Business inventory analysis

Report
Improvement Plans
for H Street Retail Shops
Andrew King, Talha Ocal, Mitsuru Misawa
August 16, 2012
Agenda
Summary
Overview of Current Situation
• Future Timeline
• SWOT Analysis
• Store Expansion History
• Leakage and Surplus Factor Analysis
Recommendations
• Increase Retail
• Security/Safety
• Sanitation/Cleanness
• Transportation/Accessibility
2
Summary
Current Situation
• H Street has great potential for retail shop owners.
• Customers want more shops along H Street.
• Restaurants have been saturated but growth continues.
• Issues Recognized: Security, Sanitation, and Transportation
Strategies for H Street as a whole
• Increase retail shops
• Resolve three main issues
• Security/Safety
Street Lamps, Security, Diversify businesses
• Sanitation/Cleanness
Volunteering
• Transportation/Accessibility
Partnership with Capital Bikeshare
Parking and taxis
• Possible BID formation
3
Major Project Overview (Timeline)
2012
• Construction of streetcar tracks from Node 1 to Benning
2013
• Giant will open (in between 3rd St and 4th St)
• Streetcars will start to run from Node 1 to Benning in
Summer 2013
[Long term future]
• H street’s streetcars will reach Georgetown
http://www.dcstreetcar.com/fact-sheets.html
4
SWOT Analysis
Helpful
Harmful
I
n
t
e
r
n
a
l
Strengths
• Performing Arts Institutions anchor H Street economy.
• Node 1 is close to Union Station, the largest station in
DC area.
• Transportation infrastructure has been established
(road & sidewalk improvements); trolley starts in 2013.
• The street has beautiful scenery and uniformity.
• Many food options (i.e. American, Mediterranean,
African, Asian, etc)
Weaknesses
• Nodes 2&3 are far from Metro (around 1.5 miles or
half an hour walking from corner of H St. and 15 th).
• There are not enough parking lots.
• Hopscotch bridge hides the street view from the
west, which may be a business barrier.
• The corridor has 13 blocks, which makes people
use automobiles.
• Empty lots and buildings cause negative impression.
• Small restaurants have saturated the corridor,
driving evening business only.
E
x
t
e
r
n
a
l
Opportunities
• H Street region has residential and business growth
potential.
• Streetcar will eventually be expanded along K Street.
• Giant supermarket will attract people from outside the
immediate H Street region.
• Although limited, there are available spaces for
parking.
• Some of the retail types are not represented, there is a
chance to start new businesses.
Threats
• Large national chains may damage small
businesses in the street as well as its scenery.
• Retail shops in Union Station, especially food shops
and restaurants, are potential competitors.
• NoMa and Capitol Hill BIDs are very close to H
Street, have been improving their business
circumstances. They may be regional competitors.
• Lack of subsidy (ending RPAG) may lower
attractiveness to entrepreneurs.
5
Retail Store Distribution/location
1
2
Node 1
Capitol Fine Wine & Spirits
Dynamic Wellness
Metro Mutts
Murry's Food Store
Beauty Supply
Aspire Health Store
Adobe Design
[This survey was done in July 2012.]
6
3
Node 3
Auto Zone
Atlas Vet
Euro Style
Thrift Store
Mike's Thrift Store
Rasheed
Baitul Khair
Node 2
Fashion One
J & V Pawn
Family Liquor
Shoe City
Foot Locker
Sports Zone
Rite-Aid
T-Mobile
Z-Mart
Rent-A-Center
H Street Pharmacy
King's Beauty Supply
GameStop
Boost Mobile
Stan's Discount Clothing
Rainbow
Styles
DTLR Fashion
Susan Fashion
Jewelry Store
Men's Fashion Center
PK Hardware
Cricket Wireless
Picture That
Dana Jewelry
3 Point Teks
7-Eleven
C.A.T. Boutique
Super Pharmacy & Medical
Equipment
North East Beauty Supply
Convenience Grocery
Thrift Store
Daily Rider
Me & My Supermarket
Family Dollar
Jumbo Liquor
Retail Expansion
Retail Growth in the H Street Corridor, 2009-2012
40
• Overall, Retail has
increased
Node 1: 4 to 6
Node 2: 12 to 36
Node 3: 3 to 7
• 38 shops have opened
• 8 shops have closed
• Node 2 retail tripled
35
30
25
20
15
10
5
New since 2009
Stayed Open
0
Closed
-5
7
Node 1, 2009
Node 1, 2012
Node 2, 2009
Node 2, 2012
Node 3, 2009
Node 3, 2012
Data Sources:
2009: WDCEP Report
2012: Direct Survey
Retail Store and Restaurant expansion
Leakage/Surplus Factor Analysis
120
100
80
60
40
20
0
-20
-40
-60
-80
Motor
Vehicle &
Parts
Dealers
Leakage/Surplus
Factor
88.4
Furniture & Electronics
Home
&
Furnishings Appliance
Stores
Stores
100
77.9
Bldg
Materials,
Garden
Equip. &
Supply
Stores
Food &
Beverage
Stores
Health &
Personal
Care
Stores
45.5
11.3
31.1
Gasoline
Stations
Clothing &
Clothing
Accessorie
s Stores
Sporting
Goods,
Hobby,
Book &
Music
Stores
General
Merchandis
e Stores
Miscellane
ous Store
Retailers
Nonstore
Retailers
Food
Services &
Drinking
Places
80.6
-45.8
18.1
-31.6
-9.9
100
-54.5
Explanation of Graph
• Negative (Surplus) – There is space for more customers at existing businesses.
