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UBC Theses and Dissertations

Planning for local strip commercial areas Whitson, Brian Leonard 1979

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PLANNING FOR LOCAL STRIP COMMERCIAL AREAS by BRIAN LEONARD WHITSON B.A., University of Alberta, 1970 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE SCHOOL OF COMMUNITY AND REGIONAL PLANNING We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA July, 1979 © Brian Leonard Whitson, 1979 In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t freel y available for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by the Head of my Departmentcor by his representatives. I t i s understood that copying or publication of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of (VVyv A, A /Y\A The University of B r i t i s h Columbia 2075 Wesbrook Place Vancouver, B.C. Canada V6T 1W5 ABSTRACT Declining s t r i p commercial areas are a common problem. Ty p i c a l l y , they appear unattractive and often have s i g n i f i c a n t vacancy rates. Without posi t i v e municipal action, they appear to have undesirable or at least uncertain futures. Yet• the complexity of these areas makes i t d i f f i c u l t for planners to suggest a viable development p o l i c y . The main purpose of thi s thesis:;is to explore conceptual frameworks and a n a l y t i c a l techniques that municipal planners can use i n studies of these problem areas. The f i r s t step i s a review of the planning and r e t a i l market structure l i t e r a t u r e s , with p a r t i c u l a r attention to the development and functions of commercial s t r i p s . An important conclusion from t h i s review i s that while r e t a i l s t r i p s face strong competition from planned shopping centres, there i s a somewhat lim i t e d range of functions that require or prefer s t r i p locations. The concepts developed i n the l i t e r a t u r e review are applied to a case study area on Hastings Street i n Burnaby, B.C. Land use studies indicate the area has the character-i s t i c structure of an unplanned shopping centre, but with a larger proportion of services and a limited range of r e t a i l i i f a c i l i t i e s . A market study i n d i c a t e s modest p o t e n t i a l f o r expansion, but v i r t u a l l y no p o t e n t i a l f o r major new f a c i l i t i e s . M a r g i n a l s a l e s estimates f o r some r e t a i l o u t l e t s are a t t r i b u t e d t o c o m p e t i t i o n w i t h other r e t a i l f a c i l i t i e s , p a r t i c u l a r l y those i n the Brentwood M a l l two m i l e s away, and to d e f i c i e n c i e s i n the appearance and s t r u c t u r a l c o n d i t i o n of b u i l d i n g s i n the area. P o l i c y p r o p o s a l s i n c l u d e redevelopment i n accordance w i t h the e x i s t i n g Community P l a n f o r the area and a r e h a b i l i t a t i o n and r e v i t a l i z a t i o n p l a n developed from the a n a l y s i s . E v a l u a t i o n of these p r o p o s a l s i s based i n i t i a l l y on the r e t u r n on investment c r i t e r i o n . The h i g h d e n s i t y , . mixed r e s i d e n t i a l and commercial redevelopment a l t e r n a t i v e i s r e j e c t e d because the l a n d r e s i d u a l value generated by the r e s i d e n t i a l component i s shown to be l e s s than the l a n d assembly c o s t s , and the commercial development g r e a t l y exceeds the a v a i l a b l e market. The r e v i t a l i z a t i o n p l a n i n c l u d e s s t r e e t b e a u t i f i c a t i o n , r e n o v a t i o n of some of the e x i s t i n g b u i l d i n g s , and encouragement of lower d e n s i t y s e l e c t i v e redevelopment compatible w i t h the p r e s e n t c h a r a c t e r of the area. S i g n i f i c a n t economic b e n e f i t s from the b e a u t i f i c a t i o n and r e n o v a t i o n elements are i n f e r r e d from the market study by c o s t e f f e c t i v e n e s s a n a l y s i s . Lower d e n s i t y development i s shown to be f e a s i b l e d e s p i t e a lower l a n d r e s i d u a l value than the Community P l a n p r o p o s a l s because of reduced l a n d assembly c o s t s . The r e s u l t s o f the economic e v a l u a t i o n are combined wi t h an e v a l u a t i o n of s o c i a l c o s t s and b e n e f i t s f o r a wide range of i n t e r e s t groups a f f e c t e d by the p r o j e c t u s i n g L i t c h f i e l d ' s P l a n n i n g Balance Sheet framework. R e v i t a l i z a t i o n produces s i g n i f i c a n t l y h i g h e r s o c i a l b e n e f i t s due to reduced d i s r u p t i o n of the community and more immediate b e n e f i t s f o r . the m a j o r i t y of a f f e c t e d i n t e r e s t groups. The c o n c l u d i n g d i s c u s s i o n i s p r i m a r i l y concerned w i t h m e t h o d o l o g i c a l i s s u e s i n the context of what can be accomplished by a s m a l l p l a n n i n g team u s i n g r e a d i l y a v a i l a b l e p u b l i c i n f o r m a t i o n . I t i s argued t h a t the use of d e t a i l e d l a n d use data w i t h i n a c o n c e p t u a l framework d e r i v e d from the r e t a i l l o c a t i o n l i t e r a t u r e i s the fundamental t o o l f o r a n a l y z i n g the i n t e r n a l s t r u c t u r e of s t r i p commercial areas and a s s e s s i n g the c o m p e t i t i v e p o t e n t i a l of r e t a i l f a c i l i t i e s . The l a n d r e s i d u a l approach to a n a l y s i s of redevelop-ment p r o p o s a l s , d e s p i t e the scope, d i v e r s i t y , and u n c e r t a i n t y c h a r a c t e r i s t i c of p r o j e c t s i n v o l v i n g redevelopment and r e h a b i l i t a t i o n over an extended p e r i o d of time, i s shown to have value i n the assessment of m u n i c i p a l p o l i c i e s . F u r t h e r -more, these market and investment o r i e n t e d methods of a n a l y s i s can be i n t e g r a t e d i n t o the more comprehensive e v a l u a t i o n methodology necessary f o r government d e c i s i o n making. The c o n c l u s i o n from the a n a l y s i s i s t h a t w h i l e planned shopping c e n t r e s have not made s t r i p commercial i v areas obsolete, they have necessitated adjustment to a more limited role. In general, that role i s best achieved by revitalization of the existing structure, rather than redevelopment. v TABLE OF CONTENTS Chapter Page I. INTRODUCTION 1 I I . THE VIABILITY OF STRIP COMMERCIAL DEVELOPMENT... 8 I n t r o d u c t i o n 8 T h e o r e t i c a l Concepts f o r the Study o f R e t a i l i n g 9 Growth of North American Commercial S t r u c t u r e I"7 F a c t o r s I n f l u e n c i n g the F u n c t i o n o f Shopping Centres 2 4 Prospects f o r the Continued V i a b i l i t y o f S t r i p Commercial Areas 35. Summary and Co n c l u s i o n 38 Footnotes 39 III. CASE STUDY LAND USE ANALYSIS: HASTINGS STREET, BURNABY 41 I n t r o d u c t i o n 41 P h y s i c a l S e t t i n g 4 3 C l a s s i f i c a t i o n of R e t a i l and S e r v i c e F a c i l i t i e s 45 S i z e and Ownership of Commercial O u t l e t s 51 A n a l y s i s o f F u n c t i o n a l Linkages Between Land Uses i n the Hastings S t r e e t Study Area'' 53 Summary and Co n c l u s i o n 66 Footnotes 6 8 IV. CASE STUDY TRADE AREA ANALYSIS: HASTINGS STREET, BURNABY 69 I n t r o d u c t i o n 69 Methods of Trade Area A n a l y s i s 72 -Case Study 78 Summary and Co n c l u s i o n 97 Footnotes - 99 v i Chapter Page V ECONOMIC FEASIBILITY ANALYSIS 101 Introduction 101 Real Estate F e a s i b i l i t y Analysis 102 The Hastings Street Community Plan 111 F e a s i b i l i t y Analysis of Community Plan Proposals 121 The R e v i t a l i z a t i o n of Retai l D i s t r i c t s : An Alternative to Redevelopment 125 Summary and Conclusion 147 Footnotes 150 VI. EVALUATION OF ALTERNATIVES: REDEVELOPMENT OF REVITALIZATION 152 Introduction 152 Evaluation Methodology 1 5 5 Application of the Planning Balance Sheet 159 Summary and Conclusion 174 Footnotes 17 8 VII. CONCLUSIONS 179 Introduction 179 Summary 179 Implications for Planning Practice 186 Crit i c i s m s of the Methodology and Areas for Future Research 188 APPENDIX 190 BIBLIOGRAPHY 192 v i i LIST OF TABLES Table Page I. C l a s s i f i c a t i o n of Business Types 47 I I . Commercial F l o o r Space i n North Burnaby 50 I I I . S i z e of Firm and Form of O r g a n i z a t i o n i n North Burnaby 52 IV. D i s t r i b u t i o n of Business Types by Percentage of T o t a l Frontage: Hastings S t r e e t Study Area 5 6 V. Comparison of Hastings S t r e e t Core-Frame Area with Brentwood M a l l by C l a s s of F l o o r Space.. 63 VI. P o p u l a t i o n and R e t a i l Consumption E s t i m a t e s : Hastings S t r e e t Trade .-.Area 8 3 V I I . Comparison between Family Expenditure and C l a s s e s of R e t a i l Sales 85 V I I I . Estimated R e t a i l S a l es by C l a s s of F l o o r Space: Hastings S t r e e t Core-Frame Area 86 IX P r o j e c t e d Incremental Commercial Expansion by C l a s s of F l o o r Space to 1986: Hastings S t r e e t Core-Frame Area 9 3 X Summary of Costs and B e n e f i t s : Hastings S t r e e t . . 173 XI P l a n n i n g Balance Sheet: Hastings S t r e e t 176 v i i i LIST OF FIGURES Fi g u r e P a g e 1. The S t r u c t u r e of Business and Commerce 15 2. T y p i c a l P o i s s o n D i s t r i b u t i o n s 21 3. G e n e r a l i z e d Land Use 4 4 4. Land Use D i s t r i b u t i o n : Hastings S t r e e t •* 57 5. D i s t r i b u t i o n of R e t a i l Group: Hastings S t r e e t ' 59 6. F u n c t i o n a l A s s o c i a t i o n : Hastings S t r e e t - 61 7. 1976 Census T r a c t s .• 81 8. Zoning: Hastings S t r e e t ~ 113 9. O f f i c i a l Land Use P l a n : Community P l a n Three. 115 10. Proposed Development: Community P l a n Three I 1 6 11. Pro Forma A n a l y s i s : High Density R e s i d e n t i a l Condominium Development 122 12. B u i l d i n g Q u a l i t y : Community Plan Three 1 2 4 13. Proposed Land Use P l a n : R e v i t a l i z a t i o n 130 14. Schematic Concept: R e v i t a l i z a t i o n 15. Pro Forma A n a l y s i s : Two Storey Commercial-O f f i c e Development I 4 3 16. Pro Forma A n a l y s i s : Medium Densi t y R e s i d e n t i a l Condominium Development i x ACKNOWLEDGEMENTS The f o l l o w i n g people deserve s p e c i a l mention f o r t h e i r p a r t i n the p r e p a r a t i o n o f t h i s study: Dr. Henry H. Hightower o f the School o f Community and Regional P l a n n i n g , f o r h i s support and c o n s t r u c t i v e c r i t i c i s m ; the Burnaby P l a n n i n g Department f o r a l l o w i n g t h e i r data to be used i n the a n a l y s i s ; my w i f e , S y l v i a , f o r her continued encouragement and ... and a s s i s t a n c e i n the completion o f t h i s study; and l a s t but not l e a s t , my son, Matthew, who was born i n the middle o f t h i s p r o j e c t and p r o v i d e d h i s f u l l c o - o p e r a t i o n by l e a r n i n g t o s l e e p through the n i g h t by the be g i n n i n g of March. x 1 CHAPTER I INTRODUCTION S t r i p commercial development along major t r a f f i c a r t e r i a l s c o n s t i t u t e s the l a r g e s t component of r e t a i l development i n North American c i t i e s . Much of t h i s i s l o c a t e d i n neighbourhood business d i s t r i c t s s e r v i n g the needs of l o c a l r e s i d e n t s . Yet i n c r e a s i n g l y shoppers are t u r n i n g t h e i r backs on these areas i n favour of more modern f a c i l i t i e s l o c a t e d i n planned shopping c e n t r e s . A major i s s u e f o r urban p l a n n i n g i s whether s t r i p commercial development i s s t i l l a v i a b l e form o f r e t a i l i n g , o r whether i t should be r e p l a c e d by more modern forms o f development. The main problem i s t h a t major r e t a i l e r s no l o n g e r see s t r i p commercial areas as the p l a c e to be. T h i s has reduced the l e v e l of investment i n these areas. E x i s t i n g b u s i n e s s e s have g e n e r a l l y been unable or u n w i l l i n g to i n v e s t s u f f i c i e n t c a p i t a l t o remain c o m p e t i t i v e . The r e s u l t has been n o t i c e a b l e p h y s i c a l d e t e r i o r a t i o n , a d e c l i n i n g share of t o t a l r e t a i l s a l e s , and i n many cases, a d e c l i n e i n the l e v e l of q u a l i t y o f goods and s e r v i c e s o f f e r e d . There has been growing p r e s s u r e from a f f e c t e d 2 merchants, and surrounding residents for whom the " s t r i p " i s often the focus of neighbourhood a c t i v i t y , for public intervention to reverse these trends. Since the physical aspects of decline are the most noticeable, they are often perceived as the cause of the problem. Yet they are generally only symptoms of deeper economic problems which must be addressed i f an e f f e c t i v e long term solution i s to be found. Planners need a working knowledge of the economic forces a f f e c t i n g the r e t a i l industry i n order to understand the nature of the problem and to develop r e a l i s t i c strategies of public intervention. It i s the purpose of t h i s thesis to outline a methodology for analyzing r e t a i l s t r i p s which can be applied by a small planning team working i n the public sector on a l i m i t e d budget. Understanding the problem requires an assessment of the operation of the e x i s t i n g r e t a i l f a c i l i t i e s . R e t a i l i n g i s an industry which lends i t s e l f well to analysis. I t i s dependent on readily studied socio-economic forces such as population and income character-i s t i c s , consumption patterns, and acquired shopping habits which make i t s performance on a market or area wide basis highly predictable. There i s a need to account for the l e v e l of competition at the l o c a l l e v e l , but t h i s i s not an insurmountable problem. Techniques w i l l be presented 3 i n t h i s t h e s i s f o r a n a l y z i n g the f u n c t i o n of s t r i p commercial areas i n r e l a t i o n t o other c o m p e t i t i v e c e n t r e s , c l a s s i f y i n g areas of s t r i p commercial development i n accordance w i t h i t s dominant f u n c t i o n a l c h a r a c t e r , and e s t i m a t i n g r e t a i l s a l e s by c l a s s o f r e t a i l space. T h i s i n f o r m a t i o n i s necessary f o r a s s e s s i n g the c o m p e t i t i v e p o t e n t i a l of r e t a i l f a c i l i t i e s r e l a t i v e to other b u s i n e s s o p p o r t u n i t i e s , e v a l u a t i n g the need f o r e x i s t i n g r e t a i l space, and i d e n t i f y i n g new business o p p o r t u n i t i e s . Planners have developed two b a s i c s o l u t i o n s f o r responding t o the d e c l i n e of s t r i p commercial areas. E i t h e r the e x i s t i n g development i s r e p l a c e d w i t h a new form of development more s u i t e d to the p r e s e n t economic s i t u a t i o n , or a means i s found which r e s u l t s i n e x i s t i n g f a c i l i t i e s b e i n g more com p e t i t i v e w i t h other forms of r e t a i l development. The most a p p r o p r i a t e response i s determined by the nature of the market and the r e s p e c t i v e c o s t s of implementation. Redevelopment has u n t i l r e c e n t l y been the most commonly accepted approach. For redevelopment to occur spontaneously, there must be s u f f i c i e n t economic i n c e n t i v e to landowners to j u s t i f y the replacement of o b s o l e t e f a c i l i t i e s . T h i s i s normally p r o v i d e d by d e n s i t y i n c e n t i v e s i n z o i n g r e g u l a t i o n s . Redevelopment of s t r i p commercial areas i s o f t e n . h i n d e r e d by the fragmented l a n d 4 ownership pattern. This slows the redevelopment process and adds to the cost. The introduction of federal sponsored urban renewal programs in the United States and Canada during the 1960s allowed many municipalities .to speed up the process under legislation allowing compulsory property acquisition and i n i t i a t i n g redevelopment in a comprehensive fashion. While some of the worst problem areas were eliminated, this approach was not altogether favourable as i t often resulted in the disruption of established communi-ties and personal hardship for parties displaced by redevelopment. More recently planners have developed a less disruptive approach termed revitalization. Generally these programs have focused on issues of urban design, environment, general attractiveness, and the functional relationship between the businesses in an existing commercial area as a means to make them more competitive. The response to this approach from the public has generally been favourable as i t results in immediate improvements to the condition of declining commercial areas without the degree of disruption associated with redevelopment. Improvement in the economic condition i s less certain, however. Some centres benefit from revitalization while others do not. Planners need to assess the economic consequences of these policies in order to determine whether they are 5 f e a s i b l e o f implementation. In theory, a thorough c o s t -b e n e f i t a n a l y s i s should be ab l e to p r o v i d e these answers, but i n most cases c o s t s and b e n e f i t s cannot be s p e c i f i e d w i t h s u f f i c i e n t accuracy. P a r t i a l methods of a n a l y s i s are normally the b e s t i n d i c a t o r s a v a i l a b l e . Methods developed i n the f i e l d s o f r e a l e s t a t e investment a n a l y s i s and e v a l u a t i o n r e s e a r c h t o judge the f e a s i b i l i t y o f development pro p o s a l s w i l l be i l l u s t r a t e d i n t h i s t h e s i s . R e l a t e d to the q u e s t i o n of economic f e a s i b i l i t y i s the i n c i d e n c e of s o c i a l c o s t s and b e n e f i t s r e s u l t i n g from a development p o l i c y . These i n c l u d e both monetary and non-monetary f a c t o r s and are much more d i f f i c u l t t o q u a n t i f y than f a c t o r s a f f e c t i n g economic f e a s i b i l i t y . Yet t h e i r i n c i d e n c e i s c r u c i a l to the q u e s t i o n o f d i r e c t p u b l i c i n t e r v e n t i o n . S i g n i f i c a n t s o c i a l b e n e f i t s may j u s t i f y the s e l e c t i o n o f a p o l i c y w i t h lower d i r e c t economic b e n e f i t s , or the s u b s i d i z a t i o n of an uneconomic p r o p o s a l . E v a l u a t i o n r e s e a r c h p r o v i d e s a means f o r d e c i s i o n makers t o c o n s i d e r a l l c o s t s and b e n e f i t s w i t h i n a c o n s i s t e n t framework. T h i s t h e s i s w i l l a l s o c o n t a i n an example o f L i t c h f i e l d ' s P l a n n i n g Balance Sheet, one of the more advanced techniques o f e v a l u a t i o n a v a i l a b l e . These techniques are presented by means of a l i t e r a t u r e review and a case study. The l i t e r a t u r e review i s c o n tained i n Chapter I I . I t d i s c u s s e s the e v o l u t i o n o f 6 s t r i p commercial areas and t h e i r p r e s e n t f u n c t i o n r e l a t i v e t o t h e i r main competitor, the planned shopping c e n t r e . A major purpose o f t h i s chapter i s t o determine whether the planned shopping c e n t r e has made s t r i p commercial areas o b s o l e t e . Chapters I I I t o VI focus on the case study, an o l d e r s t r i p commercial area l o c a t e d on Hastings S t r e e t i n Burnaby, B r i t i s h Columbia. I t i s g e n e r a l l y c o n s i d e r e d t o be i n a s t a t e o f d e c l i n e due to the poor p h y s i c a l c o n d i t i o n of b u i l d i n g s i n the area. The prese n t Community Plan f o r the area proposes t h e i r replacement w i t h h i g h d e n s i t y r e s i d e n t i a l and commercial development. R e t a i l f a c i l i t i e s i n the area face s t r o n g c o m p e t i t i o n from the Brentwood M a l l , a nearby planned shopping c e n t r e . Chapter I I I begins w i t h an e v a l u a t i o n o f the co m p e t i t i v e p o s i t i o n of Hastings S t r e e t r e l a t i v e t o ot h e r r e t a i l c e n t r e s by means of a comparative land use survey. L a t e r , a more d e t a i l e d land use survey i s used t o show the f u n c t i o n a l r e l a t i o n s h i p between r e t a i l o u t l e t s i n the study area t o enable comparision w i t h the Brentwood M a l l . Chapter IV c o n s i s t s of a market share a n a l y s i s by l i n e of r e t a i l t r a d e f o r r e s i d e n t i a l d i s t r i c t s surrounding the study area. The purpose o f these f i r s t two chapters i s to show how the f u n c t i o n of r e t a i l d i s t r i c t s can be 7 analyzed f o r p u b l i c s e c t o r l a n d use p l a n n i n g , u s i n g r e a d i l y a v a i l a b l e p u b l i c i n f o r m a t i o n . Chapters V and VI c o n s i s t o f an e v a l u a t i o n o f two a l t e r n a t e development p o l i c i e s f o r the study area. The f i r s t i s the Community Plan proposed f o r the area by the Burnaby Planning Department. The second i s a r e v i t a l i z a t i o n p l a n developed by the author i n the course of the a n a l y s i s . Chapter V c o n s i s t s o f a d e s c r i p t i o n of the two pl a n s and an a n a l y s i s o f t h e i r economic f e a s i b i l i t y . A land r e s i d u a l a n a l y s i s i s used t o determine the f e a s i b i l i t y o f the v a r i o u s p r o p o s a l s . B e n e f i t s a n t i c i p a t e d from the r e v i t a l i z a t i o n p l a n are i n f e r r e d from the market a n a l y s i s o f the p r e v i o u s chapter through the use of c o s t e f f e c t i v e n e s s a n a l y s i s . Chapter VI c o n t a i n s an e x p l a n a t i o n and i l l u s t r a t i o n o f L i t c h f i e l d ' s P l a n n i n g Balance Sheet. The purpose of t h i s chapter i s t o show t h a t a l t e r n a t e p o l i c i e s on commercial redevelopment can have s i g n i f i c a n t l y d i f f e r e n t i m p l i c a t i o n s f o r a f f e c t e d i n t e r e s t groups. The f i n a l chapter i s a summary of c o n c l u s i o n s r e g a r d i n g the Hastings S t r e e t area i n p a r t i c u l a r and the e f f e c t i v e n e s s o f the techniques used i n the study. R e v i t a l i z a t i o n i s recommended as the bes t development p l a n f o r the area due t o the lower i n c i d e n c e o f s o c i a l c o s t s and the g r e a t e r immediacy o f b e n e f i t s . The p r i n c i p a l value of the t h e s i s i s t h a t i t p r o v i d e s a c o n c i s e e x p l a n a t i o n o f methods of a n a l y s i s a p p l i c a b l e t o the study o f s t r i p commercial areas. 8 CHAPTER I I THE VIABILITY OF STRIP COMMERCIAL DEVELOPMENT Introduction'; The purpose o f t h i s chapter i s to d i s c u s s the development of s t r i p commercial r e t a i l i n g , i t s nature, and r e l a t i o n s h i p to o t h e r forms of r e t a i l development. E f f e c t i v e p l a n n i n g f o r s t r i p commercial development r e q u i r e s a thorough understanding of i t s s t r e n g t h s and weaknesses i n r e l a t i o n to other forms of r e t a i l i n g . The p o i n t s which I i n t e n d t o address are as f o l l o w s : i . the t h e o r e t i c a l b a s i s f o r the study of r e t a i l i n g i i . the e v o l u t i o n of s t r i p commercial development and i t s r e l a t i o n s h i p t o other s e c t o r s o f the r e t a i l economy i i i . the major f a c t o r s u n d e r l y i n g changes t h a t have o c c u r r e d i n the f u n c t i o n of commercial areas i v . the f u n c t i o n of the main component of s t r i p commercial development i n r e l a t i o n t o i t s main competitor, the planned shopping centr e v. the prospects f o r f u t u r e v i a b i l i t y o f s t r i p commercial developments. 9 Arguments i n support of commercial s t r i p development w i l l be developed i n subsequent s e c t i o n s oft.the paper on the b a s i s o f these p o i n t s . T h e o r e t i c a l Concepts f o r the Study of R e t a i l i n g R e l a t i o n s h i p to P o p u l a t i o n and Income Growth Before l o o k i n g a t any s p e c i f i c p a r t of the r e t a i l s e c t o r , i t i s h e l p f u l t o understand the b a s i s f o r the o v e r a l l s e c t o r . U l t i m a t e l y , the growth o f the r e t a i l s e c t o r i s l i n k e d d i r e c t l y t o the growth of the p o p u l a t i o n and per c a p i t a income of a community. Any v a r i a t i o n i n these f a c t o r s w i l l have major i m p l i c a t i o n s on the v i a -b i l i t y o f the r e t a i l s e c t o r . In one of the most compre-hensive s t u d i e s o f r e t a i l s t r u c t u r e ever completed, B r i a n Berry c a l c u l a t e d t h a t between 84% and 89% of the v a r i a t i o n i n the number of r e t a i l f i r m s o p e r a t i n g i n Chicago between 1948 and 19 58 was due to v a r i o u s aspects of p o p u l a t i o n growth and decline."'" In a s i m i l a r study of Metro Toronto, James Simmons concluded t h a t 83% of the change i n the number of r e t a i l u n i t s was due to s i m i l a r 2 . . . f a c t o r s . Reaction of the r e t a i l s e c t o r i n both communities t o changes i n e i t h e r p o p u l a t i o n or income was both r a p i d and d i r e c t . T h i s c l o s e r e l a t i o n s h i p between r e t a i l s t r e n g t h and p o p u l a t i o n growth p r o v i d e s a b a s i s f o r d i s -^ c u s s i o n of separate s e c t o r s of the r e t a i l economy. 10 O peration of the I n d i v i d u a l R e t a i l Firm An understanding of the o p e r a t i o n of the i n d i v i d u a l f i r m i s a l s o u s e f u l i n a study of the r e t a i l economy. A key premise i s t h a t i n d i v i d u a l f i r m s attempt to maximize p r o f i t s . T h i s p r o v i d e s a c o n s i s t e n t b a s i s f o r o p e r a t i o n . I t r e q u i r e s t h a t marginal c o s t equals marginal revenue. In a c o n d i t i o n of p e r f e c t c o m p e t i t i o n t h i s requirement r e s u l t s i n an optimum s c a l e o f p r o d u c t i o n a t the p o i n t of minimum average c o s t . However, as i s g e n e r a l l y known, r e t a i l i n g i s not a p e r f e c t l y c o m p e t i t i v e i n d u s t r y . In order to maximize h i s p r o f i t s a r e t a i l e r may vary the s c a l e of h i s o p e r a t i o n s , change h i s p r o d u c t i o n f u n c t i o n , or vary h i s product. The l a t t e r f a c t o r would i n c l u d e the width of h i s product l i n e , the product mix, and the type and 3 amount of e x t r a s e r v i c e . L o c a t i o n i s c o n s i d e r e d to be p a r t of the p r o d u c t i o n f u n c t i o n . A r e t a i l e r who f e e l s t h a t h i s o v e r a l l p r o f i t p i c t u r e w i l l be improved by a b e t t e r l o c a t i o n w i l l b i d f o r such a l o c a t i o n a g a i n s t competing uses. The body of knowledge which b e s t e x p l a i n s t h a t b i d d i n g process i s c e n t r a l p l a c e theory. C e n t r a l P l a c e Theory C e n t r a l p l a c e theory was o r i g i n a l l y developed to account f o r the s i z e , number, and d i s t r i b u t i o n o f towns p r o v i d i n g r e t a i l goods to surrounding r u r a l areas. To 11 make i t a p p l i c a b l e to i n t r a - u r b a n l o c a t i o n problems, Berry and G a r r i s o n r e s t a t e d c e n t r a l p l a c e theory u s i n g 4 the f o l l o w i n g concepts: i ) t h r e s h o l d (an economic c o n c e p t ) — t h e minimum amount of p u r c h a s i n g power to support the supply of a c e n t r a l good from a c e n t r a l p l a c e i i ) the range of a good (a s p a t i a l concept) --and market area of a c e n t r a l p l a c e f o r a c e n t r a l good. I t s lower l i m i t e n c l o s e s the t h r e s h o l d purchasing power, while i t s upper l i m i t i s the d i s t a n c e beyond which the good cannot be s o l d , because the demand f o r i t i s zero (the i d e a l l i m i t ) or a competing centre i s more convenient (the r e a l l i m i t ) . These concepts were used to e x p l a i n the e x i s t e n c e of a h i e r a r c h y of c e n t r e s based on a continuum o f t h r e s h o l d requirements f o r v a r i o u s goods. While i n theory b u s i n e s s e s should tend to arrange themselves randomly throughout the c i t y i n accordance w i t h the range of the r e s p e c t i v e goods s o l d , i n p r a c t i c e the i r r e g u l a r i t i e s of the t r a n s p o r t a t i o n system tend to make some l o c a t i o n s more a c c e s s i b l e than o t h e r s , and there are t r a n s f e r e f f e c t s t o be gained by c l u s t e r i n g t ogether with o t h e r b u s i n e s s e s to take advantage of the multi-purpose shopping t r i p . Consequently, b u s i n e s s e s tend to arrange themselves i n c l u s t e r s t o serve a market 12 area more or l e s s d e f i n e d by the average range of goods s o l d . There are a number of ways by which c e n t r a l p l a c e s can be i d e n t i f i e d . The s i m p l e s t approach i s to count the number of f u n c t i o n s w i t h i n b u s i n e s s areas and a r b i t r a r i l y d e r i v e a h e i r a r c h y o f centres based on the expected range of goods s o l d . Berry suggests two more accurate methods 5 i n h i s study Commercial S t r u c t u r e and Commercial B l i g h t . The f i r s t approach i s to look a t the l a n d value g r a d i e n t f o r a c i t y and d e r i v e a h i e r a r c h y from the peaks t h a t occur. T h i s p r o v i d e s a reasonably accurate r e p r e s e n t a t i o n s i n c e i t has been w e l l e s t a b l i s h e d t h a t .commercial l a n d value i s a f u n c t i o n of a c c e s s i b i l i t y to r e s i d e n t s , a c c e s s i b i l i t y t o moving t r a f f i c , s i t e economics, and the r e p u t a t i o n of an 6 area. The most accurate method i s t o d e r i v e the h i e r a r c h y from the d i s t r i b u t i o n of shopping t r i p s made by consumers. Th i s i n f o r m a t i o n can be o b t a i n e d from the O r i g i n - D e s t i n a t i o n surveys, t h a t are a r o u t i n e p a r t of t r a n s p o r t a t i o n s t u d i e s . Using one of these methods, i t i s p o s s i b l e t o d e r i v e a h i e r a r c h y o f business areas f o r a given c i t y which w i l l i n c l u d e both unplanned and planned shopping c e n t r e s . Unplanned shopping c e n t r e s are c o n c e n t r a t i o n s o f i n d i v i d u a l r e t a i l f i r m s , o c c u r r i n g a t r e g u l a r i n t e r v a l s along major urban a r t e r i a l s . They are t y p i c a l l y l o c a t e d a t the -13 i n t e r s e c t i o n s o f major t r a n s p o r t a t i o n routes and are g e n e r a l l y p a r t o f a much l a r g e r r e t a i l s t r i p . B erry has shown i n h i s Ph.D. d i s s e r t a t i o n t h a t these c e n t r e s e x h i b i t r e g u l a r l y o c c u r r i n g p a t t e r n s o f l a n d use due to the b e n e f i t s d e r i v e d from the exchange of customers as a r e s u l t 7 of the multi-purpose shopping t r i p . Commercial uses b i d up the p r i c e o f the most a c c e s s i b l e l o c a t i o n s i n these areas and arrange themselves i n a f a s h i o n which maximizes the value o f the l o c a t i o n a l advantage a v a i l a b l e . The planned shopping centr e i s a l s o a c o l l e c t i o n o f i n d i v i d u a l f i r m s . However, i t i s conceived and managed as a u n i t t o maximize the r e t u r n f o r a s i n g l e owner r a t h e r than the r e t u r n o f a l a r g e number of i n d i v i d u a l f i r m s . T h i s r e s u l t s i n a number o f fundamental d i f f e r e n c e s i n s t r u c t u r e as compared t o the unplanned shopping c e n t r e . The management i s able t o c o - o r d i n a t e the a c t i v i t i e s o f centre merchants and p r o v i d e a number of non-price s e r v i c e s and amenities which customers d e s i r e as p a r t o f the shopping e x p e r i e n c e . Unplanned ce n t r e s are most common i n the i n n e r c i t y areas which developed p r i o r t o the advent of planned shopping c e n t r e s . High l a n d p r i c e s have p r o v i d e d some p r o t e c t i o n f o r these c e n t r e s from the development of more modern forms of r e t a i l development. In the more r e c e n t l y developed suburban areas, the planned shopping c e n t r e has become the dominant form of r e t a i l development. 