The Potential Impact of Central Corridor LRT on Existing University Avenue Businesses University of Minnesota Humphrey Institute 2010 Master of Urban and Regional Planning Capstone Presentation 5.20.2010
AUTHORS: SPENCER AGNEW, PETER BAUM, MATT CROASTON,AMANDA JANZEN, ERIN JERABEK, BOB JORGENSON ANDREW SENN, AND JEF YANG PROFESSOR: STEPHEN HOENACK
Research Questions How have businesses in other parts of the country
fared during major transit infrastructure construction and beyond?
What are successful strategies for business retention employed universally? Which businesses went out of business? Which sectors survived? What kind of businesses flourished post-construction that may not have existed in those areas before?
Methodology Literature Review (few publications available directly address research question) Comparison Cities (East LA, Phoenix, Portland, Seattle) Immigrant Businesses Minority Population At Grade Business make-up/Commercial Corridor Identification of types of impacts associated with
LRT
Property value change Business sectors sensitivity
Limitations Limited research on sector trends due to
construction Some authorities do not keep records of business closures and openings during and post construction These LRT projects were finished recently Potential of economic downturn skewing impact of LRT on property values
Literature Review Majority of LRT literature considers: Mitigation Strategies Property Value Changes Comparison Cities Portland Yellow Line Seattle Central Link East Los Angeles Gold Line East Extension Phoenix Metro LRT
Findings In Portland there were 106 businesses before construction 3 closed 21 relocated permanently out of corridor 51 new businesses opened along the corridor 133 businesses along the corridor post-construction, three years after it became operational Portland noted the emergence of a new professional services sector
with nine new businesses In Seattle a majority of business sectors did not see large change in total number of businesses Seattle’s ethnic diversity of business ownership along the corridor was unchanged after construction In Phoenix, during LRT construction there was a 30-40% drop in revenue for businesses along the corridor
7 businesses closed (no complete enumeration of businesses available)
East LA experienced a significant loss of on-street parking
Findings: Moved Businesses in Portland Businesses That Closed Professional and Commercial Equipment and Supplies Merchant Wholesalers Specialty Hospital Electronics and Appliance Stores
# of Businesses 1 1 1
Businesses That Relocated Limited-Service Eating Places Consumer Goods Rental Investigation and Security Services Automotive Repair and Maintenance Agencies, Brokerages, and Other Insurance Related Activities Personal and Household Goods Repair and Maintenance Employment Services Depository Credit Intermediation Personal Care Services Residential Building Construction Full-Service Restaurants Gasoline Stations
3 1 2 4 1 2 1 1 3 1 1 1
Lessons Learned From Comparison Cities Phase construction in small segments Identify and assist business sectors that are expected
to struggle during and after construction Develop a strategy for parking accommodation along the corridor Pursue business mitigation strategies that help businesses withstand changes resulting from LRT Expect difficulty isolating factors leading to business closure during economic recession
Mitigation Techniques Used in Comparison Cities Low interest loans (3 of 4 cities) Business interruption grants (1 of 4 cities) Designated areas for construction vehicle parking (1 of 4 cities) Temporary signage to direct customers to open
businesses (4 of 4 cities) Public art displays in front of construction to lessen loss of neighborhood character (1 of 4 cities) Lunch Bus (2 of 4 cities) Technical Assistance (1 of 4 cities) Promotional marketing materials (3 of 4 cities) Product placement (1 of 4 cities)
Key Impact: Land Values Increase Disproportionately in Transit Corridor Post Construction
Source: King County Assessor’s Office
Trends in Twin Cities indicate Speculation Increasing Land Values on University Avenue
Source: Assessment Offices of Hennepin County and Ramsey County
Composition of Businesses in Study Area Table X – University Avenue Businesses (Lexington to Rice) by NAICS Industry Sector NAICS Industry Classification
5 Largest sectors: 40.8% of establishments in the corridor next 7 largest sectors:
23.8% of establishments in the corridor
Personal Care Services Civic and Social Organizations Full-Service Restaurants Specialty Food Stores Automotive Repair and Maintenance Limited-Service Eating Places Agencies, brokerages & other insurance related activities Other Professional, Scientific, and Technical Services Community Care Facilities for the Elderly Clothing Store Activities Related to Credit Intermediation Consumer Goods Rental
#
%
Sales/sq ft
Rent/sq ft
24
10.0%
$97-297
$14-19
21 20 17 16 10
8.8% 8.3% 7.1% 6.7% 4.2%
na $308 na na
na $17 $15 $15
10
4.2%
na
$15-19
8
3.3%
na
$17
8 6 5 5
3.3% 2.5% 2.1% 2.1%
na $141-171 na na
na $5-29 $13 $17
General Factors Related to Business Survivability Factors related to business survival during
construction
Current financial state of business Customer base (regular vs. walk-in) Accessibility Mitigation programs
Factors related to business survival post-construction Susceptibility to increases in rent cost (higher rental cost/sq. ft. as % of sales/sq. ft. creates greater risk) Proximity to LRT station Marketability to new customers
Personal Care Services Hair Salons, Barbershops, Nail Salons 24 establishments 10% of businesses in Lex. to Rice corridor Sector Risk (construction period): low/moderate Factors: regular clientele reduces risk Sector Risk (long-term): moderate/high Factors: high rent/sq.ft. to sales/sq.ft. ratio increases risk
Full-Service Restaurants 20 establishments 8.3% of businesses in Lex. to Rice corridor
Sector Risk (construction period): moderate/high Factors: accessibility issues increase risk Sector Risk (long-term): low Factors: proximity to LRT station reduces risk, marketability to new customers reduces risk
Location of Full-Service Restaurants
Specialty Food Stores Bakeries, Ethnic Markets 17 establishments 7.1% of businesses in Lex. to Rice corridor Sector Risk (construction period): low/moderate Factors: accessibility issues increase risk; regular clientele reduces risk Sector Risk (long-term): low/moderate Factors: proximity to LRT station reduces risk
Automotive Repair and Maintenance 16 establishments 6.7% of businesses in Lex. to Rice corridor Sector Risk (construction period): moderate/high Factors: regular clientele reduces risk Sector Risk (long-term): high Factors: high rent/sq.ft. to sales/sq.ft. ratio increases risk
Conclusions and Next Steps Full-Service restaurants and Automotive Repair and
Maintenance are most at risk during construction Automotive sector is at high risk over long term Focus outreach efforts on high risk sectors Consider use of mitigation strategies used in comparison cities
Consult with business owners about priorities among strategies Approach Met Council regarding mitigation strategies Consider lead time required for implementation
Continue documenting impacts on businesses