Saturday, August 9, 2014

Response to the International Council of Shopping Centers

From: Grow Raleigh Great
To: Raleigh City Council

Dear Raleigh City Council members,

Recently, local members of the International Council of Shopping Centers (ICSC) submitted a paper entitled “Sensible Retail Zoning” to the Raleigh City Council. In their introductory letter, the ICSC noted concerns with the Grow Raleigh Great initiative founded by residents from across the city this spring. We appreciate the ICSC’s interest in Raleigh and trust that the organization shares similar objectives that align with Raleigh’s commitment to protect and preserve neighborhoods.

Attached is our response to the ICSC paper.  To summarize:

We recognize the ICSC is renowned as the premier global trade association of the shopping center industry, representing the interests of shopping center owners, developers, managers, marketing specialists, investors, retailers and brokers, as well as academics and public officials. Grow Raleigh Great represents the interests of neighborhoods, and the residents who call Raleigh home.

Grow Raleigh Great observes that the ICSC white paper includes misstatements and incorrect assertions. Note as well that the ICSC presents data that has been modified from its original source. These changes may be misleading to Council members or other readers, so our response includes the actual source data as an exhibit – please see the ICSC document entitled “U.S. Shopping-Center Classification and Characteristics” from January 2014.

It is important to note that the ICSC source document agrees with Grow Raleigh Great on several points:

·         Grocery stores anchoring neighborhood centers are much smaller than 50,000 square feet. The average anchor in neighborhood centers ranges from 21,000 to 35,000 square feet.
·         Larger grocery stores belong in community centers. The ICSC source documents state that the average size anchor of community centers is 50,000 square feet.
·         The range of anchor sizes for neighborhood centers (21,000 to 35,000 square feet) agrees well with the definition of “superstore” put forward by another industry group, the Food Marketing Institute.  According to the FMI superstores are greater than 30,000 square feet.
·         Given that Raleigh’s Comprehensive Plan excludes superstores from Neighborhood Mixed Use areas, we find that the ICSC and the FMI agree with Raleigh’s Comprehensive Plan.

There are assertions and misinformation in the ICSC white paper that we take exception to. 

·         Neighborhood centers defined in the ICSC source document serve a radius of three miles while convenience or strip centers serve one mile or less.  The white paper mentions convenience centers but fails to mention that their average size is 13,000 square feet.   Grow Raleigh Great supports centers with stores up to 30,000 square feet, the average for a neighborhood center. 
·         After opening their white paper by detailing their own shopping center classifications that were, in their words, "based on data that underwent years of scrutiny from industry experts", they abandon that data and begin discussing the average size of grocery stores in the U.S.  At this point they also misrepresent data from the Comp Plan by asserting that NMU is intended to serve multiple surrounding neighborhoods while conflating CMU and RMU together as servicing regional populations.  In reality, the Comp Plan states that NMU "serves the immediately surrounding neighborhood" (singular), while it is the job of CMU to "draw from multiple neighborhoods" and only RMU is considered regional.
·         The ICSC white paper states that grocers are moving away from the neighborhood concept and building bigger stores. Although we are not experts in the grocery store business, we do note the following article in Time, “Your Grocery Store May Soon Be Cut in Half”, that was published June 2, 2014.  According to this article chains such as Aldi and Trader Joe’s successfully operate stores under 20,000 square feet. The article also links to additional articles documenting how traditional grocers such as Walmart, Kroger, and Publix are experimenting with smaller format stores.  Notably, one of those articles dated May 7, 2014 is entitled, “Publix quietly working on smaller prototype store” and details its plans for a 20,000 square foot store. 

Whatever the trend, Raleigh should not have to increase the size of its neighborhood centers to accommodate large stores. Instead, large stores serving large areas should move into zoning districts designed to accommodate them, be that CX or larger zoning districts.

·         The ICSC white paper includes 12 grocery-anchored shopping centers, and states that these centers “would not have been developed if the City discarded the industry definitions and practices as outlined herein.” Grow Raleigh Great disputes this claim. We agree with Raleigh’s Planning Staff, which has remapped all of these shopping centers, except one, to Commercial Mixed Use (CX). The one exception is the proposed Shoppes at Bedford Falls. The site is currently undeveloped, and a rezoning proposal has yet to reach the Planning Commission. We find it telling that of the examples provided, none of the existing shopping centers is remapped to Neighborhood Mixed Use. As with the modified ICSC source document, we do not want the Council to be misinformed on these important facts.

·         Grow Raleigh Great recommends the addition of an intermediate zoning district between NX and CX. The white paper suggests that Grow Raleigh Great’s recommendation will prevent large stores from being built. Additional gradations in zoning provided by an additional zoning district will simply clarify and make transparent where large shopping plazas with large anchors should be built.  We suggest that the ICSC fails to understand our position, and that is understandable. They have not been involved in the extremely productive discussions that have taken place in the Comprehensive Planning Committee meetings since June.

As our response paper concludes, it appears that a multitude of interests, including the ICSC, the FMI, City staff and Grow Raleigh Great have all separately arrived at a similar conclusion:  Neighborhood Mixed Use centers are anchored by single retailers around 30,000 square feet. Larger retailers, or multi-retailer anchored centers should not be zoned for Neighborhood Mixed Use. They should be zoned to larger districts, such as Grow Raleigh Great’s proposed CX-Small and CX-Large.

We invite the ICSC to join the effort to clarify the vagaries of the UDO, its failure to implement the Comprehensive Plan and to creating a development process that is predictable, consistent and beneficial. And, that lives up to the City of Raleigh’s mission statement and its commitment to “…welcome growth and diversity through policies and programs that will protect, preserve and enhance Raleigh's existing neighborhoods.” Grow Raleigh Great agrees with this mission, and we will continue to pursue sensible policies that enable growth and protect neighborhoods.

Grow Raleigh Great