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Atlantic City Public Market Feasibility Assessment

Phase 1 Report

July 31, 2013

118 William Street, Portland, Maine 04103 207.321.2016 tel 866.757.1705 fax

www.marketventures inc.com

Feasibility Assessment: Phase 1 Page 1 Atlantic City Public Market Market Ventures, Inc.

Table of Contents

Introduction ................................................................................................................................ 2 Consultant team .................................................................................................................. 3 Study approach and methods .............................................................................................. 3

Site analysis ................................................................................................................................ 5 Consumer demand ...................................................................................................................... 9

Year-round residents ........................................................................................................... 9 Visitors .............................................................................................................................. 14

Tourists and casino visitors ................................................................................... 14 Convention visitors ............................................................................................... 17 Summer residents .................................................................................................. 17

Sales potential ................................................................................................................... 17 Competitive analysis ................................................................................................................ 22

Public and farmers’ markets ............................................................................................. 22 Supermarkets and specialty food stores ............................................................................ 23 Restaurants ........................................................................................................................ 24 The Walk ........................................................................................................................... 24 Other downtown commercial ............................................................................................ 25

Retail ..................................................................................................................... 25 Office .................................................................................................................... 26

Supply analysis ......................................................................................................................... 27 Regional farmers ............................................................................................................... 27 Indoor market vendors ...................................................................................................... 29

Produce and flowers .............................................................................................. 30 Meat, poultry and seafood..................................................................................... 30 Specialty products ................................................................................................. 30 Wine and beer ....................................................................................................... 30 Prepared foods ...................................................................................................... 31 Arts and crafts ....................................................................................................... 31

Conclusions ....................................................................................................................... 32 Initial feasibility assessment ..................................................................................................... 33

Public market goals ........................................................................................................... 33 Development principles .................................................................................................... 33 Phase 1 feasibility assessment .......................................................................................... 34 Next steps .......................................................................................................................... 35

Appendix A. ............................................................................................................................. 36 Interviews .......................................................................................................................... 36 Sources .............................................................................................................................. 37

Appendix B. Sites .................................................................................................................... 39 Appendix C: Sales Analysis ..................................................................................................... 42


Introduction

In January 2013, the New Jersey Casino Reinvestment Development Authority (“CRDA”) retained Market Ventures, Inc. (“MVI”) to assess the feasibility of creating a public market in Atlantic City. CRDA is pursuing strategies to diversify the Atlantic City economy and visitor experience, as well as activate the streetscape between The Walk (Tanger Shopping Outlets) and the Atlantic City boardwalk in accordance with the Tourism District Act and the 2012 Tourism District Master Plan. After seeing the success of public markets in other communities such as Reading Terminal Market in Philadelphia, the CRDA hired MVI to determine an appropriate development concept for Atlantic City and assess the concept’s feasibility.

While Reading Terminal Market provides an excellent reference point because it is well known and appreciated by people in the region, it is not necessarily a model that can be replicated in Atlantic City. Reading Terminal is very large (over 80 vendors), has a 100-plus year history, and is located at the center of a major metropolitan area. In fact, no two public markets are alike because authentic markets emerge from the distinctive food culture of a region. A year-round public market in Atlantic City must be a unique response to the opportunities of its site and region, the interests and skills of the area’s food entrepreneurs and farmers, and the aspirations of its community. To be feasible economically, the public market will need sufficient and consistent income streams to ensure that revenues exceed the costs of management and operations, while simultaneously meeting the market’s public goals. The purpose of this study is to determine what makes sense for Atlantic City, based on local conditions and opportunities, informed by the national experience.

Public markets come in many sizes and configurations: there is not a standard model. Rather, key common elements of public markets include:

• Small independent specialty food stores that feature foods grown and produced in the region. Chain stores are generally prohibited within authentic public markets.

• Great public spaces that welcome all elements of the community.

• Active, on-site professional management that provides a range of services to ensure the public market meets its goals and support the vendors.

• Community linkages that help the public market to meet the evolving needs of the local population and leverages resources for education and training.

Many public markets have strong education programs and host special events for the community. Some focus on food production within the facility and encourage wholesale distribution.

To determine a public market’s feasibility, MVI seeks to determine if five critical elements can be achieved:

1. A great site with excellent visibility, access, parking, and supportive adjacent uses.

2. Sufficient consumer demand to support all of the businesses in the market. 3. The ability to attract high quality retailers to the market.


4. The ability to create a highly functional and attractive physical environment that offers a rich sensory experience of sights, sounds, smells, and tastes within an architecturally distinct setting.

5. The capacity to develop and manage the public market.

This Phase 1 report addresses the following elements:

• Site analysis, including assessment of the five sites that CRDA has identified as potential locations.

• Consumer demand analysis, including determination of trade areas and consumer segmentation.

• Competitive analysis, including research of existing and proposed grocery and fresh food options in the city.

• Supply analysis, including identification of potential vendors for the public market.

• Initial feasibility assessment, including proposed public market goals and a set of development principles that can guide the merchandising strategy.

The second part of the study will develop a tenant mix plan and a conceptual site plan on the selected site (including site renderings), prepare a ten year operating pro forma, estimate development costs, propose an ownership and operational structure, and test the concept with potential vendors.

Consultant team

The consultant team was led by Ted Spitzer, President of Market Ventures, Inc. MVI is a specialty urban planning and economic development firm that assists public, non-profit, and for-profit clients with planning, creating, and managing innovative food-based projects and programs, including food hubs, public markets and farmers’ markets. Information about MVI can be found at www.marketventuresinc.com.

The team included two MVI Senior Associates: Hugh Boyd, FAIA, a specialist in public market design who is based in Montclair, New Jersey, and Paul Steinke, General Manager of Reading Terminal Market.

Study approach and methods

Principle research methods included review of relevant reports, key informant interviews, focus groups, site inspections, tours of regional food offerings, and secondary data analysis. MVI also relied on its 25-plus year experience studying, planning, developing, and operating public markets to bring the national experience to this project. A list of everyone interviewed, including community members, food retailers, restaurateurs, public officials, educators, and representatives of various nonprofit organizations, is found in Appendix A, along with a list of reports that were reviewed.

http://www.marketventuresinc.com/


CRDA established a Steering Committee of community and business leaders to meet periodically throughout the study to review the research and development concepts and offer feedback and insights. Members of the Steering Committee are identified by asterisk on the interview list in Appendix A.


Site analysis

As with all retail, location is a critical factor. Key informants stressed the importance of selecting a site that is perceived as being safe to customers, as well as having on-site parking and being easily accessible for both wholesale and retail customers. While some noted that their mainland clients will not come into Atlantic City because of safety concerns, others said this perception has changed significantly in recent years. In particular, the streets in and around The Walk are perceived as very safe and there has been very little crime in this area since The Walk opened in 2003.

Important site criteria for a public market in Atlantic City include:

• Large enough to accommodate the full development program, including on-site parking (minimum two acres)

• Visible from highways or major thoroughfares

• Easily accessible to the entire region and to tourists (physically and psychologically)

• Has easy circulation around and through the site

• Offers a supportive context of other independent local businesses nearby, including food-related businesses and restaurants, and room for an outdoor farmers’ market and public spaces

• Has lots of convenient parking, ideally free and at-grade

• Provides pedestrian access and generally is in close proximity to downtown

• Able to be phased so the market can expand over time

• Available for development at a reasonable cost

While some public markets have been developed within existing structures, the cost of development is generally higher and it can be difficult to achieve all the needed design elements, such as functional loading docks. None of the identified sites have significant structures.

All of the five sites that CRDA identified as potential locations for the public market are within close proximity to The Walk and will benefit from its perception of safety. The five sites include:

1. Block 336: Mississippi & Arctic – partial block south of The Wave garage

2. Block 163: Pacific & Georgia- partial block north of Boardwalk Hall

3. Block 157: Atlantic & Ohio – partial block next to AtlantiCare Hospital

4. Block 395: Baltic & Michigan – triangular parking lot next to the Convention Center

5. Block 389: Mississippi & Fairmont – parking lot north of The Wave garage

The consultant team visited each site multiple times to assess its potential to house the public market, using the above criteria. A map identifying the five sites and a detailed site evaluation matrix is located in Appendix B.


While not without some challenges, the site that best meets the above criteria is Block 157 at Atlantic and Ohio Avenues.

