Monday, May 4, 2009

Zoning out uses

This is an interesting article about zoning codes that restricts bars and restaurants. It seems a bit top heavy, but an interesting concept for areas that rapidly gentrify and retaining some of the local small businesses. One main issue I see is that retail recruitment for more investment in an area usually starts with trying to attract restaurants. I have been working with commercial corridors from Brooklyn, NY to St. Paul and what is evident is that food, coffee shops, and bars are the things that attract local residents and other visitors.

Restaurants, especially those allowed to serve alcohol, can afford higher rents than neighborhood-serving businesses, like grocery stores, hardware stores, pharmacies and dry cleaners. As bars and restaurants become successful, an area draws more foot traffic, attracting more of those businesses. Landlords can charge higher rent, which pushes out the local businesses. This is basically an economic game theory problem: the most natural equilibrium states are a mostly-vacant corridor on the one hand, and nothing but bars on the other.

Can zoning or other regulations help keep corridors in more of a balance? Is that desirable? One options is to allow market forces to determine the retail mix. But many residents are concerned about their neighborhoods becoming "another Adams Morgan." At the same time, regulation also hampers business, leading to more vacant storefronts. Is there a way to strike a balance, encouraging free enterprise while also maintaining some diversity of store types?

I am intrigued about a comprehensive approach and some local control of what does go into a commercial corridor, especially those that have had disinvestment for years.

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