Submitted to the Central Astoria Local

Development Coalition

April 2013

Executive Summary: Retail Analysis and Business Attraction for Steinway Street

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Project Overview In November of 2012, The Steinway Astoria Partnership and Central Astoria Local Development Coalition hired Larisa Ortiz Associates (LOA) to develop a merchandising plan and retail attraction program for the Steinway Street business district. The goal of this effort is to attract retailers to Steinway Street that meet the needs and preferences of the community, complement the existing mix of tenants on the corridor, and will have a healthy, long-term future on Steinway Street. The team’s process involved an analysis of market and demographic data, physical conditions along the corridor, a block-by-block retail analysis, opportunity site analysis, competitive district analysis, as well as interviews with stakeholders, merchants, and residents in the community. The LOA team also advised the Client on a survey of community members, which was then analyzed and used to inform recommendations and strategies for the Partnership to pursue. Each of these inputs informed the retail categories that Steinway Street should target for their attraction efforts, as well as what types of retailers within those categories are a good fit for the district, its retail spaces, residents and shoppers. The analysis informed the selection of a targeted list of retailers in the categories that matched the customer profiles found in the primary and secondary trade areas serving Steinway Street. Nearly two dozen retailers were identified, pre-qualified by expansion plans, size of space, and presence in the market. The strategy for retail attraction positions the Steinway Astoria Partnership at the center of a collaborative partnership with the local real estate community, whose buy-in is essential to the success of this effort. A PowerPoint presentation highlighting key demographic indicators and consumer demand has been created for the Client to use as a tool for sharing their vision with prospective tenants, property owners and brokers. This presentation is designed to be updated with new information over time so it remains a useful communication and outreach tool. The LOA team presented the findings and prospect lists to select property owners identified by the Client in an effort to engage and enlist the active participation of property owners in the retail leasing efforts. The Client was also given a one-on-one training session in the mechanics of on-going attraction. The session included a three year work plan and templates intended to aid in prospect database management. These templates include letters to prospective tenants and property owners, templates for prospect research, sell sheets, scout cards, and vacancy lists. The objective is to fully equip the Client to use these tools and keep momentum going over time. Marketing materials were designed that highlight the corridor’s strengths and desired retailers, and can be used by the BID, property owners, and brokers to communicate the BID’s vision and attract prospective tenants, with an emphasis on the targeted retail categories identified through this process. These materials and

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training are the foundation of Steinway Street’s retail attraction program. In addition, this Executive Summary offers comprehensive retail recommendations that can be used to engage local stakeholders in supporting retail leasing efforts and in improving the overall shopping environment in support of both new and existing businesses.

Project Area The project area consists of the entire length of the Business Improvement District: both sides of Steinway Street with 28th Avenue as the northern boundary and 34th Avenue as the southern boundary. The area is located in the eastern part of Astoria, Queens. By taking the broader context into account, our analysis considered trends not only in the district, but also in similar districts, competing shopping centers, the borough, and New York City as a whole.

Figure 1: Steinway Street and Astoria in Relation to Nearby Neighborhoods

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Trade Area Steinway Street, with its mix of general merchandise and apparel offerings, is characteristic of what the retail industry considers a “Regional Shopping Center”1. Like Steinway, regional shopping centers typically offer a mix of general merchandise and fashion-oriented offerings. In a non-urban environment, this type of center typically has a trade area of five to fifteen miles, or 10 to 25 minute drive-time, but in an urban center where many customers walk and/or take mass transit, trade areas are much smaller. Therefore, data was pulled for a .5-mile radius and a 1-mile radius from the center of the Steinway Street corridor. The .5-mile radius provides insight into what is happening at the micro-level, while the 1-mile radius is more appropriate for a general understanding of market dynamics.

Natural boundaries and the location of public transportation influence the size of the trade area. These boundaries are the Brooklyn-Queens Expressway to the north and east, Sunnyside Yard and Northern Boulevard to the south and east, and the East River to the west. The size of the trade area is also influenced by competitive shopping districts and shopping centers (see Fig. 13). For example, while it is easy for a resident of Sunnyside or Jackson Heights to travel to Steinway Street, each neighborhood has its

1 International Council of Shopping Centers, Shopping Center Definitions

Figure 2: Primary and Secondary Trade Area

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own shopping district that provides similar convenience offerings. Ease of travel to shopping districts in Manhattan and to nearby shopping malls also limit the area from which people come to Steinway Street to shop. Cultural and entertainment destinations such as the UA Kaufman Astoria Stadium 14 movie theater, Museum of the Moving Image and Kid’s Playhouse do pull from a larger trade area. New destination retailers would also be likely to pull from a larger trade area. The demographic analysis that follows is based on residents living in the primary or secondary trade area, as specified.

