26 April, 2021 4 4 Comments

Imagining A New World And The Good Stuff We Leave Behind

April 26, 2021 By 4 Comments

Remote work has the potential to upend our work lives forever.

Have you noticed how fast the world moves these days?

Big changes can creep up on you, at first you may hardly notice than all it once the ground shifts and an era is gone.

When I was a kid growing up in 1970s Long Island, malls were all the rage. It’s where we hung out week after week. There was a food court, a Herman’s Sporting Goods Store, a Walden Books, a movie theater and a Spencer’s Gifts. That’s pretty much all we needed unless there was an event that required some new duds—then we moseyed over to Chess King where the polyester flowed like Niagara Falls.

The mall, the neighborhood and school were our world.

My friends all lived within a few miles of each other. I really didn’t know too many people who weren’t from the Tri-State area. Most of our parents were born, raised and lived within the confines of the Island, Westchester, New Jersey and the five boroughs. When a kid from Pennsylvania moved into the neighborhood he seemed exotic. When a family from Oregon moved down the block we lined up to take a look—the Pacific Northwest might as well have been Timbuktu.

 

Today, that’s very different.

Thanks to tech and apps like Tik Tok, our children have friends all over the country and the world. “Friend” of course is a relative term. While my friendships were forged because of proximity and relied on me seeing my buddies every day at school, today young people may never be in the same room with their best friends. They chat, text and play video games with people from all over the world.

It happened slowly and then all it once.

As we begin to see the world post-Covid (we are still very much immersed in the virus and need to be vigilant) what might the world have in store for us?

Lately, I’ve been thinking about the fate of retail and office—two big players in our physical world.

Changes in consumer behavior that seemed relatively marginal and slow-moving undermined the value of retail real estate very quickly in the U.S., especially the once beloved shopping mall. Experts believe  the same potential for disruption exists in the office sector, with changes in human behavior being massively accelerated by Covid-19.

I recently read an interview on an influential real estate blog that painted an interesting picture. Here’s what one British expert had to say.

“Offices are not dead; they are very much alive,” RealCorp Capital founder Chris Kanwei said. “But a word of caution I would sound: For most of us, we tend to look at how offices will work in the future from the perspective of our own orientation. An example, if you take UK shopping centers and look back a few years to 2006, shopping centers and retail parks were a huge deal, they were springing up left, right and center. But just on the sidelines there was Amazon. And no one figured out in 2006 where Amazon would be today, and where shopping centers would be. It is just that sort of parallel you have to look at.”

 

Kanwei said part of the inability of retail real estate to see change coming is because a group of people with very similar backgrounds and experience could not envision a future that might be radically different from their own past.

 

“There were arguments put up by mostly middle-aged people at the time: You will always love the shopping center experience, you will always want to go there with your family or your friends on the weekend. And it was a great argument, but it was being made by people to other people who saw life the same way, who had the same future aspirations.”

 

There is the potential for the same thing to happen in the office sector: an expectation that the behavior of future generations will essentially be the same as what has gone before. While the difference might not be as extreme as changes to shopping patterns, they have the possibility nonetheless to drastically alter real estate usage and value.

 

“We have a generation coming up now who are not seeing life the same way,” Kanwei said. “They are not always as interested in going out and playing with their friends. They making friends online in South America, in Russia, in Africa, playing chess games online and interacting. That is the trend: We see more and more people not wanting to engage with other humans directly. Humans collaborating will never be taken away. But we have to understand that there is a generation coming through that won’t just engage in the same way we did. This same generation will be moving in to the offices of the future, and will look to engage differently, and could see the office structure of today as archaic — why would you want to bring all of these people in to the office? And that might well change the outlook people have on offices, in the same way it has in retail. I’m not calling an apocalypse for the office. But if you are investing for the long term, you have to bear in mind, your office investment may have been worth £200M, but down the line it may be worth £5M, as we have seen with shopping centers.”

Yikes.

Still, that scenario is entirely possible.

My 28-year-old son works for a large publicly traded corporation with offices in Palm Beach County. He got the job during Covid, which means he has never worked in the home office. Instead, he’s working out of his living room and thinking of finding bigger digs because his remote working arrangement may prove permanent. He also realizes that he can live anywhere and dial into the office.

He doesn’t seem bothered at all by the situation. As his boomer dad, I can see his point but wonder if he will miss out on the camaraderie, friendship and esprit de corps of working side by side with co-workers instead of screen by screen.

I happen to like the office.

I’ve worked in newsrooms (which are the best)—chock full of characters working on interesting stories and more “corporate” environments where I was able to make some lasting friendships.