14 Unplanned and planned shopping c e n t r e s are only a p o r t i o n o f the t o t a l range of commercial development. A co n c i s e statement o f the v a r i o u s forms of r e t a i l development and r e l a t i o n s h i p t o one another i s p r o v i d e d by Berry's typology o f the S t r u c t u r e o f Business and Commerce shown i n g F i g u r e No. 1. Berry i d e n t i f i e s t h r e e b a s i c p h y s i c a l forms o f commercial d e v e l o p m e n t — c e n t r e s , r i b b o n s , and s p e c i a l i z e d areas. Each o f these forms may i n t u r n be s u b - c l a s s i f i e d by f u n c t i o n . The major f u n c t i o n s are as f o l l o w s : i ) a h i e r a r c h y of business c e n t r e s — A s . ' -• mentioned p r e v i o u s l y , these c o n s i s t of c l u s t e r s of businesses t h a t b e n e f i t from customer interchange. The number and s i z e of bu s i n e s s e s i n the c l u s t e r depends on the ext e n t o f the market area. The s m a l l e r c e n t r e s o f the h i e r a r c h y i n o l d e r urban areas are o f t e n s e c t i o n s of r i b b o n commercial s t r e e t s . Newer c e n t r e s are g e n e r a l l y i n the form o f a planned shopping p l a z a . i i ) urban a r t e r i a l and new suburban s t r i p developments— These areas are a l s o l o c a t e d along s t r i p commercial s t r e e t s but tend t o a t t r a c t uses t h a t do not r e q u i r e the k i n d of customer i n t e r c h a n g e -t h a t c h a r a c t e r i z e s the h i e r a r c h a l c e n t r e s . They FIGURE NO. 1 THE STRUCTURE OF BUSINESS AND COMMERCE C E N T E R S I P l a n n e d o r U n p l a n n e d C O N V . N E I G H B ' D COMMUNITY R E G I O N A L M E T R O P O L I T A N C . B . D . f R I B B O N S T R A D I T I O N A L SHOPPING S T R E E T URBAN A R T E R I A L NEW SUBURBAN R I B B O N I HIGHWAY O R I E N T E D P l a n n e d ( P l a z a ) U n p l a n n e d S P E C I A L I Z E D A R E A S I AUTOMOBILE ROWS P R I N T I N G D I S T R I C T S E N T E R T A I N M E N T D I S T R I C T S E X O T I C MARKETS F U R N I T U R E D I S T R I C T S M E D I C A L C E N T E R S P l a n n e d U n p l a n n e d Source: B.J.L. Berry Commercial Structure  and Commercial Blight 16 b e n e f i t from the exposure and ease of access gained from the l o c a t i o n . Examples of t h i s type of business are automobile s a l e s and s e r v i c e , f u r n i t u r e s t o r e s , and r a d i o - t e l e v i s i o n s a l e s . A v a r i a n t on t h i s b a s i c form i s the new suburban s t r i p which f e a t u r e s a wider range of s e r v i c e f u n c t i o n s such as f a s t food r e s t a u r a n t s , dry c l e a n e r s , p r i n t shops, e t c . , commonly found i n unplanned shopping c e n t r e s i n the i n n e r c i t y but unable t o l o c a t e i n planned shopping c e n t r e s . i i i ) s p e c i a l i z e d f u n c t i o n a r e a s — T h e s e are areas c h a r a c t e r i z e d by c l o s e i n t e r r e l a t i o n s h i p s between a number of d i f f e r e n t b u s i n e s s e s w i t h a high degree of customer interchange. .. U n l i k e c e n t r e s o f the f i r s t type, these c e n t r e s d e a l i n only one aspect o f r e t a i l i n g and serve the whole urban market. Examples of t h i s type are the "auto-mobile row" and the " f u r n i t u r e row" found i n l a r g e r c i t i e s . iv)highway o r i e n t e d a r e a s — T h e s e p r o v i d e s e r v i c e s t o the motoring p u b l i c such as g a s o l i n e , auto r e p a i r , and o v e r - n i g h t accomodation. They can be i n e i t h e r a planned or unplanned c o n f i g u r a t i o n . There i s a g r e a t d e a l o f o v e r l a p i n the types o f businesses found i n each c l a s s i f i c a t i o n . I t should be 17 emphasized t h a t c e n t r a l p l a c e theory does not adequately account f o r the urban a r t e r i a l highway o r i e n t e d and s p e c i a l i z e d area f u n c t i o n s . D e s p i t e t h i s l i m i t a t i o n , i t i s s t i l l a u s e f u l way of c h a r a c t e r i z i n g urban, r e t a i l s t r u c t u r e . Growth of North American Commercial S t r u c t u r e H i s t o r i c a l Background To understand the s t r u c t u r e of r e t a i l development, i t i s u s e f u l t o know something about i t s e v o l u t i o n . Simmons i d e n t i f i e s t hree stages i n the growth of r e t a i l i n g 9 i n North America. U n t i l the e a r l y 1900s, most r e t a i l development was concentrated i n the c e n t r a l b usiness d i s t r i c t s w ith only s c a t t e r e d lower o r d e r uses such as food s t o r e s i n the o u t l y i n g areas. A f t e r 1910 more s u b s t a n t i a l b u s i n e s s e s began to develop i n the o u t l y i n g areas a t the i n t e r s e c t i o n s of major t r a f f i c routes and spread out from t h e r e . These became unplanned shopping c e n t r e s and r i b b o n commercial developments. Expansion of t h i s form of development continued u n t i l the d e p r e s s i o n and World War I I f o r c e d i t s c u r t a i l m e n t . The post-war p e r i o d brought e x t e n s i v e p o p u l a t i o n growth and r a p i d expansion of r e t a i l f a c i l i t i e s , but t h i s time they were l a r g e l y i n the form o f planned shopping c e n t r e s . Each new form of development was l a r g e l y superimposed on the p r e v i o u s one. As each new 18 development o c c u r r e d , i t produced changes i n the form and f u n c t i o n o f p r e v i o u s commercial developments. Dynamic F a c t o r s A f f e c t i n g Commercial S t r u c t u r e The f a c t o r s which r e s u l t e d i n changes i n the form of commercial development are o u t l i n e d i n a paper by Vance. He a t t r i b u t e s the bulk of the changes t o improvements i n t r a n s p o r t a t i o n . Most l a r g e c i t i e s came i n t o e x i s t e n c e d u r i n g a time of mass t r a n s p o r t , and the e a r l y o f f i c e and commercial development a t the centre were the c r e a t i o n o f these f i x e d l i n e s o f movement. Improvements i n t r a n s p o r t l e a d to the spreading out of commercial development, f i r s t along s t r e e t c a r l i n e s , and then along major a r t e r i a l s as the automobile became more p r e v a l e n t . Increased c o n g e s t i o n on these a r t e r i a l s and a need f o r i n c r e a s e d p a r k i n g r e s u l t e d i n the development of the planned shopping c e n t r e . A second dynamic f a c t o r has been changes i n purchasing power and t a s t e s . Per c a p i t a earnings a f t e r i n f l a t i o n have advanced tremendously i n both Canada and the U n i t e d S t a t e s s i n c e the begi n n i n g of the century. Tastes have a l s o changed due to the mass p r o d u c t i o n o f consumer goods and the prevalence of a d v e r t i s i n g . A t h i r d major f a c t o r was the development of new forms o f housing. The development of low d e n s i t y suburbs d i l u t e d the s t r e n g t h o f the l o c a l market and made s t o r e s w i t h i n walking d i s t a n c e i m p r a c t i c a l . T h i s f o r c e d customers t o 19 d r i v e t o r e t a i l o u t l e t s . Since a c a r was now e s s e n t i a l f o r shopping, i t became r e l a t i v e l y easy f o r r e t a i l e r s t o expand t h e i r market p e n e t r a t i o n even f u r t h e r by o f f e r i n g a wider s e l e c t i o n of goods and other i n c e n t i v e s . T h i s t o p i c willi>be. d i s c u s s e d i n g r e a t e r d e t a i l l a t e r i n t h i s paper. Related to the t h i r d f a c t o r was the adoption of commercial zoning r e s t r i c t i o n s . T h e i r e f f e c t was to r e g u l a r i z e the urban l a n d use p a t t e r n and make l o c a t i o n a l i n n o v a t i o n d i f f i c u l t f o r r e t a i l e r s . Zoning has been used to p r o t e c t r e s i d e n t i a l development from the u n d e s i r a b l e e f f e c t s o f commercial development such as i n c r e a s e d t r a f f i c . G e n e r a l l y , t h i s has r e s u l t e d i n the development of l a r g e r , . more co n c e n t r a t e d r e t a i l u n i t s i n a l i m i t e d number of c e n t r a l l o c a t i o n s . I t has a l s o tended t o p r o t e c t e s t a b l i s h e d r e t a i l areas from new c o m p e t i t i o n . A f i n a l important f a c t o r has been changing r e t a i l p r a c t i c e s which have produced s i g n i f i c a n t b e n e f i t s f o r both the consumer and the r e t a i l e r . One of the most important changes i s the i n c r e a s e i n s t o r e s i z e . The consumer b e n e f i t s due to the wider s e l e c t i o n o f goods o f f e r e d and i s w i l l i n g t o t r a v e l l o n g e r d i s t a n c e s t o shop. The r e t a i l e r b e n e f i t s from the l a r g e r p o t e n t i a l market a v a i l a b l e and the economies of s c a l e p o s s i b l e from a l a r g e r o p e r a t i o n . A d v e r t i s i n g can be more e f f e c t i v e as the impact of l o s s l e a d e r a d v e r t i s i n g i s spread over a wider range of p r o d u c t s . ^ 20 D i s t r i b u t i o n o f merchandise can be more e f f i c i e n t s i n c e proportionately, less i n v e n t o r y i s r e q u i r e d t o meet peaks i n demand. The p r o b a b i l i t y of such peaks o c c u r r i n g i s reduced as the s i z e of the t o t a l market i n c r e a s e s . Curry shows t h i s r e l a t i o n s h i p by means of the Po i s s o n d i s t r i b u t i o n i n 12 Fi g u r e No. 2. T h i s shows the r e l a t i o n s h i p between the mean number of purchases i n a r e t a i l s t o r e per week and the p r o b a b i l i t y of e x p e r i e n c i n g h i g h peaks i n demand. I f a f i r m faces a very low mean r a t e o f demand f o r a product, the p r o b a b i l i t y t h a t i t w i l l o c c a s i o n a l l y face very high peak r a t e s i n demand i n c r e a s e s . The f i r m w i l l have the o p t i o n o f c a r r y i n g very h i g h i n v e n t o r i e s t o meet these demand peaks o r t u r n i n g customers away. The l a t t e r p o l i c y may not onl y i n v o l v e the l o s s o f p o t e n t i a l revenue but a l s o the l o s s o f a f u t u r e customer. I f on the other hand a f i r m faces r e l a t i v e l y f requent average demand f o r a product, peaks w i l l average out the r e t a i l e r need not c a r r y as h i g h a p r o p o r t i o n o f i n v e n t o r y s t o c k . Holdren p r o v i d e s evidence i n a study o f supermarkets t h a t a lower i n v e n t o r y t o s a l e s 13 r a t i o r e s u l t s i n lower c o s t s . Another important i n n o v a t i o n f o r both the consumer and the r e t a i l e r has been the i n t r o d u c t i o n of labour s a v i n g p r a c t i c e s such as s e l f - s e r v e shopping. The consumer b e n e f i t s through lower p r i c e s and improved convenience s i n c e w a i t i n g time i s g e n e r a l l y reduced. The o p p o r t u n i t y f o r p e r s o n a l i z e d 21 1.0 FIGURE NO. 2 T Y P I C A L POISSON DISTRIBUTIONS e.g. for any given mean purchase per week (encircled figures) expected purchases at different probability levels. T 1 r 5 10 15 20 NUMBER OF PURCHASES 25 30 22 s e r v i c e which many customers value i s reduced. However, many r e t a i l e r s have been able t o compensate by p r o v i d i n g a s u p e r i o r shopping environment, thus r e d u c i n g the need f o r s e r v i c e . The l a y o u t of the s t o r e i s very c l e a r ; a s t a n d a r d i z e d range of goods i s o f f e r e d ; and a high standard of amenities i s maintained. The r e t a i l e r b e n e f i t s from these i n n o v a t i o n s by s u b s t i t u t i n g f i x e d c a p i t a l c o s t s f o r v a r i a b l e labour c o s t s , thus p e r m i t t i n g p r o f i t margins to be more e a s i l y maintained. Simmons p r o v i d e s evidence t h a t l a b o u r c o s t s have i n c r e a s e d more r a p i d l y than any o t h e r c o s t 14 f a c t o r i n r e t a i l i n g . T e c h n o l o g i c a l and c u l t u r a l f a c t o r s have a l s o favoured the t r e n d t o l a r g e r s c a l e r e t a i l f a c i l i t i e s . The development of home r e f r i g e r a t i o n p e r m i t t e d the r e d u c t i o n i n the frequency of grocery shopping t r i p s , thus a l l o w i n g consumers to make l a r g e r purchases. The i n c r e a s e i n the number o f women i n the labour f o r c e and the t r e n d towards more l e i s u r e a c t i v i t i e s has r e i n f o r c e d the tr e n d f o r l e s s f r equent shopping t r i p s . The widespread a v a i l a b i l i t y o f consumer c r e d i t has a l s o reduced the r e s i s t a n c e o f consumers t o paying f o r l a r g e r e x p e n d i t u r e s . In most cases, the l a r g e s c a l e r e t a i l e r has been able to take b e t t e r advantage of these f a c t o r s than has the s m a l l s c a l e r e t a i l e r . The businesses l o c a t e d i n s t r i p commercial areas 23 have been a f f e c t e d by these changes t o v a r y i n g degrees depending on the type of products c a r r i e d and the manner i n which they are s o l d . The most dramatic impact has been on the high volume o p e r a t i o n s such as g a s o l i n e and food r e t a i l i n g where competition i s most i n t e n s e . The d i f f i c u l t y of assemblying l a r g e r development s i t e s i n an e s t a b l i s h e d r e t a i l area has r e s u l t e d i n many replacement f a c i l i t i e s b e i n g b u i l t i n new l o c a t i o n s . The impact on oth e r types of b usiness has been more s u b t l e . Some have been able to i n c r e a s e the s c a l e o f t h e i r o p e r a t i o n s i n t h e i r p r e s e n t l o c a t i o n s and remain c o m p e t i t i v e with reduced margins i n an expanded market. Others have been able to ma i n t a i n t h e i r p r o f i t margins by s h i f t i n g product l i n e s t o i n c l u d e items w i t h a h i g h e r p r o f i t margin. The range of goods t h a t can be c a r r i e d by a r e t a i l o u t l e t has expanded g r e a t l y due to the combined e f f e c t s of income and technology. Despite these o p t i o n s , many firms have been f o r c e d out of busi n e s s by the i n c r e a s e d c o m p e t i t i o n and r e s u l t i n g squeeze on p r o f i t margins. Berry's study o f commercial s t r u c t u r e i n Chicago between 1950 and 1960 showed t h a t the net l o s s o f r e t a i l e s t a b l i s h m e n t s due to t e c h n o l o g i c a l change amounted to 5.7% per annum. Only where the s i z e of the t o t a l market i n c r e a s e d i n p o p u l a t i o n or d i s p o s a b l e income were bus i n e s s 15 c e n t r e s able t o maintain t h e i r o r i g i n a l e x t e n t . To understand how t h i s s e l e c t i o n process has a f f e c t e d r e t i a l areas, i t i s necessary t o review the development 24 of both planned and unplanned shopping ce n t r e s and compare t h e i r s t r e n g t h s and weaknesses. F a c t o r s I n f l u e n c i n g the F u n c t i o n of Shopping Centres. The Unplanned Shopping Centre As d i s c u s s e d p r e v i o u s l y , unplanned shopping c e n t r e s grew i n response t o changing modes of t r a n s p o r t a t i o n . They g e n e r a l l y developed around a major i n t e r s e c t i o n where t r a f f i c was h e a v i e s t and expanded i n in c r e m e n t a l f a s h i o n . There was l i t t l e c o - o r d i n a t i o n among the l a r g e number of independent entrepreneurs who developed the i n d i v i d u a l b u i l d i n g u n i t s i n these c e n t r e s . They tended t o f o l l o w the e x i s t i n g s u b d i v i s i o n p a t t e r n whether i t was s u i t e d to t h e i r purpose or not. U s u a l l y there was no coherent b u i l d i n g s t y l e , p a r t i c u l a r i l y when b u i l d i n g s were added t o a centre over a number of ye a r s . Exceptions t o t h i s r u l e o c c u r r e d when busin e s s e s developed q u i c k l y i n a standar-d i z e d f a s h i o n d u r i n g a p e r i o d o f economic p r o s p e r i t y o r a f t e r the o r i g i n a l b usiness c e n t r e was destroyed by some d i s a s t r o u s event such as a f i r e . The presen t c h a r a c t e r of Vancouver's Gastown and S e a t t l e ' s Pioneer Square owes i t s e x i s t e n c e t o r a p i d r e b u i l d i n g a f t e r f i r e s which o c c u r r e d i n both of these c i t i e s i n 1889."^ L o c a l v a r i a t i o n o f t e n has a s t r o n g i n f l u e n c e on the f u n c t i o n o f unplanned shopping c e n t r e s . Most 25 important i s the mix of r e t a i l o u t l e t s . In theory t h i s i s l a r g e l y a f u n c t i o n of the surrounding market. However, i n p r a c t i c e many shops appear t o d e r i v e no l o c a t i o n a l advantage from t h e i r premises and draw t h e i r customers from a wider market. S u c c e s s f u l shops can have a b e n e f i c i a l e f f e c t on the e n t i r e area by a t t r a c t i n g a wider group o f p o t e n t i a l customers t o the area than would normally be pr e s e n t . P u b l i c i n s t i t u t i o n s and l o c a l landmarks can a c t i n a s i m i l a r f a s h i o n e i t h e r h e l p i n g or h i n d e r i n g the r e t a i l f u n c t i o n o f an area. Corner s i t e s are the most valued i n unplanned shopping c e n t r e s due to the exposure to t r a f f i c i n two d i r e c t i o n s t h a t they r e c e i v e . Consequently, uses capable of g e n e r a t i n g h i g h p r o f i t margins without consuming l a r g e amounts o f space tend to l o c a t e t h e r e . Less p r o f i t a b l e and space consuming uses tend t o l o c a t e i n l e s s exposed l o c a t i o n s . E.M. Horwood has noted the e x i s t e n c e i n unplanned shopping c e n t r e s o f two d i s t i n c t areas o f l a n d use s i m i l a r to those noted by many a u t h o r i t i e s i n the c e n t r a l b u s i n e s s 17 d i s t r i c t . The f i r s t area i s termed the core and i s c h a r a c t e r i z e d by the g r e a t e s t i n t e n s i t y o f a c t i v i t y . Only r e t a i l uses capable o f g e n e r a t i n g a hi g h volume o f trade l o c a t e here. The second area i s termed the frame and i s c h a r a c t e r i z e d by s e r v i c e and r e t a i l uses which generate a much lower volume of t r a d e . I t b e n e f i t s from the 26 p e d e s t r i a n t r a f f i c generated by the core. The c o n c e n t r a t i o n of development a t major i n t e r s e c t i o n s causes a r e s t r i c t i o n i n the t r a f f i c flow. T h i s can be b e n e f i c i a l t o r e t a i l uses i f there i s s u f f i c i e n t p a r k i n g a v a i l a b l e to accomodate- s t o p p i n g t r a f f i c . P a r k i n g demand i s a f u n c t i o n of the nature and i n t e n s i t y of commercial lan d use. The supply of p a r k i n g i s determined by the amount of o n - s t r e e t p a r k i n g a v a i l a b l e and the amount of supplementary o f f - s t r e e t p a r k i n g . For r e t a i l uses, the most c r i t i c a l component i s o n - s t r e e t p a r k i n g s i n c e i t i s immediately a c c e s s i b l e to a d j o i n i n g shops. I t i s important t o f r e e t h i s area from long term p a r k i n g by employees o f the area. P r o v i d i n g t h a t development i s not too i n t e n s e , s t r e e t s a d j o i n i n g the core commercial area can p r o v i d e overflow p a r k i n g without undue i n t r u s i o n on surrounding r e s i d e n t i a l areas. E x c e s s i v e o f f i c e development i s f r e q u e n t l y the cause of inadequate p a r k i n g i n unplanned shopping c e n t r e s . Despite the o r i e n t a t i o n of unplanned shopping c e n t r e s t o t r a f f i c a r t e r i a l s as a means of primary access, shopping i t s e l f i s p r i m a r i l y a p e d e s t r i a n a c t i v i t y . From the viewpoint o f the p e d e s t r i a n , an unplanned shopping 18 c e n t r e has a number of e s s e n t i a l environmental requirements. F i r s t , there must be a f e e l i n g of a c t i v i t y , v a r i e t y , and i n t e r e s t . T h i s can be p a r t l y p r o v i d e d by crowds. The 27 e f f e c t of a c t i v i t y can a l s o be heightened by a v a r i e t y of shop frontages and shop f r o n t designs:;and by c a r e f u l c o n t r o l of the r e l a t i o n s h i p between the h e i g h t s o f b u i l d i n g s and the width between b u i l d i n g facades-. I t i s bes t achieved by narrowness, but t h i s c o n f l i c t s w i t h the needs o f v e h i c u l a r t r a f f i c f o r wide s t r e e t s . A second requirement i s s a f e t y from t r a f f i c . I d e a l l y , p e d e s t r i a n s should be f r e e t o cr o s s a t any time from one s i d e o f the s t r e e t to another, but again there i s an obvious c o n f l i c t w i t h the needs of the automobile. P e d e s t r i a n - v e h i c l e c o n f l i c t s are a major source o f a c c i d e n t 19 f a t a l i t i e s i n urban areas. A t h i r d requirement r e l a t e d i n p a r t t o s a f e t y i s comfort. While some p r o t e c t i o n from the weather i s d e s i r a b l e , t o t a l e n c l o s u r e i s not, s i n c e c l i m a t e tends t o add v a r i e t y and i n t e r e s t t o the environment. A compromise s o l u t i o n i s the use of awnings combined w i t h wide sidewalks to permit shoppers t o move a t a r e l a x e d pace.. Shopping i s not s o l e l y a n e c e s s i t y , but i t i s a l s o a chance to mix wit h o t h e r people. I t i s a form of s o c i a l entertainment and window shopping i s a s i g n i f i c a n t l e i s u r e a c t i v i t y . The shopping environment must t h e r e f o r e be one which people can enjoy i n t o t a l f a s h i o n . The components of the shopping environment, many of them e s s e n t i a l l y c o n f l i c t i n g , are l i n k e d i n such a way th a t the whole i s 28 g r e a t e r than the sum of the p a r t s . Given the way i n which unplanned shopping c e n t r e s have developed, i s i t any wonder t h a t the r e s u l t i s sometimes l e s s than i d e a l ? The Planned Shopping Centre The planned shopping c e n t r e i s the product of c a r e f u l a n a l y s i s of the s t r e n g t h s of unplanned shopping c e n t r e s combined w i t h the i n t r o d u c t i o n of a number of s i g n i f i c a n t i n n o v a t i o n s . L i k e the unplanned shopping c e n t r e , i t s l o c a t i o n i s d i c t a t e d by major t r a n s p o r t a t i o n r o u t e s , and the s i z e and number of f u n c t i o n s are d i c t a t e d by the e x t e n t o f the t r a d i n g area. Other f a c t o r s are q u i t e d i f f e r e n t . The form o f a planned shopping c e n t r e i s d i c t a t e d by the need f o r l a r g e amounts of v e h i c l e p a r k i n g , r a t h e r than by the p r e v a i l i n g s u b d i v i s i o n p a t t e r n . Perhaps most important i s the management of the c e n t r e by a s i n g l e developer, which permits the t a i l o r i n g o f the t o t a l environment t o the needs of the shopper t o a much g r e a t e r e x t e n t than i s p o s s i b l e i n an unplanned c e n t r e . The developer of a planned shopping c e n t r e i s motivated by a d e s i r e t o maximize h i s own p r o f i t s as w e l l as those of h i s tenants. T h i s produces a somewhat d i f f e r -ent o r g a n i z a t i o n of uses than i n an unplanned c e n t r e . The need of an e x t e n s i v e area f o r p a r k i n g i n a planned c e n t r e o f t e n l i m i t s p o t e n t i a l s i t e s t o areas which are unable to i n t e r c e p t t r a f f i c i n the same way as unplanned shopping c e n t r e s f r o n t i n g on major t r a f f i c r o u t e s . A developer must r e l y on the i n h e r e n t a t t r a c t i v e n e s s o f the uses i n the c e n t r e I t i s the l a r g e s t uses--the.department stores, and • s u p e r m a r k e t s — t h a t generate- much of the t r a f f i c . . Conse-quently, they pay a lower l e v e l o f r e n t than i s the case f o r s m a l l e r businesses which b e n e f i t from t h e i r c l o s e p r o x i m i t y t o the major t r a f f i c g e nerators. A developer e x e r c i s e s g r e a t care i n the s e l e c t i o n of b u s i n e s s e s f o r a planned shopping c e n t r e . Where p o s s i b l e , only r e t a i l b u s i n e s s e s are allowed i n t o shopping c e n t r e s s i n c e they generate the h i g h e s t r e t u r n of a l l commercial uses. The number of n o n - r e t a i l uses i s r e s t r i c t e d t o the minimum r e q u i r e d to p r o v i d e e s s e n t i a l s e r v i c e s . Rents i n shopping c e n t r e s are c a l c u l a t e d as a percentage of gross s a l e s . Since r e t a i l s a l e s tend to r i s e a t a r a t e , e q u a l to o r i n excess of c o s t - o f - l i v i n g i n c r e a s e s , t h i s g i v e s the shopping c e n t r e i n v e s t o r a good hedge a g a i n s t i n f l a t i o n . To maximize p r o f i t s , the b u s i n e s s e s allowed i n t o a planned shopping c e n t r e should complement r a t h e r than compete d i r e c t l y a g a i n s t one another. Each business should be d i r e c t e d a t a s p e c i f i c segment o f the market. Chain s t o r e s are a favoured tenant i n planned shopping c e n t r e s s i n c e they adhere c l o s e l y t o t h i s p r i n c i p l e through a combination of a d v e r t i s i n g , s t o r e l a y o u t , and r e t a i l p r a c t i c e They a l s o permit a shopping c e n t r e developer to o b t a i n e a s i e r f i n a n c i n g as c r e d i t o r s c o n s i d e r them to be a b e t t e r 30 r i s k than independent r e t a i l e r s . Consequently, the range o f v a r i a t i o n i n uses found i n planned shopping c e n t r e s i s much more r e s t r i c t e d than i n an unplanned shopping c e n t r e . Comparison Between Unplanned and Planned Shopping C e n t r e s " From the p r e v i o u s d i s c u s s i o n i t i s e v i d e n t t h a t unplanned and planned shopping c e n t r e s have c e r t a i n s t r e n g t h s and weaknesses. A b a s i s f o r the comparision of these s t r e n g t h s and weaknesses i s p r o v i d e d by the e i g h t p r i n c i p l e s 20 of r e t a i l l o c a t i o n developed by R.L. Nelson. These p r i n c i p l e s are as f o l l o w s : i ) adequacy of p r e s e n t t r a d i n g area p o t e n t i a l i i ) growth p o t e n t i a l i i i ) a c c e s s i b i l i t y o f s i t e t o t r a d i n g area i v ) b u s i n e s s i n t e r c e p t i o n v) m i n i m i z a t i o n of c o m p e t i t i v e hazard v i ) cumulative a t t r a c t i o n v i i ) c o m p a t a b i l i t y v i i i ) s i t e economics The f o l l o w i n g s e c t i o n c o n s i s t s of a comparison of unplanned and planned shopping c e n t r e s based on the above p r i n c i p l e s . Adequacy of the e x i s t i n g t r a d e area r e f e r s to the number of p o t e n t i a l customers and t h e i r per c a p i t a d i s p o s a b l e income. In most cases planned 31 shopping c e n t r e s have a marked advantage over unplanned shopping c e n t r e s i n t h i s regard, as they are l o c a t e d i n the suburbs. The p o p u l a t i o n i n these areas i s younger and g e n e r a l l y more a f f l u e n t than i n the i n n e r c i t y . Planned shopping c e n t r e s have a l s o had the advantage of zoning p r o t e c t i o n from t h e i r i n c e p t i o n . The nature o f the p l a n n i n g process works to ensure t h a t they w i l l remain e c o n o m i c a l l y v i a b l e . Unplanned shopping centres, on the o t h e r hand, have to compete a g a i n s t l a r g e t r a c t s of e x i s t i n g commercial development. In areas where the per c a p i t a income has d e c l i n e d , there may i n f a c t be a g l u t of commercial f a c i l i t i e s . So f a r , Vancouver has managed to a v o i d t h i s problem which has plagued many American c i t i e s . Growth p o t e n t i a l i n a trade area i s necessary t o allow the adoption of economies of s c a l e by r e t a i l e r s t o c o u n t e r a c t d e c l i n i n g p r o f i t margins. Planned shopping c e n t r e s have b e n e f i t t e d from the r a p i d p o p u l a t i o n growth of the suburbs. Most unplanned shopping c e n t r e s have s u f f e r e d from s t a b l e or d e c l i n i n g l e v e l s of p o p u l a t i o n . To m a i n t a i n the e x t e n t of unplanned shopping c e n t r e s , e i t h e r the range of b u s i n e s s e s i n the c e n t r e must change, or there must be p e r i o d i c growth of the market i n terms o f t o t a l consumer expenditure. 