Visitation Drivers Steinway Street is immediately surrounded by destinations for entertainment and dining, which generate foot traffic and drive visitation to businesses along the corridor. In particular, these activities are clustered near the south end of the Steinway Astoria Partnership boundaries, driving traffic to the southern end of the district from the subway. The block between the subway and entertainment destinations – the Museum of the Moving Image, Kaufman Astoria Studios, UA Kaufman Astoria Stadium 14 and the Beer Garden at Studio Square – also offers significant opportunities for change, as it has the fewest ground floor retailers along the

corridor.

Figure 3: Visitation Drivers

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Demographics To put Steinway Street into context, the analysis compares the demographics of residents living within one mile of Steinway Street to the borough of Queens overall.

This comparison reveals that residents living near Steinway Street are younger than the borough average. Residents who live within one mile of Steinway Street have a median age of 34.8, younger than the borough’s median age of 37.4. The average household income of $69,124 is lower than the borough average of $70,554, but this is likely related to where the majority of the local population is in their career (due to their age) and a smaller average household size in the trade area (2.28 people) than the borough overall (2.82 people). 77% of residents in the trade area rent their homes – much higher than the borough-wide average of 57% - signifying a mobile population that is likely to have more disposable income than families whose income is tied up in real estate or mortgage payments.

Astoria is growing. The immediate area around Steinway Street is projected to grow more rapidly in the next five years than both the borough and the City. Steinway Street’s primary trade area is projected to experience residential growth from 2012 to 2017 at an annual rate of .76%.

Median Age Average Household Income

Average Household Size

Renters

Steinway Street (1mi) 34.8 $69,124 2.28 77%

Queens 37.4 $70,554 2.82 57%

Figure 4: Projected Annual Population Growth Rate 2012-2017, Data source: Esri, 2013

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Income is increasing. Higher-income households are experiencing the most significant growth, while the number of households in lower-income brackets has declined since 2000. In 2012, nearly half of all households in the trade area earned more than $50,000 annually, compared to 36% in 2000 and less than 20% in 1990. The current retail anchors on Steinway Street – many of which opened their doors in the 1990s and early 2000s – met the needs of the area ten years ago, but changes in the local demographic makeup suggest that the current mix no longer fully reflects the customer profile.

Figure 5: Percent Change in Household Income 2000-2012, Data source: Esri, 2013

The population is getting younger. Today, 70% of residents in the primary trade area are under 45 years old. There are fewer residents under 19 years old than there have been in the past 20 years, signifying that there are fewer families with school-aged children living in the area. 38% of all residents fall between the ages of 20 and 34.

Figure 6: Population by Age Group 1990-2010, Data source: Esri, 2013

0

5,000

10,000

15,000

0 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75 - 84 85+

Population by Age Group 1990-2010, 0.5 Mile

1990 2000 2010

-46% -11%

-15% -11%

5% 15%

43% 58%

-60% -40% -20% 0% 20% 40% 60% 80%

< $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999

$100,000 - $149,999 $150,000+

Percent Change in Household Income 2000 - 2012, 1 mile

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Steinway residents are educated. Residents living around Steinway Street tend to be more educated than the borough overall. Roughly 45% have an Associate’s degree or higher.

Figure 7: Educational Attainment, Data source: Esri, 2013

Consumer Profile The demographic data begins to paint a picture of an area that is more densely populated with younger residents who have more disposable income, fewer children, and are likely to live alone or with roommates. These residents are also college educated and, while they make less than the borough-wide average, they are likely to have more discretionary income. The vibrant and growing restaurant row along 30th Avenue and Broadway are one strong indicator of this market dynamic. Esri Business Analyst, a leading provider of mapping, retail and market data, has created a psychographic categorization system called Tapestry Segmentation, which divides residential areas into segments based on socioeconomic and demographic characteristics. This analysis paints a more vivid picture of who is living in the trade area and what their habits and preferences are. There are 65 unique segments in