As someone who values collaboration and who always has lots of questions for my colleagues the idea of working remotely forever doesn’t appeal to me.

I like the collision of ideas, the rhythm of the day, the ‘hey what are we doing for lunch’ routine that makes the day fly by.

As Seth Godin says: “The optimism and possibility that come from training and learning in groups is a miracle. It means that, with a little effort, we can level up, become more productive and enjoy the work more tomorrow than we did yesterday.”

So as we gradually emerge from our Covid cocoons, I hope we slow down and make some conscious decisions. Do we really want to give up the office?

After all, while millions enjoy the convenience of Amazon and a “one-click” society, didn’t we lose something by putting all those neighborhood retailers out of business?
Trade-offs.

Convenience versus camaraderie. Price versus personal service. Digital versus experience.

There’s no holding back the future—it will come. That’s the law. But we can and should choose wisely.

Here’s hoping we do.

2 March, 2020 2 2 Comments

Bricks & Mortar

March 2, 2020 By 2 Comments

Bricks and mortar is changing retail , but retail is not dying.

We’ve seen the headlines.

Macy’s closing stores.

Bed, Bath and Beyond closing stores.

Forever 21 going bankrupt (but being revamped).

It’s a “retail apocalypse” screams the headlines caused by Amazon and the big bad world of e-commerce.

Yes, the numbers look tough for brick and mortar retailers. More than 9,000 stores closed in 2019 which was more than 2018 and more than 2017—all record years.

Ugh…

But there’s a deeper story here.

My eyes were opened recently after reading a report by University of Chicago economist Austan Goolsbee. And as we plan our local cities and lament the lack of retail in places such as downtown Delray and Boca Raton we need to pay attention to societal trends and adjust our expectations and maybe our codes accordingly.

First, there is no doubt that e-commerce is growing by leaps and bounds. Twenty years ago, about $5 billion worth of goods were purchased each quarter online. Today, that number is about $155 billion per quarter.

But while that’s an impressive number it still represents only 11 percent of the entire retail sales total.

So almost 90 percent of goods are still purchased in a brick and mortar store and of that percentage, more than 70 percent of retail spending in America is in categories that are fairly well insulated from the internet due to the nature of the product or because of laws governing distribution.

These categories include cars, gas, food, beverage, drugs, home improvement and garden supplies.

So what’s going on out there?
Why is it so difficult for physical retailers to make it in the 2020s?

Goolsbee puts forth three societal trends as causes.

The rise of Big Box Stores—super centers and warehouse stores such as Costco actually ring up more sales than Amazon.

Income Inequality—as the middle class has been hollowed out, stores that cater to them have suffered or died. Retailers aiming at the high and low end of the income scale have found some success. So “dollar” stores have grown along with some high end designer retailers while retailers serving the once vast middle class— J.C. Penney and Sears have suffered.

Services Have Grown, Things Have Not—According to Goolsbee, with every passing decade Americans have spent less of their income on things and more on services and experiences. We are spending more on our health, more on restaurants, education, entertainment and business services than we used to and less on products sold in stores.

Here’s a cool stat: In 1920, Americans spent 38 percent of their income on food and 17 percent on clothing—almost all through traditional stores. Today, 10 percent of our income is spent on food and clothing eats up just 2.4 percent of our incomes.

So how does this affect our local communities?

Well, it might explain why Atlantic Avenue has become more of a food and entertainment destination than a traditional downtown where people go to shop for things like clothing and decorations.

The issue becomes more acute when property values sky rocket alongside rents. It’s hard for traditional retailers to pay high rents per square foot, especially since we still have a seasonal economy.

While we all (well some of us) love mixed-use development, it’s challenging to make retail work due to economic and societal trends. Of course, mixed-used does not have to be exclusively housing and retail, it can also include food and beverage, co-working, an educational use or something in the health or fitness space.

I have some very smart friends who have succeeded in real estate and they are having a hard time imagining what will happen to all the retail space we have built in Boca, Delray and Boynton Beach.

We definitely have a need for more housing, especially attainable housing and some of the overbuilt retail space can surely be used to add to our stock.

But that’s going to require some deft planning and a whole lot of political courage/hard work to convince residents who already live here why we need to make room for more people. P.S. if we do want our existing mom and pop retailers and family owned eateries to survive, density cannot be a dirty word. Let’s repeat: density done right is not a dirty word.

There was a time in Delray when density was encouraged in our codes and plans . And guess what?

It brought the town back to life.

Al Gore would call that an inconvenient truth, candidates running for local office would sooner break out in hives than embrace the concept but density designed properly and used strategically can do much to support the mom and pops and independent merchants we say we cherish. It’s also better for the environment than traffic-inducing sprawl like development.

