The study commissioned by the Capitol Hill Chamber of Commerce and compiled by consultants at Kidder Mathews concludes with a series of ten recommendations for making near-term improvement in the business environment along Broadway between Union and Roy.
- Encourage the redevelopment of underutilized properties with a marketing effort
- Facilitate better communication between the agencies and developers responsible for the projects and Corridor businesses
- Advocate for an aggressive panhandling law
- Advocate for additional police dedicated to the Corridor and stricter enforcement of public drunkenness, drug use, and shoplifting
- Advocate for shifting the metered parking hours from 8pm to 6pm
- Work with the City of Seattle and the business community to direct additional resources toward street/sidewalk cleaning, and tree trimming
- Encourage retail businesses to remain open during non-peak hours for the benefit of the Corridor as a whole
- Events: target attendees that align with Corridor retailer’s target customers and promote exploration of the corridor
- Create a storefront improvement program
- Chamber should more aggressively communicate its accomplishments
More interesting — and perhaps more useful — are the many observations and datapoints the analysts utilized in reaching their conclusions.
For one, it’s probably time to adjust any lingering hopes for big retail or department stores to use as anchors to draw shoppers from farther across the city — land is too dear and we’re too poor to support it.
The report says the Broadway and Pike/Pine core is unlikely to support what it calls high-end retail. “The Corridor’s income characteristics however, are not robust enough to attract high-end tenants,” the analyst writes. To reach this conclusion, the study compares the “median disposable household income” of the area to the rest of the city and to the area surrounding one of the favored high-end shopping destinations in the area – University Village:
The median disposable household income within in the PMA is roughly $39,000, in all of Seattle this figure is $53,000, and within two miles of the concentration of high-end retailers at the University Village the figure is $57,000.
As mentioned in the 2007 Report, the close proximity to Downtown Seattle and University Village largely precludes national retailers with existing locations from locating on Broadway.
Not only are we too poor — Broadway is too crowded and too expensive for the big guys. “To penetrate the urban areas, general merchandisers like Wal-Mart and Target are rolling out stores with smaller footprints, a carefully selected assortment of goods, and lower parking ratios,” the analyst writes. “These smaller stores however, are typically require 60,000+ square feet of building area, which is still too large to be accommodated by existing Corridor retail spaces.”
Even with existing too-small lots available, the prices are exorbitant. “As shown, the sales ranged between $198 and $278 per square foot of land area,” the analyst writes. “The cost of land is high enough so as to prohibit some retailers from entering the market, especially larger single use retailers that require surface parking.”
Here’s what it takes to make a project pencil out on Broadway — the report predicts it’s getting harder, by the way:
The cost to build new retail space that is integrated into a larger building is currently $300 to $400 per square foot. The rental income required to off-set the cost to construct new space and provide the developer with a return on investment is currently in the range of $35 to $45 per rentable square foot of space, triple net. As the cost of construction changes, so does the rental income required to make a project feasible. At this time rental rates in the Corridor are on the low end of this range. If rental rates decrease over the next few years as some market participants are predicting, new retail construction will not continue to be supported by retail market rents alone.
The report — included in full, below — does identify a handful of undeveloped larger parcels along Broadway that could be due for change:
- The Post Office Site located at 101 Broadway is owned by a subsidiary of Bartells…
- The former Hollywood Video Building located at 127 Broadway…
- The Teriyaki Wok Site which is located at 324 E. Broadway is a 5,825 foot underdeveloped site owned by Roy Amundson, the same developer that owns the Hollywood Video Building.
- Sound Transit owns Five Development Sites at
the future Capitol Hill Light Rail Station which is scheduled to open in 2016
- The Bonney Watson Funeral Home Site is a 14,080 square foot property containing a 19,810 square foot building just to the south of the future light rail station on Broadway; it also offers views of Cal Anderson Park. Bonney Watson also owns a 23,040 square foot surface parking lot directly to the north of the funeral home across East Howell Street.
The area also has several surface parking lots, the report notes, but concludes “none contain more than 8,000 square feet of land area.”
The study also reveals some old-world biases that may help explain certain seemingly missing elements of Broadway’s retail mix. “Ace for example, prefers markets with a home ownership rate of at least 65%,” the report notes. “The home ownership rate in the Corridor’s primary market area is currently only 16%.”
The report also illuminates some of the recent phenomenon noted as Broadway’s new retail fills in. For example, the numbers back it up, we’re indeed seeing way more banks. “Along the Corridor almost 65% of the service businesses are banks, this is up from about 40% in 2007, and will likely continue increasing as at least two additional banks are contemplating locations within the Corridor.”