• Size: Assuming the nonconforming property can be acquired by CRDA, the site is 3.7 acres (exclusive of the Caesar’s Entertainment property and the Dunkin’ Donuts lot). This site is large enough to house one or more buildings and on-site parking for the public market. The site could be developed in phases. CRDA also owns property on the block across Indiana Avenue, which potentially could be used for additional parking. Two of the sites (Blocks 336 and 395) are too small to accommodate a public market and on-site parking.

• Visibility: All of the sites offer good visibility, with Block 157 fronting Atlantic Avenue, the city’s “main street.” Block 389 has excellent visibility from the expressway, but has minimal urban context around it with auto garages and road ramps.

• Access and circulation: Block 157 has frontage on both Atlantic and Pacific Avenues, which are both two-way streets. The site is accessible from all four sides. The property owned (or targeted for acquisition) by CRDA on Block 163 is clustered around Pacific Avenue and does not currently connect to Atlantic Avenue. Block 336 is only accessible from Mississippi and Arctic Avenues, and Arctic is one-way here making it more difficult to access the site.

• Adjacent uses: Along Atlantic Avenue, Block 157 is catty-corner to The Walk and the bus station, and across the street from a new office building, while a recently built Dunkin’ Donuts is located on the block at the corner of Atlantic and Indiana Avenues. Caesar’s Entertainment houses its human resources department in an historic building on the Pacific Avenue side of the site, which provides a source of demand for the proposed market. Block 157 is also adjacent to AtlantiCare Hospital, offering the opportunity for partnerships around health and nutrition education.

As mentioned above, Block 389 has few adjacent complementary uses except for Angelo’s Restaurant. Block 163 is adjacent to the back of Boardwalk Hall and rooming houses along Georgia Avenue. On the positive side, there are some small restaurants along Atlantic Avenue.

• Pedestrian linkages and walkability: Block 157 provides the best opportunity to design a pedestrian linkage that connects Atlantic Avenue with the boardwalk, one of the primary objectives of the project. Among the other sites, only Block 163 offers any possibility to create this linkage.

• Cost and availability: A suitable site for the public market will likely require public ownership, with a ground lease providing the land to the project at nominal cost. Block 157 is attractive in this respect because Caesar’s Entertainment intends to donate its parcels on the block for a public market, along with a $9.5 million cash contribution. Block 163 would require at least $3.4 million in additional acquisition, not including any parcels that front Atlantic Avenue, which would be needed to achieve visibility to this major commercial thoroughfare.

Some key informants felt that Block 157 is not safe and customers would not go there.


However, they also predicted that The Walk would not succeed and agreed that it had fundamentally changed the perception of safety in this zone. As outside consultants without history with Atlantic City or prior perceptions of this particular place, Block 157 feels as safe as or safer than other locations, particularly Block 163 which is adjacent to dilapidated boarding houses and the back of Boardwalk Hall.

Block 157 currently includes an adult bookstore along Atlantic Avenue. This business would present significant challenges to the success of a public market because of its location on Atlantic Avenue and the nature of the use relative to the public market. As such, this use limits the desired accessibility of the public market to Atlantic Avenue, a principal retail and commercial street in the City, and presents a likely conflicting use. The other retail food uses in this block along Atlantic Avenue, while also limiting access and visibility of the market from this street, complement the proposed public market and therefore would add to the success of the marketplace at this location.

As a collection of independent businesses within a new facility, the public market at Block 157 can serve as a bridge between The Walk and its collection of upscale national retailers, and the predominately independent retailers and service businesses further north on Atlantic Avenue. At present, Atlantic Avenue north of Indiana Avenue includes fast food businesses, liquor stores, discount stores, service businesses, and neighborhood retail serving


primarily low income residents, often with empty spaces above. Many of the storefronts are deteriorated and the area feels run down. Façade improvement and code enforcement efforts must continue in earnest to support the success of the public market at this location.

Conclusion: If the sexually-oriented businesses in Block 157 could be relocated, this block given its other attributes offers the best site for the public market. Additionally, a public market located on Block 157 will support the efforts of Main Street Atlantic City to revitalize the city’s historic retail district by drawing business and visitors further along the main commercial/retail corridor of the city’s core downtown area.


Consumer demand

Demand analysis looks at who might purchase from a public market district in Atlantic City, what types of products they are likely to purchase, and what factors will either encourage or discourage them from becoming regular shoppers. Where possible, the demand analysis seeks to quantify the magnitude of potential demand.

According to research that MVI has conducted at public markets around the country, markets attract a wide range of shoppers in terms of age, ethnicity, and income level. In general, families buy more fresh food than individuals or people living in unrelated households, and people with higher income levels ($75,000 and above) are more frequent shoppers and spend more than people with lower incomes. Education level is an important indicator of interest in high quality and local foods – people with higher levels of educational attainment are generally better customers. The highest spending customer is typically a 40 to 55 year old, higher income woman.

What is unusual about some public markets, however, is their ability to appeal to both the highest income shoppers and lower income shoppers. While higher income shoppers might be drawn by unique products and superior quality, lower income and elderly shoppers appreciate the ability to purchase smaller quantities, the ability to negotiate with empowered owners, ethnic specialties, and competitive prices. The downtown location of many public markets makes them accessible to lower income households living in the inner city. Many markets have programs to lower costs for low income families, encouraging the use of SNAP (food stamps), WIC farmers’ market coupons, and “Double Bucks” to make local fresh food more affordable.

Like many businesses in Atlantic City, the public market will not rely on just local residents. This analysis looks at year-round residents within three trade areas, summer residents, casino visitors and general tourists, and convention visitors.

Year-round residents

Three separate trade areas were defined for year-round residents, using the corner of Indiana and Atlantic Avenues as the center point: a four mile ring, the band between four and twelve miles, and the band between 12 and 35 miles (see maps). While these are larger radii than typically found in larger urban areas, they are appropriate given the long distances that residents of this region typically drive to buy consumer goods and the lack of competition within these areas. Since Atlantic City is adjacent to the ocean, half of each band has no residents. 1. Residents of a 4 mile ring around the site. This ring includes all of Atlantic City and

adjacent towns, including part of Brigantine (to the north) and Ventnor City (to the south). The sites under consideration can be considered easily accessible for residents in this trade area: some will be able to walk to the market and for others it will be a short drive, bike ride, or bus trip. There is little competition within this area for quality fresh foods.


2. The band between the 4 and 12 mile

ring. This band encompasses the rest of Brigantine to the north, Margate City and Ocean City to the south, and Pleasantville and Galloway to the west. The public market will be reasonably convenient to residents in this area although will likely require a 10 to 20 minute drive. There are several supermarkets and specialty grocers in this trade area.

3. The area between the 12 and 35 mile

ring. This band represents the greater Atlantic City region, stretching nearly to Cape May in the south, Vineland and Hammonton to the west, and Ocean Township to the north. Based on our research at numerous public markets, this represents a reasonable extended catchment area for a downtown public market. The public market will not be convenient to residents of this area but rather could draw customers who care about high quality foods and a unique shopping destination.

Demographic data about the three trade

areas were acquired from Nielsen, a national market research data company. The acquired data include 2010 U.S. Census information, estimates developed by Nielsen for 2013 based on the 2010 Census, and projections for 2018.

Data about the three trade areas are summarized in the chart below. Each band is independent – only the “total” section aggregates the three bands:


Trade Area 1: 4 Mile Ring The 4 mile ring has a land area of about 25 square miles (after subtracting half of the

circle’s area for ocean). 2013 population for the 2 mile ring is estimated at 55,199 people, which represents a 2.5% decrease from the 2010 Census count of 56,589. The population is expected to decrease by 1,760 people, or 3.2%, by 2018, to 53,439 people. By comparison, the population of the United States is expected to grow 3.3% between 2013 and 2018. The growth rate of the other two trade areas is essentially flat.

The trade area is estimated to have 22,592 households in 2013, with an average household size of 2.41 people, which is below the national average of 2.55. Only 55.9% of these households are families, compared to a national average of 66.4%. Typically, small household size and small percentage of families would suggest lower than average purchases at a public market.

The median age of the population, at 39.7, is above the national median of 37.5. A healthy 39.4% of the population is in the targeted age range of 35 to 64.