32 The key f a c t o r i n determining the e x t e n t of the t r a d i n g area i s a c c e s s i b i l i t y . The route which customers t r a v e l must be c l e a r and d i r e c t arid there must be s u f f i c i e n t p a r k i n g . The unplanned shopping c e n t r e g e n e r a l l y has e x c e l l e n t access as i t i s l o c a t e d on a major thr o u g h f a r e , but i t o f t e n l a c k s s u f f i c i e n t p a r k i n g . Here the planned shopping c e n t r e has a c l e a r advantage. P r o v i s i o n of o f f -s t r e e t p a r k i n g can improve the s i t u a t i o n . On the o t h e r hand, the l i n e a r form of the unplanned shopping c e n t r e i s b e t t e r s u i t e d to the requirements of p u b l i c t r a n s i t . Should the energy c r i s i s c u r t a i l the use of the automobile, the planned shopping c e n t r e may be a t a disadvantage. Business i n t e r c e p t i o n i s the t a c t i c of l o c a t i n g a b u s i n e s s between the bulk of the customers and t h e i r accustomed market p l a c e . A l l other t h i n g s being e q u a l , most people w i l l shop a t the f i r s t o p p o r t u n i t y p r e s e n t e d to them. T h i s was one o f the p r i n c i p a l reasons f o r the p r o l i f e r a t i o n of s t r i p commercial areas d u r i n g the 1920s. Planned shopping centres,"on the o t h e r hand, tend to generate t h e i r own t r a f f i c by o f f e r i n g a wider range o f a t t r a c t i o n s than does the c o m p e t i t i o n . With t h e i r high la n d requirements, they g e n e r a l l y can not a f f o r d the types of s i t e s needed to i n t e r c e p t customers headed elsewhere. M i n i m i z a t i o n of c o m p e t i t i v e hazard r e f e r s t o the r i s k t o a business of c o m p e t i t i o n from an a l t e r n a t e shopping f a c i l i t y . Planned shopping c e n t r e s p r o v i d e 33 p r o t e c t i o n f o r t h e i r tenants by r e s t r i c t i n g the e n t r y of s i m i l a r types of b u s i n e s s e s . The c e n t r e s themselves are p r o t e c t e d by zoning and the r i g i d i t y o f urban s t r u c t u r e . I t i s j u s t n o t p o s s i b l e to c o n s t r u c t anything l a r g e enough to compete wi t h them. S i m i l a r zoning p r o t e c t i o n c o u l d be extended to unplanned shopping c e n t r e s , but seldom i s . I t i s d i f f i c u l t t o design c o n t r o l s t h a t p r o v i d e a s u f f i c i e n t degree of p r o t e c t i o n t o an unplanned shopping c e n t r e without unduly s t i f l i n g innovation.. D i r e c t c o m p e t i t i o n between busin e s s e s can be b e n e f i c i a l t o the consumer, p r o v i d e d t h a t i t does not a f f e c t the long term v i a b i l i t y o f the area. Cumulative a t t r a c t i o n r e f e r s t o the c l u s t e r i n g of b u s i n e s s e s t o i n c r e a s e trade through the e f f e c t s of the multi-purpose shopping t r i p . The a b i l i t y t o e x p l o i t t h i s f a c t o r i s one of the key reasons f o r the success o f the planned shopping c e n t r e . Unplanned shopping c e n t r e s have the. same q u a l i t y t o a v a r y i n g degree depending on the s e l e c t i o n and s p a t i a l arrangement of b u s i n e s s e s . T h e i r r e a l s t r e n g t h , however, l i e s i n the presence of l a r g e numbers of independent firms f r e e t o compete without the i n t e r f e r e n c e of a p r o f i t maximizing developer. T h i s allows the consumer a degree of choice not found i n the planned shopping c e n t r e . C o m p a t i b i l i t y i s determined by the degree of customer interchange between businesses as a r e s u l t of the 34 multi-purpose shopping t r i p . Planned shopping c e n t r e s maximize c o m p a t i b i l i t y by r e s t r i c t i n g e n t r y to a narrow range of s t o r e s s p e c i a l i z i n g i n shopping goods. Unplanned shopping c e n t r e s t y p i c a l l y have a much broader s e l e c t i o n o f commercial o u t l e t s p e r m i t t i n g them to more f u l l y serve the needs of consumers. S i t e economics i s by f a r the most important f a c t o r t o any b u s i n e s s . I t i s a f u n c t i o n o f the t o t a l ' c o s t of the s i t e p l u s the p o t e n t i a l revenue a v a i l a b l e from the s i t e . In g e n e r a l , r e n t s tend to be h i g h e r i n planned shopping ce n t r e s than i n unplanned shopping c e n t r e s . T h i s i s to be expected because o f the c o s t of the p a r k i n g p r o v i d e d and the h i g h e r q u a l i t y of the amenities and space a v a i l a b l e . Most businesses t h a t l o c a t e i n planned shopping c e n t r e s f i n d t h a t the h i g h e r c o s t s are compensated f o r by the g r e a t e r share of the market t h a t they r e c e i v e . On the o t h e r hand, there are many kinds of b u s i n e s s e s t h a t f i n d t h a t planned shopping c e n t r e s do not p r o j e c t the r e q u i r e d image f o r them t o g a i n s u f f i c i e n t market p e n e t r a t i o n . The image o f a s t o r e i s an important p a r t of whatever co m p e t i t i v e advantage a r e t a i l e r has. T h i s can come from any number of f a c t o r s such as a d v e r t i s i n g , s t o r e appearance, the type of business area, or the surrounding community. G e n e r a l l y , i t i s more d i f f i c u l t f o r a s m a l l s t o r e t o c r e a t e a d i s t i n c t image by l o c a t i o n a l f a c t o r s alone i n a planned c e n t r e than i n an unplanned c e n t r e , because 35 o f the dominance of the o v e r a l l c e n t r e i d e n t i t y and the i s o l a t i o n from environmental f a c t o r s . Only as businesses become widely r e c o g n i z e d are they able to l o c a t e i n planned shopping c e n t r e s . For example, the h e a l t h food s t o r e was u n t i l r e c e n t l y a counter c u l t u r e phenomenum l o c a t e d f o r the most p a r t i n s t r i p commercial areas. Now t h a t h e a l t h food has become widely accepted, i t i s commonly found i n planned shopping c e n t r e s . Prospects f o r the Continued V i a b i l i t y o f  S t r i p Commercial Areas From the p r e v i o u s d i s c u s s i o n , i t i s e v i d e n t t h a t s t r i p commercial areas have a number of advantages and disadvan-tages. T h e i r f u n c t i o n i s more v a r i e d than i s t h a t of the planned shopping c e n t r e , and t h i s allows them to adapt t o a v a r i e t y o f d i f f e r e n t r o l e s depending on the p a r t i c u l a r circumstances. I t i s e v i d e n t t h a t c e r t a i n s t r i p commercial c e n t r e s w i l l enjoy continued success due to t h e i r i n h e r e n t l o c a t i o n a l advantage. As urban areas i n c r e a s e i n s i z e , t h e i r major problem w i l l be an excess of development p r e s s u r e . I n e v i t a b l y they w i l l tend to assume a r e g i o n a l r a t h e r than a p u r e l y d i s t r i c t commercial f u n c t i o n . A l i m i t e d number o f r e g i o n a l uses can add i n t e r e s t and v i t a l i t y t o a d i s t r i c t c e n t r e b u t r t o o many w i l l generate 36 conflict. Particularly d i f f i c u l t to accomodate are major office developments due to the need for increased long term parking. Land use policies should clearly prescribe the scope of development anticipated in these centres. For example, the City of Vancouver has restricted office development in the West Broadway d i s t r i c t commercial area due to the d i f f i c u l t y of developing additional off-street ... 21 parking. Another role for strip commercial areas, particularly in the inner city, is as a provider of specialty goods. An interesting study of Vancouver points out that increasingly the central business d i s t r i c t is not the supplier of higher order goods to the entire 22 region. Because of the freedom of movement granted by the automobile and the high level of congestion in the central city, customers find i t easier to get to outlying centres. Thus, the most exclusive art galleries, jewellery shops, and boutiques are not located downtown but in South Granville, West Fourth Avenue, and Kerrisdale, a l l d i s t r i c t commercial centres. Merchants find that the proximity of a surrounding high income d i s t r i c t combined with the more relaxed, distinctive image of these centres allows them to compete more effectively. Other unplanned shopping centres in low income markets are developing a role as suppliers of low order 37 goods t o s p e c i a l i z e d markets. With h i g h e r incomes, h i g h e r l e v e l s of e d u c a t i o n , and the entrenchment of l a r g e immigrant p o p u l a t i o n s , the market f o r many kinds of goods has become i n c r e a s i n g l y fragmented. Mass merchandisers f i n d i t i m p o s s i b l e to compete e f f e c t i v e l y a l l o w i n g s m a l l b u s i n e s s e s to dominate the market. Thus, we see development of a counter c u l t u r e shopping area along West Fourth, a Greek area along West Broadway, and an I t a l i a n area along Commercial D r i v e . While t h i s i s a new r o l e f o r these areas, i t i s one t h a t allows them t o m a i n t a i n and enhance t h e i r e s s e n t i a l c h a r a c t e r . In o u t l y i n g areas s t r i p commercial areas have developed a r o l e as p r o v i d e r s of s e r v i c e s and other types of low overhead businesses t h a t cannot meet the high s i t e c o s t and c o m p a t i b i l i t y requirements of planned shopping c e n t r e s . S e v e r a l e m p i r i c a l s t u d i e s have shown a d i r e c t r e l a t i o n s h i p between the growth of planned shopping c e n t r e s and the 23 24 expansion of s t r i p commercial areas. ' U n f o r t u n a t e l y these types of businesses are not p a r t i c u l a r l y compatible w i t h r e t a i l o u t l e t s s i n c e they do not generate the volume of p e d e s t r i a n t r a f f i c necessary t o support a l i v e l y commercial area. I t may be p o s s i b l e t o improve the s i t u a t i o n by r e g u l a t i n g the types of uses e n t e r i n g the c e n t r e and adopting a program of r e v i t a l i z a t i o n t o enhance the image of the c e n t r e to p o t e n t i a l customers. T h i s problem w i l l be addressed i n subsequent c h a p t e r s . 38 Summary and C o n c l u s i o n The purpose of t h i s chapter has been to d i s c u s s the nature of s t r i p commercial development and the i m p l i c a t i o n s t h a t more modern forms o f r e t a i l development have f o r i t s continued f u n c t i o n . While the degree of c o m p e t i t i o n from other r e t a i l c e n t r e s i s the most c r i t i c a l f a c t o r i n continued success, t h e r e . a r e many i n d i v i d u a l f a c t o r s which c o n t r i b u t e to i t s success or f a i l u r e . The next two chapters w i l l i n t r o d u c e techniques f o r the a n a l y s i s of s t r i p commercial areas u s i n g the case study o f Hastings Street i n Burnaby, B.C. 39 Footnotes B.J.L. Berry, Commercial S t r u c t u r e and Commercial  B l i g h t , Department of Geography, Research Paper No. 85 (Chicago: U n i v e r s i t y of Chicago, 1963), p.. 171. 2 J.W. Simmons, Toronto's Changing R e t a i l i n g Complex, Department o f Geography, Research Paper No. 104 (Chicago: U n i v e r s i t y of Chicago, 1966), p. 51. 3 . J.W. Simmons, The Changing P a t t e r n of R e t a i l L o c a t i o n (Chicago: U n i v e r s i t y o f Chicago P r e s s , 1964), p.,21. 4 B.J.L. Berry and W.L. G a r r i s o n , "Recent Developments i n C e n t r a l P l a c e Theory," Papers and Proceedings of the  Regional Science Assoc., IV (1958), 110. "'Berry, Commercial B l i g h t , p. °4'7. R.L. Nelson, The S e l e c t i o n of R e t a i l L o c a t i o n s (New York: F.W. Dodge, 1958), p. 45. 7 B.J.L. Berry, "Shopping Centres and the Geography o f Urban Areas," (unpublished Ph.D. d i s s e r t a t i o n , U n i v e r s i t y o f Washington, 1958). o Berry, Commercial B l i g h t , p. 20. 9 . . Simmons, P a t t e r n of R e t a i l L o c a t i o n , p. 6. "^J.E. Vance, Emerging P a t t e r n s of Commercial  S t r u c t u r e i n American C i t i e s , Lund S e r i e s i n Geography, S e r i e s B, No. 24 (Lund: C.W.K. Gleerup P u b l i s h e r s , 1962), pp. 485-518 1 1B.R. Holdren, The S t r u c t u r e of a R e t a i l Market  and the Market Behaviour of R e t a i l U n i t s (Englewood C l i f f s , N.J.: P r e n t i c e - H a l l , 1960), p. 140. 12 C.W. Curry, The Geography o f S e r v i c e Centres  w i t h i n Towns: The Elements o f an O p e r a t i o n a l Approach, Lund S e r i e s i n Geography, S e r i e s B, Human Geography, No. 2 4 (Lund: C.W.K. Gleerup P u b l i s h e r s , 1962), p. 36. 40 13 Holdren, Market Behaviour of R e t a i l U n i t s , p. 31. 14 Simmons, P a t t e r n of R e t a i l L o c a t i o n , pp. 65-69. 15 Berry , Commercial B l i g h t , p. 173. 16W.C. S p e i d e l , Sons of the P r o f i t s ( S e a t t l e : N e t t l e Creek P u b l i s h i n g Co., 1967), pp. 238-239. 17 E.M. Horwood, St u d i e s of the C e n t r a l Business  D i s t r i c t and Urban Freeway Development ( S e a t t l e : - U n i v e r s i t y of Washington Press, 1959), p. 22. 18 J.C. B a r f o r d , "Environmental T r a f f i c Standards," (unpublished M.A. T h e s i s i n Community and Regional P l a n n i n g , U n i v e r s i t y o f B r i t i s h Columbia, 1968), pp. 21-24. 19 N a t i o n a l S a f e t y C o u n c i l , A c c i d e n t F a c t s (Chicago: The C o u n c i l , 196 7).'. 20 Nelson-, R e t a i l L o c a t i o n s , pp. 51-54. 21 Vancouver C i t y P l a n n i n g Department, K i t s a l a n o  Area P l a n n i n g Program: West Broadway P l a n (Vancouver:. C i t y Managers Report, Jan. 22, 1976), p. 8. 22 R. L e i g h , S p e c i a l t y R e t a i l i n g : A G e o g r a p h i c a l  A n a l y s i s Vancouver, B.C. Geography S e r i e s , No. 6 (Vancouver: Tantalus Research, 1966), pp. 110-113. 2 3 Berry, Commercial B l i g h t , pp. 156-159. ^ 4Simmons, Changing R e t a i l i n g Complex, p. 92. 41 CHAPTER I I I CASE STUDY LAND USE ANALYSIS: HASTINGS STREET, BURNABY I n t r o d u c t i o n The purpose of the next two chapters i s to analyze the o p e r a t i o n of a t y p i c a l s t r i p commercial area. The o b j e c t i v e s are to determine the dominant f u n c t i o n s o f the case study area, and whether i t i s capable of p r o v i d i n g e f f e c t i v e c o m petition t o a planned shopping c e n t r e . T h i s type o f i n f o r m a t i o n i s e s s e n t i a l f o r planners t o determine whether these areas should be saved or redeveloped i n more p r o f i t a b l e uses. E x t e n s i v e use w i l l be made of the theory presented i n the pre v i o u s chapter t o develop a system f o r the a n a l y s i s o f other s t r i p commercial areas. T h i s chapter begins w i t h a b r i e f c h a r a c t e r i z a t i o n of the M u n i c i p a l D i s t r i c t o f Burnaby t o p r o v i d e a context f o r more s p e c i f i c a t t e n t i o n t o North Burnaby r e t a i l f a c i l i t i e s . The d i f f e r e n c e s between the Hastings S t r e e t study area and the competing r e g i o n a l c e n t r e are shown to be matters of s i z e , range of goods, and busi n e s s o r g a n i -z a t i o n . D e t a i l e d a n a l y s i s of the study area u s i n g l a n d use data leads t o the i d e n t i f i c a t i o n of the core, frame, and r i b b o n commercial areas, as suggested by Horwood, and i s 42 shown to be c o n s i s t e n t w i t h l a n d v a l u e s . The c o n c l u s i o n from t h i s a n a l y s i s i s t h a t the c o m p e t i t i v e s i t u a t i o n and i n t e r n a l dynamics o f r e t a i l a c t i v i t i e s can be under-stood u s i n g l a n d use and l a n d value data which are r e a d i l y a v a i l a b l e p u b l i c i n f o r m a t i o n . The f i r s t requirement f o r the a n a l y s i s of r e t a i l p a t t e r n s i s a system f o r c l a s s i f y i n g and i n t e r p r e t i n g business and s p a t i a l r e l a t i o n s h i p s . P e t e r S c o t t , a noted B r i t i s h marketing geographer, l i s t s f i v e b a s i c requirements which any comprehensive a n a l y s i s must address i n order to y i e l d s i g n i f i c a n t data r e g a r d i n g r e t a i l l o c a t i o n p a t t e r n s and c o m p e t i t i o n between c e n t r e s . They are as follows:^" i . The aggregate importance of a c e n t r e i i . the composition o f the c e n t r e by type o f t r a d e i i i . the composition by s i z e of e s t a b l i s h m e n t i v . the composition by form of o r g a n i z a t i o n v. the s i z e and s t r u c t u r e of the market The f i r s t f o u r f a c t o r s r e l a t e t o the supply of r e t a i l f a c i l i t i e s and w i l l be d i s c u s s e d i n t h i s chapter. The f i f t h f a c t o r r e l a t e s t o the demand f o r r e t a i l f a c i l i t i e s and i s the s u b j e c t o f the f o l l o w i n g chapter. 43 P h y s i c a l S e t t i n g Burnaby, i s a mature suburb of the C i t y o f Vancouver 2 w i t h an estimated 19 78 p o p u l a t i o n o f 137,400. F i g u r e No.3 shows the g e n e r a l i z e d l a n d use of the m u n i c i p a l i t y . North Burnaby i s a l a r g e l y s e l f - c o n t a i n e d r e s i d e n t i a l area cut o f f from other areas by B u r r a r d I n l e t t o the nor t h , Burnaby Mountain t o the e a s t , the i n d u s t r i a l uses of the c e n t r a l v a l l e y t o the south, and the P a c i f i c N a t i o n a l E x h i b i t i o n s i t e t o the west. These major n a t u r a l boundaries make i t an e x c e l l e n t s i t e f o r the study o f com p e t i t i o n between r e t a i l c e n t r e s . The Lougheed Highway and Hastings S t r e e t are the major east-west a r t e r i a l s , w h i le W i l l i n g d o n Avenue i s the major north-south a r t e r i a l . The three major commercial c e n t r e s i n the area s t r a d d l e these a r t e r i a l s — t h e Lougheed Regional Centre surrounding the i n t e r s e c t i o n between the Lougheed Highway and W i l l i n g d o n Avenue, the twelve b l o c k long d i s t r i c t commercial c e n t r e on Hastings S t r e e t between Boundary Road and D e l t a Avenue, and the much s m a l l e r d i s t r i c t commercial centre t o the e a s t along Hastings S t r e e t c e n t e r e d on the Kensington shopping c e n t r e . A l l three are w e l l served by bus t r a n s p o r t . The Lougheed Centre has a t o t a l o f 1,009,495 square f e e t o f r e t a i l space of which 490,000 square f e e t i s contained i n the Brentwood Shopping M a l l . The two d i s t r i c t c e n t r e s have a combined t o t a l o f 44 RESIDENTIAL COMMERCIAL COMMERCIAL RECREATION INDUSTRIAL CIVIC AND INSTITUTIONAL RECREATION AND CONSERVATION AGRICULTURAL G E N E R A L I Z E D L A N D U S E BURNABY PLANNING DEPARTMENT APRIL, 1975. 45 655,558 square f e e t of r e t a i l space a v a i l a b l e w i t h no 3 major shopping m a l l s . U n f o r t u n a t e l y , no exact data on the d i s t r i b u t i o n o f space between the two c e n t r e s i s a v a i l a b l e . Based on the l e n g t h of commercial frontage present, i t i s estimated t h a t the study area c o n t a i n s about 450,000 square f e e t o f space and the area t o the e a s t about 200,000 square f e e t . T h e i r f u n c t i o n i s s i m i l a r , so f o r the purposes of the next s e c t i o n they w i l l be t r e a t e d as a u n i t . T h i s w i l l c o n s i s t o f a comparison between the r e g i o n a l and d i s t r i c t c e n t r e s of the range of f u n c t i o n s p r e s e n t u s i n g l a n d use data as the medium of a n a l y s i s . C l a s s i f i c a t i o n of R e t a i l and S e r v i c e F a c i l i t i e s Land use i s the most v i s i b l e component o f the r e t a i l supply system and i s r e a d i l y a v a i l a b l e data^ S a l e s d a t a i s a b e t t e r medium f o r a n a l y z i n g r e t a i l p a t t e r n s , but i t i s g e n e r a l l y not a v a i l a b l e a t the l e v e l o f d i s s a g r e g a t i o n r e q u i r e d f o r a s m a l l s c a l e study due t o c o n f i d e n t i a l i t y problems. As w i l l be shown, a c o n s i d e r -able amount can be done wit h l a n d use data. The f i r s t step i n the procedure i s to adopt a c l a s s i f i c a t i o n system t o aggregate the range of p o s s i b l e r e t a i l f a c i l i t i e s i n t o a more manageable number of c a t e g o r i e s . C l a s s i f i c a t i o n systems f o r r e t a i l f a c i l i t i e s can be d i v i d e d i n t o t h r e e major types: 46 i . those t h a t focus on the demand f o r f a c i l i t i e s by type of commodity s o l d i i . those t h a t focus on the supply o f f a c i l i t i e s by type of o u t l e t i i i . those t h a t focus on the s p a t i a l conformations of commercial l a n d use r e s u l t i n g from the i n t e r a c t i o n between supply and demand Any useable system w i l l i n e v i t a b l y i n v o l v e some a r b i t r a r y c l a s s i f i c a t i o n s which may be u n s a t i s f a c t o r y , but the l a t t e r system i s g e n e r a l l y the most e f f e c t i v e f o r the a n a l y s i s o f lan d use data and was the one s e l e c t e d f o r t h i s study. As a f i r s t step i n the a n a l y s i s , the e s t a b l i s h m e n t s were c l a s s i f i e d by commodity l i n e s as i n d i c a t e d i n Table I, the l e f t hand column. The c l a s s i f i c a t i o n was developed from the commodity l i n e groupings suggested by the Urban Land I n s t i t u t e f o r shopping c e n t r e development, ( r e f e r t o Appendix A) These c a t e g o r i e s were then aggregated i n accordance w i t h s p a c i a l a f f i n i t i e s observed i n o t h e r l a n d 4 use s t u d i e s . R e t a i l development was aggregated i n t o two c a t e g o r i e s — c o n v e n i e n c e and shopping. Convenience f a c i l i t i e s are d e f i n e d as the most wid e l y d i s t r i b u t e d r e t a i l o u t l e t s and i n c l u d e food, drug, and l i q u o r s t o r e s . In these o u t l e t s the tendency i s f o r customers not to shop around to any g r e a t e x t e n t f o r items but to r e l y on the n e a r e s t f a c i l i t i e s which s a t i s f y t h e i r requirements i n terras of p r i c e s t r u c t u r e , v a r i e t y , and convenience. Shopping f a c i l i t i e s tend t o be 47 TABLE I CLASSIFICATION OF BUSINESS TYPES I* L e v e l s o f Aggregation II I I I IV 1 2 18 Food Drug L i q u o r Convenience 5 General-merchandise 6,7 S o f t l i n e s 8 Hard l i n e s 9 B u i l d i n g S u p p l i e s 10 Other R e t a i l 3 Automotive Shopping R e t a i l 12 P e r s o n a l s e r v i c e 13 Business s e r v i c e 11 Finance 17 Other o f f i c e 14 Home Maintenance S e r v i c e 16 Entertainment Restaurant 15 R e s i d e n t i a l 19 Non-commercial 20 Vacant Non-commercial * Code number f o r business types, Appendix A. 48 l e s s w idely d i s t r i b u t e d because of the nature of the demand f o r t h e i r products and the tendency f o r consumers to be more d i s c r i m i n a t i n g i n t h e i r purchases. Comparison shopping i s the r u l e r a t h e r than the e x c e p t i o n . Firms s e l l i n g these products tend to c l u s t e r i n t o l a r g e r aggregations than convenience o u t l e t s i n o r d e r to b e n e f i t from c r o s s shopping and the exposure t o a wider p o t e n t i a l market. Automotive f a c i l i t i e s were grouped s e p a r a t e l y i n the c l a s s i f i c a t i o n s i n c e they tend t o have d i f f e r e n t space requirements than do o t h e r r e t a i l o u t l e t s . S e r v i c e s were d i v i d e d i n three c l a s s i f i c a t i o n s on the b a s i s of t h e i r use o f space. The most i n t e n s i v e use o f space i s achieved by the p e r s o n a l s e r v i c e and o f f i c e uses. Less i n t e n s i v e use of space i s g e n e r a l l y achieved by the entertainment and r e s t a u r a n t c a t e g o r i e s . Non-commercial, r e s i d e n t i a l , and vacant o u t l e t s were aggregated as non-commercial uses. T h i s c l a s s i f i c a t i o n system tends t o break down due to the combining of r e t a i l f u n c t i o n s through the a c t i o n s o f the m u l t i - p r o d u c t f i r m . In p r a c t i c e , t h i s i s not a s e r i o u s problem as most m u l t i - p r o d u c t firms can be c l a s s i f i e d through s a l e s o f a l i m i t e d number of product l i n e s from which they r e c e i v e the bulk of t h e i r revenue. 49 Aggregate f l o o r areas i n the l e v e l I I aggregations are shown f o r the two d i s t r i c t commercial c e n t r e s on Hastings S t r e e t and the Lougheed Regional Centre i n Table I I . A number of g e n e r a l o b s e r v a t i o n s can be made by comparing the r e l a t i v e p r o p o r t i o n s o f f a c i l i t i e s i n the two areas. Convenience s t o r e s have the same p r o p o r t i o n of f l o o r space i n both areas i n d i c a t i n g t h a t these f a c i l i t i e s take a s i m i l a r share of the market i n both d i s t r i c t and r e g i o n a l c e n t r e s . T h i s c o n f l i c t s w i t h the p r e v i o u s l y s t a t e d d e f i n i t i o n of convenience goods. I f convenience goods are the most wid e l y d i s t r i b u t e d , one would expect r e g i o n a l shopping areas to have a lower p r o p o r t i o n of these f a c i l i t i e s than the d i s t r i c t shopping areas. T h e i r dominance i n the r e g i o n a l shopping area i s perhaps e x p l a i n e d by the b e n e f i t s t h a t consumers g a i n from the multi-purpose shopping t r i p , p l u s the convenience of p a r k i n g i n a l o t r a t h e r than on a s t r e e t , and the o t h e r b e n e f i t s of a l a r g e r s c a l e o p e r a t i o n d i s c u s s e d i n the p r e v i o u s chapter. Once convenience f a c i l i t i e s reach a c e r t a i n s c a l e , i t would appear t h a t they r e q u i r e exposure to a wider p o t e n t i a l market j u s t as shopping f a c i l i t i e s do. Automobile r e l a t e d f a c i l i t i e s have approximately the same p r o p o r t i o n of f a c i l i t i e s i n each area and perhaps should be c o n s i d e r e d i n the same l i g h t as convenience goods. I t i s i n the remaining c a t e g o r i e s t h a t . t h e t r u e d i s t i n c t i o n between d i s t r i c t and r e g i o n a l c e n t r e s becomes TABLE I I COMMERCIAL FLOOR SPACE IN NORTH BURNABY C l a s s i f i c a t i o n Lougheed Hastings T o t a l S q . f t . g. "o S q . f t . Q, *o Sq. f t Q. *o 1. Convenience 85,027 8.4 55,594 8.4 140,621 8.5 2. Shopping 448,138 44.4 185,367 28.3 633,505 38.1 3. Automotive 86,861 8.6 68,611 10.4 155,472 9.3 4. S e r v i c e 218,418 21.6 178,068 27.2 396,486 23.8 5. Entertainment 151,006 14.9 • 24,422 3.7 175,428 10.5 6. Restaurant 17,900 1.8 26,504 4.0 44,404 2.7 7. Non-commercial 2,145 0.3 96,900 14.8 99,045 5.8 8. Vacant .20,092 3.1 20,092 1.3 9 . T o t a l 1,009,495 1100 655,558 100 1,662,908 100 Source: Western Realesearch L t d . , Commercial F l o o r Space Inventory, 1978 51 e v i d e n t . Shopping f a c i l i t i e s have a much h i g h e r p r o p o r t i o n of t o t a l f l o o r space i n the Lougheed area than i n the oth e r c e n t r e s . T h i s i s due to the presence of the Brentwood M a l l . Entertainment f a c i l i t i e s are a l s o b e t t e r r e p r e s e n t e d i n t h i s area because of s e v e r a l l a r g e r e c r e a t i o n complexes. In the d i s t r i c t commercial c e n t r e s , s e r v i c e , r e s t a u r a n t , and non-commercial uses have the g r e a t e s t r e p r e s e n t a t i o n . I t i s of i n t e r e s t whether the more l o c a l i z e d nature of these f a c i l i t i e s i s due to a-more r e s t r i c t e d market t h r e s h o l d than f o r other c l a s s e s o f r e t a i l a c t i v i t i e s , or whether i t i s due to a more advantageous p r o d u c t i o n f u n c t i o n f o r these f a c i l i t i e s i n the Hastings S t r e e t area. S i z e and Ownership of Commercial Outlets Two a t t r i b u t e s which a f f e c t the p r o d u c t i o n f u n c t i o n of the r e t a i l f i r m are the s i z e of the o p e r a t i o n and the form of ownership. T h e i r i m p l i c a t i o n s were d i s c u s s e d i n the p r e v i o u s chapter. To o b t a i n an i n d i c a t i o n of the average f i r m s i z e i n the d i s t r i c t c e n t r e s as opposed t o the r e g i o n a l c e n t r e , gross f l o o r space was d i v i d e d by the number of r e t a i l f i r m s o c c u r r i n g i n the two areas. The numbers of firms were taken from l i s t s of occupants i n 5 the Vancouver C i t y D i r e c t o r y . To determine the form of ownership, the names of r e t a i l chains known by the author were e x t r a c t e d from the o v e r a l l t o t a l s . The r e s u l t s o f the a n a l y s i s are shown i n Table I I I . 5 2 TABLE I I I SI Z E OF FIRM AND FORM OF ORGANIZATION IN NORTH BURNABY H a s t i n g s L o u g h e e d S t r e e t Highway T o t a l F l o o r A r e a 6 5 5 , 5 5 8 s q . f t . 1 , 0 0 9 , 4 9 5 s q . f t . T o t a l Number o f F i r m s 3 7 8 1 5 3 A v e r a g e S q u a r e F o o t a g e / O u t l e t 1 , 7 3 4 s q . f t . 6 , 5 9 8 s q . f t . T o t a l Number o f C h a i n S t o r e s 4 6 8 1 % C h a i n S t o r e s o f t h e T o t a l 1 2 . 