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The repurpose agenda – more on participation agreements

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Rob Walker's article in the New York Times Magazine today (the Infrastructure issue, also called the Architecture issue other places in the Times) on the glut of retail properties in the country was a good reminder to get back to part two of a post I'd begun earlier.

The catalyst of that earlier thinking was reading about a concept of "participation agreements" that evoked a sense of community sustainability. The source was GM's announcement that it was going to require  participation agreements of its dealers in the "new GM." They were intended to address matters of business, but also upgrades to the quality of the dealer properties and facilities. I thought that was a good idea, not only for GM and the communities of its dealers, but for communities in general. My earlier post was on the dealership in the community. But let's expand the concept.

The idea that anybody with property, in any community that cares, might become bound by a commitment to its originally expressed ownership and development intentions seems like a great concept for durable quality and development sustainability. The implications of the content of those agreements, their methods of enforcement, potential resources for support, and other inherent factors seems to suggest a method to commit to long term care of property and development and to build new only with well examined need and considered intention.

I expect that almost anybody reading this lives in a city where retail development has come to almost dominate the landscape. The overbuilding, resulting in a glut of vacant or abandoned properties is, as he notes, both a factor of a down economy as well as a robust one. Retailers in good times expanded operations leaving behind the buildings and communities that were in the last path of expansion. In this economy, they are leaving even those behind, with vacancies from Madison Avenue to the Mall of America.

We are still learning the lessons from the financial crisis and are seeking regulatory response to a system  that had gone out of control. As our cities now bear the compounding burden of excess real estate development – the costs and other impacts go well beyond the storefront – what might be appropriate responses to the emerging lessons to the retail bubble? Here is some speculation – 15 emerging concepts to test  to avoid further over-retailing of our communities.

1 Participation agreements Communities are complex ecosystems where the quality, character and development of the physical environment also affects the social, financial, and infrastructural health of the community. Shouldn't there be more asked of those who come to do business with the members of that community? Could communities become strong enough to be able to ask for sustainability commitments as part of a retailer's "participation" in the system of the community?

2 Certificates of need I pointed to this concept from health care in an earlier post seeking solutions in a similar way in the housing domain. Health care in many states is controlled by a mechanism that requires hospitals to prove the demand for new facilities and equipment before being granted permission to build. Could a more rigorous examination of need be developed by communities to require retailers to demonstrate a differential, durable and sustainable market there before granting the building permit? How could diversity and choice be assured in a system like this?

3 Exit taxes Do I recall that certain states have the right to assess a penalty against corporations leaving a state and causing a resultant unemployment? Is there applicability to retail and other uses? Could communities levy a "tax" on retailers who exit the community and leave behind a property that has no new tenant? Note in Rob Walker's article that some retailers have contract conditions denying the ability of competing retailers to occupy abandoned stores.
4 Exit strategies Exit strategies are typically weak studies intended to project the costs of leaving a community for a corporation, or the marketability of a property for different users by a developer. They are intended to inform the initial decision to build and the character of what is built. Is there a way to develop a more rigorous discipline of the costs and burdens of exit that might generate more easily recycled properties?

5 Regional trades In a recent competition to become the home of the headquarters for the New GM between Detroit, its current home, and one of its suburbs, someone suggested a trade – You can have GM if Detroit gets another corporation from the county to fill the GM headquarters. Sort of a regional zero sum game, but interesting in the implications for the avoidance of excess real estate. Would this also tend to reduce the tendency of communities to preyon each other with incentives attracting a business to the detriment of the neighboring community?

6 Zoning standards Planned Unit Developments are a means to enter into a contract for the quality and character of a development. Typically the PUD takes a broader and more creative view of property development than otherwise granted by the underlying zoning. Could this device be expanded, and could an even broader context for consideration – the entire community – come into play? Could a better balance be achieved by this means rather than the softness and ambiguity of the master plan on the community scale and the zoning regulations on a property scale?

7 Sustainability banks Sustainability is growing as a community value and it seems that both the origins as well as the ends of building could become more critically reviewed. What about the idea that some portion of the taxes paid by retailers is retained to develop a bank that could provide resources and act in creative ways to assure rapid repurposing of retail properties if a retailer were to move? Perhaps a little less of a disincentive than an exit tax?