“This can be an issue because banks usually contain blank walls that interrupt the flow of the retail shopping experience,” the report warns.
In addition to the largest businesses and issues, the report’s minutiae can be equally fascinating. Here it is on nail salons: “Within the Corridor personal care offerings have dropped from 7% of the overall retail mix in 2007 to 4% today, due mostly to a number of displaced nail salons that can’t keep up with the cost of increasing rental rates and the limited number of small (less than 500 SF) spaces available for lease.”
A lot of people, densely packed
The report also includes interesting — and valuable analysis — of factors beyond shopping. Here is a look at how the area is growing. Broadway’s “primary market area” of Capitol Hill currently stands at a robust 22,000+ people. Meanwhile, each of the orange dots on the map above represents a new apartment project that is either underway or in the planning stages around the Hill.
While the Hill is a neighborhood of walkers, we don’t have the foot traffic measured at the busiest intersections downtown:
The Downtown Seattle Association (DSA) has been conducting pedestrian traffic counts three times per year at the intersection of Broadway & East John since December of 2007. The last count taken recorded a daily volume of 1,008 pedestrians, although this is a fairly high number, it is far lower than a number of intersections downtown which see daily pedestrian volumes of close to 7,000 people.
Broadway is, however, the Hill’s busiest corridor for cars with a daily traffic volume of 23,500 at Broadway/John measured by the Seattle Department of Transportation in 2010.
The Chamber study also produces an unintentional laugh. “Broadway’s traffic lights are not coordinated to move traffic through efficiently,” the author writes and also laments the lack of a dedicated left turn lane at Broadway and E Olive Way. Wait until retail analysts get a look at changes to the lights and elimination of left-hand turns that will come with the streetcar. Meanwhile, the analyst concludes “transit ridership contributes to, but may not make retail viable on its own.”
So, what kinds of businesses should open on Broadway?
Perhaps of greatest value to business interests considering Broadway, the study runs the numbers comparing the amount of money residents of the surrounding area spend on specific categories with the amount of money captured by Broadway’s businesses. From shoe sales to books and music, Broadway has it sewn up. When it comes to things like department stores or gas stations, however, we’re “leaking” revenue — to which some might say, good riddance.
Retail surplus, represented by negative values can indicate that a market area is capturing the local resident’s spending plus additional spending from customers originating from areas outside of the trade area. A retail surplus typically either means that there is not enough spending power within the market area to support existing retailers or that the area has become a cluster for a certain type of retail segment, allowing it to attract customers from a much wider area than would typically be expected due to its ‘destination’ status.
The report’s analyst suggests one strategy for the area might be to build on its strengths. “Categories with moderate a surplus that like to cluster may provide the opportunity to strengthen the cluster,” the report notes. If that’s the case, bring on the full-service restaurants, drinking places and clothing stores. Meanwhile, a category with only “moderate leakage” like specialty food or health and personal care retailers might just also have a chance to make it. “Retailers experiencing moderate leakage may provide the opportunity to capture a greater percentage of the local demand.”
What to do
The 2007 study of Broadway called the area “a mix of unkempt storefronts, quick serve or fast-food restaurants and service uses mingled with a few restaurants and boutiques.”
Today, the analyst reports on the march of the chains:
As older lower cost buildings are being replaced by newer higher rent spaces, chain retailers, particularly limited service restaurants, are replacing local businesses. This is happening in part due to the fact that successful chains can afford to take a temporary loss on higher rent space while building up a customer base, by offsetting the loss against more established profitable locations in other areas; something many single location retailers can’t afford to do.
“Many of Broadway’s hippest businesses are local operators that depend on low rent commercial space,” the report notes.
55 respondents to a survey of Broadway businesses also complained of “street people,” parking and construction:
The three most commonly cited challenges to operating
a business within the Corridor were dealing with street people (40%), the lack of convenient affordable parking (35%), and effects of construction (15%). Other commonly cited challenges included the lack of law enforcement, increasing rental rates, general crime, declining business diversity, and insufficient streetscape maintenance.
What do they like about being on Broadway?
The three most commonly cited benefits to operating
a business within the Corridor were foot traffic (40%), population density (24%), and Broadway’s hip reputation (16%). Other commonly cited benefits include the diverse local population, the high student population, the diversity of Corridor businesses, an established customer base, and the significant tourist traffic.
The reward? Existing retailers say expect a modest return on effort on Broadway. “A survey of existing retailers located within the Corridor revealed median gross revenue of $249 per square foot annually,” the analyst writes. “$300 per square foot is considered respectable,” it is noted. Hopefully, the 21 businesses that responded are sandbagging it a bit. You don’t want to give away all of your secrets, right?
Here’s the full Broadway retail report: