Supporting Local Economies

Supporting Local Economies

Courtenay D. Mercer, PP, AICP
Executive Director, Downtown New Jersey

Rachael Thompson Panik
Associate Planner, Mercer Planning Associates

April 28, 2020

As part of Sustainable Jersey’s Virtual Summit, Downtown New Jersey Executive Director, Courtenay Mercer and NJDCA’s Neighborhood Preservation Program Administrator, Jef Buehler discussed how we can support local business when it’s not business as usual. They explored new strategies to engage the community through the Support Local Economies and Buy Local Program Sustainable Jersey actions.

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Forum Summary

Local, National, and Worldwide Context

Courtenay Mercer shared contextual background information originally presented by Marta Person Villa, NJ Retail Lead and Senior Vice President with Jones Lang LaSalle during a Downtown Management Forum hosted by DNJ on April 16th. The COVID-19 pandemic has created a new reality for local economies around the world. China, who is ahead of the US in the pandemic process, has seen significant impacts to its local economies. Now, as businesses are re-opening, analysts can assess damages more clearly. Foot traffic is moderate and consumer behavior is cautious. Social distancing is still required – food and beverage establishments are operating at 50% capacity, limited to 1-3 per table. Take out still represents 30% of restaurant income. In general, suburban areas are recovering quicker than urban areas. Similarly, countries across Europe are beginning or planning for re-opening. While approaches vary by country, Austria – who has a comparable population to NJ – is beginning to open smaller shops, with larger businesses re-opening on May 1st with proper social distancing measures in place. If infections rise, the government will implement an emergency break.

The United States is several weeks behind Europe in its impact and response to the COVID-19 pandemic, but impacts have been far-reaching and acute. Over 26 million Americans have lost jobs since mid-March, and the real unemployment rate is at 20% — the worst since 1934. Various sectors are weathering the impacts differently. Essential and discount stores, for example, are seeing sales comparable to the holiday season, grocers represent 68% of retail hiring. Meanwhile, businesses that were struggling before the pandemic, however, will likely see their demise hastened by the pandemic. Large format department stores like TJ Maxx & Macy’s are furloughing in big numbers. While it is not clear when restrictions will be lifted, it seems likely that businesses will continue to see the impact of these restrictions for months to come.

New Jersey is assessing impact to its local markets and planning for re-opening when appropriate. Retail markets are suffering, with food services and dining places suffering the most. Governor Murphy announced his “Road Back” Recovery Plan, which contains 6 principles that will guide reopening in the state:

  1. Demonstrate sustained reductions in new COVID-19 cases and hospitalizations for 14 days
  2. Expand testing capacity
  3. Implement robust contact tracing
  4. Secure safe places and resources for isolation and quarantine
  5. Execute a responsible economic restart
  6. Ensure NJ’s resiliency for future events

While it is unclear exactly how re-opening will look at this juncture, it is clear from the plan that re-opening will be not be in a few weeks, but it will be a slow and cautious re-entry.

What Can We Do Immediately?

Given the uncertain nature of the future and the pandemic’s impact on local economies, leaders must be nimble; there is not a moment to waste, and now is the time to get support on the ground. Local leaders can take advantage of free or cheap actions that are “tactical-urbanism-like,” both virtually and in the physical space.

Jeff Buehler highlighted two concepts that should drive free and cheap actions to help local economies: “make it easy,” and “show you care.” “Tactical-urbanism-like” solutions are small scale, relatively inexpensive, and can be quickly installed. They enable communities to either have a cheap and quick win; or fail fast without expending too many resources and enabling a quick pivot. For example, one low hanging fruit action is adding social distancing signage and floor stickers in as many public places as possible, and encourage and/or assist local business to do the same.

Downtowns should make it easy for people to see what is open, what their hours are, etc. Combine that content in an easily shared and concisely communicated document and share that information through existing multiple channels, including social media, email, and on the website. It is important that local government and downtown organization websites stay up to date with information about what is open, details about re-opening as it happens, direction to additional resources for support during the crisis, and campaigns to support local businesses and frontline workers. Communities can also promote the online purchase of gift cards, which provides an immediate cash infusion to a business regardless of whether they are currently open. Some examples of good communications on the web include Downtown Metuchen and Main Street Highland Park. Downtown Collingwood in Ontario, Canada created its own online portal for consumers to order food and purchase goods from its businesses (thus eliminating those high third party fees).

Downtowns and towns should promote activities that show community members are supportive. In Highland Park, they started a “love notes” campaign – collected virtually the notes are then written out on hearts and are being pasted in business windows and other highly visible spots. In another example, residents in Mason, Ohio raised $10,000 to purchase gift cards from its small businesses that were given to people in crisis due to job loss and illness. Locally, Ironbound and Mt. Prospect BIDs in Newark are similarly taking donations to distribute vouchers to seniors and low-income residents.

Communities have been taking advantage of opportunities to connect the real and virtual worlds through murals on walls or windows, both permanent and temporary. Some street art has even incorporated signage and information pertinent to the business or to public health.

Local events and services can also go virtual, with things like online yoga classes, trivia, and sing-alongs. These real to virtual events are approachable; all they require is coordination, design, and marketing. Towns can help promote these events, or event provide a landing page online for all upcoming events. Downtown Somerville recently introduced a “bingo” program where participants can win prizes for shopping local and/or participating in virtual activities.