8 Integrated financial and real estate databases I get a sense that much of what happens in real estate and finance, while perhaps ultimately linked in syndication devices, happens as if in separate worlds. Would a system that provided an integrated analysis of a community so that leasing and building decisions became essentially district, neighborhood or community based, would there be less of a tendency to move up the street to build the next big box?

9 Reverse mitigation In some places, if you built in an area where there was a wetland, you'd have to find another property and build a new wetland of larger scale to mitigate the environmental impact of your development. Could there be a similar policy applied to the built environment, perhaps in reverse? To build a new store, you would have to first make sure that the old store had sustainable tenancy.

10 Loose fit versus tailored In most of my work, we have sought to assure a developer or tenant that the floorplate of the building we were proposing would yield a high level of usable area compared to the gross area of the building. This meant making sure that construction materials, systems and furniture standards were all considered and impose planning measurements and metrics on the new property tailored to that tenant's utilization efficiency goals. Of course, we also then were part of alternative property evaluations for others and recommending against buildings designed as tailored fits for others but just not the right fit for our client. Is there a way to assure adaptability and flexibility without sacrificing efficiency and embedding years of cost on a tenant?

11 Volume Maybe it's time to rethink spatial paradigms. In most of the site searches i have been part of, in which the client is interested in exploring building reuse, the properties that rise to the top are those with high volume, like many retail, industrial and warehouse properties. While this is good news for retail property reuse, what about the growing obsolescence of office properties? Should we get away from the 8-foot ceiling? Would higher volumes everywhere assure greater potentials in reuse? Are high volume properties more

12 Site search parameters Clients in interested in LEED certification have a small incentive to consider existing properties for reuse before developing new properties. What if communities, as part of the permitting process required retailers to develop a report and assess the potentials of reuse? This could cause increased awareness on the part of retailers, assure certain due diligence by their real estate brokers, and perhaps even cause some creativity and imagination to enter the process earlier.

13 Utilization metrics Corporations are waking up to the fact, given new utilization measurement tools, that their office real estate is characteristically occupied less than 60% of the work day. This is leading to increased agility and mobility solutions and leading to an entirely new kind of workplace. I can begin to imagine similar metrics generated for retail that might influence perceptions about the amount of space demanded by current planning standards.

14 District planning Urban district councils provide a coordination of planning, but mostly on a promotional basis. Most of the location decisions that retailers make are still on the basis of individual properties. Is there a way to assure a district-wide consideration and balance in every location decision? Is there a way to bundle, for example, a retailer's location decision with a corporation's and a residential developer's so that planning, and sustainability, move outside of a single property transaction?

15 Zoning business plans How many community master plans and zoning (an antique concept when you seek urban textural and use diversity?) ordinances have business plans integrated with them? Is there a way to bring scenario planning into the planning process more effectively to assure that changing future contexts have responses in planing policy and regulation to assure community sustainability?

I guess the common ingredient in these concepts is the attempt to find a self reinforcement mechanism to reduce the mobility of retailers and the demand for new space fueled by artificial financial instruments rather than a long view of sustainability in all of its factors.

The day after The New York Times article on retail overbuilding, there was this article in the Telegraph of London (with hundreds of comments) on the demolition of American cities due to general overbuilding. Seems like a global discussion is emerging.

I'd be happy to have your own ideas and comments.

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10 more ways to jump-start the auto business

600-muscle I have only done a very quick scan of the article, "25 Ways to Jump-Start the Auto Business," in a recent Fast Company issue. But I am impressed by the fact that out of the 60 people in or close to the industry who were asked to contribute ideas only one, it seems, looked to the intersection between design/production and consumer/consumption.

Even though the experience of buying and selling cars has already changed radically in the Internet age, the lingering stench of going to the dealer remains and many experts see room for improvement. "We need to allow manufacturers to sell cars over the Internet," says Jack Gillis, author of The Car Book. "Linking the purchase process to 'just-in-time production' will start to remove the tremendous inefficiencies in the distribution channel and increase their ability to estimate demand." And it might also make buying a car, dare we say it, fun.

I have been critical, as many, about the American component of the industry, but I also believe that a key issue is that most people cannot break through paradigms about design and quality that are, in reality, a decade out of date. The financial crisis also obscures the fact that there are great products being generated that are getting the right kind of attention from a younger generation of potential buyers. What's missing is not so much a remake of the designs, not so much the quality, not so much the industry itself, but a lot about the interface between these companies and their customers. Almost everywhere else in our world, people are paying close attention to the interface between production and purchase. There is a heightened focus on customer service, the retail experience, and brand protection.