0% 5%

10% 15% 20% 25% 30% 35%

No high school diploma

High school graduate, GED

Some college Associate degree

Bachelor's degree

Master's, Professional,

PhD

Educational Attainment, 0.5 Mile

Steinway Queens

Solo Resident

34%

Family Household

45%

Nonfamily Household

21%

2010 Household Types

Figure 8: 2010 Household Types, Data source: Esri, 2013

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54% 41%

4%

1%

Tapestry Segmentation, 0.5 Mile

Trendsetters

Urban Melting Pot Laptops and Lattes High Rise Renters

total. Residents in the primary trade area for Steinway Street fall into four categories: most significantly, Trendsetters and Urban Melting Pot, with a small share of residents falling into the Laptops and Lattes and High Rise Renters categories. Expanding out to a one-mile trade area, Retirement Communities, City Lights and Metro Renters each make up a small portion of the population. According to Esri, Trendsetters residents are young, diverse and mobile. They are spenders. Fashion-conscious, they shop at stores like Banana Republic, Gap, Nordstrom and Macy’s. They buy organic food, exercise regularly and own the latest electronics. Urban Melting Pot neighborhoods are ethnically diverse, made up of over 50% foreign-born residents. Fashion conscious, yet cost conscious, Urban Melting Pot residents love to shop. Macy’s is a favorite but they also shop at other upscale retailers, as well as warehouse/club stores, especially for clothes and jewelry. Full descriptions of each of the area’s segmentations can be found online at www.esri.com/data/esri_data/tapestry.

34%

50%

2% 6% 5%

2% 1%

Tapestry Segmentation, 1 Mile

Trendsetters

Urban Melting Pot Laptops and Lattes High Rise Renters Retirement Communities City Lights

Metro Renters

Figure 10: Esri Tapestry Segmentation, 2013

Figure 9: Esri Tapestry Segmentation, 2013

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“Like” Districts An analysis was conducted of similar districts based on the following characteristics: median household income, median age, and household size. The findings suggest that Steinway Street’s trade area resembles areas in Long Island City, Greenpoint, Williamsburg, Fort Greene, Prospect Heights, Park Slope, the East Village and Midtown West (Figure 11). This comparative analysis is useful in helping to determine which districts to canvas for potential retailers for Steinway Street.

Block-by-Block Analysis Retailers have specific requirements and conditions that need to be met in order for the businesses they run to survive and thrive. Perhaps most significantly, this includes access to a steady flow of customers. Ultimately, businesses know that a distance of 200 feet can make or break successful retail. In a world where office workers increasingly venture less than 400 feet from their desks at lunch time, and pedestrian traffic changes significantly within two blocks of the subway, it was absolutely critical to look at Steinway Street not as a single monolithic retail district, but rather as a series of individual “retail micro-climates” that require customized retail attraction strategies. The retail micro-climates along Steinway Street are driven by a variety of factors, including the size of spaces available, proximity to major transportation thoroughfares and uses, and the existing anchors on the street. The maps on the following page (with vacant spaces as of November 2012 shown in orange) are included for reference. The Steinway Astoria Partnership has branded Steinway Street as the “World’s Longest Mall,” due to a high concentration of national chain retailers along the street, a mix that is more common in shopping malls in outer boroughs than

Figure 11: “Like Districts” Source: Esri, 2013, LOA

Steinway Street, Astoria

Long Island City

Greenpoint

Williamsburg

Fort Greene Prospect Heights

Park Slope

East Village

Midtown West

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commercial corridors. Anchor tenants include The Gap, Conway, Modell’s, Express, Benetton, Victoria’s Secret, and destination housewares and hardware stores including Straus Paint & Hardware, Schatz Steinway, and Gothic Cabinet Craft.

2800 Block Retail Environment: Significant cluster of furniture, housewares and hardware retailers; convenience and services.

3000 Block Retail Environment: Predominantly national and regional chain retailers with some independents. Store types include women’s affordable fashion retailers; national health and personal care retailers; convenience and services; national eateries and menswear.

3100 Block Retail Environment: Predominantly national chain retailers. Primary store type is women’s fashion and footwear.

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3200 Block Retail Environment: Predominantly furniture, professional services and convenience goods. Professional offices on the street and above retail support takeout eateries and cafes.

3400 Block Retail Environment: Primary corridor for patrons getting off the subway and walking to the movie theater. Industrial buildings with auto and lumber tenants; up and coming with new restaurants. Possible new development proposed for south end of the block.

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Shopping Environment The Steinway Astoria Partnership’s investments in the physical environment on Steinway Street have been very successful in helping to create a sense of “place” in the district. Identity signage on street banners and trash cans, hanging planters, and the presence of maintenance crews show that there is an organization managing and caring for the corridor. Street benches allow shoppers to rest in between shops or while waiting for the bus and add to the activity on the street.