• Positive (Leakage) – Insufficient businesses to meet demand. Potential customers may go elsewhere.
Implications
• Clothing stores, restaurants, and bars are on the surplus side, which implies these categories may have
been saturated.
• Other categories are on the leakage side, which means H Street can attract more people
if it has more businesses in these categories.
8
Source: Retail marketplace profile by ESRI and Infogroup
Retail Stores and Restaurant expansion (cont)
Quality of Life in 2010
250
Quality of Life Index
200
150
100
50
0
Quality of
Life Index
Amusement
Culture Index
Index
Earthquake
Index
Education
Index
Medical
Index
Mortality
Index (All
Causes)
Religion
Index
Restaurant
Index
Weather
Index
20002
117
108
186
31
185
139
130
192
180
100
DC
117
85
196
35
181
138
104
196
192
100
United States
100
100
100
100
100
100
100
100
100
100
• Zip code 20002 area has almost same index number of restaurants as those in DC,
and almost twice the national average.
• This graph implies that 20002 area may have enough restaurants, and that it
serves as a “restaurant destination area.”
9
Source: http://www.clrsearch.com/Washington_Demographics/DC/20002/Quality-of-Life
Recent Retail Survey Results
How would you rate H Street for the following?
Poor
1.3%
Below Average
0.3%
7.4%
10.9%
2.8%
Average
2.6%
5.8%
Good
1.3%
8.2%
20.4%
23.0%
22.8%
Excellent
0.1%
2.1%
0.1%
5.5%
0.7%
6.2%
15.3%
11.3%
27.7%
28.6%
21.1%
32.3%
33.1%
34.2%
This survey shows:
1. People are satisfied with entertainment and
special events/festivals.
2. People want to shop more in H Street, and
they want more variety of goods and services.
In addition, they are satisfied with the price and
----quality of the goods and services they
----purchase.
38.6%
36.3%
52.9%
39.6%
50.7%
44.7%
48.2%
37.8%
48.0%
61.6%
44.8%
39.8%
32.2%
33.6%
39.9%
30.6%
23.8%
23.5%
20.2%
20.9%
16.4%
13.4%
10.4%
5.5%
10
9.5%
7.3%
0.7%
2.6%
3. More than half of the people think that
the cleanliness of the street is lower than
average. Cleanliness is one of the
urgent issues to solve.
13.5%
13.2%
3.7%
3.0%
6.4%
1.6%
Source: H Street Main Street Retail Survey done by Lauren Adkins
4. Also, about 60% of the people believe
that safety in H street is lower than average.
In addition, more than 60% of the people feel
that shopping hours are short. Because
customers may feel it is not safe around
H Street at night time, store owners close early.
5. In summary, H Street has perceived
safety and cleanliness issues.
Summary of Current Situation
• H Street has great potential for retail shop owners and
the number of retail shops has been increasing since 2009.
• Customers want more shops and variety along H Street.
• Ordinary products seem to be needed rather than
expensive or luxury goods.
• Restaurants have been or are being saturated.
• Three primary issues were identified.
• Security/Safety
• Sanitation/Cleanliness
• Transportation
11
Strategies/Recommendations
Retail Store Strategies for H Street
12
Forecasting: Retail Store Increase
Retail Expansion Forecasting (2013&14)
60
52
50
44
40
36
30
20
12
10
0
Total
4
6
7
7
7
8
10
3
Node 1, Node 1, Node1, Node1, Node 2, Node 2, Node2, Node2, Node 3, Node 3, Node3, Node3,
2009
2012
2013
2014
2009
2012
2013
2014
2009
2012
2013
2014
4
6
7
7
12
36
44
52
3
7
8
10
• Based on the numbers of retail shops in 2009 and 2012, retail store
expansion can be simply forecasted as above.
