Five Ideas for Rebuilding Retail in the Post-Pandemic City

Launched by the San José Downtown Association and run by San José MADE, MOMENT is an experiment to transform 12 parking spaces at the ground floor of a city-owned garage with pop-up retail. Creative approaches like this will be needed as cities rethink the role of retail in a changing world.

Photo by Sergio Ruiz

“Retail is dying. Main streets are dead. Shopping malls are over.” Claims like these have loomed large in recent decades as the dominant shopping format has evolved from downtowns and main streets to department stores and shopping malls to big-box retail and power centers to Amazon and e-commerce. Observers proclaim the death of retail, pointing to vacant storefronts, statistics showing that the United States has more retail space than is needed and the convenience and growing adoption of online shopping.

While these changes have been underway for years, retail’s fate has been thrown into even greater question with the COVID-19 pandemic and resulting lockdowns that have directed stores to close and people to stay home. Total retail shopping grew 7% from the fall of 2019 to the fall of 2020, but online shopping grew 36.7% in the same period. Online shopping now makes up 14.3% of total retail shopping, up from 11.2% before the pandemic. With lockdown orders continuing into early 2021 and uncertainty around the timing of vaccine deployment and herd immunity, most retailers and restaurants continue to face an uncertain future at best, closure and bankruptcy at worst. COVID-19 has introduced new and urgent stressors on retailers who have been navigating larger changes to the industry for some time.

Right now, the pressing focus for retailers and property owners is the immediate-term survival of retail businesses and a broader economic recovery. Grants and forgivable loans — while not nearly enough — have helped some businesses stay afloat. Cities across the country have tried to made it easier for restaurants and stores to operate outdoors on sidewalks and in parking spaces by closing streets, adjusting zoning requirements and streamlining permitting. State and local governments have instituted temporary commercial eviction moratoriums. Nevertheless, the public and private sectors must also begin to consider the long-term future of retail and envision not just what is viable but what could be better for both people and neighborhoods.

It's time to look beyond a return to the status quo. Rethinking the future of retail could be a tool for economic and social transformation, literally from the ground up. A new approach to retail could jumpstart small, neighborhood-based and community-serving economies. Ground floor spaces could flexibly serve and welcome all while supporting safe and walkable streets.

As an organization that believes in the importance of place and public space, as well as the importance of a strong economy, SPUR has focused its attention on ground floor space in neighborhoods and downtowns. The design of the ground floor impacts the viability and quality of ground-floor activities — commercial or otherwise — and influences whether sidewalks and streets are public places where people want to spend time.

Among SPUR’s five-year priorities for our planning policy work is the goal to “ensure that communities are safe, inclusive and equipped to meet all residents’ daily needs with a diverse mix of businesses and services.” We envision neighborhoods where…

…activities happen in the streets, in plazas and on sidewalks

…neighbors can connect

…small businesses grow and thrive

…residents can access essential goods and services

…fast and frequent transit connects people to the city and the region

…community and cultural identity are strengthened

…people gain exposure to new things

…people feel they belong

Building a future for neighborhood retail can support SPUR’s other goals around economic resilience, belonging, racial equity, quality of life and a sustainable, low-carbon future.

Rethinking Retail: Five Ideas to Explore

As we plan for a future when gathering and in-person activities are safe again, we propose a few ideas for a better future for ground-floor retail:

1. Keep it local: Put the focus at the neighborhood level.

One of SPUR’s long-held tenets has been to “build great neighborhoods.” Brought to the world’s attention this year by Paris Mayor Anne Hidalgo, the evergreen idea of the 15-minute city has captured the imagination of people around the world during the pandemic. How might cities better plan for residents to meet all their needs within 15 minutes of their home? Utilizing the 15-minute city framework — while recognizing that many workers are not able to work from or near their home and ensuring that their needs are also met — not only benefits individual people as they work from home today but also unlocks a future that is oriented around people and place and less oriented around cars.

Downtowns and many neighborhoods have merchant associations or business improvement districts that help to improve commercial centers, but they have limited funding and capacity. Other neighborhoods have community development centers or nonprofit organizations focused on the needs of lower-income communities. But the responsibilities, powers, levers and mission that these private organizations have at their disposal is limited. Cities should explore the opportunities for expanded governance and attention at the neighborhood level to foster hyper-local economies, focus on neighborhood needs and prepare for disasters. This could happen through existing city departments and services or through a new type of organization or neighborhood agency.

Lastly, with a focus on neighborhoods, how can planners think differently about neighborhood plans? Policymakers and planners should consider the wide range of needs and opportunities of different neighborhoods, recognizing that some neighborhoods are already set up for the “15-minute city” and others are not. Many neighborhoods may be food deserts or may lack key resources or essential services that other neighborhoods take for granted. Equity considerations have too often been left off the table. Planning departments should perform neighborhood needs assessments, informed by historical injustices, that are in turn used by an interagency, public-private effort to meet those needs, whether the neighborhood lacks a grocery store, a dentist’s office, affordable child care or quality open space. A focus on neighborhood-oriented businesses and amenities in these neighborhoods can also support businesses owned by people of color and help to build community assets and wealth.