2 % 5 6 % S o u r c e s : R e a l e s e a r c h C o m m e r c i a l F l o o r ..Space I n v e n t o r y 1 9 7 8 B.C. D i r e c t o r i e s L t d . V a n c o u v e r C i t y D i r e c t o r y 1 9 7 7 53 I t i s quite evident from t h i s table that the d i s t r i c t centres are characterized by a large number of small, independent firms, while the regional centre i s characterized by a limited number of large firms, predominantly connected with national or regional chains. The regional centre i s the preferred location for these firms because i t straddles two major t r a f f i c a r t e r i a l s and i s accessible to a wider po t e n t i a l market than are the d i s t r i c t centres. Chains are able to take greater advantage of these si t e s because t h e i r larger size gives them superior access to c a p i t a l to purchase them. Private firms are r e s t r i c t e d to less accessible s i t e s and receive a smaller share of the p o t e n t i a l market. The nature of t h e i r production function i s further discussed i n the following section. Analysis of Functional Linkages Between Land Uses  i n the Hastings Street Study Area The s p a t i a l relationships between businesses i n a r e t a i l area i s an important factor i n determining the nature of the competition between r e t a i l centres because of the effects of the multi-purpose shopping t r i p . As was discussed i n the previous chapter, t h i s i s an important aspect i n the success of the planned shopping centre. A developer selects uses which tend to complement one another by generating cross shopping from one store to another. To some degree, a s i m i l a r selection process 54 occurs i n unplanned shopping c e n t r e s because of the c o m p e t i t i v e b i d d i n g of f i r m s f o r good s i t e s , but as S c o t t has p o i n t e d out, "... a high degree of complemen-t a r i t y cannot be achieved through the f r e e o p e r a t i o n of the r e n t mechanism ..." I t i s not only c o m p e t i t i o n between r e t a i l o u t l e t s , but v a r i a t i o n s i n the o r g a n i z a t i o n and s i z e of shops as determined by competition between landowners which determines the s p a t i a l o r g a n i z a t i o n of unplanned shopping c e n t r e s . Consequently, seldom i s the degree of complementarity p r e s e n t i n a planned shopping centr e ever achieved without some form of c o - o r d i n a t i o n . .The, method d e s c r i b e d here f o r judging the c o m p a t i b i l i t y of r e t a i l uses i n an unplanned shopping centre i n v o l v e s the v i s u a l a n a l y s i s of l a n d use data u s i n g the c l a s s i f i c a t i o n system d i s c u s s e d e a r l i e r . Since d e t a i l e d l a n d use data f o r the Hastings S t r e e t study area was not a v a i l a b l e , frontage lengths f o r the v a r i o u s types of l a n d use disaggregated to the block l e v e l were s u b s t i t u t e d . T h i s technique permits the s p a t i a l o r g a n i z a t i o n of an unplanned shopping cent r e to be d e t e r -mined and the degree of complementarity between r e t a i l o u t l e t s based on l i n k a g e s due to p r o x i m i t y w i t h i n the same block to be assessed. The i n f o r m a t i o n i s u s e f u l f o r judging the e f f e c t i v e n e s s of competition w i t h planned shopping centres and the e f f e c t t h a t new uses would have on an e x i s t i n g c e n t r e . 55 ; Table IV shows the o v e r a l l d i s t r i b u t i o n of l a n d use i n the Hastings S t r e e t Study Area by percentage of t o t a l frontage occupied by each c l a s s o f land use. The f i g u r e s show a much h i g h e r p r o p o r t i o n of shopping f a c i l i t i e s on the south s i d e of the s t r e e t than on the n o r t h . T h i s dominance by one s i d e of a commercial s t r i p has been noted 7 i n o ther l a n d use s t u d i e s . Perhaps t h i s i s r e l a t e d to the d i r e c t i o n o f the main evening rush hour t r a f f i c stream, s i n c e a l o c a t i o n oh t h a t s i d e of the s t r e e t allows m o t o r i s t s to stop without the inconvenience of a l e f t hand t u r n . The north s i d e of the s t r i p has the l a r g e s t p r o p o r t i o n of auto o r i e n t e d f a c i l i t i e s . T h i s may be due to the d i r e c t i o n of the morning rush hour t r a f f i c stream, or more probably to the need f o r l a r g e r p a r c e l s , which l i m i t s the r e n t paying a b i l i t y o f these uses and r e s t r i c t s them t o areas which are not i n . a s high demand by oth e r uses. O v e r a l l , s e r v i c e f a c i l i t i e s occupy the l a r g e s t p r o p o r t i o n of fron t a g e , c o n f i r m i n g the f i n d i n g s of the a n a l y s i s o f f l o o r space data f o r the three c e n t r e s c o n t a i n e d i n the p r e v i o u s s e c t i o n . •Figure No. 4 g r a p h i c a l l y shows the land use d i s t r i b u t i o n by b l o c k . The most n o t i c e a b l e aspect of the diagram i s the development of three d i s t i n c t c l u s t e r s o f r e t a i l f a c i l i t i e s a long the south s i d e of the s t r e e t . There i s a l s o a c o n c e n t r a t i o n o f s e r v i c e and convenience o u t l e t s i n the 4200 and 4300 blocks;...which i s caused by 56 TABLE IV DISTRIBUTION OF BUSINESS TYPES BY PERCENTAGE OF TOTAL FRONTAGE HASTINGS STREET STUDY AREA C l a s s i f i c a t i o n South Side North Side T o t a l 1. Convenience 18.0 3.8 11.0 2. Shopping 22.8 16.7 19.8 3. Automotive 8.1 22.3 15.1 4. S e r v i c e 21.3 28.4 24.8 5. Entertainment 0.7 6.1 3.4 6. Restaurant 5.1 6.8 6.0 7. Non-commercial 4.9 10.2 7.5 8. Vacant 17.6 5.7 11.7 9. T o t a l 98.5 100 99.3 Source: Land use survey by author February 19 79 57 FIGURE NO. 4 LAND USE DISTRIBUTION: HASTINGS STREET Pirection Frontage Units Block Number(xl00) 373839*1-04142434445464748 CONVENIENCE SHOPPING S N i—i i ' SERVICE S N AUTOMOBILE Block Number(xl00) 373839404142434445464748 ENTERTAINMENT NON-COMMERCIAL VACANT r~L-n_j nz 58 the c l u s t e r i n g o f f i n a n c i a l i n s t i t u t i o n s around the s o l e supermarket i n the area. Other c l a s s e s of business are spread f a i r l y evenly throughout the d i s t r i c t . F i g u r e No. 5 shows a d e t a i l e d breakdown of r e t a i l f a c i l i t i e s i n the area by b l o c k . Immediately e v i d e n t i s the s t r o n g c l u s t e r i n g of s o f t l i n e and food o u t l e t s on the south s i d e of the 4000 to 4200 b l o c k s . S o f t l i n e o u t l e t s — - s u c h as c l o t h i n g and shoe s t o r e s — a r e c h a r a c t e r i z e d by a high degree of comparison shopping and are s t r o n g l y complementary. The food s t o r e s i n t h i s i n s t a n c e are a l s o very complementary because they are h i g h l y s p e c i a l i z e d and b e n e f i t from the e f f e c t s o f the multi-purpose shopping t r i p . Such a str o n g c l u s t e r i n g o f r e t a i l a c t i v i t i e s does not occur elsewhere, i n d i c a t i n g t h a t t h i s i s l i k e l y the centre o f the commercial area. C o n f i r m a t i o n of t h i s f a c t i s p r o v i d e d by the graph of l a n d values f o r the area shown i n F i g u r e No. 5. These values were e x t r a c t e d from the B r i t i s h Columbia Assessment A u t h o r i t y Records which use a n n u a l l y a d j u s t e d market value f o r commercial assessments. A s t r a t i f i e d sample of f o u r values was s e l e c t e d from each b l o c k t o p r o v i d e the data base f o r the graph. Each f i g u r e was converted to a per square f o o t value to permit comparison. Depending upon which s i d e of the s t r e e t had the h i g h e s t p r o p o r t i o n of commercial l a n d use, e i t h e r the n o r t h or the south 59 FIGURE NO. 5 DISTRIBUTION OF RETAIL GROUP: HASTINGS STREET Frontage UnjLts South Side 22 -20 -18-1 6 -14-12-10-8 « 6 4-1 2 North Side 2 -4-6. 8-10 -Dollars per sq.ft. 28 -, *2.Bldg. Sup. r. Other r e t a i l -General-Drug "iiHard lines Food Soft lines 37 38 I 45 1 46 j 47 I 48 1 LAND VALUES (1978 Assessment) 12 37 I 38 I 39 I ^ 0 I 41 I 42 I 43 I 441 45 I 46 1 47 I 48 I Block Number(xlOO) 60 s i d e was p l o t t e d . As was noted i n the pr e v i o u s chapter, Berry used land values i n the study, Commercial S t r u c t u r e and  Commercial B l i g h t , t o d e l i n e a t e the boundaries of unplanned shopping c e n t r e s . Berry s t a t e s : .... i t i s r e l a t i v e l y easy t o d i s t i n g u i s h the peaks (commercial centres) from the r i d g e s (commercial r i b b o n s ) . Outer l i m i t s of the peaks are given by those p o i n t s a t which values t u r n upwards from the l e v e l s of j the r i d g e s towards the h e i g h t s o f the co r e s . Using t h i s r u l e , i t appears t h a t the commercial centre i s l i m i t e d t o the 4000 and 4100 b l o c k s . Despite having a h i g h e r l e v e l o f s o f t l i n e a c t i v i t y , the 4200 block i s not i n c l u d e d i n the core. In g e n e r a l , t h i s appears to be i n agreement wi t h the r e a l i t y o f the s i t u a t i o n . The appearance of the area, the s e l e c t i o n o f shops, and the al r e a d y e x c e s s i v e l e n g t h o f the s t r i p tend to down grade t h i s b l ock as an i n t e g r a l p a r t o f the co r e . Previous s t u d i e s have i n d i c a t e d t h a t 400 f e e t i s roughly the maximum d i s t a n c e t h a t customers are w i l l i n g t o walk i n an unplanned shopping a r e a . 8 By a p p l y i n g these procedures, i t i s r e l a t i v e l y easy to i d e n t i f y the three components of the s t r i p commercial area d i s c u s s e d i n the pr e v i o u s c h a p t e r — t h e core, the frame,and the r i b b o n . They are d e l i n e a t e d i n Fi g u r e No. 6. The core area i s very s m a l l i n comparison 61 FIGURE NO. 6 FUNCTIONAL ASSOCIATION* HASTINGS STREET Block Number j r - r -Delta •Jflllingdon ilmore LEGEND k W j RIBBON FRAME CORE: 4^—North 3 9 0 0 3 8 0 0 3 7 0 0 III V Boundary 62 to the t o t a l commercial area and i s c o n f i n e d to the south s i d e of the s t r e e t . S e r v i c e and mi s c e l l a n e o u s shopping f a c i l i t i e s t h a t b e n e f i t from the high p e d e s t r i a n t r a f f i c l e v e l s found i n the core make up the frame. The remainder of the commercial area i s r i b b o n development w i t h a wide v a r i e t y o f f u n c t i o n a l l y u n l i n k e d uses p r e s e n t . These uses tend to stand on t h e i r own m e r i t s and customers must be w i l l i n g to make a s p e c i a l t r i p t o seek them out. The beginnings o f a second major core commercial centre on the s t r i p can perhaps be seen i n .the 4300 and 4400 b l o c k s , adjacent to the major supermarket on the s t r i p . I t would appear t o be a good l o c a t i o n f o r such a centre because of the drawing power of such a f a c i l i t y f o r complementary b u s i n e s s e s . At pre s e n t , i t does not appear to be f u n c t i o n i n g very w e l l . S e v e r a l new banks have been c o n s t r u c t e d i n the area, but t h i s type o f development does not generate the l a r g e number of multi-purpose shopping t r i p s c h a r a c t e r i s t i c of a s u c c e s s f u l r e t a i l c e n t r e . The i n a b i l i t y o f banks and oth e r types o f f i n a n c i a l i n s t i t u t i o n s to generate p e d e s t r i a n t r a f f i c f o r oth e r b u s i n e s s e s has long been r e c o g n i z e d by shopping c e n t r e developers, who r e l e g a t e them t o the more i n a c c e s s i b l e areas o f planned 9 shopping c e n t r e s i f they are i n c l u d e d a t a l l . Table V giv e s a breakdown of the f l o o r area o f the study area core and frame by c l a s s o f use. The e q u i v a l e n t 63 TABLE V COMPARISON OF HASTINGS STREET CORE-FRAME AREA WITH BRENTWOOD MALL BY CLASS OF FLOOR SPACE C l a s s i f i c a t i o n Hastings S t r e e t Brentwood Core- frame M a l l * Q. "O Area (sq. ft,) Q. "5 A r e a ( s q . f t 1 Food 8.8 21,417 9.4 38,900 2 Drug 3.1 7,670 0.5 2,200 3 General-merchandise 8.3 20,327 51.4 210,700 4 S o f t l i n e s 8.8 21,488 11.5 47,000 5 Hard l i n e s 11.2 27,368 2.2 8,900 6 B u i l d i n g s u p p l i e s - - - -7 Other r e t a i l 5.9 14,445 13.9 56 ,900 8 Automotive - - 1.2 5,000 T o t a l R e t a i l 46.1 112,715 90.1 369,600 9 . Pe r s o n a l S e r v i c e 12.9 31,640 2.2 8,900 10 Business S e r v i c e - - 2.3 9 ,380 11 Finance 4.5 10,996 2.2 8,900 12 Other o f f i c e 10.1 24,709 1.5 6,300 13 Entertainment 6.5 15,906 - -14 Restaurant 4.6 11,197 1.6 6,700 15 Non-commercial 15.3 37,317 - -16 Vacant - - - -T o t a l Commercial 100.0 244,480 99.9 409,780 *Estimate based on p a r t i a l f l o o r area breakdown and on a n a l y s i s of the b u i l d i n g p l a n 64 f i g u r e s f o r the Brentwood M a l l , the e f f e c t i v e core o f the Lougheed c e n t r e , are shown f o r comparison...- Immediately e v i d e n t i s the low p r o p o r t i o n o f r e t a i l uses i n the study area, 46.1% as opposed to 88,-9% i n the Brentwood M a l l . S e r v i c e s and n o n - r e t a i l uses occupy over h a l f o f the a v a i l a b l e f l o o r space. Only a token amount of n o n - r e t a i l space i s i n c l u d e d i n Brentwood, a t y p i c a l shopping c e n t r e development p r a c t i c e . The f i g u r e s show the r e l a t i v e commercial s t r e n g t h s of the two areas. P e r s o n a l s e r v i c e i s s t i l l the l a r g e s t s i n g l e c l a s s o f uses i n the study area d e s p i t e the i n c r e a s e d importance of r e t a i l uses. Brentwood p r o v i d e s v i r t u a l l y no c o m p e t i t i o n . The study area i s a l s o the major competitor i n convenience l i n e s . While Brentwood has more t o t a l f l o o r area devoted to food s a l e s , only 8900 square f e e t i s occupied by s p e c i a l t y s t o r e s d i r e c t l y c o m p e t i t i v e with those on Hastings S t r e e t . In the drug l i n e , Hastings S t r e e t i s c l e a r l y dominant due to the presence o f a major cha i n s t o r e o u t l e t and s e v e r a l s m a l l e r s t o r e s . Other areas o f r e t a i l s t r e n g t h i n the study area are i n s o f t and hard l i n e s . The study area has c l o s e t o one t h i r d o f the t o t a l s o f t l i n e a c t i v i t y i n North Burnaby, p r i m a r i l y i n c l o t h i n g and ya r d goods. These uses generate a h i g h degree of comparison shopping and are, tog e t h e r w i t h the convenience uses, the key to the areas continued e x i s t a n c e as a d i s t r i c t c e n t r e . While hard l i n e 65 a c t i v i t y i n the study area i s much g r e a t e r than Brentwood, i t i s not n e a r l y as important t o the f u n c t i o n o f the c e n t r e as the p r e v i o u s l y mentioned uses. Much of the space i s devoted to f u r n i t u r e s a l e s which don't generate the degree of p e d e s t r i a n t r a f f i c t h a t o t h e r more complementary businesses do. These o u t l e t s a l s o face s t r o n g c o m p e t i t i o n from other r e t a i l f u r n i t u r e o u t l e t s l o c a t e d elsewhere i n North Burnaby, but not i n c l u d e d i n the study. In o t h e r l i n e s , Brentwood i s c l e a r l y dominant. The presence of a major department s t o r e e x p l a i n s the dominance i n g e n e r a l merchandise. More s u r p r i s i n g i s the dominance i n other r e t a i l l i n e s . Brentwood has an un u s u a l l y wide s e l e c t i o n o f hi g h q u a l i t y s p e c i a l t y r e t a i l o u t l e t s f o r a shopping c e n t r e of i t s s i z e . In c o n t r a s t , the s p e c i a l t y o u t l e t s i n the study area tend to be low volume, space consuming uses a t t r a c t e d t o the area by i t s low r e n t s . As was p o i n t e d out i n the p r e v i o u s chapter, Leigh's study o f s p e c i a l t y r e t a i l i n g i n Vancouver, showed a marked tendency f o r these o u t l e t s t o l o c a t e i n unplanned shopping centres."*"^ So f a r , these o u t l e t s have not chosen to l o c a t e i n the study area. An i n c r e a s e i n the number of s p e c i a l t y o u t l e t s i n the study area would i n c r e a s e the v i t a l i t y o f the area and make i t a more a t t r a c t i v e a l t e r n a t i v e t o Brentwood f o r area r e s i d e n t s . 66 Summary and C o n c l u s i o n In t h i s chapter, a method f o r a n a l y z i n g the o p e r a t i o n of r e t a i l f a c i l i t i e s u s i n g land use data was presented. The h i e r a r c h a l r e l a t i o n s h i p between r e t a i l c e n t r e s was shown by the comparison.of : t o t a l commercial f l o o r space. D i f f e r e n c e s between ce n t r e s were c l a r i f i e d by the c l a s s i f i c a t i o n o f r e t a i l u n i t s by type o f goods s o l d , s i z e of u n i t , and by form of o r g a n i z a t i o n . A method f o r a n a l y z i n g the s t r u c t u r e of an unplanned shopping c e n t r e was presented t h a t enabled the r e t a i l core t o be i d e n t i f i e d . Comparision w i t h core uses i n a competing planned shopping c e n t r e showed s i g n i f i c a n t areas of s t r e n g t h and weakness. The a n a l y s i s shows t h a t the major f u n c t i o n of the Hastings S t r e e t area i s as a p r o v i d e r of s e r v i c e s and automobile r e l a t e d goods and s e r v i c e s . Most firms are s m a l l , independently owned and managed o p e r a t i o n s . They tend not to be d i r e c t l y c o m p e t i t i v e w i t h the l a r g e r , more e f f i c i e n t o p e r a t i o n s found i n the Lougheed Regional Centre. T h i s i s p a r t i c u l a r l y t r u e of shopping goods due to the dominance of the Brentwood M a l l over o t h e r r e t a i l f a c i l i t i e s i n the area. The s e c t i o n s of the study area d e s i g n a t e d as the core and frame do f u n c t i o n as an unplanned shopping 67 c e n t r e , p r o v i d i n g some com p e t i t i o n f o r the Brentwood M a l l i n a l i m i t e d range of o u t l e t s . The v i a b i l i t y o f these f a c i l i t i e s i s c r u c i a l to the success of the study area as a d i s t r i c t commercial c e n t r e . The f o l l o w i n g chapter focuses on t h e i r market p o t e n t i a l . 68 Footnotes "^Peter S c o t t , Geography and R e t a i l i n g (London: Hutchinson & Co., L t d . , 1970), p. 106. 2 Burnaby P l a n n i n g Department, "Burnaby Reference Information," Burnaby, 1978. (Mimeographed.) 3 Western Realesearch L t d . , Commercial Floo'r space  Inventory, Greater Vancouver, B r i t i s h Columbia (Vancouver: G.V.R.D., 1978). 4 David Alexander Montgomery, "The I n t e r n a l Arrangement of Urban A r t e r i a l Business D i s t r i c t s " (unpublished M.A. T h e s i s i n Geography, U n i v e r s i t y of B r i t i s h Columbia, 1968). 5 B.C. D i r e c t o r i e s L t d . , Vancouver C i t y D i r e c t o r y (Vancouver: B.C. D i r e c t o r i e s L t d . , 1977). Peter S c o t t , Geography and R e t a i l i n g (London: Hutchinson & Co. L t d . , 1970), p. 29. 7 . B.J.L. Berry, Commercial S t r u c t u r e and Commercial B l i g h t , Department of Geography, Research Paper No. 85 XChicago: U n i v e r s i t y of Chicago, 1963), p. 31. g Community B u i l d e r s C o u n c i l , The Community B u i l d e r ' s  Handbook (Washington: Urban Land I n s t i t u t e , 1968), p. 278. 9 . Richard L. Nelson, The S e l e c t i o n of R e t a i l  L o c a t i o n s (New York-: . F.W. Dodge Corp., 1958), pp. 244-245. •^R. Leig h , S p e c i a l t y R e t a i l i n g : A Geographic A n a l y s i s Vancouver, B.C. Geography S e r i e s , No. 6 (Vancouver: Tantalus Research, 1966). 69 CHAPTER IV CASE STUDY TRADE AREA ANALYSIS: HASTINGS STREET, BURNABY Introduction The previous chapter dealt at length with various aspects regarding the supply of r e t a i l f a c i l i t i e s i n North Burnaby. This chapter i s concerned with the size and structure of the market for r e t a i l f a c i l i t i e s i n the Hastings Street area.;. This i s the key factor i n the planning of any r e t a i l venture. As shown by studies quoted i n Chapter I I , there i s a d i r e c t relationship between the size of the r e t a i l sector and the extent of the population and respective income available. A developer planning a major r e t a i l project i n the Hastings Street area would undoubtedly do extensive market surveys to determine the economic v i a b i l i t y of the project. S i m i l a r l y , public sector planners generally undertake a market survey p r i o r to the implementation of any type of r e v i t a l i z a t i o n scheme. Though t h e i r objectives vary, the techniques of analysis are e s s e n t i a l l y the same. Due to the importance of market research to a l l forms of r e t a i l development, there i s a large body of l i t e r a t u r e on the subject. Unfortunately, most studies 70 focus e i t h e r on the d e t e r m i n a t i o n of the market f o r the i n d i v i d u a l r e t a i l f i r m , or on the d e t e r m i n a t i o n o f i n t r a -urban trade r e l a t i o n s h i p s w i t h i n an e n t i r e community. Few s t u d i e s appear to have looked a t the nature of the market f o r r e t a i l f a c i l i t i e s found i n s t r i p commercial ar e a s . There are numerous p r o b l e m s — t h e wide range of f a c i l i t i e s p r e s e n t ; the d i v e r s e nature of the p o t e n t i a l market; and the q u e s t i o n of trade area boundaries between competing c e n t r e s . Most p l a n n i n g s t u d i e s t h a t have examined the problem have used e i t h e r commonly accepted p l a n n i n g standards to d e r i v e a p o t e n t i a l t r a de area, or have conducted a simple consumer survey of shoppers p r e s e n t i n the area a t any given time. Both of these methods g i v e only p a r t i a l answers to the problem s i n c e they do not examine the competitive s i t u a t i o n which e x i s t s between a l t e r n a t e r e t a i l f a c i l i t i e s . T h i s a n a l y s i s w i l l attempt to d e f i n e the nature of the market f o r r e t a i l f a c i l i t i e s i n the Hastings S t r e e t study area with somewhat more p r e c i s i o n . The a n a l y s i s c o n t a i n e d i n the p r e v i o u s chapter showed t h a t most o f the shopping goods f a c i l i t i e s are l o c a t e d i n the c e n t r a l area which was d e s i g n a t e d as the core and frame. The remainder of the area c o n s i s t s of a d i v e r s e range of f u n c t i o n a l l y u n r e l a t e d land uses and was d e s i g n a t e d as the r i b b o n . C e n t r a l p l a c e theory i n d i c a t e s t h a t core and frame areas 71 operate as hierarchal unplanned shopping centres drawing trade from the surrounding area. This permits the o v e r a l l market for r e t a i l f a c i l i t i e s i n these areas to be determined with some certainty. There i s a ymuch wider range of f a c i l i t i e s i n ribbon commercial areas, so i n d i v i d u a l f a c i l i t i e s must be analyzed separately. For thi s reason, only the nature of the market for r e t a i l f a c i l i t i e s contained i n the core and frame areas of the study area w i l l be analyzed i n this chapter. The chapter begins with a b r i e f review of the p r i n c i p a l approaches to trade area analysis. A modified version of the step-by-step approach to trade area analysis i s used to estimate a market share for r e t a i l f a c i l i t i e s i n the study area from the surrounding r e s i d e n t i a l d i s t r i c t s based on current levels of population and income. The expected increase i n sales from future population increases i s then determined. These e s t i -mates are used to project growth i n the study area of fl o o r space devoted to various classes of r e t a i l f a c i l i t i e s . Some comments follow regarding the prospects for expansion of the range of r e t a i l f a c i l i t i e s presently available i n the study area under either a comprehensive redevelopment scenario as proposed by the Burnaby Planning Department, or a r e v i t a l i z a t i o n scenario. The conclusion from the analysis i s that major redevelopment of r e t a i l f a c i l i t i e s located i n the area i s not feasible due to 72 lack of s u f f i c i e n t growth po t e n t i a l and strong competition from other centres. Modest increases i n the volume of trade and range of r e t a i l outlets presently located i n the area might be possible through a r e v i t a l i z a t i o n program. Methods of Trade Area Analysis There are b a s i c a l l y two main approaches to trade area analysis. The simplest and most widely used i s known as the step-by-step approach. The p r i n c i p l e s of t h i s approach have been well established since the 1920s, and i t enjoys a high degree of acceptance among the marketing profession. B r i e f l y , the steps necessary to implement the approach are as follows: i) E s t a b l i s h a tentative trade area for evaluation, i i ) E stablish the nature of the business types represented. i i i ) Determine the applicable purchasing power of the area, iv) Analyze competing centres. v) Survey consumers to validate i n i t i a l assumptions, vi) Estimate a market share v i i ) Evaluate i n i t i a l assumptions regarding the extent of the trade area, v i i i ) Make a f i n a l estimate of the expected trade area population. 73 Data for the step by step approach can be derived from surveys of the market area, or from estimates based on published census data. The analysis r e l i e s to a large extent on subjective evaluations of the s i t u a t i o n . The public nature of r e t a i l i n g , however, makes t h i s a v a l i d form of research. Results from th i s approach are generally comparable to the alternate approach to trade area analysis, which focuses on the application of r e t a i l gravity models. The i n t e r e s t i n gravity models by market researchers grew out of a desire to f i n d r e g u l a r i t i e s i n the empirical data obtained from market studies conducted for the step-by-step approach. The basic premise of gravity models i s that consumers attempt to maximize s a t i s f a c t i o n through t h e i r shopping behaviour, and that the p r i n c i p a l variables are ;the selection of goods available i n a given centre and the expenditure of e f f o r t necessary to t r a v e l to a given centre. The e a r l i e s t form of a gravity model to gain widespread acceptance i s known as R e i l l y ' s Model of R e t a i l Gravitation. I t was developed by W.J. R e i l l y during the 1920s and i s commonly stated i n two forms, the f i r s t being: Ba = ,Pa,N ,Db,n Bb ^Pb; X *Da' where Ba = trade area drawn by c i t y A from any given , .intermediate c i t y 74 Bb = trade drawn by c i t y B from the same i n t e r m e d i a t e c i t y Pa = p o p u l a t i o n o f c i t y A Pb = p o p u l a t i o n of c i t y B Da = d i s t a n c e o f c i t y A from the i n t e r m e d i a t e c i t y Db = d i s t a n c e of c i t y B from the i n t e r m e d i a t e c i t y N ••= 1 n = 2 The key v a r i a b l e s i n the formula are the exponents which were determined by R e i l l y on the b a s i s o f e x t e n s i v e e m p i r i c a l s t u d i e s . 1 The second statement of the law, d e r i v e d from the f i r s t , i s as f o l l o w s : DB = Dab  1 + /-' Pa' Pb where Dab = the d i s t a n c e between A and B = Da + Db DB = d i s t a n c e from B to the ou t e r l i m i t o f the trade area The outer l i m i t of the trade area was d e f i n e d by R e i l l y as the bre a k i n g p o i n t , where a consumer would be i n d i f f e r e n t between t r a d i n g i n e i t h e r c i t y A o r c i t y B. Consumers were assumed to p e r f e c t l y o ptimize t h e i r shopping c h o i c e s on t h i s b a s i s . Common sense i n d i c a t e s t h a t t h i s i s not always the case. 75 To be f a i r t o R e i l l y , i t should be s t r e s s e d t h a t the law was developed from i n t e r - u r b a n trade area r e s e a r c h and was never intended to be a p p l i e d to i n t r a - u r b a n s i t u a t i o n s . Other r e s e a r c h e r s have suggested i t s use f o r t h a t purpose i n order to o b t a i n a rough approximation 2 of p o s s i b l e trade areas f o r commercial c e n t r e s . Proxy v a r i a b l e s f o r s e l e c t i o n o f goods t h a t are used by r e s e a r c h e r s i n c l u d e r e t a i l f l o o r space, l e n g t h o f commercial fr o n t a g e , employment, and assessed l a n d v a l u e . Proxy v a r i a b l e s f o r the d i s t a n c e v a r i a b l e i n c l u d e s t r a i g h t l i n e d i s t a n c e , road d i s t a n c e , t r a v e l time, and t r a v e l c o s t . The c h i e f l i m i t a t i o n of the law of r e t a i l g r a v i t a t i o n i s the assumption t h a t consumers attempt t o o p t i m i z e t h e i r consumer behaviour i n a d e t e r m i n i s t i c f a s h i o n . In f a c t , they tend to behave i n a p r o b a l i s t i c f a s h i o n , choosing among a range of shopping a l t e r n a t i v e s on the b a s i s of numerous c r i t e r i a , both s u b j e c t i v e and o b j e c t i v e . Consequently, trade areas tend to o v e r l a p based on the c o m p e t i t i v e advantages enjoyed by each c e n t r e and cannot be broken i n t o d i s t i n c t market segments. A s o l u t i o n to t h i s conceptual problem was 3 suggested by Huff. He developed the p r o b a l i s t i c f o r m u l a t i o n of the g r a v i t y model shown below. 