Thursday, December 30, 2010
Let the nation's housing markets clear
The bursting of the U.S. house price bubble during the third quarter of 2006, presaged the financial collapse of September 2008. Since then political meddling in the housing market has continued unabated.
Fannie Mae and Freddie Mac, major perpetrators of fraud during the bubble, are protected species, funded by unlimited taxpayer dollars. The Federal Reserve has purchased trillions of dollars of toxic mortgage securities in a futile attempt to prop up a falling market. Federal subsidies to underwater mortgage holders intermittently drip into the housing market. Clumsy bids to slow down the foreclosure rates provide unwarranted hope for households that have not made a mortgage payment in months, and have no where withall to make catch-up payments.
As a consequence, the housing market is failing to clear in significant sectors of the U.S. economy. The latest statistics indicate that house prices are falling again across 20 major metropolitan areas. Many economists expect such price declines to continue for the next several months. Some four years after the bursting of the bubble, the failure of the housing market to reach a new equilibrium is primarily due to political meddling. It is high time that the political elite should recognize that economic recovery will not return to trend until the false bubble is completely erased and a sustainable house price equilibrium is restored through market process.
The process is bound to be painful as homeowners lured into unsustainable mortgsges by the false promises of the likes of Barney Frank and Christopher Dodd retreat to the reality whence they came. Unfortunately, the penalties for political fraud are minimal. In other walks of life, Barney Frank and Christopher Dodd would be sharing prison cells with like-minded scam-artists such as Bernie Madoff. Unfortunately, the United States has become a nation governed by the rule of men, not the rule of law. And, as always in such circumstances, the men who rule are members of the political class
By Charles Rowley
Tuesday, December 28, 2010
It’s All In the Retail Details: Creating the Ideal Store
Retailers often have a particular design concept in mind, but aren’t sure how to translate their ideas into a profitable store layout. Thankfully, they don’t have to go it alone.
Design professionals like Frank White and Ken Galloway of Davis Wince Ltd. Architecture offer expertise that can help save money and reduce stress, especially if they are brought on board as soon as the retailer decides to build a new store or buy or rent an existing space.
“It helps prevent signing inappropriate leases or ending up trying to fit a square peg through a round hole, where one is trying to open a store in a bad space for the brand,” Galloway says.
In the following interview, he and White discuss planning, lighting, staying on budget, and more.
Melanie McIntyre: How does a good architect go about determining a retailer’s wants and needs for a space?
Frank White: First, it is important to understand the role of architect and retail planner. There are retail design firms and architectural firm that do one or the other and occasionally both. I’m not talking an architect that takes a client’s thoughts and puts them on paper. That’s just a drafting service. It is having the knowledge and taking the time to understand what the client’s business plan is and making the correct strategic decisions to guide the project to the best possible design solution.
Guide with your head, not your heart. A simple example would be the owner might love blue and gold, but you wouldn’t want to design an Ohio State memorabilia shop in that color palette. Or another example… A vision for wide open spaces may not realistically hold enough merchandise to make the store profitable.
Ken Galloway: Yes, retail startups often fail due to lack of an appropriate design and merchandise planning. A retail entrepreneur has a passion for a type of merchandise and jumps in with both feet to sell the product– sort of a ready, fire, aim approach to retailing. Either intuitively, or by following a tried and true process, every retailer walks the same path of strategic retail planning, including space planning, store design, branding, visual communication, and the best merchandise plan to engage the consumer in an efficient, yet inspiring manner. I have been privileged to have been part of a creative group of professionals who developed a retail planning process that works well for our clients. It really works best to develop this plan before the first lease is signed.
MM: Are there any concepts that are fairly universal and/or standard in regard to space planning?
KG: There are many proven space planning concepts, which could fill a good-sized book that few would want to read. But to mention just one: planned circulation. It is critical to drive the customer through the space in an intentional and organized fashion. For instance, the loop circulation plan will lead the customer by each major merchandise category, and encourage impulse shopping. Many large-box retailers use this to create a “power alley” for shopping.
FW: There are also municipal, state, and federal requirements for handicap use, access and egress, among others. Too long to list here, but all can impact a retailer’s floor plan and merchandising.
MM: Do certain types of lighting work better for particular retail spaces?
FW: The “color” of the light is important. There are cool, warm and neutral lamp colors. These can be seen in displays at any big-box hardware store lighting department. Lamp color will enhance or drastically change a color palette.
KG: And, really, lighting is critical to creating the proper color for a store. For instance, too much white light creates a “discount” look. Too little white light makes it hard to see the product. It’s best to create the appropriate “mood lighting” that matches store design and then add select spotlighting to accent the product.
It’s harder to execute than it might seem, especially if one is working to create an energy-efficient, or “green” store, which most of our clients are now serious about achieving. Huge opportunities exist to develop green stores that yield long-term cost-savings benefits.
FW: That’s a big concern today. The current technology of LED lighting is exciting. LED lighting is extremely efficient and has a very long life. It is still a developing technology and, as such, costly but, like flat screen technology, is coming down.
MM: Startups often are concerned about budget. Are there things business owners can do to keep project costs down?
