The ADRR

In response to David’s article, I have a few thoughts to share.

I have grappled with this idea of mono-functionality with respect to certain types of retail — specifically, the concept of critical mass.  Obviously, the importance of critical mass (and its close relative, co-tenancy) varies depending on the category, though arguably it is most critical with regard to comparison goods (e.g. fashion, home furnishings, antiques, etc.), where we as consumers have traditionally gravitated to larger destinations that allow for the greatest possible choice (i.e. for “comparison shopping”).  The bigger the destination, the larger the addressable market — hence, the ever bigger “fortress” malls like Roosevelt Field, Garden State Plaza and King of Prussia as well as the massive clusters that we find on (an ever dwindling number of) urban high streets.  Flight to quality indeed.

And yet, even some real estate professionals do not seem to fully appreciate the concept.  Perhaps it is just willful self-interest, but a modest subset of landlords and brokers will routinely press for less restrictive zoning in comparison-shopping destinations so that they can more quickly backfill vacated spaces with non-synergistic uses like dental clinics and title companies — further reducing the number of options available to comparison shoppers which, once it falls below a certain threshold, can collapse in a hurry (as we see in the case of malls that lose major anchors).

Municipal planners are typically not attuned to such dynamics, either — hence, the initial recommendation in Mayor Adams’ City of Yes: Economic Development proposal to open the floodgates to non-retail uses on Madison Ave between 57th and 70th (!).  For this reason, I often impress upon my public-sector clients the need, at least in certain cases, to be very careful, even (especially) during times of distress and hand-wringing, and to avoid panicking, as many unfortunately have done amidst the supposed “retail apocalypse” and then the pandemic.  After all, once you allow in those (creditworthy) dental clinics and title companies, they ain’t going anywhere….

That said, my thinking has recently started to crystallize around a relatively new and different sort of destination, which I call, for lack of a better term, “browse-worthy.”  It has shops — usually a mix of boutiques, chain-lets and maybe a few faux-boutique brands — but not anywhere close to a critical mass of them.  And those shops are combined with compelling food and beverage — which is, as we know, what generates the buzz (and effectively serves as the anchor) in retailing these days — then packaged along with walkability, placemaking, maybe even a green space.  People are not visiting these destinations expressly to shop but rather, to consume a place in its entirely — which calls for more functional diversity in the retail mix, rather than any sort of critical mass.  They are also not going there out of convenience — many of them are nestled along intimate neighborhood shopping streets, far from a freeway exit or transit transfer.  After all, with social media and third-party rideshare, inferior visibility and access are not necessarily dealbreakers.

I think, though, that there’s quite a bit more nuance to functional diversity than meets the eye, at least as it relates to retail.  For one thing, not all non-retail uses are equal.  Owners of B/C malls, likely out of desperation, will often employ a kitchen-sink approach to backfilling vacant retail space and land, but the result can be a jumbled mess that does not synergize at all — which might work for the pro forma, but not as any sort of cohesive destination that can pull from afar.  Even the addition of a 100-unit apartment complex where a department store used to be — what does that really do, add 200 more customers to an increasingly irrelevant retail core?  That’s not going to save the day, not in the long term….