Household incomes in this area are lower than both the other trade areas and the national average. Average household income in this trade area is $54,181 compared to $75,978 in the second area and $75,082 in the third area. At the same time, 22.7% of households have income less than $15,000 per year. There are 4,764 households with income above $75,000, or 21.1% of the total.

Educational attainment is well below the national average: 14.3% of those 25 years or older have a bachelor’s degree, while 6.5% hold a master’s professional, or doctorate degree. The second trade area has higher educational attainment while the third area has about the same as the first. The chart labeled “Educational Attainment” clearly demonstrates the lower levels of educational attainment in the three trade areas compared to the national average. Educational attainment has been shown to have a strong correlation with higher spending for quality food, so this demographic quality is negative.

The population in this trade area is very diverse. Nearly 58% of residents identified themselves as non-white compared to 28.5% for the country. 26.4% of the population identified as Hispanic. In communities with large populations of recent immigrants, these residents can be frequent public market shoppers because of their familiarity with market trade in their countries of origin, assuming the market offers products that appeal to this group of consumers and prices are within their means. Well represented recent immigrant groups in Atlantic City include people of African, Southeast Asian, Caribbean, and Hispanic descent.

Some key informants felt the public market could attract a strong lunch business because there are few options for a quick lunch in the downtown. There have been discussions of encouraging food trucks in Atlantic City to meet this demand; they could be clustered in the public market’s parking lot or the market could have prepared food kiosks.

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Despite the enthusiasm voiced by local residents and leaders for a public market in Atlantic City, the trade area’s small population, low income, small household size, and low educational attainment all suggest that residents within the first trade area are not likely to be strong shoppers at a public market, unless parts of the product mix are geared to their interests. Recent immigrants to the area, who might be familiar with public markets in their country of origin, could be good customers. Nearly 35% of the residents do not own a vehicle, suggesting they have limited ability to shop outside of the city and could therefore be drawn to a convenient option nearby.

Trade Area 2: Area between 4 and 12 mile ring This band has a land area of about 200 square miles, which is eight times the land mass

of the four mile ring yet the population is less than three times larger at 150,480 people in 2013. The population is expected to grow to 150,820 people by 2018, a negligible 0.2% expansion.

The second trade area is divided into 56,107 households, with an average household size of 2.62, larger than the first trade area (2.41) and above the national average of 2.55. This population is slightly older than the first trade area with a median age of 40.9 and well above the national average of 37.5. The percentage of family households (68.2%) is above the national average of 66.4%.

Average household income in this area is $75,978, above the national average of $69,637 and far above the average in the first trade area. 37.2% of the households have income of more than $75,000, or 20,850 households.

Educational attainment in this trade area is the highest of the three trade areas and is about national averages.

On paper, the residents of the second trade area could be strong public market customers, although the population is flat. Higher educational attainment is important here, as is fairly high household income. But will customers from these outlying areas come to Atlantic City to shop for food on a regular basis? Key informants note that it used to be difficult to attract people from “off island” but the city’s image is changing and restaurants regularly attract customers from the entire region. AtlantiCare Hospital reports that it used to be hard to bring patients to Atlantic City for elective surgery but that is not true now.

The Walk (Tanger Outlets) has proven conclusively that a strong retail concept, well located and with adequate parking, can attract thousands of customers from the entire region.

Trade Area 3: Area between 12 and 35 mile ring This band has a land area of about 1,700 square miles, 8.4 times larger than the second

band. This trade area contains 359,457 people divided into 134,928. According to Nielsen, this area will experience a slight 0.9% population increase by 2018 to 362,579 people.

Families make up a large portion (69.8%) of the households, surpassing both the other two trade areas and the national rate of 66.4%. Average household size is 2.59, slightly above the national average of 2.55. The median age is 42.1, the oldest of the three trade areas and well above the national average of 37.5. 37.8% of residents are within the desired 35-64 age band, about the same as the second band.


Average household income in the third trade area is $75,082, slightly below the second trade area and well above the national average of $69,637. A strong percentage (37.8%) of the households has income of more than $75,000, which translates into 51,004 households.

Educational attainment in this trade area is about the same as the first trade area and well below national figures.

Although this area is most populated, the demographics suggest that residents of the third trade area offer a modest target for a public market. Because of the distance and the proximity of many more convenient places nearby for them to buy food, coming to the market would likely need to be an intentional destination. Saturdays and Sundays are therefore the most likely times they will come to the market. Given high household incomes and testimony that people from South Jersey travel far distances for food shopping, some residents of this trade area are likely to be good customers for the public market.

Visitors

Visitors make up a significant percentage of some public markets’ clientele, including such large and successful public markets as Pike Place Market in Seattle and City Market in Charleston, South Carolina. Given the large number of visitors to Atlantic City (estimated at 29 million per year) and the small population and weak demographic profile of many year-round residents, tourists will be a critical element of the consumer demand for a new public market in Atlantic City.

In other cities, tourists are often attracted to public markets because they are unique places, offering a window into the culture of the region where they are located. As Americans have become more interested in food and cuisine, they are searching out public markets when they travel. Tourists are often well educated and higher income, and willing to spend significantly at a market, particularly for things they can bring or ship home.

Tourists are generally more interested in buying prepared foods and craft items than fresh foods. Some fresh food vendors in public markets have found creative ways to sell to tourists, such as the fish merchants at Pike Place Market who ship fresh seafood throughout the country.

Tourists and casino visitors The State of New Jersey attracted 80 million visitors in 2011 (32 million overnight) who

spent $16.6 billion. The state has experienced double digit growth in visitor volume and spending. Until 2008, gambling was the most popular activity for visitors to NJ, attracting 40% of visitors. That number has dropped to 32% and gambling is now the third most important reason for why visitors come to New Jersey, following dining at #1 and beach/waterfront at #2.1

Visitors to the state have a high average household income ($91,000) although that number is lower for Atlantic City. Travelers are coming from farther distances and staying longer. Almost 90% of visitors travel by car, with an average one-way distance of 400 miles. Compared to arriving by airplane, this makes it easier for visitors to purchase products from a

1 “2011 New Jersey Overnight Leisure Visitor Profile,” DK Shifflet & Associates, Ltd., McLean, Virginia, February 2011, http://www.visitnj.org/sites/visitnj.org/files/2011-nj-visitor-profile-02-13-12.pdf

http://www.visitnj.org/sites/visitnj.org/files/2011-nj-visitor-profile-02-13-12.pdf


public market and bring them home.

Atlantic City gets the state’s largest percentage of overnight leisure visitors (39.4%) but that number has declined significantly since 2006 (55%). The highest spending age group is 35-54, which matches the typical highest spending customers at a public market. The largest group of visitors is couples, while only a small percentage of visitors bring children. Most come in July and August, as the chart labeled “NJ Month Trip Started” demonstrates.

A large intercept survey of visitors to Atlantic City, described in the 2008 Atlantic City Visitor Profile, found that the average visitor comes very frequently (16.6 times per year) although the median (or middle of all responses) came 8 times per year. Visitors stayed on average 2.4 nights and ate on average 2.3 meals during their visit. They spent $52 on food and beverage and $55 on shopping.2

According to the survey, most people (80.5%) come to Atlantic City primarily to gamble. This percentage dropped from 85% in 2004, likely as a result of more non-gaming options in the city, which is a positive trend for the public market.

People coming to Atlantic City primarily to shop (1.2% of respondents) make up a small but potentially important segment of visitors. Assuming there are 29 million visitors to Atlantic City a year, 1.2% equates to 384,000 people coming primarily to shop. According to the survey, they visited on average six times per year and spent $310 per shopping trip. Shoppers are predominately women (75%) with a median age of 45. These visitors can be an excellent customer base for the public market.

In addition, 90% of all survey respondents indicated that they intend to shop in Atlantic City even if it is not their primary reason for being here, suggesting that there is potentially huge demand for more shopping. At the same time, visitors ranked “shopping experience” much lower than other elements of their visit to Atlantic City (including “dining/restaurant experience”), suggesting there is opportunity to improve the shopping experience with additional offerings.

2 “Atlantic City Visitor Profile 2008,” Spectrum Gaming Group, prepared for Atlantic City Convention & Visitors Bureau

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NJ Month Trip Started Source: DK Shifflet & Associates, 2011 NJ Overnight Leisure Visitor Profile


Another potential target is people coming to Atlantic City for events (4.9% of respondents, or 1.4 million people). They typically spend 10 hours in Atlantic City and spend $100 for entertainment and $60 for food and beverage. These visitors might be particularly good customers for prepared foods at the market.

