DRI SCHENECTADY RETAIL MARKET ANALYSIS FEBRUARY, 2020 DRI SCHENECTADY RETAIL MARKET ANALYSIS - STREETSENSE (FEBRUARY 2020) | 1 Streetsense is an experience-focused strategy and design collective that creates brands people love and places people love to be. Powered by in-depth insights and an interdisciplinary approach, we enhance brands and places, drive consumer demand, and foster community. Information conveyed, data gathered and analyzed, and recommendations made within this report are intended to provide information in regard to the subject matter covered. The content presented and conclusions reached are, on the date presented, believed to be an accurate representation of facts and conditions. www.streetsense.com DC / MD / NY / LA 2 | DRI SCHENECTADY RETAIL MARKET ANALYSIS - STREETSENSE (FEBRUARY 2020) Table of Contents Introduction 4 Methodology & Retail Terminology 6 Existing Retail Inventory 8 Competition Assessment 10 Trade Area Analysis 14 Customer Profiles/ Demographics 16 Current Retail Demand 18 DRI Project Prioritization 20 Technical Appendix 22 DRI SCHENECTADY RETAIL MARKET ANALYSIS - STREETSENSE (FEBRUARY 2020) | 3 Introduction The Downtown Revitalization Initiative (DRI) is a New York state-funded grant program that is in its fourth year running. Schenectady was selected as 2019-2020’s Capital Region DRI winner SENECA ST and has been awarded $10 million to build on positive momentum in the city and to complete the redevelopment of downtown as a dynamic and diverse 24/7 destination for businesses and visitors. On behalf of the City of Schenectady, the Schenectady Metroplex Development Authority SCOTIA (Metroplex) will perform all the necessary MOHAWK RIVER functions as the lead administrator for the DRI and will also be committing $7 million in funding to the downtown revitalization efforts. The DRI study area is large and extends across a 15-minute walk shed, or measures about 4,000 UNION COLLEGE feet long end to end. It is flanked by physical ERIE BLVD boundaries, including rail lines, the Mohawk River (West), and Vale Park (East), and major PARK PL thoroughfares such as I-890, Erie Blvd and State SCHENECTADY COUNTY CC St. The large area is comprised of several distinct UNION ST retail micro-climates including Proctor’s Block, Lower State Street District, Little italy and Mohawk Harbor. STATE ST The retail market analysis presented in this report HAMILTON ST serves to evaluate market-supported retail demand (including quantity and type of retail) that will NOTT TERRACE guide the work of the Local Planning Committee in selecting and prioritizing final projects and investment as part of the DRI. A review of existing VALE PARK and upcoming competitive retail clusters in the market, a trade area analysis, and a customer demographic analysis, were undertaken to generate a comprehensive understanding of the Map of the Downtown Revitalization Initiative study area. Source: Streetsense DRI Study Area 4 | DRI SCHENECTADY RETAIL MARKET ANALYSIS - STREETSENSE (FEBRUARY 2020) VALE PARK Retail storefronts along Jay Street, a pedestrianized street in Proctor’s DRI SCHENECTADYBlock, RETAIL offering MARKET a mix ANALYSISof GAFO and - STREETSENSEF&B offerings. (FEBRUARYSource: Streetsense 2020) | 5 Methodology To evaluate downtown Schenectady’s ability to command ASSIGN CAPTURE RATES competitive retail rent rates and terms, the presence of a market (unmet) demand for future retail offerings must be established. Expenditures are determined from information gathered For the purposes of this assessment, the following tasks were from the U.S. Census Bureau, ESRI, and Claritas, Inc., as appropriate. These total estimated expenditures are undertaken to evaluate the retail potential. multiplied by a capture rate to estimate total captured expenditures. Capture rates are set by evaluating the amount, accessibility, and quality of existing and proposed retail development on the site’s ability to draw customer SURVEY & INVENTORY expenditures within the context of the larger market. A summary and assessment are undertaken of the existing competition for customers in the area’s market. TRANSLATE DEMAND INTO SQUARE As the study area is located in a market that contains a number of shopping options within close proximity FEET OF RETAIL SUPPORTED and of some level of convenience to the consumer, Total estimated, captured expenditures in each retail the level of impact for these competitive centers are category are divided by high and low sales per square incorporated in the analysis. foot (PSF) figure by retail tenant type. These figures are representative of expected sales PSF for that retail IDENTIFY TRADE AREAS category, according to actual retail sales nationwide (reported in annual and quarterly SEC reports) and Boundaries