Learn how those in commercial real estate are stepping up to help ailing town centers.
It’s tough to overstate the impact of vibrant town centers on the health of our communities, says Patrice Frey, CEO of the Chicago-based National Main Street Center. “Main streets are the heart and soul of our communities. They play an outsized role,” says Frey.
Her nonprofit group’s mission is to help locals working to revive their downtowns. Commercial real estate pros bring special skills and energy to that task, she says. Indeed, around the country, real estate pros are committing their time and expertise to downtown revitalization—often with striking results.
Small Town, Big Payoff
When it comes to hard-scrabble downtowns, Kennebunk, Maine, doesn’t seem to fit the bill. The picturesque town is surrounded by beaches, historical sites, a national wildlife refuge, and swank summer homes. But more than a decade ago, from the vantage point of his company’s downtown Kennebunk headquarters, John Anderson, president of Investcomm Commercial Group, could tell the main drag needed a lift. Nearby attractions were bringing a lot of traffic through the town, he says, but the downtown was having trouble getting visitors to stop and take a look around. It also seemed that disparities in lighting, pedestrian crossings, and planters were keeping Kennebunk from presenting a harmonious front to both visitors and residents. As a member of the town’s Downtown Committee, Anderson began discussing ways to solve these issues with his fellow committee members back in 2005. In 2008 the committee created a temporary downtown revitalization subcommittee, which Anderson chaired. The group heard proposals from a number of companies that design community improvement projects, finally settling on one that presented an initial master plan with a price tag of $13 million.
Then came the work of whittling down the proposal to a scope that would be affordable for a town with a population barely topping 10,000. The committee surveyed residents and followed up with more targeted workshops. Anderson says, even for commercial real estate professionals who are immersed in development and deal-making, it’s difficult to determine which improvements will make the biggest impact. “Just walking through the downtown every day, you have your blinders on,” he says. But examining pictures of the existing downtown gave committee members a new perspective. The first thing they noticed was a “big sea of asphalt.” This demonstrated the need for pavers and a brick sidewalk to delineate walking areas from the street.
The group also identified inconsistent signage standing in the way of a cohesive, inviting space. Simple “wayfinding” projects can reduce disorientation for visitors and residents while also offering a revitalization bonus.
“Signage plays a really important secondary role, which is branding,” Frey says. “It helps visitors understand this is a place that is managed. This is a place people care about. This is a place that people are invested in.”
Although the committee in Kennebunk reduced the cost of the project to $2.1 million, voters rejected the plan in June 2009. Anderson says the project was mocked as a “yellow brick road” fantasy. “We didn’t communicate to the community what we wanted to do,” he says. So the committee slashed the budget further by selecting lower-cost materials and cutting out some features, such as a town clock. In November 2009, the voters approved a $1.6 million proposal for a three-phase project. The city is funding the project with a bond, paid for using tax-increment financing.
The first phase was completed in 2011, resulting in widened sidewalks with brick pavers and granite curbs; new light posts, trees, and planters; and a brick plaza. Phase two, concentrating on upgrades just south of downtown, was completed at the end of 2014. Phase three is on hold while the city deals with road improvements in another area, but Anderson says the town has already seen a great improvement in foot traffic. “It’s funny, looking at the old news articles and seeing how negative they were,” Anderson says. “But it has turned into the vision a lot of us had. We really gave people a reason to get out of their cars and see downtown Kennebunk.”
Anderson says commercial vacancy rates that ran between 20 percent and 40 percent before the revitalization project are down to around 3 percent, and downtown Kennebunk is seen as an appealing investment for outsiders. “We were able to attract an out-of-state developer when we explained to him what we’d accomplished,” he says, noting the developer was so impressed with the work that he invested $1.5 million to turn an old building in downtown Kennebunk into a mixed-use retail and residential project. “If you invest in the community, you’ll attract other companies.”
Although an exact ROI can be hard to calculate, decreased vacancies and new private development are common parts of the value proposition of downtown revitalization. The National Main Street Center deems such projects to be “one of the most powerful economic revitalization tools in the nation,” estimating that for every dollar communities spent on a Main Street Center program in 2014, they saw an average of $26 in new investment. Over the last 35 years, the group says its programs have generated $61.7 billion in new investment, with net gains of more than 520,000 new jobs and 120,000 new businesses. The group’s work is in sync with consumer demand for walkable communities—and that demand is not isolated to large population centers. “Boomers and millennials especially are voting with their feet,” she says. “The housing boom downtown is happening in rural America, it’s happening in midsized cities, and it’s happening in urban areas.”
Get the Community on Board
When the city of Milwaukee demolished the Park East Freeway—a mile-long spur built as part of a plan to encircle downtown with expressways—in 1999, its goal was to connect isolated neighborhoods and open valuable land to development.
“Then the recession hit,” says Tracy Johnson, president and CEO of the Commercial Association of REALTORS® Wisconsin, noting development dollars for this “troubled” real estate suddenly became scarcer. “We recognized that the land wasn’t going anywhere, so we put together a comprehensive marketing program.” CARW offered to help the city and county attract developers by creating a custom website and marketing materials for the land. The association also convinced the government to offer commissions to real estate professionals who brought development to the empty parcels, countering the below-market prices and red tape associated with selling government-owned property.