Node 1: 7 (2013) to 7 (2014)
Node 2: 44 (2013) to 52 (2014)
Node 3: 8 (2013) to 10 (2014)
• In the current situation of H Street, this forecast should be realistic.
• However, by simply walking down H Street, it is apparent that the
vast majority of new construction is restaurants.
13
Source: http://www.mta.info/news/stories/?story=762
Issue: Security/Safety
Crime Risk Index
20002
Washington DC
•
National
6.47
5.72
•
•
5.63
4.7
•
4.56
3.83
3.54
2.85
1.88
1.81
1
Total
Crime
Risk
•
1.81
1
1.21
1
1
Murder Pape Risk Robberry
Risk
Risk
1
Assault
Risk
1.31
1.121
Burglary
Risk
1.42
1.29
1
Larceny
Risk
1
Motor
Vehicle
Theft Risk
Nationwide average crime numbers are indexed at 1, and compared to
average levels in 20002 and DC as a whole.
14
Crime Statistics: http://www.fbi.gov/stats-services/crimestats
•
20002 area has higher rates of some
types of crime than DC.
This data coincides with the survey.
Bars on front doors may cause
people to feel insecure.
Gates keep the restaurant and bar
crowd from recognizing retailers
Possible Solutions:
• Increase street lamps
• Replace bars and gates with
protective window wrap
• Hire private security
• Increase police patrols
All these solutions require funding:
capital improvements require large
payments up front, and patrols
require funding in perpetuity
Issue: Security/Safety
Low visibility of retailers at night is a negative – we want to capitalize on
the vibrant night life of the corridor as much as possible!
Expanded retail hours (The Daily Rider)
• Increased convenience for customers
• Increased visibility of business could help with growth
Shared front end space / multi-use space
• Shared storefronts: branching out
• Dynamic Wellness & Raw Juice Bar
• Sidamo’s recent “Lending Library”
• Restaurant or bar hosting Trunk Sales during the daytime
• A vacant building could be rented out as a venue for traveling sales,
suit fittings, etc
15
Issue: Sanitation/Cleanliness
Recommendation: Clean Team Volunteers
• Gathering volunteers to form clean teams is one solution
• Consistency and sustainability are a concern
• Volunteer labor may work better on a specific-project basis
Another solution: BID formation
• Forming a BID may also work to address these issues
• The stable funding of a BID would help ensure sustainable
Clean Team activity
16
Issue: Transportation/Accessibility
Recommendation: Capital Bikeshare
• Streetcars:
Will run through H Street NE, but the west end is at 3rd St NE.
Streetcars cannot pull people from downtown DC to H Street.
• Trains and buses:
Changing and/or adding lines would be expensive and the decision making authority rests with
other agencies. These alternatives are not realistic.
Promoting and advertising Capital Bikeshare may be the best alternative.
• Already established: Numerous existing stations and aggressive expansion of the program
• Inexpensive fees
•
•
First 30 minutes for free (for members)
Popular with both tourists and locals
17
Issue: Transportation/Accessibility
Recommendation: Capital Bikeshare
Capital Bikeshare is not fully utilized in H Street Area
even though it is difficult to access the area for people
who do not have cars/automobiles.
There is much space to utilize Capital Bikeshare in H
Street.
How to promote?
Becoming a sponsor of Capital Bikeshare might not
work, since only one fifth of the people are aware that
the DC government and other institutions are
sponsors of Capital Bikeshare.
However, collaborating with Capital Bikeshare would
work by, for example,
1. Giving one day pass as gifts/rewards to H Street
customers.
2. Spreading ad papers for H Street around Union
Station, Chinatown and elsewhere.
18
Source: Capital Bikeshare 2011 Member Survey Report June 14, 2012
Issue: Transportation/Accessibility
H Street NE already has four Capital Bikeshare stations,
but to increase density and convenience, one
or two more stations can be added.