Events too play a role too, by bringing people to town where they might stop and shop or come back to check out stores they might see while attending an arts show or festival.

As the son of an independent pharmacist, I have a deep appreciation for how hard it is to make it in retail and how important good retail is to a vibrant and vital central business district.

As we sift through the barrage of campaign attack ads already hitting our mailboxes and inboxes, it would be useful to see if any candidate offers ideas on how to grow the local economy in a high rent, seasonal environment with tons of competition from nearby cities, without an Office of Economic Development (the two member team resigned and have not been replaced) in a changing world being disrupted by technology and things we can never anticipate such as coronavirus.

It’s not an easy challenge, but real leaders…effective leaders…. ask the questions that matter and focus their communities on issues of substance. Or we can continue to accept vapid statements saying we are against crime, for good schools and against development.

Give me substance over tired canards.

It’s time.

We live in changing and complicated times. We need ideas and leadership.

16 January, 2019 14 14 Comments

Those Great, Good Places

January 16, 2019 By 14 Comments

Found this shot of Ken and Hazel’s on Newspaper.com

I’m a member of my hometown page on Facebook.

It’s a combination of great photos, obituaries, current news and nostalgia.

It’s a great way to stay in touch and reminisce.

Recently, someone created a hugely popular post listing old businesses.

The post went viral and has attracted scores of responses as the list of “great old places” keeps growing; old pizza places that we loved, long shuttered department stores, delis, record stores (remember those?), grocers, movie theaters (when one screen was the rule and a triplex was a big deal), bowling alleys, florists and sub shops (or were they hero, grinder or sandwich shops?)I can’t remember.

The post was a great walk through the past. And it’s still going on.

Which got me thinking of some great old businesses that once inhabited this place.

Now admittedly, my history only dates to the summer of ‘87 but that’s 30 plus years— enough to have seen a few things come and go.
So here’s my list. Feel free to add.

Burger Chin, the Arcade Tap Room, Ken and Hazel’s, the Patio Delray, Costin’s Florist, Mercer Wenzel, AE George and Sons, Clay and Hy’s Boutique, Damianos, Splendid Blendeds, Bob Miller State Farm Insurance, Sefa, The Phoenix, Sopra, Delray TV, Pierce Tire, The Rod and Gun, Dirty Moe’s, Liberties, Louie Louie’s, Tryst, Sal’s Sporting Goods, The Trellis Shop, the Seagull Shop, Tom’s Ribs, Club Boca, Taco Viva, the Delray Mall, Webster’s, Jefferson’s, the Boca Mall, Mervyn’s, Pete’s, D Train, Locos Only, Elwood’s, Las Hadas, Pineapple Grill, Hoot, Toot & Whistle, Gillis & Sons and The Annex. Whew.
You get the drift…
Great places all..at least as I remember them.

 

26 November, 2018 0 Comments

Amazon & Main Street

November 26, 2018 By Leave a Comment

Is Amazon gunning for Main Street?

So I’ve been doing a lot of thinking lately about Amazon.com.

The e-commerce giant has been all over the news lately finally naming two winners to share the spoils of its H2 Headquarters quest and dominating Black Friday and Cyber Monday sales.

I’ve long wondered about the pros and cons of incentives but my reading about the deal and Amazon’s business model led me to wonder and worry.

What are we doing?
 Is Amazon growing too big for our own good?

Has Jeff Bezos created a monster that taxpayers in Virginia and New York are subsidizing?

What does this mean for Main Street?

Then I read an interview with Starwood Group CEO Barry Sternlicht on Bisnow Media and my gravest concerns were verified.

Here’s a quote that ought to make us think.

“I was super disappointed in the cities they chose. Neither city needed them. And the fact that New York is in an opportunity zone and they got $5.5B of credits for the $5B of investment. I’m not a fan of the gifts. I mean, really? Amazon, a $1 trillion company doesn’t have the resources to build a plant? They need inducements? A $1 trillion company. And by the way, Amazon’s job these days is to put most everyone else out of business. So you’re facilitating that. Mom and dad can’t get a $5B tax break to expand their dry cleaners.

 

If you’re Amazon and you want to be a responsible corporate citizen just say, ‘No. We can do this on our own. We’re big boys. We’re worth $1 trillion. We’ll build these plants on our own.’ Why not go to a city like Atlanta or Miami, and why pick some place that doesn’t really need you? And those are congested cities, particularly New York, and the fact that it’s in an opportunity zone so they’ll never pay taxes on the building and land. I find it abhorrent. I think it’s just awful. It’s like a free headquarters. Why doesn’t somebody give me a free headquarters?”