Challenges exist, however, with the appearance of storefronts. Many awnings and signs are damaged or dirty. These conditions give the appearance that retailers are not invested in the neighborhood, or that they might be going out of business. There is an issue on Steinway Street particularly among national chain retailers, which is perhaps exacerbated by customers’ expectation that these stores have an image to uphold among each of their locations. In addition to the issues visible from the street, there also appear to be problems happening within the stores that may further deter shoppers. Yelp.com, a popular website for customer reviews, reveals numerous complaints and low ratings for conditions inside Steinway Street stores that relate to layout, merchandise and customer service.

Figure 12: Hanging flower basket along Steinway Street

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Competitive Districts Steinway Street shares its shoppers with a number of other shopping districts and centers. Residents living near Steinway Street can easily access these alternative districts by subway, bus or car, as illustrated below.

These districts and some of their prominent tenants include:

Shopping District/Center Sample Tenants Shops at Northern Boulevard Stop & Shop Old Navy Marshalls Chuck E. Cheese's Sunnyside Business District Baby Blue Pio Pio Riko Hallmark 82nd Street – Jackson Heights Children’s Place Footlocker Fabco Shoes Jackson Heights Cinema Queens Center Mall Forever 21 H+M JCPenny Macy’s Urban Outfitters

Figure 13: Competitive Districts

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Shopping District/Center Sample Tenants Rego Center Costco Kohl's Century 21 T.J. Maxx Marshalls Roosevelt Field Mall Bloomingdale's JCPenney Macy's Nordstrom Dick's Sporting Goods Neiman Marcus (opening 2015) Citi Field Mall (planned) Construction to begin in 2015; 200 retailers, 1

Million SF Sky View Center Target

BJ’s Marshalls Old Navy

A significant challenge for Steinway Street is competing with these nearby districts, particularly the shopping malls, which do not face many of the same challenges as an urban commercial district such as parking availability or exposure to the elements. In addition, these competing centers are receiving significant upgrades. Roosevelt Field, for example, will receive a $300 million upgrade from 2013 to 2015. Opened in 2010, Rego Center is a brand new shopping center. One million square feet of retail is being planned for an enclosed destination shopping center off the 7 Train at Citi Field and construction is slated to begin in 2015. In order for Steinway Street to remain competitive, resources must not only be allocated to the retail mix but also to maintain the quality of shopping environment and improve the overall shopper experience.

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Strategic Positioning Retailers typically cluster by use, lifestyle and price, and Steinway is no different. Co-tenancies between complimentary retailers allow people to cross-shop and compare goods, strengthening the district as a destination shopping environment. When plotted on a matrix (see next page) comparing the price of merchandise (low to high) to the “lifestyle” (traditional to trendy/hip), each block has its own price point and image. Understanding these micro-dynamics is critical to steering the right retailers to the right spot along the street. The matrix below shows a selection of retailers located on Steinway Street, color-coded by block. The district’s retailers tend to cluster in a low to medium price point and offer goods that range from traditional to contemporary. The strongest block in terms of price point is the 3100 block, where we find a cluster of national chain retailers. The retail rents along this block are also the strongest. We encourage the Client to steer national apparel retailers to this block to support co-tenancy and cross-shopping among these retailers. The 3200 and 3400 blocks show the greatest diversity of retail offerings, at low to medium price points. Rents along these blocks are also lower, allowing for a more interesting mix of national, regional and local businesses. New concepts, including restaurants and eating establishments, are a better fit along this block. These blocks are also the closest in proximity to the growing evening entertainment cluster in the vicinity of the Kaufman Astoria Studios. The 2800 block shows the most “traditional” offerings – and it is also the furthest from the subway, suggesting that the offerings are geared more towards local residents. Some of the most established “mom-and-pop” businesses are located along this stretch of the street.

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Figure 14: Steinway Street Price and Lifestyle Matrix

Key: 2800 block 3000 block 3100 block 3200 block 3400 block

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When Steinway Street’s Tapestry Segmentation (described on Page 8) is plotted on the same matrix, the analysis begins to suggest a mismatch between Steinway Street retailers and local resident consumers. A more appropriate retail mix for Steinway Street would include a wider variety of retail offerings that fall into the lifestyle categories that the retail industry defines as “Contemporary” and “Trendy/Hip”, at a medium price point. By attracting retailers that offer Contemporary and Trendy/Hip apparel at a medium price point, the mix will become more reflective of shopper preferences and encourage more shopping by local residents who currently shop elsewhere. There is already a strong cluster of contemporary retailers at a low-to-medium price point; steps must also be taken to strengthen these existing businesses, which will in turn reinforce the district identify as a destination for wide selection of apparel at an affordable price point.