2. Reconsider the role of the ground floor: Treat it as quasi-public space.

Cities must think about the ground floor more expansively. Many of our existing ground floor spaces are intended to bring the public in — to eat, to drink, to shop, to get a haircut — and while these are primarily private and commercial activities, they often play a part in our communities as “third places,” the spaces where we socialize outside of our homes and workplaces. How might cities think about the ground floor as an extension of public space? And how can we allow and accommodate a wider range of uses at the ground floor to both keep those spaces occupied and promote their quasi-public nature?

For example, developers don’t expect a financial return from the ground-floor space in new development in many locations. Could they contribute that space to a nonprofit or quasi-public agency that was set up to own, curate and manage ground-floor space in a neighborhood? Such an organization could, free from politics, build the diversity of ground-floor tenants to meet the needs of a community in the same way that shopping malls once had a competitive advantage over main streets because a single owner could curate the offerings more strategically. This could be done in existing neighborhood storefronts as well. In the “On Canal” model in New York, WallPlay has creatively repurposed several contiguous vacant storefronts on Canal Street, curating and managing a mix of retailers and art and culture organizations, creating co-benefits and a sense of place.

3. Put retail in strategic locations: Shift retail demand to main streets and downtowns, and repurpose obsolete shopping mall and shopping center sites.

Many people have identified the vast — and mostly theoretical — redevelopment potential in the sites of dying or defunct shopping malls and shopping centers. Across the country, some old shopping mall sites have been redeveloped into mixed-use communities, with new multifamily housing, offices and retail in a more urban format, but these efforts have primarily relied upon the initiative and creativity of the property owner. Furthermore, the focus has been on the potential redevelopment opportunity and not on what could be done to move existing retail to a more urban format.

What if local government were to intentionally close obsolete shopping centers and move existing businesses to people-scaled retail spaces, before repurposing that land for denser housing and mixed-use neighborhoods (and not e-commerce distribution centers)? Policymakers and planners should identify potential redevelopment sites and identify tools to incentivize the closure of those centers and preserve/relocate the small businesses occupying them. If the region’s shopping habits can only accommodate so many square feet of retail space, we must be intentional to ensure as much of that retail space as possible is in neighborhoods and downtowns.

4. Allow for flexibility and creativity within planning, zoning and design controls.

Planning, zoning and design controls should all be reexamined to ensure that regulations allow for creativity and flexibility for small businesses and other organizations. This evolution must better match the trajectory of today’s economy and business trends: fast-moving, entrepreneurial, opportunistic and flexible.

Cities should consider narrowing the locations where they require commercial retail uses — only the places where continuous retail frontage is most likely to succeed — and expand their definition of what active uses may take place in ground floors. At the ground floor, zoning should allow by right not only retail stores, restaurants, bars and cafes but also small-scale manufacturing and noncommercial uses, nonprofit services, spaces for art and culture, childcare and elder care, medical facilities and shared work spaces.

Cities and landlords should also make it easier for pop-ups to lease and operate spaces and for those spaces to be flexibly designed, allowing for movable dividing walls and removing building code barriers. Making approvals and permitting easier and faster for new businesses would also be beneficial for the small business environment. We suggest adopting innovations like virtual building inspections or automated plan review and permitting for simple tenant improvements. Lastly, interagency teams that are neighborhood-oriented could help support this new future for flexible small business growth.

5. Transform the standard operating model for landlords and small commercial tenants.

The pandemic has already forced nearly all small businesses and their landlords to get creative and renegotiate the terms of their leases in order to keep everyone in business. The market (meaning financial institutions and property owners as a whole) should adjust its expectations accordingly. It’s unlikely that most tenants in most locations will be able to “go back to normal” for some time even after vaccines and herd immunity allow more public interactions to resume. One idea that could catch on is percentage rent, where the tenant pays a small baseline rent plus a percentage of their revenue, so the property owner benefits when the tenant flourishes and receives enough to operate when the tenant is not doing so well. Or maybe the path forward is to institutionalize a standard pop-up operating model using short-term licenses that provides more flexibility and opportunity for small businesses and business owners, especially immigrant, Black and Latinx-owned businesses, that lack access to the standard capital and credit requirements that many lenders require.

Retail has been in a state of flux for decades — and it will continue to evolve over time. In recent years, the long-dominant shopping mall began dying out, independent booksellers unexpectedly surged, and immersive and “experience “retail seemed assured — until the pandemic. Now, e-commerce seems unlikely to go away, and though it poses a threat to public life, it has proven to be not only a convenience but also a lifeline during the last year. We can and should expect more retail transformations in the future.

As our country launches a public health and economic recovery, there is a generational opportunity to make deliberate decisions about how we want our neighborhoods — spaces both public and quasi-public, both commercial and not — to be configured. The way we treat and occupy ground floor space influences not only how we shop, eat and drink, but also how we work, how we play, how we organize and experience our lives and how we connect to others. This may be a key time to reconsider and transform how we design, build, regulate and finance these places that are vital to both public life and prosperity.

Many thanks to Tim Bacon, Seth Boor, Christina Cho, Elisse Douglass, Carrie Denning Jackson, Bruce Katz, Tom Radulovich, Christopher Roach, Fran Weld, Byron Weiss and dozens of others who have contributed to the thinking behind this piece.