A recent retail market analysis for Atlantic City found that food service and drinking places (NAICS 772) supplied $288 million in sales in 2011, while the demand from local residents was only $42 million, so visitors purchased about $246 million worth of restaurant meals. With 29 million visitor trips to Atlantic City in 2011, this equates to only $8.48 per visitor, suggesting there might be a significant opportunity to grow this category.3

According to a recent tourism promotion survey, 2012 was a record year for hotel demand in New Jersey, partially driven by internal displacement caused by Hurricane Sandy but strong before that as well. Atlantic County was up 10-15% for the year. This survey found that visitors to Greater Atlantic City spend high amounts on shopping (about $155) and food & drink (about $110).4

As throughout the resort’s history, many Philadelphia residents come to Atlantic City. The Philadelphia region has the country’s strongest concentration of public markets and many area residents are accustomed to shopping at markets. This might provide the incentive to attract successful public market vendors from Philadelphia to open branches of their businesses in Atlantic City.

Casino visitors have been an important part of The Walk’s success. To encourage casino guests to shop at The Walk when it opened, management arranged for reward dollars to be spent at The Walk and offered extended hours for high rollers. The Walk sold $1 million in gift certificates to one casino during an early year, which supported The Walk tenants and offered a tool for the casinos to reward their good customers. A similar program could be effective for the public market, with the casinos agreeing to purchase a substantial amount of public market gift certificates during the facility’s initial years. Market vendors would compete for customers but they would know in advance that these certificates could only be spent within the public market and therefore they have a strong opportunity to meet their sales projections. Being able to redeem casino reward dollars would also be of major benefit to the market. Both of these programs could be a major boon to the market’s initial leasing effort.

The Atlantic City Alliance, a recently-created, non-profit entity funded and overseen by the city’s casinos to market the city, is seeking to broaden the city’s visitor demographic from just people coming to the city for gaming. They are targeting “fun seekers,” defined as people over 21 who come to Atlantic City for a relaxing getaway where they can dine, be entertained, and gamble. ACA is not targeting families in its advertising campaigns. The public market can be developed to support this effort, with a major emphasis on prepared foods and “food entertainment.”

3 “Retail market analysis for downtown Atlantic City,” Community Land Use & Economics Group, LLC, Arlington, VA, December 2011, page 12. 4 “2013 Tourism Promotion Survey: New Jersey Visitor Profile Study,” Lloyd Levenson Institute of Gaming, Hospitality & Tourism, Stockton College of New Jersey


Convention visitors About 1 million people attend events at the Convention Center each year. Overnight

guests (about 1/3 of the total) spend $150 on shopping and $200 on food and beverage, while day-trip visitors spend $100 shopping and $50 F&B.

According to the Convention and Visitors Authority, Atlantic City attracts about 400,000 people per year for trade shows, plus the city hosts 11-12 annual consumer shows, such as the Classic Cars show that brings 38,000 people in a weekend. Last year the city hosted 114 events and 88 shows.

Given the close proximity of the Convention Center to the potential public market sites, these attendees could become strong customers at the public market, particularly for ready-to-eat meals and products to easily transport home. About 80% of convention business takes place midweek and offseason, since the hotels are so highly occupied in the summer. Given the sharp drop in tourists to Atlantic City during the off-season, it would be particularly beneficial to market vendors to have this potential source of customers for the slower months. There are currently few choices for conventioneers to eat and the public market could attract them if there is easy and free parking plus quick service options.

Summer residents The beach communities around Atlantic City include many summer homes, particularly

for Philadelphia area residents who have weekend homes at the shore. In Ocean City, for example, the year-round population of under 12,000 swells to over 115,000 people in the summer.5 Summer residents are likely to be higher income and, unlike visitors who stay in hotels, have access to full kitchens so should be interested in fresh food. Given the familiarity of Philadelphia residents to public markets and the lack of high quality food shopping in the region, this could be a very important customer base for the market.

Sales potential

Based on the demographic profile of area residents and typical expenditure patterns as determined by the Bureau of Labor Statistics’ Consumer Expenditure Survey, Nielsen estimates the retail sales potential for consumer goods. Using their estimated per capita expenditures for various food items, Nielsen creates a Food Purchasing Index that compares local expected purchases to national averages on the household level. In any category, a score of 100 means that households within the defined trade area are expected to buy exactly the same as the national household average. If households in the targeted trade area are expected to purchase less of a particular product, the index will be less than 100. Conversely, if they are expected to buy more of a certain item, the index will be more than 100. For example, if the average household in the trade area is expected to buy $1,200 worth of baked goods per year and the national average is $1,000 per household, then the index would be 120.

For each trade area, the estimated food purchasing index for 2013 is:

5 NY Times, May 7, 2004, http://www.nytimes.com/2004/05/07/travel/weekender-ocean-city-nj.html?src=pm

http://www.nytimes.com/2004/05/07/travel/weekender-ocean-city-nj.html?src=pm


Since the food purchasing index generally trends with income, it is not surprising that nearly all of the categories are below 100 in the first trade area. The one exception is poultry at 106. Seafood is particularly low at 49. The numbers improve considerably in the second trade area, with the majority of food categories at or above 100. Most of the categories are above 100 in the third trade area, with bread and poultry standing out as particularly high.

These findings reinforce the idea that residents in the first trade area are unlikely to be strong users of the public market, while the residents of the other two trade areas are more likely shoppers but still not strongly positive.

The charts below shows Nielsen estimates for aggregate annual food and beverage expenditures divided between the types of products typically found in fresh food markets, in thousands of dollars. The shrinking population and income in the first trade area are reflected in the expected drop in consumer demand for every product category between 2013 and 2018:

In the second trade area, demand is expected to increase slightly for each product


category with an aggregate increase among the fresh and specialty food categories of $4.3 million, to a total of $209 million of demand for these foods:

In the third trade area, demand will increase $16.4 million or 3.2% for the fresh and specialty food categories, to a total of $526.2 million:

Combined, the three trade areas are expected to see an increase of $19.6 million in demand for fresh and specialty foods over the next five years, a 2.5% increase. Demand for food


away from home will increase faster, to $657 million.

The pie chart labeled “Fresh Food Demand” shows the relative size of the demand in the three trade areas, with the four mile ring representing the smallest share at 9% and the third trade area representing the largest demand for fresh and specialty foods at 65%.

Vendors at a public market in Atlantic City need to carve out (or “capture”) a small percentage of the demand from these trade areas in order to have adequate sales. However, the amount of money that consumers spend on food is not a fixed figure: changing preferences and intriguing offerings can induce consumers to spend more on food rather than other goods, particularly for households with more discretionary wealth.

To estimate the potential demand for fresh food products within the public market, this consumer demand data is utilized with projected capture rates for each of the products in each of the three trade areas. The chart labeled “Sales Analysis – 2013,” in Appendix C shows the calculations. This chart repeats the product categories and demand estimates from the chart above in the first two columns. The third column, labeled “Potential,” contains a realistic estimate for the percentage of sales that market vendors could be able to obtain, based on the analysis of demographic factors, distance to the market, and existing competition.6

The fourth column, labeled “Sales,” is the product of multiplying the potential by the capture percentage. For example, in the Baked Goods category, Nielsen estimates $4.1 million in consumer demand for baked goods within the first trade area. Market Ventures, Inc. estimates that vendors in the Atlantic City Public Market could reasonably capture 1.5% of those sales, based on our experience and research. This results in the potential for $61,500 in annual baked goods sales at the public market from residents in the first trade area. Adding the sales for baked goods across all three trade areas, we estimate that the demand for bakery products within the public market is reasonably $528,400 million.

The capture rates for the first trade area are influenced upward by the close proximity of the public market to residents and the lack of competing stores nearby, but downward by the 6. These estimates have been developed and refined by the Market Ventures, Inc. through its work planning, developing, and operating public markets and its research of other public markets around the country. The potential suggests what accomplished vendors might realistically achieve for sales from a trade area. Particularly strong vendors might achieve higher sales from the trade area if their business is unique and attractive to consumers. Conversely, weak vendors will fall short of the demand potential because area residents will spend their dollars elsewhere. This analysis is only meant to provide a barometer of potential, not a prediction of what actual sales might be.

4 mile ring 9%

4-12 mile band 26% 12-35 mile

band 65%

Fresh/Specialty Food Demand Atlantic City Region


weak demographics in this area. In the second area, the demographics are substantially better but there is some competition and the market is not as convenient. Capture rates are estimated at slightly higher than the first trade area. The third trade area has a larger population but downtown Atlantic City is not convenient for these residents. Capture rates are estimated at one-third the amounts of the second trade area.

Summing the sales total column for the two mile ring, a reasonable estimate of demand is $2.1 million, which represents 1.7% of the demand for all fresh food sales and food away from home in this trade area. The demand estimate for the second trade area is $6.5 million (1.8% of the demand for fresh, specialty, and food away from home in this region) and $5.4 million from the 12-35 mile band, which is 0.59% of demand for that region. Taken as a whole, the three trade areas reflect $14.0 million in demand for fresh food and prepared meals at the public market out of the region’s $1.4 billion of total demand, or 1.0% of the total.

Given the wide variation in tourist purchases, a capture rate methodology has not been developed for visitors. Rather, we utilize a mark-up factor over the sales to local residents. For this analysis, sales to visitors have been projected at 20% of the local consumer demand for fresh foods, and 100% of the demand for prepared foods. Based on add-on sales, shoppers from outside of the 35 mile ring are expected to generate sales of $5.8 million, which brings total market sales potential to $19.8 million.

As the chart labeled “Sources of Demand” shows, the 4-12 mile ring represents the largest share of potential demand at 33%, followed by visitors at 29% and residents of the 12-35 mile band at 27%. Residents within the four mile ring reflect 11% of sales.

These demand estimates are only for retail sales. Often public market vendors have wholesale accounts, such as bakeries selling bread to restaurants or fish vendors acting as distributors to local accounts. Several of the potential vendors interviewed expressed interest in being at the public market in order to develop this wholesale trade, which should be encouraged in the design and leasing process since it creates more stable and profitable tenants.

Based on sales of $19.8 million and average sales of $750 per square foot (which would provide the basis for profitability), the demand for specialty foods at a public market in Atlantic City could be met with 26,400 leasable square feet. Based on a typical efficiency factor, this would require 40,000 sf of gross building area.

4 mile ring 11%

4-12 m band 33%

12-35 m band 27%

Visitors 29%

Sources of Demand Atlantic City Public Market


Competitive analysis

Public and farmers’ markets

Landis Marketplace, located in the middle of Vineland’s main street within a former department store building, is the closest similar public market development (36 miles from Atlantic City). This project, which started in 2007 and opened in 2011, was developed by the City of Vineland with the idea of having a mix of independent fresh food retailers. The development budget was $4 million, with $2.8 million coming from the city’s Urban Enterprise Zone and $1.2 million in New Market Tax Credits.

The City found it was very difficult to get vendors to sign leases. The project suffered from an over-optimistic business plan, which suggested that vendors would pay $30 per square foot in rent. They expected $800,000 in rental income but are getting only one-half that amount.

The entire market is now master leased to Amish Markets, which operates similar facilities on other towns around New Jersey and Pennsylvania. The upstairs has become mainly craft merchants and the downstairs includes the Amish vendors. The master lease holder is building a restaurant on the first floor. Landis Marketplace operates Wednesday afternoon (crafts only) and Thursdays through Saturdays (the Amish vendors will not work on Sundays, although this day is typically the busiest day for consumers to buy fresh foods). The City subsidizes the operation with $100,000 in marketing funds plus staff time.

According to USDA, there are 24 farmers’ markets operating within 50 miles of Atlantic City and six farmers’ markets within a 20 radius (including the Atlantic City Farmers’ Market, operated by CRDA). As the map to the right shows, these farmers’ markets are generally located along the coast.7

The Atlantic City Farmers’ Market, which operates seasonally on Thursdays and Saturdays from 10 am to 4 pm, is located on Atlantic Avenue between North and South Carolina Avenues, six blocks east of Block 157 in City Center Park. It is a very small market, with only two or three farmers plus a few other vendors. According to community residents, the Market is very popular and appreciated by local residents and the farmers generally sell out each day.

The Margate Community Farmers’ Market is operated in the parking lot behind Steve and Cookie’s By the Bay (about five miles south of Atlantic City) on Thursday mornings between mid-June and the end of July. This is a larger market, with about 15

7 http://search.ams.usda.gov/farmersmarkets/default.aspx#

http://search.ams.usda.gov/farmersmarkets/default.aspx


farmers, and reportedly very popular.

Many communities in the region are looking to create new farmers’ markets, causing concern about the availability of farmers to supply so many locations.

Supermarkets and specialty food stores

The Atlantic City MSA (Atlantic County) had 213 food and beverage stores in 2007, a 5% drop from 224 stores in 2002. Sales, however, increased 17% from $628 million to $734 million. Most of the establishments within this category are grocery stores, which dominate food and beverage sales (the other two categories are beer/wine/liquor stores and specialty food stores). The MSA’s 125 grocery stores represent 85% of sales, while the 51 beer/wine/liquor stores represent 12.9% of sales. The MSA had only 37 specialty food stores, which are the types of businesses found in public markets. Specialty food store sales were reported as $15.7 million, or 2.1% of total food and beverage sales. Average store sales are only $424,000.

By contrast, New Jersey has 1,226 specialty food stores with sales of $826 million, or 3.6% of statewide food and beverage sales. Average stores sales were reported at $666,000, or more than 50% higher.

Save-a-Lot, which caters to low income consumers, is the only supermarket in Atlantic City. Several key informants said the store does not meet the needs of the community for higher quality items.

Outside of the city, there is a Pathmark in Ventnor City, an Acme in Brigantine, and ShopRite supermarkets in several neighboring communities. Casel’s Supermarket, an independent small supermarket on Ventnor Avenue in Margate City, traces its roots to a grocery store in Atlantic City in 1929 and has been under the current ownership since 1982. They have a strong deli and prepared food offering.

Key informants noted that many residents travel nearly an hour to go to the nearest Whole Foods Market near Mt. Laurel. They mentioned that residents regularly travel more than an hour for food shopping in northern New Jersey or Philadelphia.

Ducktown reportedly had the city’s greatest concentration of food businesses but most of them have closed. This neighborhood still has a few food stores, including Formica’s Bakery and Barbera Seafood Market. Other food stores in Atlantic are small ethnic shops and corner stores.

0

20

40

60

80

100

120

140

Grocery stores Specialty food stores

Beer, wine liquor stores

Number of Stores Atlantic City MSA

2002 Economic Census 2007 Economic Census


Restaurants

The Atlantic City MSA included 711 food service and drinking establishments (NAICS 772) in 2007 with sales of $617 million. This included 323 full service restaurants and 281 limited service eating places. Both the number of establishments and sales increased significantly over 2002, with sales increasing 58% from $390 million.

Compared to the entire state, the restaurants in Atlantic City generally report higher average sales. For full service restaurants, average sales in AC equaled $1.2 million in 2007 compared to $846,000 for the state. Limited service eating places in AC had average sales of $531,000 compared to $494,000 for the state.

The blocks around The Walk include a few independent eateries but mainly chain restaurants, including Applebee’s, Ruby Tuesday, Melting Pot, Longhorn Steakhouse, and Ruth’s Chris. According to the former manager of The Walk, it took about 18 months for these restaurants to build up their clientele and reach profitability, suggesting that new restaurants will need to be adequately capitalized to survive the first two years.

There are a number of historic and popular restaurants in Atlantic City, including Dock’s Oyster House, Fork and Knife, White House Subs, and Angelo’s. More recent entries include Tony Baloney’s and there are numerous restaurants within the casinos, mainly fine dining options but not easy places for a quick lunch.

According to a commercial baker in Atlantic City, his sales to restaurants have dropped about 25% from their pre-recession peak, reinforcing the challenges that restaurants face. Independent restaurant owners report that the 12 weeks of summer can account for 40-75% of their annual sales.

The Walk

Since its grand opening in 2004, The Walk has proven that retail can be created successfully in downtown Atlantic City. Sales per square foot reportedly average over $500 for the 90 stores that occupy slightly less than 500,000 square feet, meaning gross sales top $200 million. Tanger is reported to have paid $200 million to buy the shopping complex from the original developer. There has been little turnover or vacancy, even during the depths of the recession. Base rents range from $15 to $65 per square foot, depending on the store’s size, location, and when it started. In addition, nearly all pay percentage rent.

0

50

100

150

200

250

300

350

Full service restaurants

Limited service eating places

Special food services

Drinking places

Number of Restaurants Atlantic City MSA

2002 Economic Census 2007 Economic Census


According to a former manager of The Walk, some key elements of its success include:

• Walkability – men prefer outdoors to mall, wide sidewalks, visually stimulating, well lighted

• Events

• Nothing like it in region

• Great radio ads, reaching MD, DC, VA plus great word of mouth

• Timing

There has been very little crime associated with The Walk. The Walk has also been perceived as safe, with almost no graffiti or other property crime. All the stores are alarmed and have cameras; some have their own security staff. The mall hired four off-duty police officers per shift.

While there has not been formal consumer research, the manager believes that 30% of the shoppers come from within 60 miles (stretching to Cherry Hill), about 30% are casino patrons, and another 30% are convention visitors.

There are approximately 10,000 parking spots within two blocks of The Walk, with The Wave garage opening last year. The Wave charges $3 for the first hour. Valet parking is popular on weekends.

Other downtown commercial

Retail In contrast to The Walk, other downtown Atlantic City retail properties have a high

vacancy rate (estimated at 20%), are older un-renovated storefronts, and attract rents that range from $10-16/square foot triple net. Sales of vacant retail and mixed-use buildings list at $230-$270/sf, although few transactions actually happen, according to area brokers.8

According to an Internet survey of downtown businesses, most have been located in Atlantic City for many years and serve mainly locals. Their reported rents average $10.71/sf. They consider perceptions of safety to be the biggest challenge to attracting new business and they report a steady decline in sales.

Retail developments associated with the casinos have had mixed results. The Pier Shops at Caesar’s is an upscale development with national luxury retailers, accessed from the boardwalk. The Quarter within the Tropicana Casino has a mix of national and local retailers, including a wine shop, candy and cookie stores, and Zeytinia gourmet food and marketplace.

8 “Retail market analysis for downtown Atlantic City,” Community Land Use & Economics Group, LLC, Arlington, VA, December 2011


Office Most available office spaces are in unrenovated second floor walk-up buildings (class

B/C) and there are substantial vacancies. Asking rents are typically $4.00/sf for unrenovated space. The asking rents for upper-story class A/B space in renewed or renovated buildings with elevators is $16-25/sf, but leases are often written for 20% less.

One recent commercial project (built in 2009) was 1801 Atlantic Avenue, which is across the street from Block 157. The building has 38,000 sf available and the asking rent is $28/sf triple net.


Supply analysis

The supply analysis examines the sources of product that could be sold or produced at the Atlantic City Public Market.

Regional farmers

Information about the region’s agricultural sector was gathered from the Census of Agriculture and key informant interviews.

New Jersey has experienced a substantial reversal in the number of farms operating around the state. The chart labeled “Number of Farms: New Jersey” shows the quinquennial Census of Agriculture counts between 1959 and 2007. Between 1959 and 1974, the state experienced a dramatic plunge in the number of farms. There was a rebound through the early 1980s and the count was stable until the early 2000s, when the number of farmers began to grow again. Using data from the period between 1974 and 2007, a linear regression line would suggest that the number of farms in New Jersey will grow to 10,958 farms by 2017, a number last seen in the early 1960s..

In part, these numbers could be affected by recent improvements in the counting of small farms but there have certainly been increases, particularly among smaller farms that utilize direct marketing outlets such as farmers’ markets and community supported agriculture.

For purposes of analysis, the research focused on a 7 county region around Atlantic City as the likely source of farmers participating in the public market. These counties include:

• Atlantic

• Burlington

• Camden

• Cape May

• Cumberland

• Gloucester

• Ocean

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1959 1964 1969 1974 1978 1982 1987 1992 1997 2002 2007

Number of Farms - New Jersey


According to the 2007 census, there were 3,386 farms in the seven county region, an increase of 2.6% from 3,300 farms in 2002. As the chart to the right “Number of Farms – Region” shows, the region has seen recent growth in the number of farms. One factor that will influence the continuation of this upward trend is the availability of marketing opportunities that will provide sales outlets for these farmers.

Not only has the number of farms increased, but the market value of products sold has increased substantially, as well. The change has been slightly faster within the region than the state as a whole:

Since fresh vegetables constitute a large percentage of products sold at a farmers’ market, it is also interesting to see the changes in land used for vegetables both in the region and New Jersey. There has been a slight increase in the number of farms in New Jersey growing vegetables (1.5% to 1,456 farms) but a more substantial decline in acreage (-8.5% to 50,641 acres). Within the region, there was also a drop in the number of farms (to 595) but a smaller decrease in acreage. With nearly 31,000 acres for vegetables, this seven county region accounts for 60% of the vegetable

2,950 3,000 3,050 3,100 3,150 3,200 3,250 3,300 3,350 3,400 3,450

1992 1997 2002 2007

Number of Farms - Region

55,374

31,512

50,641

30,603

New Jersey Region

Land used for vegetables Acres 2002 Acres 2007


acreage in the state.

In 1992, USDA began tracking direct marketing, which it defines as “agricultural products sold directly to individuals for human consumption.” Direct marketing channels typically include farmers’ markets, U-pick operations, farm stands, and community supported agriculture (CSAs). Many farmers who engage in direct marketing are the type of small, retail oriented farmers who participate in public markets. 544 farmers in the seven county region reported direct marketing in 2007, up from 490 farmers in 2002 but a drop from 561 in 1997.

Direct marketing sales surpassed $10 million in 2007 and can be expected to continue to rise. Based on recent trends, this number should increase to $12.7 million by 2017.

Given the popularity of farmers’ markets and the huge population influx during the summer, there is perhaps an opportunity to develop a large scale open-air farmers’ market as part of the Atlantic City public market. Moving the existing farmers’ market to the downtown core should increase its customer base, while still being convenient for Atlantic City residents. If the farmers’ market has a shed roof structure and amenities like water and electricity, it will be able to differentiate from the many small markets in the region.

Indoor market vendors

The market research includes an initial assessment of the potential to attract vendors to a a public market in Atlantic City. This is the most crucial element in determining the market’s feasibility: are there enough available and interest vendors with the requisite skills and passion to be successful merchants within the market? At this feasibility stage, the question is if there is “fertile ground” for vendors, which can eventually lead to market tenants.


The decline in retailers within Atlantic City has been attributed in part to high real estate prices, high fees and taxes, and bureaucratic barriers to launching a new enterprise. To be successful, the public market must reduce the barriers of entry for potential tenants and break the mold of conventional AC downtown retail, as The Walk did.

Produce and flowers South Jersey is home to several farmer cooperatives that account for a large percentage of

the fresh produce grown in the state and shipped on a wholesale basis. An initial conversation with the president of the Landisville Produce Cooperative determined that they are interested in being part of the public market. Their vision is to capture retail sales as well as have a base to service restaurants and other buyers in Atlantic City. The produce cooperative includes 75 farmers and hires an operations manager, who is enthusiastic about being part of the public market. Their warehouse and packing facility is located 30 miles away in Vineland. The cooperative members collectively grow a large variety of products, providing a diverse set of offerings that can all be labeled “Jersey Fresh.”

South Jersey is known for its blueberries and cranberries. These iconic products should be included in the market.

There is currently only one florist in town. A floral business at The Walk failed.

Meat, poultry and seafood South Jersey has limited amounts of meat, dairy and poultry production nearby, which

will limit the amount of locally raised and produced products in the market. Attracting a butcher can be difficult but a good butcher can be a major attraction for a public market.

Given Atlantic City’s location, seafood could become a signature item at the market although key informants noted that it is a challenge to get local seafood now and area residents indexed low for seafood purchases. Atlantic City has a fleet of clammers at Barney’s Dock but all the product goes to processors. Cape May is one of the largest fresh fish landing sites in country. One seafood vendor interviewed showed strong interest in becoming a vendor, and would like to do both retail and wholesale.

Specialty products Several key informants mentioned Bagliani’s in Hammonton as likely to be interested.

They offer a wide range of Italian specialty products and make sandwiches and other prepared foods.

Atlantic City has some authentic, historic food products, such as salt water taffy and Mr. Peanuts. It can be helpful to integrate local iconic brands into the facility.