Figure 15: Income and Lifestyle Matrix, Steinway Street .5-mile Trade Area

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Retail Opportunities An analysis of market data reveals significant leakage, or opportunity in three main retail categories: 1) food service and drinking places, 2) clothing and clothing accessories stores, and 3) general merchandise stores (department stores fall into this category). These are the categories where Steinway Street should focus retail attraction efforts. The need for these types of retailers is reinforced by input gleaned from interviews with stakeholders and from the consumer survey, as well as the demographic analysis, which has illuminated that retail attraction should focus on retailers that offer contemporary/trend/hip apparel and general merchandise at medium price points. The retail gap analysis below identifies significant opportunity for new retailers to capture discretionary income that is currently being spent by residents outside of the study area. 1-Mile Retail Leakage Analysis

Demand Supply Retail Gap

(Retail Potential) (Retail Sales)

Food Services & Drinking Places 216,097,706 140,705,450 75,392,255

Clothing & Clothing Accessories Stores 73,751,543 42,534,638 31,216,905

General Merchandise Stores 80,535,591 48,691,073 31,844,518

Miscellaneous Store Retailers 32,239,722 20,783,715 11,456,007

Furniture & Home Furnishings Stores 39,778,341 27,700,452 12,077,889

Sporting Goods, Hobby, Book, Music Stores 16,213,285 8,656,677 7,556,608

Electronics & Appliance Stores 46,196,116 29,802,176 16,393,939

Health & Personal Care Stores 62,424,522 56,835,663 5,588,859

Total Retail Trade Food & Drink $272.4 Million

What is Retail Leakage? Retail Leakage is calculated as the difference between buying power (demand) and retail sales (supply) with a defined Trade Area. When Retail Leakage is a positive value there is unmet demand by residents in the trade area, representing opportunities for new or existing businesses to target. When Retail Leakage is a negative value there is either a healthy concentration of retail to build from, or there is a saturation of retail that indicates limited opportunity for business growth or expansion.

12%

20%

29%

46%

56%

Entertainment/Nightlife

Homegoods

Bookstore

Dining

Apparel

Name types of businesses you would like to see come to Steinway Street

Figure 16: Businesses wanted on Steinway Street *Source: Steinway Astoria Partnership, Consumer Survey, 2013

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Additional Retail Recommendations The Steinway Astoria Partnership has made, and continues to make, many successful improvements to the corridor. Building and expanding on these successes will position Steinway Street to remain competitive even as new shopping areas are constructed or undergo renovation. The following recommendations are targeted at addressing issues that Steinway faces that may deter the desired retailers or shoppers from visiting the corridor.

• Prioritize retail attraction efforts on sites that allow for the addition of anchor tenants. Putting the right retailer in these spaces is crucial, as it sets the tone for the district. Once a successful anchor moves in, smaller retailers will follow, just like in a shopping mall.

• Develop a mailing and/or email list of existing business owners, including restaurateurs in the immediate area outside of the district. Existing business owners are in the best position to offer referrals and can serve as a funnel for new prospects and tenants. Use them as a tool to connect with new retailers.

• Develop a mailing and/or email list of local brokers and send regular communication regarding retail vacancies and new or expanding businesses.

• Continue to build relationships with property owners and retailers, taking care to gather lease expiration dates for each and every property within the district. This will allow the Partnership to more effectively anticipate up-coming retail attraction opportunities in time to help property owners fill spaces with the kinds of tenants outlined in this report.

• Seek retail uses with evening hours, especially at the south end of the corridor. Visitors are likely to get off the subway and walk to the movie theater at the south end of the corridor in the evening, but many stores are not open past 6pm.

• Develop a protocol for getting stores, especially national retailers, to clean up awnings and signage.

• Define metrics for measuring the impact of your retail leasing program, including number of vacancies filled, reduction of square footage of vacancies, and number of new stores opened.

Conclusion This report outlines the block-by-block merchandising recommendations for the district as well as recommendations that will set the stage for successful retail attraction efforts. But ultimately, the success of this effort lies in the on-going execution and commitment to building strong relationships with property owners, brokers and retailers whose participation is critical to ensuring that the tenant mix is the right one for the community and district as a whole.