76 P i j = ( f o r any zone) Subject to the c o n s t r a i n t t h a t n E P l j = 1.0 j = l where BiLj. = the p r o b a b i l i t y t h a t consumers i n zone i w i l l be a t t r a c t e d to c e n t e r j Aj = the a t t r a c t i v e n e s s of c e n t e r j d i j = the d i s t a n c e from zone i to centre j X = a parameter value which i s to be c a l i b r a t e d to r e f l e c t the e f f e c t of d i s t a n c e o r some oth e r proxy v a r i a b l e The c a l i b r a t i o n of X n e c e s s i t a t e s a market survey. The c h i e f advantages of the p r o b a l i s t i c g r a v i t y model are t h a t i t permits a n a l y s i s o f the co m p e t i t i v e r e l a t i o n s h i p among any number of c e n t r e s and the u n d e r l y i n g assumptions of the model can be e a s i l y v a r i e d . P r o b a l i s t i c g r a v i t y models are g e n e r a l l y programmed f o r r o u t i n e s o l u t i o n by a computer. been developed. Lakshmanan and Hansen suggest t h a t the a t t r a c t i v e n e s s f u n c t i o n as w e l l as the d i s t a n c e f u n c t i o n be r a i s e d to a power to r e f l e c t d i f f e r e n c e s i n the Two improvements to H u f f s b a s i c g r a v i t y model have 77 selection of goods carried by a given centre. A further revi s i o n to the basic formulation by the B r i t i s h researcher, Alan G. Wilson, has an exponential function being substituted for a power function to achieve a better f i t between the model and survey 5 r e s u l t s . Tests of thi s model i n a Canadian context to analyze the merits of shopping centre proposals have achieved better results than tests using Huff's model. The question of which method of trade area analysis i s best for a given s i t u a t i o n depends largely on circumstances and the resources available. . The step-by-step approach i s conceptually simpler and adaptable to many d i f f e r e n t s i t u a t i o n s . The data requirements are generally less onerous, since estimates and subjective evaluations can be used when hard empirical data i s lacking. On the other hand, the analysis i s usually limited to one centre and the results can be questionable, given the subjective nature of many of the estimates used. Gravity model analysis i s generally considered to to be conceptually superior and to be based on more objective data sources. While the results may not be more accurate, they can be duplicated by another party. The analysis can be extended to include any number of di f f e r e n t shopping f a c i l i t i e s with ease. Once the basic 78 parameters of the model have been programmed, the components of the model can be v a r i e d e a s i l y . Disadvantages of the g r a v i t y model approach over the step-by-step approach are t h a t i t i s c o n c e p t u a l l y more complex and more expensive due to e x t e n s i v e data requirements and the need f o r computerized data p r o c e s s i n g . The approach has g e n e r a l l y o n l y been used to analyze r e t a i l f a c i l i t i e s o f the same c l a s s . L i t t l e r e s e a r c h has been done on the c o m p e t i t i v e s i t u a t i o n e x i s t i n g between l a r g e and s m a l l s c a l e c e n t r e s , such as the Brentwood Shopping M a l l and the Hastings S t r e e t commercial area. For t h i s reason and a g e n e r a l l a c k of both data and resources to i n v e s t i n the p r o j e c t , the step-by-step approach was chosen f o r t h i s study. D e t a i l s of the methodology are c o n t a i n e d i n the f o l l o w i n g s e c t i o n . Case Study Methods of A n a l y s i s The a n a l y s i s i s based on the step-by-step method but due t o time and resource; c o n s t r a i n t s , no t r a d e area survey was conducted. A survey to measure the degree of c o m p e t i t i o n between a planned r e g i o n a l shopping c e n t r e and an unplanned d i s t r i c t shopping c e n t r e would have been extremely d i f f i c u l t to d e s ign and a d m i n i s t e r . Trade flows were estimated u s i n g a combination of p u b l i s h e d income and expenditure data, a f l o o r space survey of the area by type of commodity, 79 and s u b j e c t i v e assessment of the c o m p e t i t i v e p o s i t i o n of the area. The f o l l o w i n g f o u r assumptions are c e n t r a l t o the a n a l y s i s : i ) Shoppers tend t o move toward the dominant t r a d i n g c e n t r e , i i ) Shoppers tend to p a t r o n i z e the c l o s e s t c e n t r e w i t h equal f a c i l i t i e s , i i i ) Shoppers tend t o f o l l o w t r a d i t i o n a l c i r c u l a t i o n p a t t e r n s , iv) Average l e v e l s of r e t a i l s a l e s and consumption by l i n e of commodity w i t h i n the area of a n a l y s i s are p r o p o r t i o n a t e t o those of the Vancouver Census M e t r o p o l i t a n Area throughout the p e r i o d of a n a l y s i s . Computational procedures have been adapted from an 7 a r t i c l e by W i l l i a m E. Cox, J r . The f i r s t step i n the a n a l y s i s was to determine a t e n t a t i v e market area f o r the c e n t r e . F o l l o w i n g t h i s , the t o t a l expenditure f o r r e t a i l consumption by market area r e s i d e n t s was determined. The b a s i c equation used was E = (c) (I) (b) where E = expenditure f o r r e t a i l goods and s e r v i c e s c = consumer u n i t s ( f a m i l i e s and unattached i n d i v i d u a l s ) 80 I = average income l e v e l s b = expenditure r a t i o The second equation a l l o c a t e s the t o t a l amount of r e t a i l expenditure to the v a r i o u s r e t a i l f a c i l i t i e s p r e s e n t i n the study area and p r o v i d e s a measure of r e t a i l s a l e s f o r each c l a s s of b u s i n e s s per square f o o t . s = (E) (d) (e) (f) (g) (h) i where S = the expected l e v e l of r e t a i l s a l e s by c l a s s of business per square f o o t d = r e s i d e n t trade flow r a t i o e = the percentage a l l o c a t i o n of consumer expenditure (E) by c l a s s of r e t a i l space f = shopping p a t t e r n r a t i o g = a t t r a c t i v e n e s s f a c t o r h = n o n - r e s i d e n t trade flow f a c t o r i = t o t a l square footage by c l a s s of business w i t h i n the core area Data Sources Wherever p o s s i b l e , p u b l i s h e d data sources were used. S t a t i s t i c s Canada p u b l i s h e s e x t e n s i v e p o p u l a t i o n and income data i n t h e i r census t r a c t s e r i e s , so these areas were used to form the t e n t a t i v e t r ade area. The l o c a t i o n of the f o u r census t r a c t s forming the t e n t a t i v e trade area i s shown i n F i g u r e No. 7. The area i s c o n f i n e d to Burnaby due to 81 82 the p r o x i m i t y of other commercial f a c i l i t i e s t o Vancouver r e s i d e n t s . Data used f o r the f i r s t e quation and the summary of r e s u l t s i s shown i n Table VI. The base p o p u l a t i o n f i g u r e s are taken from the 19 76 census, as v i r t u a l l y no -' 8 growth i n the housing stock has o c c u r r e d s i n c e t h a t date. The two estimates of f u t u r e p o p u l a t i o n are taken from p r o j e c t i o n s o f f u t u r e housing stock f o r the area prepared q by the Burnaby P l a n n i n g Department. . Family households and unattached i n d i v i d u a l s are t r e a t e d as separate consumer u n i t s because of c o n s i d e r a b l e v a r i a t i o n i n r e s p e c t i v e income l e v e l s . The incomes shown are the l e v e l s r e p o r t e d i n the 19 71 census t r a c t s e r i e s p r o j e c t e d at the average r a t e s r e p o r t e d i n the "Consumer Expenditure Surveys f o r Vancouver t o 19 78 l e v e l s . "^ , 1" 1" The 19 86 p r o j e c t i o n uses t h i s base, but i t has been p r o j e c t e d forward a t a r a t e of 3% per annum. T h i s i s the r a t e of r e a l f a m i l y income growth f o r e c a s t by the Economic C o u n c i l of Canada, 12 assuming no f e d e r a l economic s t i m u l u s . The p r o j e c t i o n i s i n constant d o l l a r s . The expenditure r a t i o of 0.5 f o r r e t a i l goods and s e r v i c e s i s d e r i v e d from the 19 74 Urban Family 1 Expenditure Survey f o r Vancouver and i s assumed to remain constant f o r the l e n g t h of the p r o j e c t i o n 13 due to the modest expected r a t e of income growth. The Economic C o u n c i l of Canada expects t h a t s t a b i l i z a t i o n of the lab o u r f o r c e p a r t i c i p a t i o n r a t e w i l l make the p r e v i o u s l y experienced h i g h l e v e l s of income growth 83 TABLE VI POPULATION AND RETAIL CONSUMPTION ESTIMATES: HASTINGS STREET TRADE AREA 1978 (estimate 1) ." 1986 (estimate 2) 1986 1. Population (No.) Census Tract 239 5841 5841 240 6520 6520 241 6207 7304 242 6480 6480 2. Family Units (No.) Census Tract 239- 1560 1560 240 1745 1745 241 1630 1689 242 1760 1760 3. Unattached Individuals (No.) Census Tract 239 - 715 715 240 1020 1020 241 1075 1875 242 980 980 4. Average Family Income ($) * ** Census Tract 239" 23405 29724 240 19730 25057 241 20093 25518 242 21695 27553 5. Average Non-Family Income ($) Census Tract 239.*- 8889 11289 240 7482 9502 241 7421 9425 242 7115 9036 6. Expenditure Ratio 0.5 0.5 7. Consumption ( M i l l i o n $) Census Tract 239 21.43 26.36 240 21.03 25.87 241 20.36 30.17 242 22.58 27.77 * (income 1971) (1.125) 5(1.08) 2 5841 6520 13298 6480 1560 1745 2053 1760 715 1020 4782 980 ** 29724 25057 25518 27553 12289 9502 9425 9036 0.5 26.36 25.87 48.52 27.77 ** (income 1978) (1.03)' 84 u n l i k e l y . T o t a l r e t a i l e x p e n d i t u r e i n 19 78 f o r t h e m a r k e t a r e a i s e s t i m a t e d a t $85,406,496. T h e p r o j e c t i o n s a r e d i s c u s s e d l a t e r . D a t a f o r t h e s e c o n d e q u a t i o n i s s h o w n i n T a b l e V I I a n d V I I I . T a b l e V I I a t t e m p t s t o l i n k t h e r a n g e o f c o n s u m e r e x p e n d i t u r e b y c l a s s o f g o o d t o r e t a i l s a l e s b y c l a s s o f r e t a i l o u t l e t f o r M e t r o V a n c o u v e r . D a t a i s e x p r e s s e d a s a r a t i o o f t o t a l s a l e s a n d t o t a l e x p e n d i t u r e r e s p e c t i v e l y a n d i s d e r i v e d f r o m a v a r i e t y o f s o u r c e s . ^ ' ^ ' ^ I t i s e v i d e n t t h a t w i t h t h e e x c e p t i o n o f c o n v e n i e n c e a n d s h o p p i n g g o o d s , t h e r a t i o s o f r e t a i l e x p e n d i t u r e c o r r e s p o n d r e a s o n a b l y w e l l t o t h e r a t i o s o f r e t a i l s a l e s i n a p a r t i c u l a r c l a s s . T h e r a t i o o f c o n v e n i e n c e g o o d s e x p e n d i t u r e i s m u c h l o w e r t h a n t h e r a t i o o f c o n v e n i e n c e g o o d s o u t l e t s a l e s . T h e o p p o s i t e i s t r u e o f t h e r a t i o o f s h o p p i n g g o o d s e x p e n d i t u r e a n d s h o p p i n g g o o d s o u t l e t s a l e s . T h e p r i m a r y r e a s o n s f o r t h i s a r e - . : f i r s t , t h e b r o a d e n i n g o f p r o d u c t l i n e s b y s h o p p i n g g o o d s s t o r e s — p a r t i c u l a r l y d e p a r t m e n t s t o r e s — t o i n c l u d e c o n v e n i e n c e g o o d s ; s e c o n d , s a l e s o f s h o p p i n g g o o d s t o c o m m e r c e a n d i n d u s t r y ; t h i r d , t o u r i s t s a l e s b y s h o p p i n g g o o d s o u t l e t s . T h i s a p p a r e n t t r a n s f e r o f s a l e s f r o m . c o n v e n i e n c e g o o d s o u t l e t s t o s h o p p i n g g o o d s o u t l e t s m a k e s : : r e t a i l s a l e s r a t i o s a b e t t e r m e a s u r e o f t h e t r u e l e v e l o f r e t a i l s a l e s i n a g i v e n b u s i n e s s s e c t o r t h a n c o n s u m e r e x p e n d i t u r e r a t i o s . T h e y a r e u s e d i n t h e s e c o n d e q u a t i o n a s v a r i a b l e d ' . A l l o f t h e i n f o r m a t i o n n e c e s s a r y f o r t h e 85 TABLE VII COMPARISON BETWEEN FAMILY EXPENDITURE AND CLASSES OF RETAIL SALES VANCOUVER CM.A. Family Expenditure % R e t a i l Sales % 1. Convenience Goods 38. ,0% Convenience Goods 28.7% Food Cleaning, paper, and misc. supplies T o i l e t preparations Drugs Cigarettes and Tobacco Alcohol Reading materials 26.8% 3.2% 1.6% 0.8% 2.0% 2.6% 1.0% Outlets Combination food Specialty food Pharmacies Government liquor Stores 14 5. 2 6 .2% .8% .5% .2% 2. Shopping Goods 26. .6% Shopping Goods 35.6% Furniture and appliances Other household equipment Clothing General merchandise 5.4% 3.4% 11.6% 6.2% Outlets Department stores General merchandise Hard l i n e s Soft l i n e s Other goods 16. 2. 5 4 5. .7% .9% .9% .4% .7% 3. Meals outside the home 6. .0% Restaurants 4.9% 4. Services 4. .8% Service Outlets 4.4% Cleaning Personal care Repairs Miscellaneous 0.8% 1.2% 0.6% 2.2% Cleaning Personal care Miscellaneous 1 1 2 .1% .0% . 3% 5. Entertainment Alcohol consumed outside the home Admissions 1.2% 1.0% 2. .2% Entertainment F a c i l i t i e s Licensed liquor outlets Commercial entertainment 0 2 .9% .4% 3.3% 6. Automobile 21. .6% Automobile Related 22.9% Purchase expense Operating costs Other vehicles 9.2% 9.4% 2.9% Outlets New car dealers Service outlets 13 9 .6% . 3% 7. Total R e t a i l Expenditure 99, .2% Total Consumer Receipts 99.7% 8. Other R e t a i l Receipts Services to businesses Accomodation and food (tourism) Heavy equipment rental 8 4 0 .6% .9% .2% 13.7% 9. Total R e t a i l Receipts 113.7% Sources: 1971 Census of R e t a i l Trade 1971 Census of Service Trade 19 74 Consumer Expenditure Survey TABLE VIII ESTIMATED RETAIL SALES BY CLASS OF FLOOR SPACE: HASTINGS STREET CORE-FRAME AREA Variables Census Tract s Clas 3 of Floor Space Specialty Food** Drugs General l l e r c h . Soft Goods Hard Goods Other Goods Services ReBtaurant Total 1. Reta i l Consumption (E) ($000,000) 1978 239 240 21.43 21.03 241 20.36 242 22.58 2. Retail Consumption (E) ($000,000) 1986 estimate 1 26.36 25.87 30.17 27.77 3. Reta i l Consumption (E) ($000,000) 1986 estimate 2 26.36 25.87 48.52 27.77 4. Resident Trade Flow Factor (d) 0.3 0.75 0.9 0.4 5. Expenditure Ratio by Retail Class (e) 0.058 0.025 0.029 0.044 0.059 0.057 0.044 0.049 0.308 6. Shopping Pattern Ratio (f) 0.71 0.51* 0.37 0.31 0.75 0.20 0.78 0.20* 7. Attractiveness Factor (8) 1.0 1.0 0.6 0.6 0.8 1.0 1.0 1.0 8. Non Resident Trade Flow Factor (h) 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23 9. Floor space by Ret a i l Class (i) 21417 7670 20327 21488 27368 14445 31640 11197 155552 10. $ Sales Per Square Foot by Retail Class (S) 1978 109.97 99.99 19.30 23.21 78.84 48.10 66.12 53.34 61.43 11. $Sales Per Square Foot by Retail Class (S) 1986 estimate 1 155.06 140.99 27.21 32.73 111.18 67.82 93.22 75.20 86.61 12. $Sales Per Square Foot by Retail Class (S) 1986 estimate 2 194.65 176.98 34.16 41.08 139.56 85.14 117.03 94.77 108.73 C O * includes some competition outside of Brentwood ** Sample calculation: Specialty Food [(21.43x0.3) + (21.03x0.75)+(20.36x0.9) + (22.58x0.4)] x 0.058x0.71x1.0x1.23*21417 - 109.97 87 second equation i s shown i n Table V I I I , together w i t h the f i n a l r e s u l t s . The source and s i g n i f i c a n c e o f the remaining v a r i a b l e s are b r i e f l y d i s c u s s e d i n the f o l l o w i n g paragraphs. V a r i a b l e e, d e f i n e d as the shopping p a t t e r n r a t i o , weights the amount of f l o o r space of a p a r t i c u l a r l a n d use c l a s s i n the Hastings S t r e e t core-frame area a g a i n s t the t o t a l supply of s i m i l a r r e t a i l f a c i l i t i e s competing f o r the surrounding market. Except where i n d i c a t e d i n Table V I I I , the only e f f e c t i v e c o m p e t i t i o n i n the area i n the range of r e t a i l f a c i l i t i e s b e i n g c o n s i d e r e d i s Brentwood M a l l . Purchases made o u t s i d e of these f a c i l i t i e s by area r e s i d e n t s are assumed t o be compensated f o r by purchases made i n the area by o u t s i d e r e s i d e n t s . The e f f e c t o f the shopping p a t t e r n r a t i o i s t o - c a l c u l a t e a market share of area consumption f o r r e t a i l f a c i l i t i e s l o c a t e d i n the Hastings S t r e e t core-frame area. V a r i a b l e f , the r e s i d e n t trade flow r a t i o , i s a s u b j e c t i v e w e i g h t i n g of d i s t a n c e and c i r c u l a t i o n p a t t e r n s f o r each of the f o u r census t r a c t s which d e f i n e the market area. C i r c u l a t i o n p a t t e r n s were gi v e n more emphasis i n the r a t i n g , s i n c e i n a l l i n s t a n c e s , d r i v i n g times t o r e t a i l f a c i l i t i e s are under ten minutes and do not c o n s t i t u t e a s i g n i f i c a n t b a r r i e r . H a b i t and convenience are c o n s i d e r e d t o be more important f a c t o r s . 88 Another s u b j e c t i v e l y d e r i v e d v a r i a b l e i s the a t t r a c t i v e n e s s r a t i o g. I t i s used to compensate f o r d e f i c i e n c i e s i n the q u a l i t y of study area r e t a i l f a c i l i t i e s which h i n d e r c o m p e t i t i o n . T h i s f a c t o r was d e r i v e d by the author and another planner knowledgeable of the r e t a i l f i e l d f o l l o w i n g a t o u r of the area. The major d e f i c i e n c i e s were c o n s i d e r e d to be poor e x t e r i o r appearance and poor d i s p l a y and s e l e c t i o n of merchandise. Lack of p a r k i n g which i s commonly c o n s i d e r e d a problem i n othe r unplanned shopping c e n t r e s was not c o n s i d e r e d a s i g n i f i c a n t d e f i c i e n c y . The s m a l l s i z e of the core-frame area makes p a r k i n g r e a d i l y a v a i l a b l e on a d j o i n i n g s t r e e t s . V a r i a b l e h, the no n - r e s i d e n t trade flow r a t i o , i s used to estimate the amount of trade a t t r i b u t a b l e to p a s s i n g t r a f f i c . T h i s source o f business has always been c o n s i d e r e d an important reason f o r a s t r i p commercial l o c a t i o n , though i t i s l i k e l y more important t o businesses l o c a t e d i n the ri b b o n than t o busi n e s s e s l o c a t e d i n the core. The r a t i o i s d e r i v e d from a p u b l i s h e d r e s e a r c h study by F. W. Boal and D. B. Johnson which i n d i c a t ed t h a t 18.7% o f the busi n e s s o f core type e s t a b l i s h m e n t s i n a s t r i p commercial area s i m i l a r t o Hastings S t r e e t was d e r i v e d from p a s s i n g 18 t r a f f i c . The n o n - r e s i d e n t t r a d e flow r a t i o was d e r i v e d by i n v e r t i n g the r e s i d u a l o f t h a t percentage s u b t r a c t e d from u n i t y , g i v i n g a f i g u r e o f 1.22. 89 The f i n a l v a r i a b l e i i s simply the gross f l o o r area by c l a s s of r e t a i l space f o r the Hastings S t r e e t core-frame area, taken from Table V i n the p r e v i o u s chapter. The e f f e c t o f t h i s i s to gi v e a measure of r e t a i l s a l e s by c l a s s f o r the area per square f o o t , r a t h e r than a t o t a l f i g u r e . S a l es per square f o o t are a w e l l r e c o g n i z e d measure of r e t a i l i n g e f f i c i e n c y and are used i n the i n d u s t r y as a c r i t e r i o n f o r p l a n n i n g f u r t h e r expansion of the r e t a i l s e c t o r . I m p l i c a t i o n s o f the Present S i t u a t i o n L i n e ten of Table V I I I p r e s e n t s the r e s u l t s o f equation two a t pr e s e n t p o p u l a t i o n and income l e v e l s . The r e s u l t s of the two p r o j e c t i o n s t o 19 86 are d i s c u s s e d i n the f o l l o w i n g s e c t i o n . The trends are more s i g n i f i c a n t than the a c t u a l numbers, s i n c e estimated data i s used. The s e l e c t i o n of businesses i n the core area l i m i t s p o t e n t i a l t r a de to a maximum of 30.8% o f t o t a l r e t a i l expenditure by the market area. T h i s t r a n s l a t e s to average p o t e n t i a l square f o o t s a l e s o f $169.11. A weighted average o f the s a l e s estimates per square f o o t of each c l a s s o f r e t a i l space d e r i v e d from the equation i n d i c a t e s t h a t the probable l e v e l i s onl y $61.43 per square f o o t or 36.3% of maximum p o t e n t i a l t r a d e , i n c l u d i n g the e f f e c t s o f p a s s i n g t r a f f i c . Data from the Urban Land I n s t i t u t e on planned community and neighbourhood.'^shopping 90 c e n t r e s i n d i c a t e s t h a t t h i s i s r e l a t i v e l y low i n comparison . . . . 19 to o ther s i m i l a r Canadian s i t u a t i o n s . S a l es per square f o o t by c l a s s of r e t a i l space show c o n s i d e r a b l e v a r i a t i o n . S p e c i a l t y food and drug o u t l e t s have the h i g h e s t l e v e l s . The s e l e c t i o n of f a c i l i t i e s i s good and•there' i s r e l a t i v e l y l i t t l e c o m p e t i t i o n f o r the p o t e n t i a l market. Hard goods a l s o appear reasonably s t r o n g , though f u r n i t u r e l i n e s may be f a c i n g competition from l a r g e f u r n i t u r e supermarkets such as Woodwards' F u r n i t u r e F a i r , which was not i n c l u d e d i n the a n a l y s i s . S a l e s o f other goods l i n e s are r e l a t i v e l y low due to the wide v a r i e t y of such f a c i l i t i e s found i n the Brentwood Mall,.' S e r v i c e s and r e s t a u r a n t s appear t o be doing w e l l d e s p i t e competition from the ri b b o n commercial area. By f a r the weakest areas are g e n e r a l merchandise and s o f t goods l i n e s . They face s t r o n g c o m p e t i t i o n from o u t l e t s i n Brentwood M a l l , and w i t h few e x c e p t i o n s , t h e i r image i s weak and t h e i r s e l e c t i o n of goods poor. C l e a r l y , convenience goods o u t l e t s and s e r v i c e s are the s t r o n g e s t r e t a i l f a c i l i t i e s i n the area. The dominance of s e r v i c e s i s even more e v i d e n t when n o n - r e t a i l s e r v i c e s are c o n s i d e r e d . Four banks occupy key corner s i t e s i n the co r e . Other n o n - r e t a i l s e r v i c e s i n c l u d e medical and d e n t a l c l i n i c s , r e a l e s t a t e o f f i c e s , insurance and t r a v e l agents, and accountants. 91 In some sections of the study area, non-commercial uses occupy v i r t u a l l y a l l of the frontage. They benefit from the high volumes of pedestrian t r a f f i c seeking out r e t a i l outlets i n the area. However, they do not a t t r a c t as high a volume of pedestrian t r a f f i c as r e t a i l outlets and tend to detract from the image of a pedestrian shopping area. The problem i s the r e s u l t of inadequate demand for r e t a i l space i n the core-frame area. I t might correct i t s e l f i f increased demand for r e t a i l space were to cause rents i n the core-frame area to r i s e further above those i n the ribbon commercial area. Non-commercial uses would l i k e l y trade o f f a c c e s s i b i l i t y for lower rent payments at locations outside the core. The prospects for further r e t a i l development are discussed i n the following section. Projections of Future R e t a i l Sales Lines eleven and twelve of Table VIII show the l e v e l of r e t a i l sales per square foot that the e x i s t i n g r e t a i l sector could a t t a i n i f population and income were to r i s e to levels projected by the Burnaby Planning Department without any further r e t a i l expansion. The gross increase i n the l e v e l of r e t a i l sales per square foot over e x i s t i n g levels would be 41% for projection No. 1 and 77% for projection No. 2. These levels of increase would l i k e l y generate increased expansion of the r e t a i l sector to absorb any excess p r o f i t s that might be available. 92 A l l of the expected growth i s u n l i k e l y t o be a v a i l a b l e f o r expansion of the r e t a i l s e c t o r . Returns i n some l i n e s of trade might be i n s u f f i c i e n t t o generate expansion even i n an expanded market. In a d d i t i o n , the t r e n d towards h i g h e r overhead.costs, which was d i s c u s s e d i n Chapter I I , r e q u i r e s e x i s t i n g r e t a i l space to be used more e f f i c i e n t l y . Berry estimates t h a t the e f f i c i e n c y o f r e t a i l space use i n Chicago i n c r e a s e d a t a r a t e of 5.7% 20 per annum between 1950 and 1960. A recent Canadian study estimated t h a t r e t a i l e f f i c i e n c y would have to i n c r e a s e a t a r a t e of 3% per annum to meet i n c r e a s e d over-21 head c o s t s . That f i g u r e i s c o n s i d e r e d reasonable f o r t h i s example. A p p l y i n g the 3% e f f i c i e n c y f a c t o r t o the e x i s t i n g l e v e l s of r e t a i l s a l e s r e s u l t s i n a net i n c r e a s e i n r e t a i l s a l e s a v a i l a b l e f o r r e t a i l expansion of only 10.9% f o r the f i r s t p r o j e c t i o n and 40% f o r the second p r o j e c t i o n . Returns i n a l l l i n e s of trade except g e n e r a l merchandise and s o f t l i n e s are c o n s i d e r e d adequate to generate f u r t h e r expansion. T h i s t r a n s l a t e s t o a 12,396 square f o o t expansion of the-core area under the f i r s t p r o j e c t i o n and a 4 3,14 3 square f o o t expansion under the second p r o j e c t i o n . S p e c i f i c amounts f o r each l i n e are shown i n Table No. IX. In both cases, expansion of the r e t a i l s e c t o r i s not of any g r e a t magnitude. The most o p t i m i s t i c TABLE IX PROJECTED INCREMENTAL COMMERCIAL EXPANSION BY CLASS OF FLOOR SPACE TO 19 86: HASTINGS STREET CORE-FRAME AREA C l a s s o f F l o o r Space 1. Food 2. Drug 3. General Merchandise 4. S o f t Goods 5. Hard Goods 6. Other Goods 7. S e r v i c e s 8. Restaurant 9. TOTAL E x i s t i n g P o p u l a t i o n P o p u l a t i o n Development Estimate #1 Estimate #2 ( s q . f t . ) ( s q . f t . ) 21417 7670 20327 21488 27368 14445 31640 11197 155552 2334 836 * _ * _ 2983 1574 3449 1220 12396 ( s q . f t . ) 8567 3068 * _ * _ 8595 5778 12656 4479 43143 * I n s u f f i c i e n t expected r e t a i l s a l e s t o generate a d d i t i o n a l expansion. 94 p r o j e c t i o n would on l y i n c r e a s e the e x i s t i n g r e t a i l s e c t o r by 27% and t o t a l core area space by 16.3% I t i s u n l i k e l y t h a t a d d i t i o n a l r e t a i l space would be r e q u i r e d , s i n c e new r e t a i l uses would probably d i s p l a c e n o n - r e t a i l uses which would move out o f the core i n response t o h i g h e r r e n t s . Prospects f o r I n c r e a s i n g Present R e t a i l S a l es The p r e v i o u s p r o j e c t i o n s are based on the assumption t h a t l i m i t a t i o n s now apparent i n the study area i n the q u a l i t y o f some r e t a i l o u t l e t s and i n the range of r e t a i l f a c i l i t i e s remain constant. F u r t h e r i n c r e a s e s i n s a l e s might occur i f e i t h e r of these l i m i t a t i o n s was improved. The three c l a s s e s of r e t a i l space most a d v e r s e l y a f f e c t e d by q u a l i t y d e f i c i e n c i e s are g e n e r a l merchandise, s o f t goods, and hard goods l i n e s . The q u a l i t y d e f i c i e n c i e s r e l a t e p r i m a r i l y t o the e x t e r i o r appearance o f the i n d i v i d u a l s t o r e s and surrounding area and to the .'poor d i s p l a y and s e l e c t i o n of merchandise. These problems c o u l d be remedied by a program of comprehensive redevelopment or modest r e n o v a t i o n , t o g e t h e r w i t h the adoption of b e t t e r r e t a i l i n g p r a c t i c e s . The f e a s i b i l i t y of the two opt i o n s would depend on the d i f f e r e n c e i n t o t a l c o s t and the improvements i n o p e r a t i n g e f f i c i e n c y a v a i l a b l e from new r e t a i l space, as opposed to renovated r e t a i l space. 95 An i n c r e a s e i n the range of r e t a i l f a c i l i t i e s c o u l d r e s u l t from the development of t o t a l l y new f a c i l i t i e s o r the expansion of e x i s t i n g ones. The two major r e t a i l o u t l e t s not p r e s e n t i n the area now are a department s t o r e and a supermarket. The s e l e c t i o n of s p e c i a l t y (other goods) o u t l e t s i s a l s o r a t h e r l i m i t e d . The f o l l o w i n g a n a l y s i s shows t h a t o n l y the l a t t e r category has a reasonable chance f o r implementation. Recent sources i n d i c a t e t h a t a supermarket must a t t a i n s a l e s of a t l e a s t $225.00 per square f o o t on a minimum area of 25,000 squre f e e t i n o r d e r to meet expenses. This r e q u i r e s a t r a d i n g area p o p u l a t i o n of approximately 20,000. Since the area i s adequately served by two. 30,000 square f o o t supermarkets, even the maximum a n t i c i p a t e d p o p u l a t i o n i n c r e a s e of 7,000 would not generate s u f f i c i e n t buying power to support another. The p o s s i b i l i t y of a department s t o r e i s even more remote. A s u c c e s s f u l f u l l l i n e department s t o r e must have s a l e s of $100.00,per square f o o t on a minimum area of 70,000 squre f e e t , n e c e s s i t a t i n g a trade area p o p u l a t i o n i n excess of 40,000. The Brentwood M a l l has 176,088 square f e e t of department s t o r e space and appears to serve the market adequately. The a d d i t i o n a l p o p u l a t i o n growth i n the Hastings S t r e e t area alone would not j u s t i f y the development of a new department s t o r e . 96 Expansion of other goods li n e s i s li m i t e d by competition from the Brentwood Mall which contains most of the possible high volume uses. The study area presently provides a limited selection of low volume, space consuming uses such as a bookstore, a musical instrument shop, and a c r a f t s store. Some expansion of these types of uses appears possible due to the high cost of the Brentwood location and the lack of other suitable locations i n North Burnaby. Due to t h e i r low rent paying a b i l i t y however, these uses would not be a t t r a c t i v e tenants for a major redevelopment project. They require older, low rent forms of accomodation. A general program of r e v i t a l i z a t i o n intthe area would enhance t h e i r prospects of success, since more than any other type of use, they depend on impulse buying generated by a high volume of pedestrian t r a f f i c . Pleasant surroundings are a necessary pre-condition for the development of that t r a f f i c . 