Wine and beer Initial research with wineries in the region found they are very interested in being part of

the public market and they offer a product that appeals well to locals and visitors. There are 45 registered wineries in state and there are some very good wines being produced in region, as recently noted by national media. These wineries derive much of their sales from tasting room visits and, for some, direct shipping. The huge number of visitors to Atlantic City is a great


opportunity for these wineries to build their customer lists, particularly if there are tasting rooms or tasting opportunities within the public market, as well as to inform visitors about their wineries and encourage them to visit. The public market can also be a launching pad to encourage area restaurants to carry and feature local wines.

Getting liquor licenses in New Jersey is very difficult and expensive. New ones are only available if there is a growth in population, which is not happening in Atlantic City. Therefore a liquor license must be purchased from an existing owner, which is very expensive.

One recent change in liquor laws that could be used to the public market’s advantage is the “winery outlet license,” which is available to the state’s wineries and cost only $250 per year. Food service vendors in the public market could be paired with a winery, allowing that winery’s wine to be sold in packages and served on a BYOB basis. This is not a consumption license but a package license so consumers must buy a full bottle of wine, although the bottle can be any size, including perhaps half bottles and single serving containers.

There is presently only one distillery in New Jersey and current law makes it very difficult to start a distillery. However, there is currently an effort in the state legislature to reform the law. A distillery in the public market might be another excellent business concept that appeals to both area residents and visitors, and certainly comports with Atlantic City’s reputation as place to find alcohol that is not available elsewhere.

Craft breweries growing in popularity around country and a brew pub can be a very compatible business for a public market. Tun Tavern is currently the only beer producer in Atlantic City. Although New Jersey liquor laws might prevent it from happening, some communities have developed “urban wineries” where the wine is produced at an urban facility. This could be a great concept for the public market.

Prepared foods Independent restaurant owners participating in a focus group expressed interest in being

part of the public market and appear enthusiastic about its prospects for success. They recommended a strong connection between area chefs and the public market to bring a strong culinary sensibility and edge to the project.

Some of the restaurateurs currently buy from farmers at the Atlantic City Farmers’ Market and other farmers make deliveries to the restaurants. They are seeking more locally grown foods and would likely purchase from vendors in the public market.

Additional research is needed to explore casino restaurateur’s interest in the public market.

SBDC reports that there is substantial demand for food production space among entrepreneurs in the area. Perhaps the public market could include a shared commercial kitchen, facilities which have been added to other public markets around the country.

The public market could be a home for food trucks, which increase the market’s prepared food offerings during peak periods.

Arts and crafts Some public markets include hand-made crafts as part of their tenant mix. These


products can be very appealing to visitors while supporting local artisans. Crafts can be sold as part of an outdoor farmers’ market, perhaps on their own day.

Stockton College has begun to lease space within The Wave Garage for art studios, galleries, café, museum exhibition space, and shop. Rents are only $3 per sf for galleries, far below The Walk rents.

According to key informants, there are many people involved with arts production in and around Atlantic City but they have few places to sell. Craft vending takes place now at Crafters Village in Gardeners Basin. Area specialties include folk arts such as pottery, glass, and decoy carving. The arts community is described as “underground,” not connected or cohesive.

Conclusions

The ability to attract high quality vendors to the public market is the most important determinant of the market’s long term success. Initial research suggests a great deal of enthusiasm for the public market from people associated with food and beverage in the region, particularly independent restaurants and wineries. The small number of specialty food stores in the region means that the public market will need to attract vendors from outside the region or have start-ups.


Initial feasibility assessment

Public market goals

By definition, public markets have clearly defined social and economic development goals. An important part of the planning process is establishing these goals, which succinctly capture what the public market is meant to achieve. Once determined, they should held drive decision making during both the development and operational phases, and they should be used to evaluate the market’s achievements.

Suggested public goals for the Atlantic City Public Market are:

1. To diversify the local economy by creating an anchor attraction that serves local residents and visitors

2. To activate the downtown streetscape, particularly by connecting Atlantic Avenue to the boardwalk

3. To provide business creation and employment opportunities

4. To expand the community’s access to fresh healthy foods and diet-related education

Development principles

Based on the project’s goals as well as the research and analysis, the following principles are suggested to guide the development of a public market in downtown Atlantic City:

1. It must be large enough to act as a magnet and attract a wide range of customers (including local and regional residents, conventioneers, and casino visitors), but not so large that skilled vendors cannot be found.

2. The market should offer “affordable luxury” as well as deals, not just high end items. This is the formula that historically brought success to Atlantic City as a resort and which underpins the success of The Walk.

3. The public market must offer a mix of unique and special items that feature what is authentic about Atlantic City and South Jersey in terms of both people and products, including the region’s ethnic diversity. There should be a strong emphasis on prepared foods, wine, beer and spirits, and products that appeal to both locals and visitors.

4. Shopping at the public market must be a fun, entertaining shopping experience. The market is a show, re-created daily, and it needs great sets and actors.

5. The public market facility needs to be a bold and captivating building that helps change attitudes about retail in Atlantic City (as The Walk did) and be distinctly different from area supermarkets.

6. The public market must be perceived as convenient and safe, with easy access, adequate parking, convenient loading zones, and good lighting.


7. The public market needs flexibility so it can expand to meet seasonal demand and provide facilities that support a variety of sale channels, including wholesale trade. Ideally the design should accommodate phased growth. Its hours of operation should reflect seasonal demand.

8. Recognizing the challenges facing independent food retailers, the public market should provide low barriers to participation and an entrepreneurial model that shares both risks and rewards.

9. The public market and vendors must be adequately capitalized to weather a multiyear start-up period.

10. The public market should be designed to leverage the resources of Atlantic City institutions including the casinos, AtlantiCare Hospital, Atlantic Cape Community College, and Stockton College.

11. The public market should offer healthy products and educational facilities and programs that help address the diet-related health needs of the community.

Phase 1 feasibility assessment

Developing a successful public market in any community is challenging and complex. In pursuit of their mission to support farmers and fresh food producers, public markets around the country work hard to attract and serve local consumers, and sometimes view tourists as a distraction or even a nuisance. In some cases, tourists crowd the aisles and gawk at the fresh food but only buy prepared foods or crafts. They drive the public market’s economics toward becoming a food court with tourist trinkets.

The Walk has proven that a bold retail project can work in downtown Atlantic City, attracting a mix of regional residents and visitors. The public market must learn from The Walk’s experience and why people do or do not come to Atlantic City, and offer an experience that consistently attracts a similarly wide range of customers.

The demand analysis shows that Atlantic City can achieve adequate consumer demand to support a public market with approximately 26,400 square feet of net leasable area. Since there is little competition in the region and residents currently travel far distances to shop for quality food, there is a good opportunity to capture a share of these sales. However, Atlantic City has not been a draw for fresh food sales for regional residents or visitors, so the public market must change people’s ingrained habits when it comes to shopping for food. The market must offer both fresh and prepared food, as well as highlight the region’s beer, wine, and spirits.

Among the parcels studied, Block 157 offers the best location for a public market in Atlantic City provided visibility to Atlantic Avenue is improved and incompatible uses, such as the existing sexually-oriented business, are relocated. It is large, accessible, adjacent to The Walk, and expands the connectivity of the downtown area along the Main Street corridor and to the boardwalk.

The vendor analysis found enthusiasm and interest among independent restaurateurs and some potential retail stores, although there are very few specialty stores in the region from which to draw. Once the concept is further developed, additional testing is needed with potential


vendors, particular those located around Philadelphia who might open another location in Atlantic City. The role of casino chefs needs to be explored.

The Atlantic City Public Market must be conceived of differently from other markets, with recognition that tourists are essential for the project’s success. At the same time, to be an authentic public market, the facility needs to support the sale of fresh and artisan foods. The suggested development principles lay the groundwork for a concept that can meet the project’s goals and create profitable vendors.

Next steps

Based on the research and conclusions of this Phase 1 report, the second part of the study will:

1. Develop a mix of proposed vendors

2. Create a conceptual site plan on the selected site and renderings

3. Prepare a ten year operating pro forma

4. Estimate development costs

5. Propose an ownership and operational structure

6. Test the concept with potential vendors

7. Assess the concept’s feasibility

8. Prepare a Phase 2 presentation and report


Appendix A.