Around that time, the NBA’s Milwaukee Bucks were agitating for a new basketball arena to replace the outdated BMO Harris Bradley Center, and CARW saw opportunity in dovetailing its work in Park East with the business community’s efforts to keep pro basketball in the city. “We could see the writing on the wall,” Johnson says. With support from chambers of commerce and others, CARW spearheaded a public relations campaign to convince local and state government that a new arena would boost revitalization efforts downtown. “We really got the discussion moving.”
It wasn’t easy to get everyone on the same page, especially since the public has become less responsive to pro sports teams’ relocation threats. State, county, and municipal officials all wanted to make sure they weren’t stuck with more of the bill than they could manage. Other issues—from an alarming increase in murders to the tough political climate resulting from an unsuccessful gubernatorial recall election that pitted the state’s governor against the Milwaukee mayor—threatened to overshadow the project. Johnson says the key to keeping the conversation in focus was playing the part of a helpful mediator. “We basically said, ‘We know this needs to be figured out. How do we help?’ ” she says. “Our role was to keep the drumbeat going.”
In the end, $250 million in public subsidies were approved for the project, split between the state, county, and city, with a ticket surcharge of $2 each going back to the state and local government to help defray costs. The other half of the $500 million price tag for the arena will come from the Bucks’ owners and other private sources. Now that the government has approved the funding structures, Johnson says the road to the arena opening in 2018 or 2019 doesn’t seem so long. “The NBA is OK because we have a plan,” she says, adding that this has also meant “a lot of out-of-state investors coming into the community, looking to do value-added development” in the Park East area.
Much of CARW’s success is thanks to engaged commercial members who were willing to embrace the cause regardless of their proximity to downtown. CARW surveyed members in 2014 and got the go-ahead to make the arena its top priority. “We didn’t have a lot of resistance,” Johnson says. “The really cool thing about [people in] this industry is that they get that all ships rise. They understood that if the Bucks left, that income tax revenue would go away.”
The vision for downtown redevelopment goes well beyond the new arena. CARW members have been instrumental in promoting the city’s global leadership in the growing field of freshwater resource management, Johnson says. Over the last decade or so, a coalition of government, private industry, nonprofits, and academia has built the Global Water Center in downtown Milwaukee into a sort of “Silicon Valley of water.” The group, known as The Water Council, has been recognized by many—including the Environmental Protection Agency, the International Economic Development Council, and the United Nations—for building a collaborative economic engine for innovation.
“Milwaukee has got a really awesome, beautiful lakefront,” Johnson says, noting that the council’s physical presence, global influence, and active business incubator all contribute to downtown revitalization. “We really are trying to take advantage of that, building our brand around water.” Johnson says CARW members understand this contribution and play a vital role in spreading the word about what makes Milwaukee a great place to do business. “We’re very modest here in Milwaukee,” she says. “Nobody’s going to know about it if we don’t talk about it.”
Industry Help for Placemaking
While many revitalization projects hinge on garnering political and financial support from the community, there are other avenues for funding. One grant program, available to REALTORS®, takes a small-bore approach to transformation.
When a local group approached Christina Morrison, a property manager and commercial real estate consultant in Delray Beach, Fla., with an idea for transforming vacant downtown land into a community garden aimed at teaching kids about agriculture, she was eager to help. “Children here think their food comes from [grocery chain] Publix,” she jokes. “I thought it was a great idea, so I gave them a check.”
As a former president of the REALTORS® Commercial Alliance of the Palm Beaches and Treasure Coast and a past city commissioner, Morrison is very active in her community already. But she wasn’t aware of the opportunities available to REALTORS® interested in pitching in on such projects until she mentioned the idea to Belinda Krause, the commercial alliance’s executive director. Many structures—benches, playground equipment, cisterns, and bridges—were planned for the multiphase project, and Krause told Morrison that a Placemaking Micro-Grant from the National Association of REALTORS® could fund a significant section. After Krause secured the grant in early 2015, Morrison gathered REALTOR® volunteers, along with affiliates and a local school, to work on a pergola and stone path. Less than two months later, the work was finished.
In a neighborhood that doesn’t often get much positive attention, the project was well received. “Neighbors were happy to see that something was going to happen with [the lot] that wasn’t drug- or crime-related,” she says. “It was quite a community-building effort. I think it boosted the reputation of REALTORS® in the area.”
NAR placemaking grants range from $500 to $3,000, and projects vary widely according to community needs. Often, they include transforming vacant space into parklets, farmers markets, bike parking, or other uses.
Frey praises the placemaking initiative, saying REALTORS® have been able to make a great deal of positive change from what may seem like a small amount of money. “[The grants] have an outsized impact on downtowns,” she says. “It may seem like a drop in the bucket, but it’s a very significant investment. We’re really grateful for the leadership of NAR and the funding they’ve put behind that.”
NAR also offers Smart Growth Action Grants. These grants can fund research and assist in planning and lobbying for policy changes that may help launch and sustain downtown revitalization projects. Morrison hopes to secure a smart growth grant to help her city address land use and development issues on a blighted commercial section of Congress Avenue in Delray Beach. “We want to help transform the area into a true live-work area environment,” she says.
The association encourages other members to follow Morrison’s lead and pursue these funding opportunities, says Holly Moskerintz, NAR community programs outreach manager. “Real estate professionals know their downtowns like few others business professionals out there. Our Community Outreach Grants are a great way for commercial practitioners bolster their expertise with concrete tools for getting the job of community revitalization done.”
By: Meg White (REALTORMag)
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Learn how those in commercial real estate are stepping up to help ailing town centers.