Transit Crucial to Attracting Urban Retailers

If you own commercial property in an urban location, trumpet your proximity to mass transit to attract retailers—even those that traditionally serve suburban shoppers with cars. As retailers continue to incorporate suburban concepts into urban areas, more–including big-boxes—are going vertical. And as developers favor transit-oriented development, the nation’s top retailers say that the need for mass transportation is beginning to outweigh the need for traditional parking design, according to commercial real estate speakers at the International Council of Shopping Centers’ (ICSC) 2011 New York National Conference & Deal Making event.

ICSC speakers discussed the challenges retailers face—including site selection, obtaining local approvals, expansion concerns, and store formats. The panelists also addressed the paradigm shift of retailers like wholesale clubs and supermarkets—two concepts largely seen in the suburbs—that are becoming as popular in cities as their suburban locations, especially near subway and bus lines.

“If we could be close to mass transit, it could be absolutely critical,” said Patrick Smith, vice president of real estate at BJ’s Wholesale Club, an operator of 192 clubs and 107 gas stations across 15 states. Smith explained that despite the bulk-quality of BJ’s merchandise, more city customers are taking the train to its stores. “More people are using mass transit and some people walk,” he said, noting that the BJ’s parking garage at Bronx Terminal Market is vastly underutilized. “For a BJ’s customer, you may think that is absolutely ridiculous. We never expected people to use mass transit to shop at a wholesale club.” And executives from Burlington Coat Factory noted that mass transit is “absolutely a requirement” when selecting an urban location.

While mass transit is reducing the need for the amount of parking, Daniel Shallit, director of real estate for the Northeast Region at the Sports Authority, said parking cannot be totally eliminated from the retail model, though. He said that large urban markets, like Boston, still need parking spaces. Taking away parking spaces would affect store size, he pointed out, because retailers would no longer be able to sell large items, such as treadmills, if customers can’t park their car nearby to take them home. “The logic is, if you buy a treadmill at a Sports Authority, you can’t take that on a bus or a train. You need a car or you need some way to access a car to get that product home,” Shallit said. Urban locations sell fewer hard goods (like weights and fitness equipment) and more soft goods (like clothing and shoes) due to ease of transport on a bus or train. “But we still want to be close to mass transit because it builds awareness,” he said. “The more people that see us by commuting know that we are there and that’s really, really important to us.”