19
Source: http://capitalbikeshare.com/stations
Issue: Transportation/Accessibility
Parking options
• Look into possibility of grant funding for turning vacant
lots into parking areas
• Mixed use of the incoming Giant parking garage which
will have 250 – 270 parking spots
Taxi Stand
• For many errands, or for parents, Bikeshare won’t work
• Partner with a private company to have a taxi stand in a
central and convenient location
20
Source: http://capitalbikeshare.com/stations
BID Formation
BID formation
• BID can help fund security and sanitation solutions
• Community support is required
H Street can satisfy this requirement
Assessment (funding) comes from community
BID could provide services similar to Main Street
• Existing 8 BIDs in DC and BID Council may be
informative in terms of expenses, services, and best
practices
21
BID Formation
Existing 8 BIDs Financial Data
Adams Morgan
Income
BID Assessments
Other
Total
Capital River
616,460
Expenses
Administration
Marketing
Cleaning&Safety&Maintenance
Infrastructure
Community Building
Economic Development
Transportation
Other
Total
204,382
•
22
317,634
148,059
511,249
Georgetown
Golden Triangle
Mount Vernon
NoMa
1,309,659
10,384,523
3,177,475
167,573
3,345,048
4,576,979
103,792
4,680,771
546,413
92,850
639,263
1,735,134
227,535
1,962,669
882,981
1,007,347
1,336,918
5,480,131
796,165
542,021
979,274
924,880
695,247
719,198
435,602
1,881,126
403,906
241,424
371,953
39,316
141,090
304,415
389,075
742,256
249,431
680,335
443,864
592,855
10,337,615
3,141,422
124,739
3,805,995
97,400
649,759
150,622
1,835,799
33%
20%
21%
67%
10%
10%
16%
17%
15%
19%
58%
57%
16%
17%
8.5
34
100
400
20.25
81
120
480
35.5
142
43
172
19
76
35
140
$10,901
$11,417
$2,099
$6,513
$3,817
$10,937
$4,181
$1,856
$4,894
$5,302
$2,174
3
4
20
42
45
42
7
9
2
12
40
6
6
8
13
Blocks
Blockfaces
•
•
1,572,666
33,051
1,605,717
Downtown
150,216
222,424
80,309
66,912
1,496,803
Administration/BID Revenue Ratio
Administration/BID Expense Ratio
Clean&Safety&Maint cost per blockface
Administration cost per blockface
Administrative Staff
Hospitality Staff
Maintenance Staff
Capitol Hill
n/a
$6,011
1
1
5
$1,278 n/a
$794
6
2
7
There are 8 BIDs in DC
Most BIDs disclose their financial
information in annual reports
Some data obtained from 990’s
Source: http://www.dcbidcouncil.org/map/
H Street Area
Limitations of Corridor Financial Analysis
• Data Availability
• Lack of historical property data means no accuracy in forecasting
• Lack of SF / linear frontage in OTR data
• Leads to use of “Assessed Value” model for projecting assessments
• Assumptions
• Relative stability of assessed values
• Same assessment method used for each corridor
• Costs for similar services do not vary across BIDs
• Future Analyses
• Compare multiple assessment models: LF, SF, Assessment, Hotels
• Different assessment models are more appropriate in different areas
• Always keep in mind: resident/merchant impact!
Corridor Analysis: H Street
Assessed Value Model
$120 per residential unit
$0.15 commercial rate per $100 assessed
$0.05 vacant rate per SF Land Area
H Street, 2011
# registered Land Area
Restaurant
20
35,014
Retail
127
418,262
Commercial
23
243,319
Parking Lot
18
87,976
Vacant
57
148,451
Other
11
99,377
Residential Single Family
748
1,191,788
Residential Multifamily
588
267,414
Apartment Units
229
Total
1592
2,491,601
Assessed Value
$ 11,194,580
$ 99,247,210
$ 110,590,220
$ 21,259,100
$ 26,844,270
$ 25,728,390
$ 567,071,460
$ 240,899,340
Mean Value
$ 559,729
$ 781,474
$ 4,808,270
$ 1,181,061
$ 470,952
$ 2,338,945
$ 758,117
$ 409,693
$ 1,102,834,570
Projected Annual BID Assessment: $372,450
Mean daily cost to H St restaurant: $2.30
Mean daily cost to H St retailer: $3.21
Data Source: 2011 OTR data
BID Formation
Human Resource Expense Assumption
Mount Vernon
(Benchmark)
Assumption 1
(No PT assistant)
Assumption 2
(1 PT assistant)
Assumption 3
(2 PT assistants)
•
•
•
•
HR Cost
Admin
/HR Cost
Executive Assistant (FT) Assistant (PT)
$70,000
$50,000
$35,000
Cleaners
$40,000
Landscapers
$40,000
$360,000
33.3%
1
1
0
3
3
$360,000
33.3%
1
1
0
4
2
$395,000
39.2%
1
1
1
4
2
$430,000
44.2%
1
1
2
4
2
Benchmark: Mount Vernon (because of similar area and business size)
•
2 administrations and 6 maintenance stuffs
•
Assume there are five positions: executive, full-time assistant, part-time assistant, cleaner,
and landscaper
In H Street corridor, In total 6 members should be enough for cleaners and landscapers.
