Kelly Rula said, We don't really know what the next five years will look like.
Kelly Rula was recently hired by the Seattle Department of Transportation to work on new mobility, climate, and urban freight issues after working on final mile delivery for Amazon Prime.
Subtracting AVs from the equation, it become quite clear that a storm on the horizon. Laura Bliss writes, "With taxable land already over-allocated to retail and parking, changing shopping habits, and ever-faster delivery, self-driving cars will only accelerate the changes already happening." Communities are not exactly ready for what is here, as well as what is ahead: "more empty buildings, a harder economic punch from the lost retail and heavier road I pats of increased goods delivery."
Justin Robbins said, "At the very least, new developments should be future-proofed against blight and hits to tax revenue. Essentially,
Don't build any parking garages you can't adapt to other uses.... Create internal rids and roadways on large new developments, so that you can fill in as things change.
To mitigate transportation map acts, Kelly Rula suffered that "cities could follow Seattle's example by studying food movements, testing dedicated loading zones and sensor-enabled curbs, and looking at road pricing to mitigate added deliveries, in additions to human trips."
Communities might want to consider adaptive reuse of vacant retail space as it becomes available. Can dead and dying malls be reused for housing, museums, or office space?
Whatever the case, Mr. Stein told CityLab, "cities anticipating and preparing for the future are more likely to come out winners. Those who aren't--perhaps by dint of their economic inability to plan ahead--could be choking on the fumes."
Rick Stein used this analogy,
Technology is like wate,.... If you don't channel it where you want it to go, it spills all over the place.