Here’s another one that ought to give you pause or maybe hives.

“Amazon was fine when they helped little businesses survive, now they’re actually going after little businesses. And that’s not healthy for this country. You’re creating a monster. Now you’re funding the monster to destroy mom and dad’s businesses. That ain’t a good deal.”

The coup d’grace was Sternlicht’s next set of sentences:

“The endgame for Amazon is to wipe out the main streets of America. Maybe if the consumer is so busy he’s OK with that. But I can assure you they don’t know the consequences of what they’re doing. Those commercial businesses along main street pay the real estate taxes that fund schools and if they go away, and most assuredly they are going away, then taxes on individual homes will have to go up to pay for the support system.

 

I don’t think the average person spends a lot of time thinking about that. It’s really convenient to have them deliver a bicycle pump to your house that costs $20 for free in an hour. By the way, that’s predatory pricing. In the industrial commodity complex if you sell aluminum below the cost of consumption of aluminum, it’s called dumping and it’s illegal. They’ve been allowed to get away with that forever. They’ve lost more money in shipping than they made in the margins on the goods that they were selling. That’s predatory pricing and they were never called out on it. In my view, what they’re doing is illegal, and it crushed mom and dad. How can you compete with that?

 

The endgame where the consumer will get really crushed is when my little store that I used to go to buy my pump is out of business and Amazon will charge me $80 for a pump and $200 to have it delivered. The government put restrictions on the sale of vaping for teens. That’s the government looking to the future and saying it’s not good for teenagers. The government could look to the future and say, ‘You’re going to destroy America as we know it today, and we can’t let that happen.’”

Wow….

In the interest of full disclosure, I buy frequently from Amazon. Like everyone else, I enjoy the convenience, the vast selection and the ability to shop prices. Companies that I work with do lots of business on the Amazon platform and it has added to their bottom lines and our ability to access consumers throughout America.

But I do worry about what all of this is doing to Main Street. In Delray, we have an interesting dynamic, high real estate values which lead to high rents and a shifting landscape which makes it hard for independent retailers to survive. These conditions lead to vacancy, which isn’t good for a Main Street.

But I also don’t think it makes any sense to long for the good old days or wish that technology is going to retreat. It’s not.

Retail—at least as we knew it– is over or at the very least highly challenged.

Sure there will be stores, but successful retailers will have to carve out a very distinct niche, learn to be “experiential,” employ a digital strategy and or exist in high traffic areas. It’s possible to succeed, just not easy or obvious anymore. And frankly—as the son of a retailer—it never was easy.

Still, while it seems counterproductive to wish away the likes of Amazon, there are some big issues that we need to talk about as a society.

If retail fails or shrinks considerably (and that’s what’s happening), it will have an impact on sales and property taxes which fuel local government.

Real estate on and off Main Street will have to be rethought and reinvented.

There’s peril and opportunity in change, the challenge for leaders and communities is to make you maximize opportunity and hedge against peril.

P.S. the next article I read on Bisnow was an interview with Jorge Perez, CEO of Related Companies. It was on sea level rise and included this quote: “Sea level rise is something that is going to hit us all.”

Yes it is…and that’s a thought for another day. We sure do live in interesting times.

 

 

4 December, 2017 0 Comments

A Place For Humanity Amidst Change

December 4, 2017 By Leave a Comment

A vintage Sears catalog.

When I read the news, I look for patterns.