for trade areas are then determined for industry standards. The result of each calculation is a primary and tertiary (regional) levels of customer draws. high- and low-productivity number. Under the condition Trade areas are impacted by competition, drive times, of “high productivity,” retail sales volume PSF are high; sociological and geographical boundaries, shopping thus a smaller amount of retail space is needed to patterns by customer type, pedestrian volumes, and capture consumer expenditures. This condition is often other factors. This information provides a starting point associated with better quality retail tenants, as it allows for understanding the realistic customer base (existing retailers to purchase higher quality inventory, hire more and potential) for the retail market. qualified employees, and invest in regular maintenance and improvements. At high productivity, although there are fewer retailers, they are operating at a high level of quality TRACK EXPENDITURES BY and efficiency. CUSTOMER TYPE “Low-productivity” conditions assign lower potential sales The Primary Trade Area (PTA) identifies the segments volume per square foot to each type of retail; therefore, from which the district’s establishments draw a majority a larger amount of retail space is supported but with of their regular sales. The percentage of household significantly less profitability. This condition represents a expenditures captured by retailers is expected to be much riskier retail environment, potentially characterized highest in its PTA. Additionally, convenience is a major by high turnover as a result of the inability to make factor for sales generated locally. The Regional Trade profit. The irony is that low-productivity retail tenants are Area (RTA) delineates market segments that will also essential to market conditions where it is necessary to attribute to sales generated at lower capture rates. “prove the market.” High-productivity tenants are often Streetsense and International Council of Shopping highly selective in choosing a site, and may not accept the Centers (ICSC) estimates office worker spending at necessary level of risk associated with an up-and-coming $5,049 (in 2018 dollars) annually near their workplaces. commercial district. The result of this calculation yields an estimated total amount of demand for the site. 6 | DRI SCHENECTADY RETAIL MARKET ANALYSIS - STREETSENSE (FEBRUARY 2020) Retail Terminology NEIGHBORHOOD GOODS & SERVICES GROCERY STORE TAILOR/SEAMSTRESS/ (NG&S) NEIGHBORHOOD MARKET CLOTHING REPAIR STORE NG&S retailers rely on spending from nearby CONVENIENCE STORE/ NAIL AND HAIR SALON residents, students, and employees. NG&S is BODEGA BARBER SHOP “convenience based” retail that must be located within close proximity to a customer’s place of BUTCHER/ DELICATESSEN SPA work or home with easy access (by foot/ bike/ PHARMACY/ DRUG STORE PET FOOD STORE transit, private vehicle) and/ or convenient DRY CLEANER PET GROOMERS parking. Generally, customers will travel to the nearest NG&S offering available to them. LAUNDROMAT PRINTER/ MAIL SERVICES FOOD & BEVERAGE (F&B) FULL-SERVICE RESTAURANT ICE CREAM SHOP F&B retailers can attract customers from a SIT-DOWN RESTAURANT COFFEE SHOP/ CAFE larger trade area than NG&S retailers, especially QUICK SERVICE DINING BAR/ BREWPUB when they are clustered. A greater number of FAST CASUAL RESTAURANT FOOD TRUCKS patrons will be interested in a collection of F&B establishments that oer a variety of options FAST FOOD RESTAURANT that serve food or alcohol that is consumed on CARRY-OUT RESTAURANT premises. APPAREL/CLOTHING STORE SPORTS EQUIPMENT STORE GENERAL MERCHANDISE, APPAREL, FURNISHINGS & OTHERS (GAFO) ELECTRONIC EQUIPMENT HOBBY STORE AND SUPPLY STORE CRAFT STORE GAFO retailers face a tremendous amount of retail competition, both from brick-and-mortar FURNITURE STORE ANTIQUE STORE stores and online, for a relatively small percentage PET SUPPLIES STORE GIFT SHOP of household expenditures. GAFO retailers attract BOOK STORE AUTOMOTIVE EQUIPMENT customers from farther distances, but rely on exposure and foot traffic generated by anchors. MUSIC STORE STORE DRI SCHENECTADY RETAIL MARKET ANALYSIS - STREETSENSE (FEBRUARY 2020) | 7 Existing Retail Inventory Map of retail micro climates within DRI study area. Source: Streetsense The DRI Study Area is comprised of four retail micro-climates (Proctor’s Block, Lower State SENECA ST Street District, Little italy and Mohawk Harbor) that each have a distinct supply of retail spaces and mix of existing ground-floor retail tenants. When combined, the study area offers approximately a MOHAWK HARBOR total of 413,000 SF of existing retail spaces*. 145,000 SF (CLASS A SPACES) The greatest density of existing retail spaces are located