97 Summary and C o n c l u s i o n The purpose of t h i s chapter has been to examine the s i z e and s t r u c t u r e of the market f o r f a c i l i t i e s i n the core-frame area of the Hastings S t r e e t study area. F o l l o w i n g a b r i e f survey o f c u r r e n t approaches t o trade area a n a l y s i s , an estimate o f the p o t e n t i a l volume of trade a v a i l a b l e at present[ and expected f u t u r e p o p u l a t i o n l e v e l s was made us i n g a market share approach. The a n a l y s i s i n d i c a t e d t h a t even wi t h the most o p t i m i s t i c p o p u l a t i o n growth e s t i -mates f o r the surrounding area, only modest i n c r e a s e s i n the s c a l e of e x i s t i n g r e t a i l f a c i l i t i e s were l i k e l y t o occur. They c o u l d be accomodated w i t h i n the e x i s t i n g stock o f commercial b u i l d i n g s i n the area. O p p o r t u n i t i e s f o r expansion of both the s c a l e and range of f a c i l i t i e s r e p resented i n the study area were then e x p l o r e d . Moderate i n c r e a s e s i n the r e t a i l t rade o f s o f t l i n e , g e n e r a l merchandise, and hard l i n e o u t l e t s were estimated to be a v a i l a b l e through improvements to the appearance of s t o r e s and b e t t e r methods of merchandise d i s p l a y and s e l e c t i o n . The pro s p e c t s f o r expansion of the range of f a c i l i t i e s p r e s e n t i n the study area were then e v a l u a t e d . Major expansion was shown t o be i m p r a c t i c a l due to l a c k o f s u f f i c i e n t a v a i l a b l e market. Some expansion of the o t h e r goods l i n e s was thought f e a s i b l e , p r o v i d e d t h a t the c o n d i t i o n o f the area was 98 upgraded.and re n t s remained near pres e n t l e v e l s . The c o n c l u s i o n from t h i s a n a l y s i s i s t h a t the nature and ext e n t o f the market does not favour the redevelopment of r e t a i l f a c i l i t i e s p r e s e n t l y l o c a t e d i n the area. Lack of s u f f i c i e n t growth p o t e n t i a l and s t r o n g c ompetition from the Brentwood M a l l make i t u n l i k e l y t h a t a developer would be able t o a t t r a c t the hig h volume tenants necessary t o permit c o n s t r u c t i o n of a major new r e t a i l f a c i l i t y . The major problem of the area appears t o be q u a l i t y d e f i c i e n c i e s i n some r e t a i l l i n e s competing d i r e c t l y w i t h s u p e r i o r f a c i l i t i e s l o c a t e d o u t s i d e the study area. T h i s has r e s u l t e d i n d e c l i n i n g s a l e s volumes. A r e v i t a l i z a t i o n program might p r o v i d e a b i g enough i n c e n t i v e to re v e r s e t h i s t r e n d i f c o s t s are kept t o a modest s c a l e . I t might a l s o encourage a wider range of r e t a i l o u t l e t s to l o c a t e i n the area than are now p r e s e n t . The f o l l o w i n g chapter examines the economic consequences of both schemes t o land owners t o determine which has the g r e a t e s t chance f o r implementation:.: 99 Footnotes ''"W.J. R e i l l y , Law of R e t a i l G r a v i t a t i o n (New York: R e i l l y , 1931). 2 R.L. Nelson, The S e l e c t i o n of R e t a i l L o c a t i o n s (New York: F.W. Dodge Corp., 1958), p. 149. 3 David L. Huff, "A P r o b a l i s t i c A n a l y s i s of Shopping Centre Trade Areas," Land Economics, XXXIX No. 1 (1963), 81-90. 4 T.R. Lakshmanan and W.G. Hansen, "A R e t a i l Market P o t e n t i a l Model," J.A.T.P., XXXI (May, 1965), 134-143. 5 Al a n G. Wilson, " I n t e r - R e g i o n a l Commodity Flows: Entropy Maximizing Approaches," Geographical A n a l y s i s , I I No. 3 (1970), 255-282. 6 R.W. McCabe, Pla n n i n g A p p l i c a t i o n s of R e t a i l  Models, (Toronto: O n t a r i o M i n i s t r y of Treasury, Economics, and Intergovernmental A f f a i r s , 1974). 7 W.E. Cox J r . , "A Commercial S t r u c t u r e Model f o r a Depressed Neighbourhood,"* J o u r n a l of Marketing, XXXIII No. 3 (1969) , 1-9. 8 S t a t i s t i c s Canada, General P o p u l a t i o n , Household, Family, and Labour Force Data f o r Census T r a c t s , 19 76,  Vancouver Census T r a c t s , Cat. No. 95-828 (Ottawa: M i n i s t r y o f Supply and S e r v i c e s , 1978), p. 49. 9 Burnaby P l a n n i n g Department, P o p u l a t i o n and Housing  P r o j e c t i o n s , I n t e r n a l Memo, Burnaby, 1978. (Mimeographed.) 10..; S t a t i s t i c s Canada, Table 3, Income - .. D i s t r i b u t i o n by Census D i s t r i b u t i o n by Census'Tracts,  19 71, Vancouver Census T r a c t s , Cat. No. 95-758, S e r i e s B (Ottawa: M i n i s t r y of Supply and S e r v i c e s , 1973), p. 53. 11 S t a t i s t i c s Canada, Table 1, Summary of Family  Expenditure by C i t y , A l l F a m i l i e s , and Unattached  I n d i v i d u a l s , Urban Family Expenditure 19 74, Cat. No. 62-544 (Ottawa: M i n i s t r y of Supply and S e r v i c e s , 1976), pp. 3-4. 100 12 Economic C o u n c i l of Canada, Fourteenth Annual  Review: Into the 80s ;(0ttawa: M i n i s t r y of Supply and S e r v i c e s , 1977), p. 93. 13 S t a t i s t i c s Canada, Urban Family Expenditure  Survey 19 74, pp. 3-4. 14 Economic C o u n c i l of Canada, Fourteenth Annual Review p. 93. 15 S t a t i s t i c s Canada, Urban Family Expenditure  Survey 19 74, pp. 3-4. 16 S t a t i s t i c s Canada, Table 7-17, Census of R e t a i l  Trade by Kind of Business, 19 71, Vancouver, Market  Research Handbook, 1977-78, Cat. No. 63-224 (Ottawa: M i n i s t r y of Supply and S e r v i c e s , 1977), p. 418. 17 S t a t i s t i c s Canada, Table 7-18, Census of S e r v i c e  Trade by Kind of Business, 1971, Vancouver, Market Research  Handbook, 1977-78, Cat. No. 63-224 (Ottawa: M i n i s t r y of Supply and S e r v i c e s , 1977), p. 419. 18 F.W. Boal and D.B. Johnson, "Nondescript S t r e e t s , " T r a f f i c Q u a r t e r l y , XXII No. 2 (1968), 339. 19 Urban Land I n s t i t u t e , The D o l l a r s and Cents of  Shopping Centres 19 75 (Washington: Urban Land. I n s t i t u t e , 1975), pp. 240-275. 20 B.J.L. Berry, Commercial S t r u c t u r e and Commercial  B l i g h t , Department of Geography, Research Paper No. 85 (Chicago: U n i v e r s i t y o f Chicago, 1963), p. 173. 21 R.W. McCabe, Shopping Centre D e c i s i o n s : E v a l u a t i o n  Guides (Toronto: O n t a r i o Department of M u n i c i p a l A f f a i r s , Community P l a n n i n g Branch, 1971), p. 42. 22 R.J. Z a v i s l a k e and A.J.P. Jackson, Realty Research Group L t d . , "Does P l a n n i n g Consider the Foodstore Customer?" C.I.P. Forum, (November, 19 78) 4. 101 CHAPTER V ECONOMIC FEASIBILITY ANALYSIS Introduction The purpose of t h i s chapter i s to compare the economic v i a b i l i t y of alternate development plans for the Hastings Street study area. The need to generate an adequate return on the required investment i s fundamental to the success of any redevelopment scheme. To the extent that i t i s possible to judge these matters quickly and e f f e c t i v e l y from a t h i r d party perspective using p u b l i c l y available information, planners should be aware of the economic consequences of alternate development proposals. Techniques used by the r e a l estate development industry to judge economic f e a s i b i l i t y w i l l be presented i n this chapter, using representative data from the Hastings Street Study area. This data i s derived from p u b l i c l y available information and the analysis detailed i n previous chapters. The chapter begins with a discussion of the nature of r e a l estate investment and the methods currently used by the re a l estate industry to judge the f e a s i b i l i t y of development projects. The d e t a i l s of the Hastings Street Community Plan, currently sanctioned by the Municipal 102 Corporation of Burnaby, are presented together with the case both for and against large scale comprehensive redevelopment. A pro forma analysis of a development proposal under the terms of the Community Plan, using the land residual approach, i s then presented. The conclusion from th i s analysis i s that the returns from the development are i n s u f f i c i e n t to j u s t i f y the cost of land assembly under current market conditions. The next section discusses the f e a s i b i l i t y of a r e v i t a l i z a t i o n program for the area. Some examples of the approach are mentioned and the basic steps i n the implementation process are outlined. The case for r e v i t a l i z a t i o n of the Hastings Street study area i s then stated together with methods for evaluating the f e a s i b i l i t y of the various components of the program. Four separate a c t i v i t i e s are d i s c u s s e d — s t r e e t b e a u t i f i c a t i o n , r e h a b i l i -tation of e x i s t i n g structures, s e l e c t i v e redevelopment of new structures, and continued management programs for the area by the business community and municipality. The conclusion from th i s analysis i s that r e v i t a l i z a t i o n o f f ers a feasible alternative to comprehensive redevelopment i n the Hastings Street study area. Real Estate F e a s i b i l i t y Analysis The role of f e a s i b i l i t y analysis i s to determine the a b i l i t y of an investment to make a p r o f i t . Real estate 103 i s a c a p i t a l a s s e t s i m i l a r i n some r e s p e c t s t o any investment, but a l s o w i t h some unique f e a t u r e s . The natures o f these d i f f e r e n c e s i s important to the a n a l y s i s p r o c e s s . Perhaps the most important d i f f e r e n c e from o t h e r a s s e t s i s t h a t r e a l e s t a t e has a f i x e d l o c a t i o n . I t must a t t r a c t income and a market r a t h e r than moving to the most d e s i r e a b l e market as can c e r t a i n other types of investments. Consequently, the value of an investment p r o p e r t y i s g r e a t l y i n f l u e n c e d by f a c t o r s o u t s i d e the property, indeed more so, than by other f a c t o r s o r i g i n a t i n g w i t h i n the p r o p e r t y . There are s i g n i f i c a n t i m p e r f e c t i o n s i n the market f o r r e a l e s t a t e which a l s o a f f e c t i t s v a l u e . The f i x e d l o c a t i o n of r e a l e s t a t e a s s e t s r e s t r i c t s the t o t a l supply. F u r t h e r r e s t r i c t i o n s are caused by the long l i f e o f e x i s t i n g a s s e t s and the h i g h c o s t of replacement of o b s o l e t e s t r u c t u r e s with more e f f i c i e n t a s s e t s . The r a t e of new c o n s t r u c t i o n i s low i n comparison to the t o t a l stock of a s s e t s i n the market. Yet demand can change r a p i d l y due to a wide v a r i e t y of circumstances. C o m p l i c a t i n g the market i s the f a c t t h a t buyers and s e l l e r s f r e q u e n t l y operate without any c l e a r conception of how the r e s t of the market i s o p e r a t i n g . There are no good sources of i n f o r m a t i o n upon which to base investment d e c i s i o n s as there are i n c e r t a i n other markets. 104 Consequently, the r e a l e s t a t e market i s seldom i n balance as to supply and demand. Risks are h i g h e r than i n a f i e l d where the market i s more p r e d i c t a b l e and must be compensated f o r i n the r a t e of p r o f i t r e q u i r e d to make investment a t t r a c t i v e . There are a v a r i e t y of d i f f e r e n t sources of r e t u r n on a r e a l e s t a t e investment to a t t r a c t i n v e s t o r s i n t o the market. The most important source i s the net o p e r a t i n g income a f t e r expenses t h a t r e s u l t s from r e n t a l income. T h i s i s determined by the market and tends to r i s e along w i t h r e a l e s t a t e values because of i n f l a t i o n and growth of the economy. The tendency f o r a s s e t value to a p p r e c i a t e accounts f o r the second major source of r e t u r n on a r e a l e s t a t e investment. A f u r t h e r i n c e n t i v e r e s u l t s from the f a c t t h a t the long l i f e o f r e a l e s t a t e investments makes them e x c e l l e n t c o l l a t e r a l f o r debt f i n a n c i n g . For a s m a l l e q u i t y investment, i n v e s t o r s are able to p a r t i c i p a t e f u l l y i n the growth o f p r o p e r t y v a l u e s , u s i n g f i x e d c o s t borrowed c a p i t a l t o i n c r e a s e the r a t e of r e t u r n on t h e i r i n i t i a l e q u i t y investment to be r e a l i z e d a t the time the p r o p e r t y i s s o l d . T h i s i s known as l e v e r a g e . Real e s t a t e tax r e g u l a t i o n s a l s o p r o v i d e an i n c e n t i v e not a v a i l a b l e to other forms of investment through a c c e l e r a t e d d e p r e c i a t i o n schedules which al l o w a d d i t i o n a l income to be earned on 105 d e f e r r e d taxes p r i o r to the s a l e o f the p r o p e r t y . Most of the l a r g e fortunes i n r e a l e s t a t e have been c r e a t e d by the i n t e r p l a y of leverage and tax i n c e n t i v e s o p e r a t i n g w i t h i n a growing economy. The r e t u r n from a r e a l e s t a t e investment i s determined by s u b t r a c t i n g the i n i t i a l c o s t of the a s s e t from the stream of b e n e f i t s which accrue to the owner. S p e c i f i c a l l y , the r e t u r n should be determined i n p r e s e n t value terms which i s d e f i n e d as the flow of monetary and non-monetary b e n e f i t s , net of c o s t s , d i s c o u n t e d back to the date of the a n a l y s i s . S y m b o l i c a l l y s t a t e d : n a - e EV Present Value = E —- — + C t = l (1 + r ) Z (1 + r ) n Where a t = the gross b e n e f i t s expected from the p r o p e r t y i n year t e^ = the expense of m a i n t a i n i n g the p r o p e r t y i n year t r = a d i s c o u n t r a t e r e p r e s e n t i n g net b e n e f i t s foregone due to investment i n the p r o p e r t y EV = the e s timated value of the p r o p e r t y at the end of the h o l d i n g p e r i o d C = the i n i t i a l c o s t of the p r o p e r t y 106 A v a r i a t i o n on the pr e s e n t value f o r m u l a t i o n i s the I n t e r n a l Rate of Return. Instead o f u s i n g a d i s c o u n t r a t e r e p r e s e n t i n g net b e n e f i t s foregone due to investment i n the p r o p e r t y , a d i s c o u n t r a t e i s c a l c u l a t e d which r e s u l t s i n the Present Value being equal to zero. The I n t e r n a l Rate of Return re p r e s e n t s the a c t u a l r a t e o f r e t u r n on the i n i t i a l e q u i t y investment i n a p r o p e r t y . Whether the Present Value approach or the I n t e r n a l Rate of Return i s used, investment i n the c o n s t r u c t i o n of new r e a l e s t a t e i s j u s t i f i e d only when the r e t u r n from e x i s t i n g comparable r e a l e s t a t e investments on the market i s s u f f i c i e n t l y h i g h t o j u s t i f y the a d d i t i o n a l r i s k and expense to new c o n s t r u c t i o n . To determine the f e a s i b i l i t y o f redevelopment of an e x i s t i n g investment p r o p e r t y , the a n a l y s t must make two c a l c u l a t i o n s . A favo u r a b l e d e c i s i o n w i l l r e s u l t o n l y i f : n a 1 — e 1 EV 1 n a - e EV E — + - c. . > E — + — r - — : — . t = l (1 + t ) t (1 + r ) Z X J t = l (T + r'jt (1 + r ) f c The f i r s t term r e p r e s e n t s the sum of the expected b e n e f i t s from the new development minus the expected i n i t i a l c o s t ( C \ j ) , w h i l e the second term r e p r e s e n t s the sum of the expected b e n e f i t s from the e x i s t i n g development minus the market value of the p r o p e r t y (C). 107 In most s i t u a t i o n s , an i n v e s t o r w i l l have to purchase p r o p e r t y f o r a redevelopment, and the stream o f expected b e n e f i t s from the p r o p e r t y w i l l have a l r e a d y been c a p i t a l i z e d i n t o the purchase p r i c e . Consequently, the key f a c t o r i n the f e a s i b i l i t y of most redevelopment p r o j e c t s i s the c o s t of the l a n d . W i t h i n c e r t a i n l i m i t s , labour, c a p i t a l , and e n t r e p r e n e u r s h i p are mobile and w i l l go where they can make the most co m p e t i t i v e r e t u r n . The r e s i d u a l a f t e r these demands are s a t i s f i e d i s the p r i c e t h a t can be p a i d f o r l a n d . L i k e a l l r e a l e s t a t e t r a n s a c t i o n s , the market f o r redevelopment l a n d operates under the p r i c e mechanism. Buyers have a c e r t a i n c e i l i n g p r i c e beyond which they w i l l not pay, w h i l e s e l l e r s have a f l o o r p r i c e beyond which they w i l l not s e l l . In between these two f i g u r e s i s an area f o r n e g o t i a t i o n . That area i s g e n e r a l l y l a r g e r f o r redevelopment p r o p e r t i e s than f o r other types of investment p r o p e r t y . T h i s i s because' the f l o o r p r i c e i s g e n e r a l l y based on the continuance of the present use of the s i t e , w h i le the c e i l i n g p r i c e i s based on an estimate of the revenue a v a i l a b l e from the h i g h e s t and b e s t use of the s i t e under the c u r r e n t market and zoning s i t u a t i o n . Obviously not a l l p r o p e r t y i n a redevelopment area w i l l be redeveloped a t the h i g h e s t and b e s t use. Consequently, the d i f f e r e n c e between the f l o o r and c e i l i n g p r i c e i s known as f l o a t i n g value s i n c e i t can s e t t l e anywhere i n a redevelopment area. 108 : O c c a s i o n a l l y , l a n d p r i c e s w i l l be h i g h e r than the h i g h e s t and bes t use would i n d i c a t e . T h i s may r e s u l t from an u n r e a l i s t i c view of the h i g h e s t and b e s t use of the pr o p e r t y . T h i s i s g e n e r a l l y due to the f a c t t h a t f l o o r p r i c e s f o r pr o p e r t y do not tend t o f a l l as q u i c k l y as they r i s e i n the face of changing economic circumstances. The s a l e s p r i c e r e p r e s e n t s a s i g n i f i c a n t p o r t i o n of the r e t u r n on an investment, and i n v e s t o r s are normally r e l u c t a n t t o s e l l a t what they c o n s i d e r a l o s s . Many l a r g e i n v e s t o r s are able to h o l d out i n d e f i n i t e l y u n t i l such time as the market or the zoning changes s u f f i c i e n t l y to support the hig h e r v a l u a t i o n . T h i s f a c t o r and the problem of f l o a t i n g value tend to slow the assembly of s i t e s f o r redevelopment c o n s i d e r a b l y . Since the c a l c u l a t i o n of Present Values r e q u i r e s the e s t i m a t i o n o f f u t u r e c o s t s and revenues which tends to be very u n c e r t a i n , the development i n d u s t r y g e n e r a l l y uses a si m p l e r technique known as the l a n d r e s i d u a l approach to make the i n i t i a l e v a l u a t i o n o f the f e a s i b i l i t y o f a new development. The g e n e r a l formula f o r the technique i s as f o l l o w s : (Market Value) - ( C o n s t r u c t i o n Costs) - ( P r o f i t ) = Land R e s i d u a l D e c i s i o n C r i t e r i a : Land R e s i d u a l > Land Value A p p l i c a t i o n of the formula r e q u i r e s estimates o f the net o p e r a t i n g income a n t i c i p a t e d from the p r o p e r t y and the p r o j e c t e d c o n s t r u c t i o n c o s t s . An estimate of the 109 market value for the property i s obtained by using the formula: v - i Where V = the estimated market value of the property I = the net operating income a f t e r expenses R = the estimated o v e r a l l rate of return on the investment The gross income from the property i s a function of the market rent available from the development under normal operation and the amount of development that takes place on the s i t e . Various uses generate d i f f e r e n t market rents. This i s a function of supply and demand as influenced by the location of the property and i t s s p e c i f i c c h a r a c t e r i s t i c s . Generally, commercial uses provide the highest rate of return, followed by o f f i c e , then r e s i d e n t i a l use. P r e v a i l i n g market rents are determined by a survey of comparable properties. These are multi p l i e d by the size of the building and then adjusted to r e f l e c t the e f f i c i e n c y of building space use, estimated vacancies, and anticipated expenses to determine the net operating income. The o v e r a l l rate of return i s the figure which expresses the relationship between the t o t a l market value of the proposed property and the net operating income during the f i r s t year of normal operation for the property. It i s also determined by analyzing the sales of comparable 110 p r o p e r t i e s . I t d i f f e r s from the I n t e r n a l Rate of Return s i n c e i t does, not r e f l e c t the impact of leverage from mortgage f i n a n c i n g , the h o l d i n g p e r i o d and the d i s c o u n t r a t e , or the f i n a l s e l l i n g p r i c e . Thus, i t p r o v i d e s only a rough estimate of the a c t u a l r a t e of r e t u r n t h a t the i n v e s t o r w i l l experience, but t h i s i s s u f f i c i e n t f o r v a l u a t i o n purposes. C o n s t r u c t i o n c o s t s are e s timated by m u l t i p l y i n g the s i z e o f the development by p r e v a i l i n g market r a t e s per square f o o t of c o n s t r u c t i o n space. Adjustments can a l s o be made to r e f l e c t the q u a l i t y of the space, market c o n d i t i o n s , and added a m e n i t i e s . A l t e r n a t e l y , the e s timated c o s t can be determined more p r e c i s e l y by e s t i m a t i n g the labour and m a t e r i a l s necessary to complete a s p e c i f i c d e s i g n . A percentage i s then added to r e f l e c t the developers overhead and the c o s t of i n t e r i m f i n a n c i n g . To determine the developer p r o f i t , a sum equal to 15% of t o t a l expenses i n c l u d i n g l a n d i s added to c o n s t r u c t i o n c o s t s . The t o t a l i s s u b t r a c t e d from the e s timated market value to determine the l a n d r e s i d u a l . The previous d i s c u s s i o n would appear to i n d i c a t e t h a t there i s a p r e c i s e p o i n t a t which redevelopment w i l l or w i l l not take p l a c e , but t h i s i s not so. V a r i o u s p a r t i e s have d i f f e r i n g p e r c e p t i o n s o f what r i s k s a development o p p o r t u n i t y p r e s e n t s and of what r a t e of r e t u r n on investment they c o n s i d e r adequate. I l l G e n e r a l l y , the g r e a t e r the margin between the c a l c u l a t e d l a n d r e s i d u a l and the c o s t of the s i t e , the g r e a t e r i s the p r o b a b i l i t y of development. The l a n d r e s i d u a l approach p r o v i d e s a q u i c k and convenient method f o r determining the f e a s i b i l i t y of r e a l e s t a t e investment p r o j e c t s . I t w i l l be used l a t e r i n the chapter to determine the f e a s i b i l i t y of a l t e r n a t e development p r o p o s a l s f o r the Hastings S t r e e t study area. There are more advanced techniques f o r determining development f e a s i b i l i t y , but t h e i r i n f o r m a t i o n requirements g e n e r a l l y p l a c e them beyond the c a p a b i l i t i e s o f a p u b l i c s e c t o r a n a l y s i s . The Hastings S t r e e t Community P l a n The need f o r p u b l i c i n t e r v e n t i o n t o c o r r e c t the e x i s t i n g b l i g h t c o n d i t i o n s on Hastings S t r e e t has been e v i d e n t f o r some time. The area experiences h i g h vacancy r a t e s from time to time, has a r a p i d t u rnover of b u s i n e s s e s , and e x h i b i t s a r e l a t i v e l y low l e v e l of b u i l d i n g q u a l i t y . Approximately 25% of the b u i l d i n g stock i s r a t e d as poor by the Assessment A u t h o r i t y of B.C.''" The f i r s t p u b l i c i n t e r v e n t i o n i n the area o c c u r r e d i n 196 3, when d e t e r i o r a t i n g b u i l d i n g c o n d i t i o n s and poor economic c o n d i t i o n s i n the area l e a d ': to a s e r i e s of meetings between the m u n i c i p a l i t y and p r o p e r t y owners. 112 Th i s r e s u l t e d i n a d e c i s i o n by the m u n i c i p a l i t y t o purchase a l l p r o p e r t i e s on the south s i d e of the 3800 and 3900 bl o c k s of Hastings S t r e e t , s u b j e c t to r e c e i v i n g f e d e r a l urban renewal funding. T h i s was o b t a i n e d and the r e s u l t i n g p l a n f o r the area proposed the development of a hig h d e n s i t y mixed use r e t a i l / o f f i c e / r e s i d e n t i a l development f o c u s i n g on a p u b l i c square. The i n t e n t o f the p l a n was to pr o v i d e a c a t a l y s t t o spur on the ev e n t u a l redevelopment of the e n t i r e western end of the Hastings S t r e e t area i n Burnaby. The s i t e f o r the p r o j e c t was a c q u i r e d and c l e a r e d f o r d i s p o s a l by p u b l i c tender to a developer w i l l i n g to b u i l d to--the standards s e t ,by the p l a n . An o f f e r from Summerhill Management L t d . was r e c e i v e d i n 19 72, but f o r some u n s p e c i f i e d reason d i d not proceed. The 2.3 acre s i t e remains vacant, a w a i t i n g a s u i t a b l e p r o p o s a l . New developments i n the Hastings S t r e e t area are governed by two m u n i c i p a l l a n d use documents—the Zoning Bylaw and the Community P l a n . The former was i n t r o d u c e d i n 1965 and d i v i d e d the m u n i c i p a l i t y i n t o a number of l a n d use d i s t r i c t s . The zoning f o r the study area i s shown i n F i g u r e No. 8. The two major d i s t r i c t s i n the area are the C3 General Commercial d i s t r i c t and the C4 S e r v i c e Commercial d i s t r i c t . The former d e s i g n a t i o n permits a f l o o r area r a t i o o f f i v e (FAR 5.0), the h i g h e s t l e v e l p e r m i t t e d i n the m u n i c i p a l i t y . The l a t t e r d e s i g n a t i o n i s intended f o r C4 low d e n s i t y a u t o - o r i e n t e d commercial uses w i t h i n a maximum permi 113 JULiu LEGEND R5 Residential District (Two-family) P2 Administrative and Assembly Dis t r i c t P8 Parking District C3 General Commercial Dis t r i c t Ck Service Commercial Dis t r i c t C7 Gasoline Service Station Dis t r i c t <- North FIGURE NO. 8 ZONING: HASTINGS STREET STUDY AREA 114 FAR of 2.0. Another s i g n i f i c a n t f e a t u r e of the Zoning Bylaw i s the i n c o r p o r a t i o n of a f l o a t i n g Comprehensive Development d i s t r i c t . T h i s permits the development o f an area embracing more than one land use c l a s s i f i c a t i o n as an i n t e g r a t e d u n i t based on a comprehensive p l a n which i s /; approved at the time the area i s rezoned. I t i s a n t i c i p a t e d by the m u n i c i p a l i t y t h a t much of the Hastings S t r e e t area w i l l be rezoned f o r redevelopment i n accordance with the Comprehensive Development d i s t r i c t r e g u l a t i o n s . The o v e r a l l m u n i c i p a l development p o l i c y f o r the major p o r t i o n of the area i s o u t l i n e d i n the Hastings S t r e e t Community Pl a n . T h i s c o n t a i n s g u i d e l i n e s f o r the appro v a l of Comprehensive Development d i s t r i c t s . The o f f i c i a l land use map and a schematic concept showing the u l t i m a t e p r o j e c t e d form and s c a l e of the redevelopment i s shown i n F i g u r e No. 9 and F i g u r e No. 10. Adopted i n 1969, the p l a n confirms the recommen-dat i o n s of the urban renewal p l a n by d e s i g n a t i n g a high d e n s i t y Comprehensive Development d i s t r i c t i n the 3700 t o 3900 b l o c k s of Hastings S t r e e t . A f u r t h e r high d e n s i t y r e s i d e n t i a l d i s t r i c t i s proposed f o r the 4200 and 4300 b l o c k s , w i t h other areas covered by the p l a n to remain i n commercial development. Through l o t development t o A l b e r t and Pender S t r e e t i s proposed throughout the area. T h i s would permit the development of p o i n t b l o c k h i g h r i s e 115 i t IT It 4 ! • 1 t ( "1 -tl f7-II J _ ,1, y WILLINGDON AVE. B.il-i - R O S S E R AVE. MADISON AVE. If -CARLTON AVE. r Proposed RM5 High Density Apartment Sites 1 - Site Area-303ac;Max.FAR-2.2; Approximate Total Units 380: Population Density - 280 People/ac.(Approximate) 2 - Site Area - 2 80 ac; Max FAR-2 2; Approximate Total Units 360: Population Density-290 People/ac.(Approximate) . 3 -Site Area-1.55ac: Max.FAR-2.2; Approximate Total Units 190> Population Density- 280 People/ac (Approximate) 7 -Site Area- 1.55ac. Max FAR-2 2. Approximate Total Units 190; Population Density-280 People/ac. (Approximate) 8 -Site Area-0.91ac;Max.FAR-2 2, Approximate Total Units 1C0; Population Density - 250 Peoole/ac.( Approximate) 10 -Site Area-3.50ac.-. Max.FAR- 2 2; Approximate Total Units 445; Population Density-290People/act Approximate) 11 -Site Area-3.40ac.; Max.FAR-2.2; Approximate Total Units 430; Population Density-290 People.'ac.