FW: Understanding the responsibilities of the tenant and landlord up front is so important. A preconstruction analysis of the space before signing a lease will assure there are no major “surprise” modifications needed to match the business plan.
KG: Also, the best way to bring a store in on budget is to develop the budget up front, then plan and design to that budget. This takes experienced store planners and designers, but once the design is complete and the preliminary budget is “knocked out,” it becomes much easier to move through construction with few costly change orders. But it all starts with assessing the space up front.
MM: Why should business owners consider hiring an architect to work on their retail space?
KG: I’ll start by saying that it is very important that the retail design team include more than just traditional architects. Architecture is a very important tool to get a new store built on time and on budget, but successful stores utilize a team design approach, which includes a store planning project manager, merchandise planners, environmental designers, visual communication designers, lighting designers, documentation specialists, architects and select engineers. Business owners should evaluate any firm’s ability to bring a team together that can handle all of these elements.
FW: This goes back to a point I made earlier about retail teams as opposed to basic drafting service providers. Verify the portfolio of the architectural firm you are considering and also the professionals that will be working on it. Typically, an architect should take the lead, but the team needs these other specialized service providers as well.
MM: Is there anything else you think I should know?
KG: While this may sound a bit too passionate, there are few businesses that are more fun, and at the same time more challenging, than trying to create a new retail concept. There are so many “moving parts” that all must come together at the right time to make the store work. Once the prototype has been developed, it is easier to execute with each successive store, but the fun, high risk, and thrill, is in the up-front planning. This is where the creative juices best flow and full nights sleep are rare!
FW: In a new retail venture, assume that it will evolve until the product mix is established. Entire chains have been spun off of sub categories of successful businesses. Go Figure on High Street in the Short North is a full figure retail shop. Sherri Brunner has found that reducing her inventory to focus on better product and accessories has increased her sales and the customers love it.
Tuesday, December 14, 2010
Arena District, Neighborhood Launch honored
The city’s Downtown Commission has won an endorsement of its first inaugural Harrison Smith Awards for urban design.
The downtown planning panel recognized the downtown’s Arena District and the Neighborhood Launch condo neighborhood on East Gay Street before a packed house of more than 200 guests during a luncheon presentation at the Columbus Metropolitan Club.
The Arena District plaque honored developer Nationwide Realty Investors Ltd.;
master planner MSI Design; and building architects 360 Architecture, NBBJ, Lupton Rausch Architecture and
Design, Sullivan Bruck Architects, URS Corp; and Meleca Architecture.
Columbus developer Jeff Edwards of the Edwards Cos. and the condo designers at Brian Kent Jones Architects Inc. and Lupton Rausch were recognized for the Neighborhood Launch condo project on East Gay between North Fourth and North Sixth streets.
Now back to that endorsement mentioned earlier.
Jay Smith, the son of Harrison “Bill” Smith Jr., the founding chairman of the Downtown Commission, complimented the Downtown Commission for the projects selected for the initial awards. Harrison Smith died in August 2009 after a career as a leading real estate attorney with the Smith and Hall LLC law firm. He served as chairman of the Downtown Commission for 12 years when his term expired in June 2009.
“I think he would have been very, very pleased” with the design awards choices, said Jay Smith, a real estate agent at the R.S. Garek Associates brokerage, in a phone interview with Columbus Business First.
The younger Smith called the Arena District a “natural” winner because of its significant economic impact downtown. But he also lauded Jeff Edwards for showing how a quality downtown neighborhood can get built in Columbus.
For those not making the presentation, Urbanophile blogger Aaron Renn
served as keynote speaker at the Metro Club event.
A video link to Renn’s Metro Club presentation is here.
Read more: Arena District, Neighborhood Launch honored | Business First
The Short Fall of Pizzuti
Developer Joel Pizzuti had hoped to receive support for a demolition permit during the 10th joint meeting of the Victorian Village and Italian Village commissions Wednesday night to help push a mixed-use project that has caused much intense discussion since January.
A 70-minute meeting apparently convinced Pizzuti to back off.
When it looked like that support would not come easily, the Pizzuti Cos. president and his legal and design advisers huddled for five minutes and then announced they would forego a vote on the permit until the design portion of the project gets fleshed out better and gains the necessary support. Pizzuti called the strategic retreat a matter of “trusting” permission to secure a demolition of the back portion of the ex-United Commercial Travelers property at 632 N. Park St. will come from the Victorian Village panel once a few nagging issues get resolved.
Not forcing a vote likely will work in Pizzuti’s favor, given a statement by Victorian Village commissioner Jack Decker that his reading of the city’s code for historic neighborhoods appears to call for a concrete plan for a new project before a commission can approve a demolition permit, conditional or not.
“In my view, the demolition permit goes hand in hand with approval of an appropriate (replacement) project,” Decker said.
The panel during an Oct. 28 meeting had informally indicated support for partial demolition, reasoning that redevelopment of the entire United Travelers’ property likely is not economically feasible given Pizzuti’s presentation of a cost analysis of redeveloping that property as offices and other commercial space.
