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Portland Public Market Feasibility Study & Business Plan

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Portland Public Market Feasibility Study & Business Plan Portland Public Market Feasibility Study & Business Plan Portland Public Market Feasibility Study & Business Plan Prepared for: Portland Development Commission Prepared by: Bay Area Economics GBD Architects Project for Public Spaces Shiels Obletz Johnsen February 2006 March 7, 2006 Mr. Ross Plambeck Portland Development Commission 222 NW 5th Avenue Portland, OR 97209 Dear Ross: We are pleased to provide this completed Feasibility Study for the proposed Portland Public Market. The Study addresses both market and financial feasibility, as well as the potential development strategy and business plan for the Market. Recommended next steps are identified. This Study seeks to inform the larger Ankeny / Burnside Strategy effort that is currently underway. The Strategy will address the potential for a larger Market District, with the Public Market as a catalyst anchor use. The work for this Study indicates a substantial potential for a Market District that could serve as an organizing theme for revitalization of the surrounding area. Our work has shown that there is great interest and potential support for the Public Market, but also that there are a number of complex issues to be addressed. The effectiveness of solutions to address start-up risks and other implementation challenges is likely to be the most significant factor in determining whether a Public Market becomes viable and self-sufficient. The work for this Study was reviewed and guided by an Advisory Committee of local residents active in the food industry and related fields. On behalf of our consultant team, we would like to thank the members of the Advisory Committee, PDC staff, and others who provided valuable assistance in the preparation of the Study. Sincerely, Janet Smith-Heimer Ron Golem Managing Principal Vice President Executive Summary Purpose of the Study This report presents the findings from a Feasibility Study for the proposed Portland Public Market. This study was commissioned by the Portland Development Commission (PDC), and funded in part by the U.S. Dept. of Agriculture. The Study assesses the market support and financial feasibility of a preliminary Market concept in the Skidmore Fountain Building, a historic structure adjacent to Ankeny Plaza in Old Town Portland and provides a detailed business plan along with implementation strategies. What is a Public Market? A public market is a permanent retail facility where multiple small vendors gather to sell fresh and prepared food from stalls, attracting shoppers by the variety of locally-produced food items. Project for Public Spaces (PPS), a non-profit organization engaged in stimulating the creation of public markets throughout the U.S., has identified these key characteristics of a public market: . Public markets have public goals such as preserving local agriculture; and . Public markets usually create public spaces where people can gather, and public markets contain locally-owned independent businesses such as local farmer vendors and other small retailers. The proposed Portland Public Market would operate indoors on a permanent, year-round basis, distinct from farmers’ markets in the region, which operate outdoors on a seasonal, part-time basis. The proposed Portland Public Market would have a variety of differently sized permanent vendor stalls, temporary day tables, restaurants, dry and cold storage facilities, and an important educational component with demonstration kitchens and classrooms for educational programs. The kitchens and classrooms, and the corresponding educational programming, are key components of creating a public use to attract the general public. Evolution of the Portland Public Market Concept The Portland Public Market, Inc. (PPM) non-profit, and its fundraising entity, Historic Portland Public Market Foundation, have over the last five years advocated, fundraised (including a USDA grant), and developed a vision and number of concepts for the creation of a public market that would reconnect Portland with its long history of public markets offering locally grown food. The Portland region is an outstanding example of an agricultural economy connecting with a strong interest in fresh, healthy, locally produced food. Many other organizations and individuals in the Pacific Northwest, as well as around the U.S. and the world, are organizing around the principles of sustainable agriculture, and more broadly sustainable lifestyles. This supports three broad opportunities for a public market in Portland: . The market as a place to demonstrate sustainable agriculture, address food policy issues, and provide food and nutrition education; . The market as a place to attract the public and foster small, locally-owned businesses in a gathering place that promotes community interaction and activities; and . The market as a place to satisfy increased consumer demand for specialty food items, particularly high quality gourmet and ethnic food items. The Portland Public Market Creation of a successful new venture at the Skidmore Fountain Building requires that the market capture the most advantageous aspects of these three opportunities, while positioning itself to avoid direct competition with other retailers and markets. This can best be done by orienting it towards sustainable retailing, including a primary focus on fresh and prepared foods grown locally, but also encompassing a limited amount of complementary sustainable products and services, with a year-around approach to the merchandising mix. This broadened concept enables strong marketing and branding opportunities, unique to Portland and the Pacific Northwest. It is an extension of local policies of sustainability, agricultural preservation, quality foodstuffs, and support for micro-enterprises, including ethnic retailers. A Market District The effort to create a public market, consideration of the future of the Saturday Market, proposals for Little Italy, and PDC goals for urban revitalization of the area surrounding the Skidmore Fountain Building has led to discussion of the opportunity for a themed Market District that incorporates all these uses. Other successful public markets show that fresh, prepared, and specialty food as well as related merchandise items are the core retail categories needed for success. There are, however, a range of other complementary uses, including sit-down restaurants, wineries, breweries, cooking schools, and small scale food production facilities, as well as residences that can benefit from the foot traffic and identity created by a public market, as well as augment the customer base for market vendors. These uses can generate synergy with each other by being located in various nearby locations, and most of them have greater potential to attract private investment than does a public market. The potential for a Market District is being evaluated in a separate consultant study, and therefore is not addressed in this Study, except to note its potential. Plans to secure the future of Saturday Market are currently under consideration by a separate consultant study. The Saturday Market is a generator of substantial foot traffic, and has a customer base that is better educated and somewhat more affluent than Portland’s population as a whole, characteristics that are consistent with the target audience for the Public Market. Retaining the Saturday Market in a site as close to the Public Market as possible would generate significant benefits for the Public Market as well as a potential Market District. The Study addresses options for doing this, including potential coordination issues if the two markets share use of certain areas. Focus of this Report This report focuses on the following key questions (with steps taken to address the questions shown as sub-bullets): 1. Market Demand. Will the Portland region generate sufficient customer demand, and potential vendor interest to support a Public Market with a range of fresh, high-quality, locally-produced food? Steps taken to research this demand question included: . A shopper survey of residents within two miles of the proposed site . A downtown employee survey within walkable distances . A vendor survey to ascertain interest in selling at the Market ii . An overview of food retailing trends and shifting spending patterns 1. Building Reuse Feasibility. Can the Skidmore Fountain Building, which requires substantial rehabilitation, be made into a functional Market building? \ Steps taken to research this facility question included: . Architect site tours and plan review . General assessment of structural and historic constraints on reuse as Market . Conceptual layout of key, main, and necessary functions 1. Development and Operating Feasibility. What are the likely development costs, and how much initial public investment is needed to create the Market? Can the general concept achieve operating feasibility? Steps taken to analyze this financial feasibility question included: . Comparison of three design options . Analyses of financing and organizational strategies, merchandizing and educational programs and partnerships . Development of project timeline identifying actions leading to targeted opening date . Estimate of initial investment to create a Market, including renovation of the existing structure and new construction to enlarge the building to a feasible initial size. Evaluation of operating revenues and costs based on conceptual layout developed. Market Demand Food Spending Trends A key question regarding market demand for a public market is whether this
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