(Approximate) 12 -Site Area-3!43ac.; Max FAR-2 2; Approximate Total Units 440; Population Density-295 People/act Approximate) 13 -Site Area-3.47ac; Max.FAR-2.2; Approximate Total Units 445: Population Density-295 People/ac:(Approximate) 4 -Existing RM3 Apartment Site 5 -Proposed C3 Commercial 6 -Hasting Street Urban Renewal Area 9 -Proposed C3 High Density Commercial ZZIExisting & Proposed RM3 Medium Density ETiZ~] Proposed C3 Commercial lliiiiiiiiijMajnr Pedestrian Links GILMORE AVE. — (=q r MACDONALD AVE. Note: See revised subarea plan for the Urban Renewal Precinct adopted by Council on 78/01/23. U L • INGLE TON AVE. i! -ESMOND AVE. I I' - B O U N D A R Y RD FIGURE NO. 9 - ^ N o r t h OFFICIAL LAND USE PLAN-(Ref. Date: June 1969) C O M M U N I T Y P L A N T H R E E 116 117 b u i l d i n g s s e t w e l l back from the s t r e e t as s p e c i f i e d i n the schematic concept, and presumably, l a r g e i n t e g r a t e d commercial developments f o c u s i n g on an i n t e r i o r m a l l . The e f f e c t of the p l a n , i f f u l l y implemented, would be to r a i s e the p o p u l a t i o n by 7,0 00 to approximately the s a t u r a t i o n l e v e l estimate of the Burnaby P l a n n i n g 2 Department. The e x i s t i n g r i b b o n commercial development w i t h i n the d e s i g n a t e d area would g r a d u a l l y be e l i m i n a t e d . Some ground f l o o r commercial space would be allowed under the terms of the Comprehensive Development zoning design n a t i o n . The e x i s t i n g core commercial area and the convenience cent r e a t the W i l l i n g d o n Avenue i n t e r s e c t i o n would remain i n t h e i r p r e s e n t l o c a t i o n , but would be redeveloped a t a h i g h e r d e n s i t y . Fundamental to the p l a n i s the c o n s o l i d a t i o n of the h i g h l y fragmented land ownership of the area, c o n s i s t i n g c h i e f l y of s i n g l e , twenty f i v e t o f i f t y f o o t frontage l o t s , i n t o l a r g e through l o t p a r c e l s . The concept r e q u i r e s l a n d c l o s u r e s p l u s e x t e n s i v e u t i l i t y r e r o u t i n g , and i t has proven to be extremely d i f f i c u l t t o implement. Apart from the urban renewal s i t e , only one p r o p o s a l t o develop i n accordance with the Community P l a n has been r e c e i v e d and t h a t has not gone forward, even a f t e r s e v e r a l years of n e g o t i a t i o n . Other p r o j e c t s do not appear to be under a c t i v e c o n s i d e r a t i o n by developers, as an a n a l y s i s of c u r r e n t 118 l a n d ownership i n d i c a t e s t h a t no s e r i o u s move to assemble 3 a major p a r c e l f o r development i s o c c u r r i n g . Co n s i d e r a b l e pressure f o r a d d i t i o n a l s m a l l s c a l e development has been r e c e i v e d by the Burnaby P l a n n i n g Department. Through the o p e r a t i o n of t h e i r P r e l i m i n a r y Plan Approval process, they have f o l l o w e d a p o l i c y o f d i s c o u r a g i n g new proposals f o r s m a l l s c a l e commercial development, except i n cases where they are l o c a t e d adjacent to areas of good q u a l i t y two s t o r e y development, or where they c o u l d be i n t e g r a t e d i n t o a f u t u r e comprehensive development i n accordance wi t h the Community P l a n . Over the p a s t ten ye a r s , a number of banks and two s t o r e y commercial b u i l d i n g s have been c o n s t r u c t e d under t h i s p o l i c y . There may be some q u e s t i o n as to the l e g a l i t y of t h i s p o l i c y , s i n c e the Community Plan has not been o f f i c i a l l y adopted i n accordance w i t h S e c t i o n 697 of the M u n i c i p a l Government Act. Presumably, S e c t i o n 702AA(1)(d) g i v e s some l e g i t i m a c y t o the p o l i c y , s i n c e i t allows m u n i c i p a l i t i e s to give c o n s i d e r a t i o n t o "the f u l f i l l m e n t o f community g o a l s " i n the e x e r c i s e of zoning powers. I t would appear t h a t the development o b j e c t i v e s of the Community P l a n have hindered normal redevelopment investment i n the area. Burnaby has chosen to forego modest i n c r e m e n t a l commercial redevelopment i n favour of l a r g e s c a l e comprehensive redevelopment i n order to 119 r a d i c a l l y change the c h a r a c t e r of the area. Ten years l a t e r , the o b j e c t i v e s of the pl a n have not been achieved. To understand the reasons f o r t h i s , i t i s h e l p f u l t o c o n s i d e r some of the advantages and disadvantages of l a r g e s c a l e development p r o j e c t s as r e a l e s t a t e investments. The primary advantage o f l a r g e s c a l e redevelopment i s t h a t i t has the p o t e n t i a l to generate a l a r g e r o v e r a l l r e t u r n . A l l unit; c o s t s b e i ng equal, a l a r g e s c a l e development w i l l produce a l a r g e r r e t u r n than a s m a l l s c a l e development. More important are the economies of s c a l e on f i x e d c o s t items i n c o n s t r u c t i o n — p r i n c i p a l l y l a n d , but a l s o amenity c o s t s and overhead expenses. Large s c a l e developments are able to pr o v i d e b e t t e r f a c i l i t i e s and have h i g h e r q u a l i t y design than s m a l l s c a l e developments because c o s t s are d i s t r i b u t e d more e f f i c i e n t l y . Some of these f i x e d c o s t economies may be absorbed by more expensive c o n s t r u c t i o n c o s t s due t o high e r standards of c o n s t r u c t i o n and a d d i t i o n a l s t r u c t u r a l requirements, but wi t h c a r e f u l d e s ign and choice o f m a t e r i a l s , i n p l a c e u n i t c o s t s f o r r e i n f o r c e d c o n c r e t e h i g h r i s e development equal to those f o r 4 l o w r i s e frame c o n s t r u c t i o n are f e a s i b l e . Savings i n maintenance costs can a l s o be r e a l i z e d by u t i l i z i n g f i x e d c o s t expenses such as j a n i t o r o r c a r e t a k e r s e r v i c e s more e f f i c i e n t l y . Insurance r a t e s a l s o tend to be lower, though the l o c a l e o f the b u i l d i n g i s o f t e n more 120 important than the type of c o n s t r u c t i o n . As l a r g e s c a l e . developments tend to be c o n s t r u c t e d of more durable m a t e r i a l s , a developer can f r e q u e n t l y o b t a i n a lower mortgage i n t e r e s t r a t e . There are i n t a n g i b l e b e n e f i t s which can a f f e c t the value of the development. S i z e i s an i n d i c a t i o n o f s t a t u s i n our s o c i e t y , and t h i s tends to make l a r g e s c a l e developments immune to adverse neighbourhood e f f e c t s which can a f f e c t the p r o p e r t y values of s m a l l s c a l e developments. The h i g h e r s t a t u s a l s o allows them to command h i g h e r r e n t s . On•the other hand, there are a l s o disadvantages to l a r g e s c a l e development, p r i m a r i l y d u r i n g the development process. These p r o j e c t s are more complex and there i s a h i g h e r r i s k of l o s s of the i n i t i a l investment. Fewer developers have the c a p a c i t y to undertake major p r o p o s a l s . Markets f o r l a r g e s c a l e s t r u c t u r e s are l e s s common and s i t e s are more d i f f i c u l t t o o b t a i n . Overhead c o s t s p r i o r to c o n s t r u c t i o n tend to be h i g h e r . T h i s r e s u l t s i n a g r e a t e r need f o r a developer to be able to minimize r i s k s by hedging them with other p a r t i e s i i n v o l v e d i n the development, s i n c e the s c a l e of the investment i s so much g r e a t e r . A developer must weigh the disadvantages a g a i n s t the apparent advantages p r i o r to undertaking a development scheme. 121 F e a s i b i l i t y A n a l y s i s of Community Plan Proposals In order to t e s t the f e a s i b i l i t y o f the Hastings S t r e e t Community Pla n , a pro forma land r e s i d u a l a n a l y s i s of a t y p i c a l h i g h d e n s i t y r e s i d e n t i a l p r o j e c t f o r the area was prepared. The r e s u l t s are shown i n F i g u r e No.11 The s i t e i s l o c a t e d on the e a s t e r n edge of the core commercial area. The development p r o p o s a l i s a 12 t o 15 s t o r e y h i g h r i s e condominium wi t h a maximum FAR of 2.2, c o n t a i n i n g 122 r e s i d e n t i a l u n i t s p l u s underground p a r k i n g Current Vancouver market r a t e s f o r c o s t s and revenues are 5 6 7 used i n the a n a l y s i s . ' ' The o v e r a l l l a n d r e s i d u a l value of $1,216,679 i s e q u i v a l e n t to a per square f o o t value of $24.72. T h i s f i g u r e must cover the c o s t o f assembling the s i t e , h o l d i n i t u n t i l the p r o j e c t r e c e i v e s o f f i c i a l a pproval, c l e a r i n g the e x i s t i n g improvements from the s i t e , and paying f o r u t i l i t y r e l o c a t i o n and other s i t e l e v i e s r e q u i r e d by the m u n i c i p a l i t y . Present l a n d values i n the Community P l a n area are shown i n F i g u r e No.5, Chapter I I I . The range i s from $13.50 to $27.00 per square f o o t . Since improvement values would i n c r e a s e these f i g u r e s by a f a c t o r from 1.0 to 4, i t i s e v i d e n t t h a t o n l y a few l o c a t i o n s i n the l e s s i n t e n s e l y developed r i b b o n commercial area w i t h low g improvement value are f e a s i b l e f o r redevelopment. L o c a t i o n s of s t r u c t u r e s r a t e d as poor q u a l i t y by the 122 FIGURE NO. 11 PRO FORMA ANALYSIS* HIGH DENSITY RESIDENTIAL CONDOMINIUM DEVELOPMENT Assumptions 1. L o c a t i o n : Western 1/3 s i t e 10 ( r e f e r to F i g u r e No. 9) 2. Area 1.13 acres 3. FAR 2.2 4. T o t a l U n i t s 122 Cost A n a l y s i s B u i l d i n g hard c o s t Xaverage s i z e of u n i t 800 s q . f t . ) @ $27 per gross s q . f t . @ 90% b u i l d i n g e f f i c i e n c y $ 2,928,000 Plus p a r k i n g @ 1.25 s t a l l s per u n i t $ 4,500 per s t a l l $ 686,250 . T o t a l hard c o s t $ 3,614,250 S o f t c o s t @ 27% of hard c o s t $ 975,848 T o t a l c a p i t a l c o s t e x c l u d i n g l a n d $ 4,590,098 Revenue Analysis--; T o t a l s e l l i n g p r i c e $55,000 per u n i t $ 6,710,000 Less c a p i t a l c o s t $ 4,590,098 Less p r o f i t to developer @ 15% of t o t a l c o s t i n c l u d i n g l a n d $ 90 3,22 3 Res i d u a l Land Value $ 1,216,6 79 Value of land per square f o o t $24.72 123 the Assessment A u t h o r i t y o f B.C. are shown i n F i g u r e No. 12. T h e i r widely s c a t t e r e d l o c a t i o n s make i t h i g h l y u n l i k e l y t h a t a l a r g e enough s i t e t o permit h i g h r i s e r e s i d e n t i a l development c o u l d be assembled a t a f e a s i b l e p r i c e . Any major improvements or holdouts by e x i s t i n g landowners would push the land c o s t s w e l l above the f e a s i b l e l i m i t . C l e a r l y , the r i s k s i n v o l v e d i n assembling a s u i t a b l e s i t e are not j u s t i f i e d by the revenues generated from r e s i d e n t i a l development. A p o s s i b l e case f o r redevelopment c o u l d be made i f some other uses c o u l d be i n c l u d e d i n the p r o p o s a l . Commercial and o f f i c e development u s u a l l y generate a hi g h e r r a t e of r e t u r n per u n i t o f space. S e v e r a l f a c t o r s tend to m i t i g a t e a g a i n s t t h a t p o s s i b i l i t y , however, The f i r s t i s the low estimated s a l e s volume f o r e x i s t i n g businesses l o c a t e d i n the area shown by the market a n a l y s i s . Despite an a n t i c i p a t e d p o p u l a t i o n growth o f 7000 persons, only moderate i n c r e a s e s i n the s i z e o f the market are p r o j e c t e d . Yet the s i z e of the proposed development s i t e s r e q u i r e s t h a t any commercial development be f a i r l y e x t e n s i v e . A l l p a r c e l s have a t l e a s t 20 0 f e e t of frontage. I f developed t o a depth o f 100 f e e t , t h i s would r e s u l t i n 20,000 square f e e t o f commercial space. That l a r g e a component of commercial space would be necessary to have a s i g n i f i c a n t impact on the economies of the p r o j e c t . Most of the p o t e n t i a l tenants would be small, s i n c e major tenants are a l r e a d y p r e s e n t i n the study areas or i n the Brentwood M a l l . Without AVE. 125 a long term commitment from a major tenant, a developer would have d i f f i c u l t y s e c u r i n g long t e r m f i n a n c i n g f o r a p r o j e c t of t h a t s i z e . From t h i s b r i e f a n a l y s i s , the c o n c l u s i o n i s t h a t the Community Plan has l i t t l e chance of being implemented under c u r r e n t market c o n d i t i o n s . Land p r i c e s are too hi g h to a t t r a c t r e s i d e n t i a l development a t the s p e c i f i e d d e n s i t y , and the market f o r commercial development i s too l i m i t e d . As i t now stands, the p l a n appears counter p r o d u c t i v e t o the v i a b i l i t y o f the area as a d i s t r i c t commercial c e n t r e . Probable consequences i n c l u d e the hindrance of normal redevelopment, the e s c a l a t i o n of land p r i c e s above t h e i r r e a l i s t i c market v a l u e , and a d e c l i n e i n the q u a l i t y of e x i s t i n g s t r u c t u r e s due to u n c e r t a i n t y by owners r e g a r d i n g the value of r o u t i n e maintenance. A p l a n more s u i t e d t o c u r r e n t market c o n d i t i o n s would o f f e r more b e n e f i t t o the area. The R e v i t a l i z a t i o n o f R e t a i l D i s t r i c t s : An A l t e r n a t i v e to Redevelopment In r e c e n t y e a r s , there has been a growing t r e n d i n p l a n n i n g thought towards c o n s e r v a t i o n of d e c l i n i n g urban areas r a t h e r than redevelopment. In part., t h i s has been due to the d r y i n g up of funds f o r urban renewal programs. Perhaps more s i g n i f i c a n t , however, has been the growing i n t e r e s t of the p u b l i c i n p l a n n i n g i s s u e s and the commonly 126 expressed desire to preserve the basic character of older urban areas. As Kevin Lynch writes, "We prefer a world that can be modified progressively against a backdrop of 9 valued remains..." Successful examples of r e v i t a l i z a t i o n of declining areas through conservation techniques has cemented the conviction that i n many instances redevelopment i s not the best approach. R e v i t a l i z a t i o n i s not a new approach. I t i s applied universally throughout the world to adapt the physical heritage of the past to the rapidly changing requirements of the present society. R e v i t a l i z a t i o n techniques take many forms—routine maintenance and repair of aging structures, b e a u t i f i c a t i o n and redecoration of structures and accompanying fix t u r e s , renovation, restoration, adaptive re-use, even redevelopment when i t i s done i n harmony with surrounding structures. Property owners undertake these actions to preserve the value of t h e i r property. When r e v i t a l i z a t i o n techniques are part of a co-ordinated program, they can become a powerful t o o l for urban planning. They can be applied to both r e s i d e n t i a l and commercial situations, but' perhaps are most successful when the co-operation of the entire community i s obtained. Local examples of the r e v i t a l i z a t i o n approach include the restoration of Gastown and many of the projects 127 u n d e r t a k e n b y t h e V a n c o u v e r L o c a l . A r e a P l a n n i n g P r o g r a m . W h i l e e v e r y s i t u a t i o n i s u n i q u e , t h e d e v e l o p m e n t o f a r e v i t a l i z a t i o n p r o g r a m g e n e r a l l y h a s s e v e n s t e p s i . I n i t i a l o r g a n i z a t i o n p h a s e i i . D e v e l o p m e n t o f p u b l i c s u p p o r t i i i . G o a l i d e n t i f i c a t i o n i v . D e f i n i t i o n o f p r o g r a m o b j e c t i v e s v . F i n a l p l a n p r e p a r a t i o n v i . P r o g r a m i m p l e m e n t a t i o n v i i . C o n t i n u i n g m a n a g e m e n t T h e s t e p s d o n o t a l w a y s f o l l o w i n t h i s s e q u e n c e b u t w i l l b e d i s c u s s e d i n t h a t m a n n e r . T h e r e m u s t b e a n i n i t i a l g r o u p t o c o - o r d i n a t e t h e v a r i o u s a s p e c t s o f t h e p r o g r a m a n d t o s t i m u l a t e f u r t h e r c o m m u n i t y s u p p o r t . T h e r e a r e a v a r i e t y o f g r o u p s t h a t c o u l d u n d e r t a k e t h e t a s k , b u t i t i s i m p o r t a n t t h a t t h e g r o u p h a v e a f a i r l y b r o a d i n i t i a l b a s i s f o r s u p p o r t f r o m t h e c o m m u n i t y . I t c o u l d b e a n o n -p a r t i s a n c o m m u n i t y o r g a n i z a t i o n o r a p a r t i c u l a r i n t e r e s t g r o u p a f f e c t e d b y t h e p r o g r a m . F r e q u e n t l y , t h e L o c a l B u s i n e s s A s s o c i a t i o n w i l l t a k e t h e i n i t i a t i v e i n a c o m m e r c i a l r e v i t a l i z a t i o n p r o g r a m s i n c e t h e y s t a n d t o g a i n t h e m o s t f r o m t h e r e s u l t s . T h e f i r s t t a s k o f t h i s i n i t i a l g r o u p i s t o s t i m u l a t e p u b l i c s u p p o r t f o r t h e p r o g r a m . P u b l i c m e e t i n g s a n d p r e s e n t a t i o n s a r e a c o m m o n m e t h o d o f g e n e r a t i n g t h i s 128 support. Examples of s u c c e s s f u l programs can be used to i l l u s t r a t e the impact of r e v i t a l i z a t i o n . I t i s important to generate feedback. The use of a brochure and q u e s t i o n a i r e , d i s t r i b u t e d a t meetings or through the m a i l t o l o c a l r e s i d e n t s , i s a v a l u a b l e means o f ge n e r a t i n g f u r t h e r support. A s s i s t e d by the comments of i n t e r e s t e d groups and i n d i v i d u a l s , the i n i t i a l o r g a n i z i n g group can then draw up a l i s t of goals f o r the program t o address. These goals w i l l p r o v i d e the b a s i s f o r more s p e c i f i c program o b j e c t i v e s . O b j e c t i v e s w i l l be d e f i n e d by examining v a r i o u s p o s s i b l e a l t e r n a t i v e programs and p o l i c i e s t o implement g o a l s . G r a d u a l l y , the range of op t i o n s w i l l be narrowed to a group of f e a s i b l e a c t i o n s which w i l l c o n s t i t u t e the f i n a l p l a n . F u r t h e r p r e p a r a t i o n w i l l be necessary t o b r i n g t h i s l i s t o f a c t i o n s to the implemen-t a t i o n stage. Implementation w i l l i n v o l v e o b t a i n i n g the necessary funding t o c a r r y out the v a r i o u s programs decided upon i n the f i n a l p l a n . Some of these programs w i l l d e a l w i t h the esta b l i s h m e n t of p o l i c i e s to enable the area to remain v i a b l e i n the f u t u r e . F e a s i b i l i t y a n a l y s i s p r o v i d e s a means f o r d e f i n i n g the nature of the f i n a l programs. Because the scope of r e v i t a l i z a t i o n p o l i c i e s i s so wide, a s i n g l e a n a l y t i c a l technique such as l a n d r e s i d u a l a n a l y s i s w i l l not p r o v i d e s u f f i c i e n t i n f o r m a t i o n . A v a r i e t y of techniques must be used to r e l a t e c o s t s to areas of s p e c i f i c b e n e f i t . 129 To i l l u s t r a t e the use of f e a s i b i l i t y a n a l y s i s i n the p u b l i c s e c t o r , f o u r separate programs t h a t t o g e t h e r c o u l d c o n s t i t u t e a r e v i t a l i z a t i o n program f o r the Hastings S t r e e t study area w i l l be o u t l i n e d . A proposed lan d use map and a schematic concept are shown i n F i g u r e s No. 13 and 14. The f o u r programs are s t r e e t b e a u t i f i c a t i o n , r e h a b i l i t a t i o n of e x i s t i n g commercial s t r u c t u r e s , s e l e c t i v e redevelopment, and c o n t i n u i n g management programs. Improving the appearance of the area should be one o f the b a s i c program o b j e c t i v e s . Unpleasant surroundings are a s t r o n g d e t e r r e n t t o people u s i n g a commercial area on a c o n s i s t e n t b a s i s . To promote such an area i s a s e l f d e f e a t i n g a c t . Most r e t a i l e r s r e a l i z e t h i s and attempt t o p r e s e n t as good an /image- to t h e i r customers as they t h i n k i s p o s s i b l e . However, the image t h a t people have of a commercial area i s determined more by the r e l a t i o n -s h i p between the v a r i o u s components of the whole area than i t i s by a s i n g l e s t o r e . Most people would agree t h a t the image of Hastings S t r e e t i s a c h a o t i c one w i t h a m u l t i t u d e of s i g n s , t r a f f i c , p a r k i n g l o t s , and b u i l d i n g s of a l l s i z e s , s c a l e s , and designs competing f o r a t t e n t i o n . Consequently, most landowners do not appear to p l a c e much a t t e n t i o n on the appearance of t h e i r premises beyond m a i n t a i n i n g the 130 WILLINGDON AVE. LEGEND CORE AREA RETAIL DISTRICT Maximum s t o r e f r o n t width-5 0 f e e t FAR 3 . 0 Design Gui d e l i n e s HIGH DENSITY GENERAL COMMERCIAL DISTRICT Maximum s t o r e f r o n t width-5 0 f e e t Far 3 . 0 Design Gui d e l i n e s M A C D O N A L D AVE. — - j — , — Y/\ GENERAL COMMERCIAL DISTRICT FAR 2 . 0 No width r e s t r i c t i o n s OI MEDIUM DENSITY RESIDENTIAL DISTRICT FAR 1 . 1 Underground p a r k i n g FIGURE NO. 1 3 PROPOSED LAND USE PLAN: REVITALIZATION TLJ ^ "North B O U N D A R Y RD. 131 FIGURE NO. 1^ ' SCHEMATIC CONCEPT: REVITALIZATION 132 c u r r e n t standard of the area. The key to improving the appearance o f Hastings S t r e e t i s to i n c r e a s e the l e g i b i l i t y o f the image which Kevin Lynch d e f i n e s as, "... the ease w i t h which i t s p a r t s can be or g a n i z e d i n t o a coherent pattern.""'"''" The p r i n c i p l e sources o f order i n the area a t the present time are the s t r e e t and i t s a s s o c i a t e d common u t i l i t y systems. By upgrading these f a c i l i t i e s , i t i s p o s s i b l e t o s i g n i -f i c a n t l y improve the image of the e n t i r e area. The major emphasis of the b e a u t i f i c a t i o n program should be on c r e a t i n g an a t t r a c t i v e environment f o r p e d e s t r i a n s s i n c e they generate the l a r g e s t amount of t r a d e . I t i s important t o develop a number of u n i f y i n g d esign themes t o strengthen the common i d e n t i t y of the area. Of prime importance i s the treatment g i v e n t o the sidewalks. Most programs i n c o r p o r a t e s p e c i a l paving m a t e r i a l s and matching crosswalks where f e a s i b l e to emphasize the p e d e s t r i a n nature of the area. Other u n i f y i n g themes might i n c l u d e benches throughout the area f o r people to r e s t and lan d s c a p i n g o f boulevards to pro v i d e some s e p a r a t i o n between the sidewalk and the s t r e e t . D e c o r a t i v e l i g h t i n g f i x t u r e s at a l o w e r l l e v e l than the overhead l i g h t standards s e r v i n g t r a f f i c would a l s o h e l p to d i s t i n g u i s h the commercial area t o p e d e s t r i a n s and p a s s i n g m o t o r i s t s . 133 To be most e f f e c t i v e , the improvements should emphasize the u n d e r l y i n g order of the uses i n the area caused by the c l u s t e r i n g of complementary b u s i n e s s e s . The major focus of improvements should be i n the c o r e -frame area which c o n t a i n s most of the shopping f a c i l i t i e s and generates the l a r g e s t amount of p e d e s t r i a n t r a f f i c . Spreading the improvements throughout the ri b b o n commercial area would be a wasted e f f o r t s i n c e these f a c i l i t i e s depend p r i m a r i l y on p a s s i n g auto t r a f f i c f o r t h e i r b u s i n e s s , or are l a r g e enough to generate t h e i r own t r a d e . I t i s not p o s s i b l e t o judge p r e c i s e l y what the impact o f the s t r e e t b e a u t i f i c a t i o n program would be on r e t a i l s a l e s s i n c e many other f a c t o r s have to be c o n s i d e r e d . However, the impact of i t s c o s t s can be e v a l u a t e d more r e a l i s t i c a l l y by comparing i t w i t h c u r r e n t l e v e l s o f r e t a i l s a l e s . A rough measure of c o s t e f f e c t i v e n e s s can be o b t a i n e d by comparing the c o s t o f a s t r e e t b e a u t i f i c a t i o n p r o j e c t to the c o s t o f o t h e r methods f o r improving the appearance of the area, such as r e h a b i l i t a t i o n or redevelopment. A c o s t estimate can be determined by a n a l y z i n g another comparable p r o j e c t . The West Broadway S t r e e t B e a u t i f i c a t i o n program, i n c o r p o r a t i n g many o f the elements mentioned above, was c o n s t r u c t e d by the C i t y o f Vancouver i n 19 76 a t a c o s t of $80.0 0.)per f r o n t a g e f o o t . 134 A m o r t i z a t i o n over f i f t e e n years at an i n t e r e s t r a t e of 9% compounded semi-annually, with the p r o p e r t y owners paying two-thirds of the t o t a l cost,-as a l o c a l improvement charge, r e s u l t e d i n an annual o u t l a y of $7.00 per frontage 12 f o o t . For an average one s t o r e y b u i l d i n g e i g h t y f e e t i n l e n g t h , the c o s t would be under ten cents per square f o o t . T h i s i s l e s s than 0.5% of the lowest per square f o o t s a l e s estimate from the trade area a n a l y s i s o f the previous chapter. No other form of improvement to the area c o u l d generate as much p o s i t i v e impact f o r such a minimal o u t l a y . C l e a r l y , the s t r e e t b e a u t i f i c a t i o n program i s a c o s t e f f e c t i v e means to upgrade the appearance of the area. F u r t h e r improvement i n the image of the area c o u l d be obtained by an area wide r e h a b i l i t a t i o n program. A more ambitious r e h a b i l i t a t i o n e f f o r t would focus on the f u n c t i o n of r e t a i l o u t l e t s so t h a t they c o u l d compete more e f f e c t i v e l y w i t h more modern r e t a i l c e n t r e s . Though the b a s i c o p e r a t i o n of a r e t a i l s t o r e i s r e l a t i v e l y simple, there have been many design improvements i n t r o d u c e d which have a s i g n i f i c a n t impact on the success of a r e t a i l venture. The primary f a c t o r i n the appearance of a r e t a i l o u t l e t i s the s t o r e f r o n t . T h i s i s a s m a l l s t o r e ' s b e s t advertisement. Whatever form i t takes, i t has a d e f i n i t e job to do. F i r s t , i t must cat c h the eye by b e i n g w e l l 135 o r g a n i z e d and i n t e r e s t i n g . Second, i t must i d e n t i f y the s t o r e and g i v e a g e n e r a l impression of the s t o r e p r o p r i e t o r and the type of merchandise he o f f e r s . T h i r d , i t must a c t as a stage f o r the d i s p l a y of merchandise. 13 Fourth, i t should p u l l people i n t o the s t o r e . I t i s not the purpose of t h i s t h e s i s t o d i s c u s s s t o r e f r o n t d e s i g n . However, the l a t t e r p o i n t r e q u i r e s f u r t h e r e l a b o r a t i o n . In order f o r people to e f f e c t i v e l y view a s t o r e f r o n t d i s p l a y , they must be drawn out of the main p e d e s t r i a n t r a f f i c stream. The r e c e s s e d s t o r e f r o n t o r arcade i s one of the most e f f e c t i v e means of doing t h i s . Besides g i v i n g people an o p p o r t u n i t y to stop and browse, i t a l s o i n c r e a s e s t o t a l e f f e c t i v e window space. The l o s s o f s e l l i n g f l o o r space i s more than made up by the i n c r e a s e d drawing power generated by the r e c e s s e d shop window. Too much v a r i a t i o n among s t o r e f r o n t s can destroy the impact of t a s t e f u l i n d i v i d u a l designs. C o - o r d i n a t i o n of r e h a b i l i t a t i o n e f f o r t s i s p o s s i b l e by means of uniform standards f o r s t o r e dimensions, s t o r e f r o n t s , s i g n s , e x t e r i o r m a t e r i a l s , and c o l o u r s . The a r b i t r a r y nature of standards can be so f t e n e d through the est a b l i s h m e n t of a design review panel made up of r e p r e s e n t a t i v e s of the area to c r i t i c a l l y judge the s u i t a b i l i t y o f e x t e r i o r r e n o v a t i o n s . While harmony among s t o r e f r o n t designs 136 i s desireable, i t should not be achieved at the expense of i n d i v i d u a l i t y . The best'solution i s often for merchants to pool t h e i r resources and hire an architect to co-ordinate the design of several stores. S i g n i f i c a n t improvements i n the operation of a store can be made through renovation of the i n t e r i o r . Once a customer i s i n the store, he s t i l l needs to be convinced to purchase the merchandise. I t should be displayed a t t r a c t i v e l y i n a manner which promotes maximum sales. Just as there are classes of r e t a i l outlets s e l l i n g d i f f e r e n t kinds of merchandise, there are also sub-classes 14 of merchandise which have d i f f e r e n t s e l l i n g requirements. Impulse goods are luxuries or suddenly desired merchandise, depending for sale on good display and a c c e s s i b i l i t y . Convenience goods are staple items of standard q u a l i t y , use, and popularity. Demand goods are necessities that bring i n a steady flow of customer t r a f f i c . The economic success of any store depends on how well i t stimulates impulse buying. Thus, a store must be planned to give impulse goods maximum exposure. T y p i c a l l y , they should be located at the front of the store, followed by convenience items i n the centre, and demand items at the rear. Displays should follow i n a l o g i c a l l y related sequence to provide cues to other impulse purchases. 