If we look at what others are doing, we might get a few clues about what to do here, as well. Some of these might be-

1. Stop screaming-We are not motivated by the screaming ads placed by local dealership groups. This is such a predominant style of communication that it affects our perception of the quality of your products and of the entire industry.

2. I'm an American, but not that kind of American…why do you make us resist buying that truck we want for the work it will do for us?-It's about utility, isn't it; not about patriotism and living in the country and dominating everybody around us. And stop screaming.

3. Why do you think we do all of our research on the Internet instead of in your dealership?-You know the statistics. We avoid you like the plague and make all of our selection decisions before walking into the dealership, where, again, the only thing that matters is the deal. Isn't there some value to you in making our relationship more robust, more complete, longer lasting, mutually interesting?

4. It looks like your web sites are intended to be a starting place for our relationship; you should design them to do that-We want simplicity, clarity, efficiency and speed. And a follow-up when you say that you will. And why not give is the same or better information we can get through 3rd party sources-We get specs, prices, availability from other sites, and you know we do, so why not offer it to us yourself? We might like you, and trust you, more.

5. We're really interested in the product, can we suspend the deal for a few minutes?-Money matters a lot to all of us these days, but transforming your company and your industry means we should first be interested in wanting to know more about you and your products and services. But we can't see through the deal clutter.

6. We am going to spend a much longer time with this vehicle-It looks as though everything from the economy to manufactured quality will mean that this vehicle is in our garage for a few years. How will you make us interested in what you have to offer over that time? How will you design the experience to make our extended relationship mutually valuable?

7. Redesign the sales process to become a respectful buying experience and an expression of an interest in a long-term relationship-Clean up your desk; this transaction is about us, not about you. Redesign the finance and insurance process; get rid of 75% of those forms most of which look like 25th generation Xeroxes. Get the sales manager to give you some authority to conclude the deal yourself. We'd like to walk out feeling pride in our purchase, whole after the transaction, and interested in coming back for the updates.

8. Think through the design of your store to promote the quality and value of your product-If your product is so great, of such quality, then become a member of the community. Plan your site to not be a blight. Give us a great experience driving by, and driving in. We might then leave your license plate frame on.

9. Really great brands connect the retail experience and the product experience-It seems you are trying to say, "Look! Look! Look at me!!!" Try designs that invite us to explore what you sell.

10. Partner with or influence others in the community who have something to do with the auto, too-We wonder what might happen if the makers and sellers of cars, realizing that the older sense of the car being part of the culture was valuable, would work together with the entire services chain to make ownership and use a delight. Start with gas stations, for example-why do these things have to be blindingly lighted, for example, so the only thing we see as we drive by is an under-canopy array of ugly bare light fixtures. It's called light pollution and we believe it decreases the property values and security in my community. Think about your product in a broader cultural context.

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Making working visible

making-work-visible_1791_002 There are at least two levels of invisibility in my town, two layers of its cross-section where you have to struggle to find signs of life. There is an upper layer-the anonymous and blank windows of the high rise office towers-and a lower layer-empty retail shops and lobbies reflecting the level of occupancy of the floors rising above them.

Colleagues are now in the midst of the periodic ritual of designing infills for empty storefronts in the CBD. The first of these that I remember occurred back in the early eighties. It was a joint venture sponsored by the local architectural professionals and the local artists market. Reasonable successful as a promotional event, artists filled up empty shop windows in the shadows of the GM headquarters, where Saks Fifth Avenue had long served the city and finally pulled up for the suburbs. Their works seemed delightfully in the right place, numbered for reference in the weeks-long auction that took place while they were on view.

In an interim attempt to clean up the city for some event that might draw visitors here from other places, the city commissioned decals for the upper windows of many of the downtown buildings to attempt to convey a sense of life and occupation in the ever declining city. Scenes of curtained windows and table top lamps to be viewed by the "people mover" that cruised the unpopulated city at the second and third floor levels, the program was met with more derision than appreciation, and caused more attention to the reality that it attempted to mask.

More recently, when the Superbowl came to town a couple of years ago, the local architects and contractors teamed up under the auspices of the downtown business association to fill up shopfronts with some form of creative construction. Some baldly promotional and off-purpose, and others only half-heartedly committed, they were left to decay shortly after the event and, as the earlier attempts, contributed to the sense of abandonment.

