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Planners Face Questions About The Future Of Retailing

Mar 31, 2009
How the heck do you plan a city when no one knows what the world of retail sales will look like in 10 years?

That's a question I've pondered for some time, and it came to mind again with the recent news that Gottschalks is officially going out of business. Gottschalks' closure closely follows Mervyns' late 2008 shut-down and the more recent shuttering of Circuit City. In a number of California cities, Gottschalks and Mervyns were located in the same mall or shopping district. Soon, those cities will have two 60,000-square-foot boxes sitting empty.

The Gottschalks' announcement comes at a time when shopping mall owners across the country are struggling mightily. As evidenced in this story from the Bay Area, General Growth Properties is barely hanging on. General Growth owns more than 200 malls, including some in California that are downright iconic.

And, as Bill Fulton has been reporting, auto malls and automobile dealers face a very uncertain future.

What's a planner to do?

I know, I know, we're all supposed to have gotten past Euclidian, used-based zoning. That's so 20th century. But even if we want to embrace form-based zoning, we still need to have a feel for how people are going to buy food, cars and other goods in the future.

It used to be that retail cycles lasted about a generation. By the end of the 90s, however, retail cycles were down to about seven years. That was the length of time it took for lifestyle centers to bypass power centers as the hottest retail properties. The explosion of Internet sales compressed the cycles even further. (It wasn't that long ago that we all made jokes about Jeff Bezos losing hundreds of millions of dollars a year.) Now, the recession is throwing everything into doubt. Some cities have seen their sales tax receipts fall every quarter for more than a year. A recent analysis for the Santa Clara Valley Transportation Authority forecast that sales tax revenue, after inflation, would be flat through 2036.

Local governments have made many questionable land use and economic development decisions since Proposition 13 elevated the importance of sales tax as a local revenue. Cities and counties have not only accommodated, they have subsidized the latest retail trends. Some of those decisions look even more questionable today, but at least most of them literally paid off for a while.

The questions remain: Now what? Should we continue to plan as if the retail world of 2005 will return after the recession ends? Do we stick with general plans adopted five or 10 years ago that assume retail growth will continue ever-onward? Are planners wasting their time processing projects that will be obsolete before the developer even breaks ground? What are cities to do with what appears to be a glut of retail space?

In a way, we're lucky. We have a period of time to answer these questions, because nobody has money to build much of anything right now.

Paul Shigley
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