On Wednesday, the city’s staff offered some support for a “conditional” permit that might require a zoning plan, an acceptable design and a traffic study for the entry and exit of vehicles before Pizzuti could actually knock down a part of the cross-shaped building. Pizzuti said such a conditional permit may allow plans for an art gallery for the holdings of his father,
Ron Pizzuti, the development firm’s chairman and CEO, to move froward.
But with the Victorian Village members sending mixed messages on that route, Joel Pizzuti demurred.
“I feel we and the commission have the same goal – to allow for a project that’s appropriate and complements the historic neighborhood,” Pizzuti told Columbus Business First. “We now need to focus attention on the design.”
Citizen input
Meantime, the battle between historic preservation of a residential neighborhood and support for economic development surfaced a bit during a public comment section of the meeting.
Area resident Jeff Harper said he supports business growth along North High but also worries about his street becoming a “thoroughfare” if the parking garage’s only entrance isn’t relocated. That will cause values of Victorian Village condos facing the street to decline, he said.
And Kathy Mast Kane, executive director of the Columbus Landmarks Foundation preservation group, voiced concern about demolishing a portion of the “contributing building” in a historic neighborhood as well as the impact of such tall buildings along the commercial strip.
“Columbus Landmarks Foundation ... believes there is opportunity here for historic preservation objectives to be met,” Kane said, “and a new mixed-used project to thrive.”
On the other side, Short North developer Mark Wood read a letter from the Short North Special Improvement District supporting the concept of the hotel dubbed the Joseph, office building and garage.
“The development will attract customers to support the (Short North) commercial district,” Wood said, “which in turn will provide sustainability for the boutique retail shops, art galleries and restaurants that give the neighborhood its vibe.”
No doubt the debate will continue into the new year.
Pizzuti’s Short North project fails to win demolition permit | Business First
Tuesday, November 30, 2010
Thursday, November 18, 2010
Short North Development: Woods Co
Strength in the Short North retail and apartment markets is spurring a plan to dramatically expand the building that houses the Northstar Cafe.
Developer Mark Wood is moving forward on a $4.5 million project to add three floors to 937-951 N. High St., the building his Wood Cos. bought in 2002.
“When we bought the property, we knew we wanted to expand it,” Wood said. “Originally, (the expansion) was only going to be residential. It’s really a wonderful mixed-use (project) to maximize the site development.”
Wood plans to add 10,000 square feet of office space and two apartments on a second floor and 22 apartments on the third and fourth floors.
When Wood Cos. renovated the building for street-level retail eight years ago, it had the former medical lab strengthened with additional structural steel in preparation for eventually adding floors.
“(That) is allowing us to do a higher-end product because we already have a significant investment in the building,” Wood said during an interview at the Northstar Cafe, one of the site’s five retail operations.
Resilient market
Wood said his firm has built or bought about 100 apartments over the nearly 30 years as it has invested in Short North commercial properties. Just a handful of those rentals are vacant.
“The residential market has been so strong for us,” Wood said. “We know there’s a market because we deal with it every day.”
Joe Armeni, another Short North housing developer and investor, said Wood Cos. has chosen an opportune time to build considering low apartment vacancies and solid rent levels. Armeni, owner of Re/Max City Center Realtors, said just three of the 350 residential units that his brokerage leases and manages are empty.
“The market is extremely strong now,” he said, crediting in part the weak economy and the sluggish single-family housing market for much of the strength of apartments. “We’ve been able to get steady rent increases the last two years.”
Armeni noted the strength in the North High commercial corridor between downtown and the Ohio State University campus.
“Overall, the Short North has been stable,” he said. “If you drive up High Street, there are not many vacant storefronts.”
Wood acknowledged the Short North commercial market has shown resilience despite the poor economy. For example, he cited a continuing influx of home decor retailers and the relocation of bicycle merchant Paradise Garage to a neighboring High Street building to accommodate the growth it experienced.
“I think the Short North,” he said, “is one of the few places you’re seeing new development.”
Defining storefronts
Lower construction costs also encouraged Wood Cos. to move forward, he said, as well as the ability to finance the deal.
Construction should get under way by late November with completion set for next fall.
The project will mean a temporary relocation of the Jazz Arts Group offices to Wood Cos. space across High Street. Other tenants include the Zpizza gourmet pizzeria and the Kiaca gallery of African art. Those businesses, as well as the Northstar Cafe, are scheduled to remain open during the construction.
“If we hadn’t done that forward planning,” Wood said of the first renovation, “it would have been difficult for the businesses to stay open.”
Once the three-story addition is complete, Jazz Arts Group and Wood’s firm will move their offices to the building’s second floor.
Wood said the architectural design by Schooley Caldwell Associates Inc. features a 2,500-square-foot patio for office and apartment tenants on a first-floor roof toward the back of the complex.
The expansion also will include converting a portion of the property off Second Avenue into a 24-slot parking garage for residents and office tenants.
The High Street facade, he said, will feature different styles of bricks to create the appearance of three separate buildings.
“We really see the project as an opportunity to define the storefronts,” Wood said. “Our approach is about building a neighborhood.”