Another initiative is now in the works. As I watch colleagues prepare their submission, I have too much memory of the past to become enthusiastic and supportive of the present, already seeing the future.

But their work got me thinking. I propose an inversion of the city's cross section, or at least a partial inversion. I want to make work-that is, working- visible. What is up should come down, what is down should become real.

The abandonment of storefronts in the city is caused by the fact that the offices above them are so lightly occupied that the market for the amount of retail space in the city is unsustainable. Preservation of these spaces as "storefronts" under a fantasy of retail restoration only perpetuates, maybe accelerates, decay.

Upstairs, invisible to the world, are the remnants of corporations, professional firms, and others who have maintained their place in the city. Who they are and what they do and how they contribute and why they are here-is invisible. These are lonely places. Nobody shares an elevator with you. Walking the halls stirs uneasiness, wondering who else might be there who should not be there and wondering why you are. We squeeze in under low ceilings and look out of small windows from ever-shrinking space.

I want to move downstairs. I want to be in expansive spaces with high ceilings. I want to be in light filled spaces where high windows bring sunlight deep into the interior. I want to have a reason to put what I do prominently on display. I want to look out and see people, maybe even greet people, rather than look across to an unoccupied building across the way, or down to the streams of people leaving the city.

So, I propose that landlords reconsider the use of their buildings, that brokers reconsider how they promote space and to whom, and I propose that everybody left upstairs goes downstairs. There just might be enough of us to fill up the ground level of all of our buildings. And if we did we'd have a city that is alive. We would see who is here. We would see the work we all do. We would get to know each other better and probably collaborate with each other more frequently. We'd build energy from our own activity and reinforced by the visible activity of others.

The upper floors of our buildings would remain anonymous and invisible and, for the moment, irrelevant. But the ground floors would be lighted, active, visible, productive, energizing, and more than sustainable.

3/24/9 This just in

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Gorgeous to look at and lovely to touch

6185wpvvyjl_bo2204203200_pisitb-sticker-arrow-clicktopright35-76_aa240_sh20_ou01_crop Gary Hamel, in his “Management 2.0” blog in the Wall Street Journal, references “Detroit-itis” to describe the failures of industries other than autos to use design to transform their products and, as a result, their industries, as Apple did.

We have a sense that "Detroit," as the representative term for the American automotive industry, has made significant but unrecognized advances in styling, in design, and in performance.

There may be many reasons why this is not yet acknowledged in Congress, in the press, and in consulting blogs, but there could also be a substantial reason in consumer perception. That is, shopping, buying, and owning an automobile in most cases still carries the stigma, if not the reality, of uncomfortable and unsatisfying experiences.

Apple's key transformation from similar cultures in the computer industry was not only with their product design and performance, but also in the retail experience. Apple's transformation includes an alignment of place with product in all of its aspects---the physical environment iterating the brand attributes, its people acting as consultants rather than salesmen, the Genius Bar elevating not only what is offered but also the status of the owner---and contributes to the perception of quality, the attribution of value to the brand, and the development of an enthusiast culture in the extension of the customer’s relationship.

And then there's the App Store. An extraordinarily exuberant marketplace formed around the iPhone created by Apple and suppliers who provide customized mini-modules fitting the iPhone platform, but selectable and customizable by any user.

There are at least six businesses inside an auto dealership—new car sales, used car sales, service, parts and accessories, finance and insurance. Individually and collectively they provide rich opportunities to Apple-ise the experience.

But as the market and products shift from the familiar conventions of internal combustion, to electric, hybrid and hydrogen propulsion systems, and as the “skateboard” potential of emerging vehicle architecture allows greater customization, what we call a car and who we are as consumers becomes very different. As new vehicles with new embedded technologies emerge, these legacy businesses may be joined by opportunities to engage differently in the dealership environment—to offer training, personalization, maintenance and upgrades, and other consulting services. These new businesses will provide a context for transformational retail models. Rather than simply a setting for objects, the dealership can become a place for an extended and satisfying experience.

The Apple model provides a great example to explore for a shift in who a dealer is and what a dealership looks like. It offers an opportunity to use physical and experiential design to draw car buyers for, as Hamel call it, “the sheer, stupid joy of interacting with something that was gorgeous to look and lovely to touch,” and more.

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