Total HR cost depends on how many people are needed for administrations.
Also, other expenses should be considered.
25
TIF model
• The idea: Because BIDs cause property values to increase, set up a TIF
to capture that value in order to help fund the BID
• The model: “Low-growth” or normal model for 10 years for corridor
compared to “Higher-growth” post-BID model for same time frame and
area
• The result: The NPV of the difference in tax revenue is the “incremental
gain” which is then adjusted for a general fund carve-out to establish the
TIF fund.
• This is a small TIF because the growth models are very conservative.
26
TIF Model Assumptions
Discount Rate
Homestead Exemption
Owner Occupancy Rate
General Fund Carve-Out
Growth Rates
Base Case
Annual (continuous)
Initial (from BID foundation)
With BID formed
Annual (continuous)
Initial (from BID foundation)
5%
Does Not Change
Does Not Change
50%
Restaurant/Bar
Tax Rates
Property Tax Class I Residential
Property Tax Class II Commercial
Property Tax Class III Vacant
Homestead Exemption
Retailer
Commercial
$0.85
$1.85
$5
$67,500
per
per
per
/Occupied Unit
$100
$100
$100
64%
Owner-occupied
Vacant Residential Multi Residential Single Homestead Exemption
2%
0%
2%
0%
2%
0%
-6%
0%
2%
0%
2%
0%
3%
0%
4%
3%
4%
3%
3%
3%
-10%
0%
2%
0%
2%
0%
3%
0%
Growth rates are estimates, need historic data to be able to forecast
Currently uses the H Street Corridor, but could be adapted to other
corridors
27
TIF Subsidy Payments
TIF money establishes a fund and uses an amortization table to fund BID
activity during a multi-year setup period. This takes the initial burden off of
their constituents and creates a funding mechanism with a definite end.
NPV Gain
General Fund Cut
Net from TIF
$2,618,296.19
$1,309,148.09
$1,309,148.09
5-year Subsidy
TIF Portion
0.33 $
BID Tax Portion
$
Estimated Individual Tax Burden
Restaurant
Retailer
$
$
8-year Subsidy
TIF Portion
0.22 $
BID Tax Portion
$
Estimated Individual Tax Burden
Restaurant
Retailer
28
$
$
100%
436,383 $
0%
$
80%
349,106 $
20%
38,242 $
60%
261,830 $
40%
141,012 $
40%
174,553 $
60%
244,403 $
20%
87,277 $
80%
348,437 $
0%
$
100%
453,143 $
0%
$
100%
471,268 $
0%
$
100%
490,119 $
0%
$
100%
509,724 $
0%
100%
530,113
$
$
242 $
338 $
504 $
703 $
786 $
1,097 $
1,090 $
1,521 $
1,416 $
1,978 $
1,473 $
2,057 $
1,532 $
2,139 $
1,593 $
2,225 $
1,657
2,314
100.0%
290,922 $
0.0%
81,528 $
87.5%
254,557 $
12.5%
132,792 $
75.0%
218,191 $
25.0%
184,651 $
62.5%
181,826 $
37.5%
237,130 $
50.0%
145,461 $
50.0%
290,253 $
37.5%
109,096 $
62.5%
344,047 $
25.0%
72,730 $
75.0%
398,538 $
12.5%
36,365 $
87.5%
453,754 $
$
100%
509,724 $
100%
530,113
151 $
211 $
315 $
440 $
491 $
686 $
681 $
951 $
885 $
1,236 $
1,105 $
1,543 $
1,341 $
1,872 $
1,593 $
2,225 $
1,657
2,314
-
-
$
$
0%
0%
THANK YOU!
Any Questions?
29
Appendix: Alcohol Moratorium
• One possible strategy to stabilize the number of restaurants and bars
in the corridor is a moratorium on licenses to serve alcohol
• The procedure for this involves a petition by community organizations
• Covering the entire corridor would require two moratorium zones
• This strategy is not recommended unless restaurants and bars begin
“taking over” the neighborhood and become a legitimate nuisance
30

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