Finally, some communities are setting up their own relief funds or working with foundations to do so. Westfield, Summit, and Somerville are all working with foundations to redistribute donated funds to businesses. Places like Jersey City, Newark, and event smaller communities like Bordentown City are allocating government funds to support their businesses.

What Can We Do Long-Term?

Even though re-opening will be done slowly and cautiously, there are initiatives that leaders, downtown organizations, and businesses can plan for now that will help with long-term re-entry. A foremost need for consumers is to feel safe; businesses need to plan for how they will communicate to the public that it is safe to come into their store or restaurant. Towns should consider supporting businesses with deep cleaning by contracting with an industrial hygienist to develop a plan for your downtown or individual businesses, and/or do the cleaning at a group discount. Towns could also consider giving the businesses that meet a certain standard a clean seal of approval to help boost consumer confidence. Additionally, towns can hire or subsidize the cost of a visual designer to help redesign retail or restaurant space so that there is room for people to enjoy the business while still following social distancing protocols.

While many stores have moved to online platforms to accommodate curbside pick-up or take out, it seems likely that the trend of online purchases will continue. For businesses who were unable to create online inventories or provide takeout, there may continue to be missed sales opportunities in the future without investment in online solutions. While trends are not entirely certain at this point, it is possible that all businesses will need to provide some kind of online ordering option to stay valid even beyond the pandemic.  

Vacancies will naturally be a part of the pandemic’s fall out. Businesses that survive will be stronger than ever, but those that were already struggling this will expedite their demise. The 2008 retail vacancy rate increase was roughly 8%. Many experts believe vacancy increases will be more similar to those associated with a natural disaster at approximately 25%. New Jersey was at 4.4% before COVID, so we could potentially be looking at 30% vacancy. According to a survey of retailers by Jones Lang LaSalle, for every month of recession, it takes 3-4 months to recover. Ultimately, some are projecting the recovery to take 2 to 3 years. Successful downtowns will begin to plan for these vacancies now.

Ms. Mercer suggested setting up a one-stop-shop in a centralized location for businesses and landlords to interact with downtown district and/or town staff that can provide them with information and support. Marketing campaigns will continue to be important – including those promoting existing businesses, as well as advertising vacancies. Towns should engage in intentional outreach to landlords to try to avoid vacancies in the first place, and then to fill any that occur. Experts are encouraging landlords to be flexible, because evictions will likely not result in a better situation – there is not a waiting pool of tenants, and any tenants that come in will want reduced rent.

Additionally, downtowns should be opportunistic if anchor locations (i.e., corner lots or otherwise prominent locations) become vacant. Could there be a better use in that space?  Also, it is important to ensure that zoning supports the types of businesses that may want to fill your vacancies. Towns should get creative as you maintain beautification for streets and storefronts that become empty. While vacancies are to be expected during this time, it is important for community morale that excessive vacancies do not change the character of downtown.

Finally, towns/downtown districts should consider creating a leasing plan. Leasing packages visually demonstrate where vacancies are located in relation to existing businesses, residents and other services. When possible, the information in the package should also contain:

  • Street address
  • Property overview, including zoning
  • Physical characteristics, including size, unique characteristics, infrastructure quality, presence of basement, etc.
  • Zoning requirements
  • Floor plan and site plan
  • Market aerial and site aerial (with identifying logos or names) – also show residential units, train stations numbers, traffic counts
  • Financial details, including rent and triple net charges
  • Co-tenants, specifically recognizable brands
  • Demographics (population numbers, median household income, ethnic breakdown, cell phone data, retail leakages, etc.)
  • Contact information
  • In business districts where the anchor is not necessarily retail, how can towns support non-profits?
    First, if they are welcoming patrons, their re-opening will have to follow similar approaches as a for-profit business when it comes to making people to feel safe. Also, virtual tours and virtual events can bolster interest in the site. Development experts are saying that non-profits should continue to fundraise – people want to give. They should do fun and interesting things so they can take advantage of earned media.
  • What tools do you use for creating maps for leasing packages?
    While it depends on the purpose of the map, general resources include ERSI online or ESRI Business Analyst, Claritas, and Google Earth. The State Asset Map is a great way to get data about demographics and available programs.
  • What can we do about absentee/uncooperative landlords?
    It is likely that, eventually, they will want to fill their vacancies, so ensure your landlords know that there are benefits to cooperating with you, including free marketing and assistance filling vacancies. Also, reward good behavior; for example, work with property stewards who care about your community first; and as they have success, other, less cooperative landlords may follow suit. Some will likely still be uncooperative, but you can find basic statistics about the property (including estimated square footage) using Google Earth, publicly available data, and ESRI business analyst data.
  • Is it ok to host street fairs in the future?
    It is too soon to say for sure, but at the moment it is unsafe to do large events. In the short term, keep as much activity as possible virtual. If there are smaller events, like farmers markets, you need to have a concrete plan for cleanliness and social distancing.

    Places like New Zealand and Oakland, CA are taking back the streets from the cars to provide more space for pedestrians and cyclists. Towns can create bike lanes through tactical urbanism approaches. Some European cities are also ceding over public spaces to allow restaurants to set up tables to recapture lost capacity due to social distancing.

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