What’s bubbling just under the surface? What trends are starting to emerge? Are there clues out there to tell us where we are going next?
It’s fun to discern what might be happening and it’s also helpful in business to try and see where the world is heading.
What I’m seeing lately are a bunch of stories that indicate angst about technology and a push back against the dominance of our digital society. It seems that we are beginning to really worry about the addictive power of our smart phones, the amount of data tech companies like Facebook and Google have on us, the corrosive impact that social media can have on society and the ubiquitous reach of Amazon.
So this could get interesting.
One of the best trend spotters out there is marketing expert Seth Godin. Here’s what he wrote on Black Friday:
“The buying race is over. Amazon won. The shopping race, though, the struggle to create experiences that are worth paying for, that’s just beginning.”
Godin was lamenting the herd mentality whipped up by media to shop on the day after Thanksgiving.
But while he acknowledged Amazon’s dominance, he also sees opportunity for physical retailers in the “real world” to compete by offering experiences, service, design, fun and community.
We better hope so, because there are a lot of jobs, sales tax for local governments and consequences for Main streets and shopping centers if retailers don’t figure out a way to compete more effectively.
Another go to source for trends is “Redef”, an email newsletter that aggregates great stories from a wide variety of sources.
One recent piece came from the LA Times which talked about the comeback of catalogs. In an era of seemingly endless growth for online shopping, the humble mail order catalog is getting new life as merchants strive to battle email fatigue. 
While nobody is predicting the return of the Sears catalog (or the iconic retail chain) there seems to be growing anxiety over a purely cyber world. 
Don’t get me wrong. Facebook is great in moderation. Amazon is convenient and Netflix is wonderful.  
But it would be sad if we lost face the face interaction we get at a great retail store and the experience of seeing a movie with a group of people. 
While these and other industries are under assault by the threat of mobile and internet technology, there is some evidence that the “analog” world won’t go without a fight. 
The New York Times has experienced a surge in print subscriptions, vinyl records and cassettes are staging a comeback,  physical books and independent bookstores are enjoying a mini renaissance and there are retail districts around the country that are doing very well. 
While AirBnB is thriving, smart Hotel brands like Aloft, Hyatt Place, Canopy, and Ace are also proving to be enduring competitors. Boutique hotels such as Cranes Beach House, historic properties such as the Colony Hotel and larger but stylish options like the Seagate remain desirable for travelers of all ages. 
As for theaters, there seems to be room for Netflix and iPic, Hulu and Alamo Drafthouse. 
While Harvard sociologist Robert Putnam has reported on the phenomenon of people “Bowling Alone” which chronicled the struggles of civic groups and bowling leagues—there are a raft of new groups emerging:  One Million Cups, Creative Mornings, WiseTribe, Community Greening, Human Powered Delray and Better Delray carving out community. 
Locally, Rotary, Elks and Kiwanis remain vibrant and vital.
 
As for me, I don’t see technology retreating. I think we will see autonomous cars within the next 10 years, streaming services will grow and groceries will be delivered to our homes. But I do think that smart retailers who create experiences and relationships will thrive. Great restaurants will continue to draw crowds and while golf courses will continue to close— options like Top Golf (food, fun, night golfing) will fill the gap. 
I think the key will be placemaking. 
The cities that create vibrant, safe, walkable places will draw crowds and investment. Fred Kent, a part time Delray resident and founder of the Project for Public Spaces (www.pps.org), has reported on the “power of 10” –the need for communities to create at least 10 activities in order for places to thrive.  PPS is right. 
We will look up from our phones–if there’s something compelling and active to draw us in.
 We will want to gather for concerts at Old School Square and Mizner Park. We may want to take a class or two online but there will also be a desire to interact in person with other students and a desire to go to happy hour even though you can order beer, wine and spirits online. 
I think a backlash is brewing. We will bend technology just enough to allow us to remain human. 
At least that’s my hope. 
17 July, 2017 2 2 Comments

A Return To Bay Street

July 17, 2017 By 2 Comments

Greetings from The Bahamas.
About a dozen years ago, I was part of a small group that got invited to The Bahamas to meet business and political leaders looking to improve downtown Nassau.
I was thinking about that trip and a follow up visit by Bahamian officials to Delray this week as I returned to Paradise Island and made a trip to Bay Street.
U.S. Ambassador Ned Siegel asked former Mayor Tom Lynch and I to visit and talk about what we learned from the revitalization of downtown Delray Beach. We were joined by Boca Chamber President Troy McLellan and Kelly Smallridge, the president of the Business Development Board of Palm Beach County.
It was a memorable trip. And thanks to Ned, we met a who’s who in the Bahamian business world and government.
What struck us was the lack of local government so that the “little things” that mean so much –stuff like potholes and traffic flow –were left to the national government to deal with.
One of the issues at the time for Bay Street business leaders was the magnetic pull of cruise passengers and tourists to Atlantis, the massive resort that kind of has it all from magnificent pools and restaurants, to stores, aquariums and of course a casino.
We were asked to make some recommendations and we did and we later hosted a delegation in Delray, Boca and Palm Beach County.
I’m still in touch with a few of the Bahamians from that trip, mostly on social media.
So it was interesting to go back and ask as many people as I could how downtown was doing.
Of course, when you ask you get the gamut of responses: Bay Street was “thriving”, “struggling”, doing “awesome” and “so-so.”
When we were there we saw four cruise ships and the streets and stores were busy.
Side streets looked the same as a dozen years ago–still in need of some TLC. And parts of Bay Street were doing well and parts were marked by empty stores and blight.
So it goes…but it’s a beautiful place, with nice people, vibrant color, tropical weather, good food and happy music. And the residents…they love it here. Lots and lots of pride.
One thing was notable. Everywhere we went, people seemed to still know and miss Ambassador Siegel. That’s pretty cool. He left a mark here.
I hope he knows that.