Interviews

Name Title Organization

Winn Allen Owner Allen's Clam Bar Margaret Brennan-Tonetta Executive Director Rutgers Food Innovation Center Kim Butler Director, Communications CRDA Kenneth Calemmo* COO Cooper Levenson (AC Chamber) Louis Caracciolo Owner Amalthea Cellars Elizabeth Cartmell President Atlantic City Alliance Monty Dahm Owner Tun Tavern Felix Donato Manager Landisville Produce Cooperative Frank Dougherty Owner Knife & Fork Restaurant Maureen Dougherty Owner Knife & Fork Restaurant Sean Fischer Executive Asst to President Atlantic Cape Community College Gef Flimlin Treasurer East Coast Shellfish Growers Assoc. John Formasano President Landisville Produce Cooperative Frank Formica Owner Formica Bros. Bakery Sandra Forosisky Director of Economic Dev. City of Vineland Maureen Frank Director AC Free Public Library Michael Gagno Executive Director Noyes Museum of Art Jeff George Owner Scales/AC Cruises Donald Guardian Director, Special Improve. District CRDA Mike Hauke Owner Tony Boloney's Lori Herndon Executive VP AtlantiCare Gary Holloway Public Market Manager Landis Marketplace Diane Holtaway Associate Director Rutgers Food Innovation Center Bill Horin Art C Lynne Hughes VP & Chief Counsel Caesar's Entertainment Corp. Sonny Ireland PACE Alma Johnson Venice Park Civic Association Amara Kamara Owner Bongo African Grocery Store Joseph Kelly President Greater Atlantic City Chamber Dennis Konzelman* President Westside Civic Association Scott Mackey Legislative Director Garden State Seafood Association Rizwan Malik Councilman, 5th Ward AC City Council Timothy Mancuso Councilman, 6th Ward AC City Council Alex Marino* Freeholder Atlantic County John Maxwell Owner Maxwell Shellfish Kelly McClay* Dean ACCC - Academy of Culinary Arts


Thomas Meehan Director, Project Implementation CRDA Keith Mills Director Planning & Development, City of AC Dominic Moffa* Sr. VP, Administration AtlantiCare Joseph Molineaux* Director NJ Small Business Dev. Center Steven Moore Councilman, 3rd Ward AC City Council Peter Mora President Atlantic Cape Community College Gary Musich VP, Sales & Services AC Convention & Visitors Authority Susan Ney Thompson Deputy Executive Director CRDA Kevin Ortzman* General Manager Caesar's Entertainment Corp. John Palmieri Executive Director CRDA Richard Perniciaro Dean Atlantic Cape Community College Ali Reynolds Director, Community Partnerships CRDA Bunny Rixey Director, Real Estate & Dev. CRDA Larry Sharrott Owner Sharrott Winery Curt Taylor Owner Los Amigos Diane Tharp Special Events Manager Tun Tavern Charlie Tomasello Owner Tomasello Winery Rick VanVraken* Ag. & Resource Mngt Agent Rutgers Cooperative Extension Pete Varsalona Owner Sack O' Subs Jane Williams Owner Back Back Ale House Kyle Williams Owner AC Restaurant Group Libby Wills First Ward Civic Association John Witmer* Director of Construction Projects Caesar's Entertainment Corp. *Steering Committee

Sources

1. “Atlantic City Tourism District Master Plan,” CRDA/Jones Lang LaSalle, February 2012

2. “Atlantic City Visitor Profile 2008,” Spectrum Gaming Group, prepared for Atlantic City Convention & Visitors Bureau

3. Johnson, Nelson, Boardwalk Empire: The Birth, High Times, and Corruption of Atlantic City, Medford Press, Medford NJ, 2002

4. Johnson, Nelson, The Northside: African Americans and the Creation of Atlantic City, Plexus Publishing, Medford NJ, 2010

5. “Retail market analysis for downtown Atlantic City,” Community Land Use & Economics Group, LLC, Arlington, VA, December 2011


6. “Residential Market Potential: Downtown Atlantic City Study Area,” Zimmerman/Volk Associates, Clinton, NJ, October 2011

7. “The Atlantic City Regional Transportation Plan, Volume 2: Implementation Program” DMJM Harris, May 2009

8. “2013 Tourism Promotion Survey: New Jersey Visitor Profile Study,” Lloyd Levenson Institute of Gaming, Hospitality & Tourism, Stockton College of New Jersey

9. “2011 New Jersey Overnight Leisure Visitor Profile,” DK Shifflet & Associates, Ltd., McLean, Virginia, February 2011, http://www.visitnj.org/sites/visitnj.org/files/2011-nj-visitor-profile-02-13-12.pdf

Historic cover photographs courtesy Atlantic City Free Public Library




Appendix B. Sites


Location

1. Block 336: Mississippi & Arctic – partial block south of The Wave garage

2. Block 163: Pacific & Georgia- partial block north of Boardwalk Hall

3. Block 157: Atlantic & Ohio – block next to AtlantiCare Hospital

4. Block 395: Baltic & Michigan – triangular parking lot next to Convention Center

5. Block 389: Mississippi & Fairmont – parking lot north of The Wave

Size 1.2 acres (too small)

2.0 acres; irregular shape 3.6 acres 0.4 acres (too

small) 3.8 acres

Visibility from major thoroughfares

Limited visibility because blocked by The Wave garage and The Walk

Potential visibility from Atlantic Ave if land purchased and included

Excellent potential visibility from Atlantic Ave and The Walk

Visibility from Michigan and Baltic Ave

Excellent visibility from expressway

Access and Circulation

Access from Mississippi and Arctic Aves; Arctic is one way northbound

Requires Atlantic Ave access – CRDA would need to purchase additional property

Access from all four sides, easy circulation

Michigan Ave Access via Fairmount Ave (one way)

Site conditions (visible)

Building with Barbera Fish Market, City-owned Patsy Wallace Center building in middle of lot. Both buildings likely need to be demolished

Parking lot; Older buildings

Caesar’s HR building and new parking lot on Pacific; New Dunkin’ Donuts on NE corner, which could serve as a complementary use to the market

Fenced parking lot

Surface parking lot, no structures

Adjacent uses

Adjacent to The Walk; large surface parking lot across street expected to be Bass Pro Shop; near Formica Bakery, White House Subs, and Ducktown shops

Back of Boardwalk Hall on Pacific, dilapidated boarding houses on Georgia; Trump Plaza garage on Mississippi, restaurants and bars on Atlantic

AtlantiCare Hospital; Catty-corner from The Walk and bus station; On “Main Street” Atlantic Avenue (Popeye’s and liquor stores further east), new office building across Atlantic; Claremont and Bally’s bus station on Pacific

Convention Center; Sheraton Hotel; Tun Tavern; Applebee’s

The Wave garage; Angelo’s restaurant, non-supportive uses (auto garages, road ramps)

Pedestrian linkages and walkability

Good link to The Walk; does not provide linkage to boardwalk

Could help link Boardwalk Hall to Atlantic although back of Hall not

Links Atlantic Avenue to Pacific, best fulfills goal of linking Atlantic/The Walk

Good linkage to The Walk; does not provide linkage to boardwalk

Does not provide linkage to boardwalk


pedestrian friendly; several blocks from The Walk

to boardwalk

Parking

Adjacent to large structured parking; Unlikely to accommodate surface parking

Expanded site could accommodate parking on-site; adjacent to Trump Plaza garage; small lot on Georgia Ave

Potential surface parking on-site and on CRDA land on adjacent block to east; Structured parking on Pacific at the Claridge

Too small for on-site parking

Potential for surface parking and adjacent to The Wave garage

Cost/availability

Partially owned by CRDA; City-owned Patsy Wallace Center and other building require purchase and relocation

Part of block owned by CRDA, $3.4 m to acquire several lots adjacent to CRDA land; Need to acquire land and buildings along Atlantic Ave.

Majority of site donated by Casear’s along with $9.5 million cash contribution; Several parcels must be purchased and razed

Owned by CRDA

Owned by CRDA

District

Arts & Cultural District

Arts & Cultural District

Main Street; Eds & Meds Corridor Arts & Cultural

District

Alternative uses

Proposed location for skateboard park; High value location because adjacent to Bass Pro Shops and The Walk

Zoned resort casino so potentially high value site

Parking lot used by Tun Tavern, The Walk

Proposed site of mixed-used development


Appendix C: Sales Analysis

atlantic city public market feasibility assessment - · pdf fileatlantic city public market...

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