137 U n f o r t u n a t e l y , p s y c h o l o g i c a l f a c t o r s make i t d i f f i c u l t t o p r e c i s e l y c l a s s i f y a p a r t i c u l a r type of merchandise. Depending on the nature of a customer's other purchases and the mood i n v o l v e d a t the time of s a l e , a r o a s t , a s t e r e o r e c o r d i n g , or a dress may be an impulse, convenience, or a demand item. Consequently, the l a y o u t of the s t o r e should be f l e x i b l e enough t o accomodate changes i n buying h a b i t s which occur from time to time. L i k e the s t o r e f r o n t , the i n t e r i o r l a y o u t of a s t o r e should a l s o act as a stage f o r the p r e s e n t a t i o n of merchandise. The e x t e n t o f commercial r e h a b i l i t a t i o n should be r e l a t e d to the i n c r e a s e i n the volume of s a l e s a n t i c i p a t e d from the improvements. Again the trade area a n a l y s i s of the p r e v i o u s chapter can p r o v i d e the b a s i s f o r an estimate of the expected impact o f r e h a b i l i t a t i o n . T h i s i s u s e f u l f o r judging the amount of emphasis t h a t should be p l a c e d on the program and f o r c o n v i n c i n g merchants of the value of r e h a b i l i t a t i o n e x p e n d i t u r e s . The trade area a n a l y s i s i n d i c a t e d t h a t the three c l a s s e s of r e t a i l o u t l e t s most a d v e r s e l y a f f e c t e d by q u a l i t y d e f i c i e n c i e s are g e n e r a l merchandise, s o f t l i n e s , and hard l i n e s . Removal of these q u a l i t y d e f i c i e n c i e s would have r e s u l t e d i n a 67% i n c r e a s e i n the trade estimates f o r g e n e r a l merchandise and s o f t l i n e o u t l e t s , and a 25% i n c r e a s e f o r hard l i n e o u t l e t s . Some of those q u a l i t y d e f i c i e n c i e s are r e l a t e d t o s c a l e advantages 138 enjoyed by the competition, so i t i s u n l i k e l y t h a t they c o u l d be completely e l i m i n a t e d by a program of r e h a b i l i t a t i o n . However, many of them c o u l d , and i t i s u s e f u l to examine the cumulative economic impact of those i n c r e a s e s . A l l o w i n g f o r a 50% margin over the c o s t o f goods f o r s o f t l i n e o u t l e t s and a 40% margin i n the case of gen e r a l merchandise and hard l i n e o u t l e t s , r e s u l t s i n an estimated net annual i n c r e a s e i n a v a i l a b l e per square f o o t revenue of $7.74, $5.15, and $7.88, r e s p e c t i v e l y , a t c u r r e n t s a l e s l e v e l s . I f t h i s were amortized over 10 years a t an est i m a t e d second mortgage r a t e of 14% compounded semiannually w i t h l e v e l monthly payments, i t would permit a t o t a l investment of $42.18, $28.06, and $42.94 per square f o o t f o r s t o r e improvements i n the three r e t a i l l i n e s . T h i s i s s u f f i c i e n t t o cover the most ambitious r e n o v a t i o n and would j u s t i f y redevelopment i f warranted by s t r u c t u r a l c o n d i t i o n s . An investment o f t h i s magnitude i s u n l i k e l y to be made because of o t h e r c o s t s connected w i t h running a r e t a i l b u s i n e s s , but the example does i l l u s t r a t e the impact t h a t r e n o v a t i o n s can have on sub-standard b u s i n e s s e s . I t i s more d i f f i c u l t t o j u s t i f y r e n o v a t i o n s f o r othe r l i n e s o f r e t a i l o u t l e t s and s e r v i c e s . Due to a la c k of c o mpetition, these o u t l e t s appear to be able to capture an adequate share of the market. Renovations must t h e r e f o r e be j u s t i f i e d as p a r t o f g e n e r a l maintenance c o s t s , o r as a means t o prevent the e r o s i o n of the market 139 by new c o m p e t i t i o n . Each i n d i v i d u a l merchant would have to j u s t i f y the expense of renovations based on h i s own experience. One p o s s i b l e source of i n c r e a s e d trade might be an i n c r e a s e i n the n o n - r e s i d e n t trade flow r a t i o . More people might be drawn from o u t s i d e the surrounding t r a d e area i f there were more s p e c i a l t y r e t a i l o u t l e t s . Implementation of r e v i t a l i z a t i o n programs might be a s u f f i c i e n t i n c e n t i v e to a t t r a c t more o f these o u t l e t s to the area. S t r e e t b e a u t i f i c a t i o n and r e h a b i l i t a t i o n programs can only p r o v i d e a p a r t i a l s o l u t i o n to the d e c l i n e of the Hastings S t r e e t study area. Over the long term, there i s a l s o a need to r e p l a c e o b s o l e t e s t r u c t u r e s t h a t cannot be r e h a b i l i t a t e d and i n t r o d u c e new uses which cannot be i n c o r p o r a t e d i n t o e x i s t i n g s t r u c t u r e s . Fundamental to long term s t a b i l i t y of the area i s the adoption of a redevelopment p o l i c y which r e s u l t s i n new development " s i m i l a r to t h a t which a l r e a d y e x i s t s , y e t p r o v i d e s investment o p p o r t u n i t i e s f o r landowners. Experience i n other areas i n d i c a t e s t h a t i t i s p o s s i b l e to i n c o r p o r a t e new development i n t o an e x i s t i n g commercial area i f the uses are compatible, and i f they are designed i n a manner which complements e x i s t i n g b u i l d i n g forms. Both f a c t o r s can be covered by changes to the present Zoning Bylaw. The f i r s t step should be to r e c l a s s i f y l a n d uses 1 4 0 p e r m i t t e d i n the v a r i o u s zoning d i s t r i c t s i n accordance 1 5 w i t h the p r i n c i p l e s o f r e t a i l c o m p a t i b i l i t y . These p r i n c i p l e s are as f o l l o w s : i . C l a s s i f i c a t i o n s of l a n d uses p e r m i t t e d w i t h i n the v a r i o u s zoning d i s t r i c t s should be arranged to i n c l u d e p r i m a r i l y those uses which draw on trade t h a t i s mutually i n t e r c h a n g e a b l e . The two zoning d i s t r i c t s p r e s e n t l y c o v e r i n g the study area allow too much v a r i a t i o n i n the range of p e r m i t t e d uses t o f o s t e r the development of s t r o n g r e t a i l c o m p a t i b i l i t y . i i . Uses should not be allowed t o c r e a t e i n t e r -r u p t i o n s i n the p e d e s t r i a n t r a f f i c flow past adjacent r e t a i l e s t a b l i s h m e n t s . Such i n t e r r u p t i o n s are c r e a t e d by dead spots where a pedestrian: l o s e s i n t e r e s t i n walking f u r t h e r — driveways, or p h y s i c a l breaks i n the b u i l d i n g f rontage; e x c e s s i v e c r o s s t r a f f i c ; and en v i r o n m e n t a l l y d e l e t e r i o u s q u a l i t i e s such as n o i s e , hazards, smoke, or u n s i g h t l i n e s s . i i i . Businesses which c r e a t e e x c e s s i v e c o n g e s t i o n should be p l a c e d i n separate c l a s s i f i c a t i o n s u n l e s s there i s a c l e a r l y i n d i c a t e d mutual economic advantage. 141 v. Except where adequate o f f - s t r e e t parking i s provided, businesses which generate excessive long term parking should be separated from those generating primarily short term parking. The presence of r e t a i l compatibility i n the core-frame of the study area has already been demonstrated. The area should be designated as a separate zoning d i s t r i c t i n order to encourage further compatible develop-ment. Non-compatible development should be r e s t r i c t e d to the ribbon commercial area. The proposed boundaries for the new zoning d i s t r i c t are shown i n Figure No. 13. Permitted uses i n the d i s t r i c t should include a l l convenience and shopping goods outlets, personal and f i n a n c i a l services, and restaurants. Other o f f i c e develop-ment should be r e s t r i c t e d to second f l o o r l o c a t i o n s o n l y , i n order to avoid the development of further dead spots for pedestrian t r a f f i c . A n c i l l a r y r e s i d e n t i a l use above the f i r s t f l o o r would also be permitted. Designation of the core-frame area as a separate zoning d i s t r i c t would l i m i t i t s size to the present 244,480 square feet of f l o o r space. Further r e t a i l development should be incorporated by displacing e x i s t i n g non-retail uses which are more appropriately located i n the adjoining ribbon commercial area. Regulations for the new zoning d i s t r i c t should incorporate guidelines c o n t r o l l i n g the character of new 142 development. New b u i l d i n g s should complement e x i s t i n g b u i l d i n g forms i n the area. They should be of a s i m i l a r h e i g h t and width w i t h common design f e a t u r e s and f i n i s h i n g m a t e r i a l s . Maximum s t o r e width should not be more than f i f t y f e e t , and maximum h e i g h t should not be more than three s t o r i e s . The s u i t a b i l i t y o f the d e s i g n should be c o n s i d e r e d by a design review panel i n the same manner as s t o r e f r o n t r e h a b i l i t a t i o n i s c o n s i d e r e d . C r i t i c a l t o the success of the new redevelopment p o l i c y i s whether developers can conform to the proposed development standards and s t i l l r e a l i z e an adequate r e t u r n on t h e i r investment. The d e n s i t y of development under the proposed standards would be somewhat l e s s than t h a t p e r m i t t e d by the Hastings S t r e e t Community P l a n . However, t h i s i s compensated by the h i g h e r r e t u r n per u n i t o f area generated by commercial development. F i g u r e No. 15 shows a pro forma a n a l y s i s f o r a two s t o r e y c o m m e r c i a l - o f f i c e development meeting the standards of the proposed core zoning d i s t r i c t . The development p r o p o s a l generates a l a n d r e s i d u a l value of $21.13 per square f o o t which i s o n l y s l i g h t l y lower than t h a t a v a i l a b l e from the h i g h r i s e condominium p r o p o s a l shown i n F i g u r e No. 11 f o r the Hastings S t r e e t Community Plan ($24.72). However, there are fewer b a r r i e r s than f o r the condominium p r o p o s a l . Only a s i n g l e l o t i s r e q u i r e d so the developer i s f r e e t o 143 FIGURE NO. 15 PRO FORMA ANALYSIS: TWO STOREY COMMERCIAL-OFFICE DEVELOPMENT Assumptions 1. Location: 4000 block North side, Hastings Street 2. Lot dimensions: 34' x 122' 3. Building dimensions: 34' x 72' Brick construction 4. Building area: 4896 square feet (FAR 1.2) 5. Parking requirements: 1 s t a l l per 500 sq. f t . of bu i l d i n g area Cost Analysis Building hard cost r e t a i l s h e l l 8 S34 per s q . f t . $ 83,232 o f f i c e space 8 $30 per s q . f t . $ 73,440 Plus basement l e v e l for f i v e parking s t a l l s 8 $8 per sq. f t . $ 19,584 Total hard cost $176,256 Soft cost 8 30% of hard cost $ 52,877 Plus tenants' allowances 8 $4 per s q . f t . $ 19,584 Total c a p i t a l cost excluding land $248,717 Revenue Analysis Rental revenue-commercial 8 $10 per s q . f t . (net) 8 95% bu i l d i n g e f f i c i e n c y $ 23,256 - o f f i c e 8 $8.50 per s q . f t . (net) 8 95% bu i l d i n g e f f i c i e n c y $ 19,768 Less vacancy allowance 8 5% 2,151 E f f e c t i v e gross income $ 40,873 Less expenses 8 7% of e f f e c t i v e gross income $ 2,861 Plus parking 8 $90 per space per year $ 900 Net Revenue 38,912 Net income c a p i t a l i z a t i o n rate 10% Building value $389,120 Cap i t a l Cost $248,717 Developer's p r o f i t 8 15% of t o t a l cost including land $ 52,773 Residual Land Value $ 87,631 Value of land per square foot $21.13 = 144 choose a s i t e w i t h low improvement v a l u e . Since there i s no need to assemble a number of l o t s i n t o a l a r g e p a r c e l , the h o l d i n g p e r i o d p r i o r t o development can be much s h o r t e r . Other advantages i n c l u d e reduced l e a d time p r i o r to c o n s t r u c -t i o n , few l o c a l improvement charges by the m u n i c i p a l i t y , and s i g n i f i c a n t l y l e s s r i s k d u r i n g the c o n s t r u c t i o n phase. Given these advantages and the p r i c e of land i n the area, low d e n s i t y commercial redevelopment appears to be a f e a s i b l e p o l i c y . The f o u r t h program i n the proposed r e v i t a l i z a t i o n scheme would be the adoption of c o n t i n u i n g management a c t i v i t i e s to ensure the continued success o f the r e j u v e n a t e d commercial area. Without them, the impact of other programs w i l l be s h o r t l i v e d . A number of these measures are not u n l i k e those undertaken by developers to ensure the continued success of planned shopping c e n t r e s . Many of the a c t i v i t i e s would r e q u i r e the establish:-: ment of a s t r o n g l o c a l b usiness a s s o c i a t i o n . The r o l e of the a s s o c i a t i o n would be somewhat analogous to t h a t of a shopping c e n t r e manager. I t would p r o v i d e a mechanism f o r o r g a n i z i n g area wide a c t i v i t i e s and d e a l i n g with common problems. Examples of the type of a c t i v i t y which might be c a r r i e d out by a l o c a l b usiness a s s o c i a t i o n i n c l u d e the o r g a n i z a t i o n o f promotional events, the development of common a d v e r t i s i n g programs f o r the area, the procurement 145 and management of, o f f - s t r e e t p a r k i n g areas, and the c o - o r d i n a -t i o n of maintenance and renovations t o e x i s t i n g s t r u c t u r e s i n the area. Another important area which might be undertaken by a l o c a l b usiness a s s o c i a t i o n i s the o r g a n i z a t i o n of c o - o p e r a t i v e s e r v i c e programs to a i d businesses too s m a l l to undertake them on t h e i r own. Such programs might i n c l u d e o p e r a t i n g a c e n t r a l i z e d d e l i v e r y s e r v i c e along the s t r i p ; h i r i n g c o n s u l t a n t s on management, merchandising, and buying: techniques; sponsoring a group insurance program; s e t t i n g up a c e n t r a l fund f o r s t o r e improvement loans; making common c r e d i t arrangements, and so f o r t h . ^ Adoption of these programs might a s s i s t s m a l l b u s i n e s s e s to meet the c o m p e t i t i o n from planned shopping c e n t r e s . F u r t h e r study by the business a s s o c i a t i o n would be r e q u i r e d to d e t e r -mine whether they were f e a s i b l e and a c t u a l l y served a u s e f u l f u n c t i o n . Other management programs would be c a r r i e d out by the M u n i c i p a l C o r p o r a t i o n of Burnaby. They would r e l a t e to c o n t r o l of r e t a i l c o m p e t i t i o n i n the area and to the r e l a t i o n s h i p between r e t a i l t r a d e and p o p u l a t i o n growth. There i s a need to p r o t e c t the area from e x c e s s i v e r e t a i l c o m p e t i t i o n . No f u r t h e r r e t a i l development o u t s i d e of the area should be p e r m i t t e d unless warranted by 146 p o p u l a t i o n growth. P a r t i c u l a r l y important i s the need to r e s t r i c t the incremental expansion o f the Brentwood M a l l . The s c a l e economies a l r e a d y p r e s e n t there would make i t d i f f i c u l t f o r study area r e t a i l o u t l e t s to compete e f f e c t i v e l y a g a i n s t a d d i t i o n a l m a l l development. With the l e v e l l i n g o f f , o f consumer incomes, the c o n t r o l o f competition w i l l become i n c r e a s i n g l y important to the success o f e x i s t i n g r e t a i l a r e a s . There i s a l s o a need to i n c r e a s e the s i z e o f the market to maintain the s i z e o f the e x i s t i n g r e t a i l s e c t o r . As was p o i n t e d out i n Chapter I I , d e c r e a s i n g margins r e q u i r e t h a t e x i s t i n g r e t a i l space be u t i l i z e d more e f f i c i e n t l y . S i nce h i g h r i s e r e s i d e n t i a l s t r u c t u r e s do not generate s u f f i c i e n t revenue t o meet e x i s t i n g land c o s t s i n the study area, other means f o r i n c r e a s i n g r e s i d e n t i a l development must be found. Two s o l u t i o n s are the d e s i g n a t i o n of a d d i t i o n a l areas adjacent to the study area f o r medium d e n s i t y apartment development, and the adoption o f measures to encourage the replacement of o b s o l e t e s i n g l e f a m i l y housing w i t h h i g h e r d e n s i t y i n f i l l - 'units compatible w i t h o t h e r s i n g l e f a m i l y development. Land p r i c e s i n the surrounding r e s i d e n t i a l areas are l e s s than h a l f those encountered i n the study area, so lower d e n s i t y r e s i d e n t i a l development i s a f e a s i b l e a l t e r n a t i v e . I t i s a l s o more 147 compatible with the p h y s i c a l and socio-economic e n v i r o n -ment o f the area. A pro forma la n d r e s i d u a l a n a l y s i s of medium d e n s i t y apartment development i s shown i n F i g u r e No. 16. I t produces a l a n d r e s i d u a l of $8.86. At c u r r e n t land p r i c e s , t h i s p r o v i d e s s u f f i c i e n t i n c e n t i v e f o r developers to undertake redevelopment. Summary and C o n c l u s i o n The purpose of t h i s chapter has been t o examine the f i s c a l aspects of a l t e r n a t e approaches to s t r i p commercial redevelopment. The f i r s t s e c t i o n o u t l i n e d the nature of r e a l e s t a t e investments and the techniques used by the development i n d u s t r y to judge the f e a s i b i l i t y o f new development p r o j e c t s . The p r e s e n t Hastings S t r e e t Community Plan was then e v a l u a t e d u s i n g the l a n d r e s i d u a l technique and was judged not t o be f e a s i b l e under c u r r e n t market c o n d i t i o n s . Despite having the h i g h e s t l a n d r e s i d u a l v a lue of any of the development a l t e r n a t i v e s c o n s i d e r e d , the d i f f i c u l t i e s of assembling a s u i t a b l e s i t e f o r a h i g h r i s e condominium were not adequately compensated f o r . In subsequent s e c t i o n s , an a l t e r n a t i v e p l a n o f commercial r e v i t a l i z a t i o n was presented. The p l a n c o n s i s t e d of f o u r separate p r o g r a m s — s t r e e t b e a u t i f i c a t i o n , r e h a b i l i t a t i o n i S b f e x i s t i n g s t r u c t u r e s i n the area, a new redevelopment p o l i c y compatible w i t h e x i s t i n g forms of development i n the area, and c o n t i n u i n g management 148 FIGURE NO. 16 PRO FORMA ANALYSIS: MEDIUM DENSITY RESIDENTIAL CONDOMINIUM DEVELOPMENT A s s u m p t i o n s 1. L o c a t i o n : 3 800 b l o c k P e n d e r S t r e e t 2. L o t d i m e n s i o n s : 1 5 0 ' x l 2 2 ' 3. B u i l d i n g d i m e n s i o n s : 116'x58' Frame c o n s t r u c t i o n 4. B u i l d i n g a r e a : 20184 s q u a r e f e e t (FAR 1.1) 5. P a r k i n g r e q u i r e m e n t s : 1 p e r d w e l l i n g u n i t ( u n d e r g r o u n d ) 6. T o t a l u n i t s : 22 C o s t A n a l y s i s B u i l d i n g h a r d c o s t ( a v e r a g e s i z e o f u n i t 825 s q . f t . ) @ $27 p e r g r o s s s q . f t . P l u s p a r k i n g @ 1 s t a l l p e r u n i t @ $4,000 p e r s t a l l T o t a l h a r d c o s t S o f t c o s t @ 25% o f h a r d c o s t T o t a l c a p i t a l c o s t e x c l u d i n g l a n d Revenue A n a l y s i s T o t a l s e l l i n g p r i c e @ $50,000 p e r u n i t L e s s c a p i t a l c o s t L e s s p r o f i t t o d e v e l o p e r @ 15% o f t o t a l c o s t i n c l u d i n g l a n d R e s i d u a l l a n d v a l u e $544,500 $ 88,000 $632,500 $158,725 $790,625 $1,100,000 $ 790,625 $ 147,211 $ 162,164 V a l u e o f l a n d p e r s q u a r e f o o t $8.86 149 programs to maintain the v i a b i l i t y of the area as a r e t a i l c e n t r e i n the f u t u r e . Methods f o r e v a l u a t i n g the f e a s i b i l i t y of s e l e c t e d aspects of these programs were a l s o presented. The c o n c l u s i o n from t h i s chapter i s t h a t r e v i t a l i z a t i o n i s a more r e a l i s t i c p o l i c y f o r Hastings S t r e e t than i s comprehensive redevelopment. Under c u r r e n t market c o n d i t i o n s , there are s i g n i f i c a n t b a r r i e r s to h i g h r i s e r e s i d e n t i a l development. O p p o r t u n i t i e s f o r g e n e r a t i n g an adequate r e t u r n On investment appear more p l e n t i f u l under a p o l i c y of commercial r e v i t a l i z a t i o n . In a d d i t i o n , there are s i g n i f i c a n t monetary and non-monetary b e n e f i t s to the r e s t of the community. The next chapter p r o v i d e s a more comprehensive d i s c u s s i o n o f the nature of the c o s t s and b e n e f i t s f o r the proposed schemes. 150 Footnotes "^ B. Whitson, "Hastings S t r e e t Redevelopment Study" (Burnaby: Burnaby P l a n n i n g Department, 19 78).(Typewritten.) 2 Burnaby P l a n n i n g Department, P o p u l a t i o n and  Housing P r o j e c t i o n s , • I n t e r n a l Memo, Burnaby., May 1978.-(Mimeographed i..) 3 B. Whitson, "Redevelopment Study." 4 H. Aregger and O. Claus , H i g h r i s e B u i l d i n g  and Urban Design (New York: F r e d e r i c k A. Praeger, P u b l i s h e r s , 1967), pp. 38-39. 5 Urbanics Consultants L t d . , Robson S t r e e t  R e v i t a l i z a t i o n Study (Vancouver: Vancouver C i t y P l a n n i n g Department, 19 78), Appendix H. Urbanics Consultants L t d . , Harbour Park Development  A l t e r n a t i v e s (Vancouver: Vancouver C i t y P l a n n i n g Department, 1977), Appendix B, pp. 38,42,50. 7 • M. Cole, i n t e r v i e w , Assessment A u t h o r i t y o f B r i t i s h Columbia, Burnaby and New Westminster o f f i c e , Burnaby, B.C., February, 1979. g Assessment A u t h o r i t y o f B r i t i s h Columbia, Burnaby  Assessment R o l l , 19 78. 9 K. Lynch, What Time i s t h i s Place? (Cambridge, Mass.: M.I.T. Press, 1972), p. 39. " ^ P r i v a t e R e v i t a l i z a t i o n of Downtown Inc. , R e v i t a l i z a t i o n of Downtown: S e l f - h e l p G u i d e l i n e s f o r the  Smaller C i t y (Santa Cruz: P.R.O.D., 1975), pp.39-46. 11 K. Lynch, The Image of the C i t y (Cambridge, Mass.: M.I.T. Press, I960) ,. pp.2-3. 12 Vancouver C i t y P l a n n i n g Department, Broadway West—A  Community Improvement P r o j e c t (Vancouver: The Department, 1974). 13 M o r r i s Ketchum J r . , Shops and Stores (New York: Reinhold P u b l i s h i n g Co., 1957 Revised E d i t i o n ) , p. 124 14 I b i d . , p. 16. 151 15 R.L. Nelson and F.T.. Aschman, Co n s e r v a t i o n and  R e h a b i l i t a t i o n Of Major Shopping D i s t r i c t s (Washington: Urban Land I n s t i t u t e , T e c h n i c a l B u l l e t i n No. 22, 1 9 5 4 ) , p.. 16 C i t y o f Toronto Planning Board, Toronto's R e t a i l  S t r i p s (Toronto: The Board, 1 9 7 6 ) , p. 43. 152 C H A P T E R V I E V A L U A T I O N O F A L T E R N A T I V E S ' : R E D E V E L O P M E N T O R R E V I T A L I Z A T I O N I n t r o d u c t i o n T h e p r e v i o u s c h a p t e r a t t e m p t e d t o c o m p a r e t h e e c o n o m i c c o n s e q u e n c e s o f r e d e v e l o p m e n t t o t h o s e o f r e v i t a l i z a t i o n . T h e c o n c l u s i o n w a s t h a t a l t h o u g h r e d e v e l o p m e n t o f f e r e d t h e p o t e n t i a l o f h i g h e r r e t u r n s t o p r o p e r t y o w n e r s , t h e r e w a s g r e a t e r s e c u r i t y o f r e t u r n t o i n v e s t o r s f r o m r e v i t a l i z a t i o n . P u b l i c d e c i s i o n m a k e r s f a c e d w i t h t h i s c o n c l u s i o n w o u l d r e q u i r e f u r t h e r i n f o r m a t i o n b e f o r e m a k i n g a d e c i s i o n i n f a v o u r o f o n e p l a n . T h e r e a r e s i g n i f i c a n t m o n e t a r y a n d n o n - m o n e t a r y c o s t s a n d b e n e f i t s t o o t h e r i n t e r e s t g r o u p s w i t h i n t h e m u n i c i p a l i t y w h i c h a l s o n e e d t o b e c o n s i d e r e d . T h e m o s t c o m m o n m e t h o d f o r o b t a i n i n g t h i s i n f o r m a t i o n i s t o c a l l f o r p u b l i c r e a c t i o n . U n f o r t u n a t e l y , t h i s a p p r o a c h i s n o t a l w a y s e f f e c t i v e . T h e r e i s o f t e n a g r e a t d e a l o f m i s u n d e r s t a n d i n g a b o u t t h e n a t u r e o f t h e p r o p o s a l s . C o n f l i c t s b e t w e e n o p p o s i n g i n t e r e s t g r o u p s a r e a f r e q u e n t o c c u r e n c e . . T h e d e c i s i o n m a k e r i s o f t e n l e f t w i t h a n i n c o m p l e t e , f r a g m e n t e d v i e w o f t h e r e s p e c t i v e i m p a c t s o f t h e p r o p o s a l s u p o n w h i c h t o b a s e a d e c i s i o n . E v a l u a t i o n r e s e a r c h p r o v i d e s a means f o r d e c i s i o n makers to more thoroughly assess the impacts of a l t e r n a t e p l a n n i n g p r o p o s a l s . The most w i d e l y accepted e v a l u a t i o n technique i s c o s t b e n e f i t a n a l y s i s . T h i s technique i s commonly used i n the p r i v a t e s e c t o r , and r e a l e s t a t e f e a s i b i l i t y a n a l y s i s techniques presented i n the p r e v i o u s chapter are a v a r i a t i o n on the b a s i c methodology. Cost b e n e f i t a n a l y s i s i s not always w e l l s u i t e d to the e v a l u a t i o n of p u b l i c s e c t o r a l t e r n a t i v e s . M u l t i p l e o b j e c t i v e s must f r e q u e n t l y be accounted f o r ; the scope of c o s t s and b e n e f i t s i s g e n e r a l l y much wider; non-monetary c o n s i d e r a t i o n s must be taken i n t o account. Another-group of techniques has been developed to handle these problems. Two of the most advanced techniques are the Goals Achievement Matrixr,i developed by M o r r i s H i l l , and the P l a n n i n g Balance Sheet, developed by N a t h a n i e l 1 2 L i t c h f i e l d . ' Both methods attempt t o extend the c o s t b e n e f i t methodology to adequately address p u b l i c s e c t o r d e c i s i o n s . The most comprehensive approach i s the Goals Achievement Matri x . I t attempts to measure the achievement of common s o c i e t a l goals w i t h r e s p e c t to more or l e s s homogeneous i n t e r e s t groups. Both the importance of the goals and the importance of the i n t e r e s t groups are r e c o g n i z e d i n the f i n a l r e s u l t by a weighting system. The d e c i s i o n maker need only accept or r e j e c t the f i n a l 154 recommendation,:' The P l a n n i n g Balance Sheet approach r e j e c t s the n o t i o n of common s o c i e t a l g o a l s . S o c i e t y i s assumed to c o n s i s t of a l a r g e number of d i s t i n c t i n t e r e s t groups, each w i t h t h e i r own s e t of o b j e c t i v e s . The technique.;uses these o b j e c t i v e s to measure the c o s t s and b e n e f i t s which accrue from a l t e r n a t e courses o f a c t i o n . The v a r i o u s c o s t s and b e n e f i t s are then aggregated to determine the recommen-ded a l t e r n a t i v e . P r i o r t o acceptance, the d e c i s i o n maker must c o n s i d e r the r e l a t i v e importance of each i n t e r e s t group. L i t c h f i e l d argues t h a t determining weights i s a matter of e t h i c a l judgement and t h a t the r o l e of the a n a l y s t 3 i s t o p o i n t out the d i s t r i b u t i o n a l e f f e c t s ; The r e s u l t s can be used as a t o o l to optimize the f i n a l d e c i s i o n through m o d i f i c a t i o n s i n the nature of the p r o p o s a l or by s h i f t i n g c o s t s to e q u a l i z e the d i s t r i b u t i o n of b e n e f i t s . Both methods are s i m i l a r i n t h a t the success of t h e i r a p p l i c a t i o n depends on the nature of the g o a l statements a g a i n s t which the c o s t s and b e n e f i t s of a l t e r n a t e a c t i o n s are measured and on the nature of the data upon which the a n a l y s i s i s based. I d e a l l y , g o a l statements should be o b t a i n e d d i r e c t l y from i n t e r e s t groups through market r e s e a r c h . U n f o r t u n a t e l y t h i s i s not always p o s s i b l e . A l e s s s a t i s f a c t o r y approach i s f o r goals to be imputed to s o c i e t y or the a f f e c t e d i n t e r e s t groups by the a n a l y s t , as was done i n t h i s study. I t i s 155 important t h a t goals be s t a t e d i n a manner t h a t allows t h e i r achievement to be measured. Market value i s u s u a l l y the most accurate measure of c o s t s and b e n e f i t s and should be used whenever p o s s i b l e . Other u n i t s of value must be d e r i v e d to estimate non-monetary c o s t s and b e n e f i t s . E v a l u a t i o n Methodology As one of the purposes o f t h i s t h e s i s i s t o show the d i f f e r i n g i m p l i c a t i o n s f o r v a r i o u s i n t e r e s t groups of a l t e r n a t e development p l a n s , the P l a n n i n g Balance Sheet was chosen as the method of a n a l y s i s . The Hastings S t r e e t Community P l a n and the r e v i t a l i z a t i o n p l a n developed i n the p r e v i o u s chapter were the s u b j e c t of the a n a l y s i s . The l i m i t a t i o n s of the a n a l y s i s are as f o l l o w s : ;i) F i r s t , the a n a l y s i s assumes f u l l completion of each p r o j e c t p r i o r t o e s t i m a t i o n of c o s t s and b e n e f i t s . The degree of r i s k i n h e r e n t i n the p l a n f o r a given i n t e r e s t group to achieve gains i s accounted f o r , but not the very c o n s i d e r a b l e r i s k t h a t redevelopment w i l l not proceed as planned. i i ) Second, no attempt i s made to d i s c o u n t f o r time d e s p i t e the f a c t t h a t b e n e f i t s are achieved over d i f f e r e n t p e r i o d s of time. T h i s f a c t o r must be c o n s i d e r e d f o l l o w i n g 156 the analysis. i i i ) Third, the evaluation i s based on expert opinions formed by the analysis contained i n previous chapters. iv) Fourth, the evaluation does not consider the impact of other municipal programs such as transportation improvements on the f u l f i l l m e n t of plan objectives. I t i s assumed that both schemes would be equally affected. The usefulness of the Planning Balance Sheet would be extended considerably by more extensive data c o l l e c t i o n , but that i s beyond the scope of t h i s thesis. The f i r s t step i n the evaluation i s to i d e n t i f y a l l i n t e r e s t groups. They are divided into two categories as shown i n Table XI. Producer/Operators, shown on the f i r s t page of the Table, are people or groups who play a part i n providing services to be re a l i z e d from the project. Consumers, shown on the second page of the Table, are people or groups who use the services provided and are paired with the corresponding producer/operators. Each associated pair of producer/operator and consumer i s engaged i n a transaction whereby the former produces goods for sale to the l a t t e r . These transactions are not confined to market goods and services. Indirect trans-actions are included as well. A l l producer/operators 157 and consumers encur costs and benefits which can be of three types: i) Direct or I n d i r e c t — D i r e c t relates to costs which the producer/operators or consumers must bear and to benefits which they can hold under current laws and customs. Indirect costs or benefits are e x t e r n a l i t i e s which cannot be exchanged with other parties for f i n a n c i a l gain. i i ) Real (Technological) or Pecuniary—These relate to changes i n established as opposed to new goods and services brought about by external events. Real costs and benefits occur when there are actual changes i n qu a l i t y . Pecuniary changes i n value ari s e from r e l a t i v e changes i n supply and demand. i i i ) Real or Transfer—'Real relates to the use of r e a l resources such as men: and materials to create value, while transfer relates to the growth i n value of f i n a n c i a l resources such as land which does not consume resources. Table XI also contains the s p e c i f i c a t i o n s for costs and benefits of producer/operators and consumers. The f i r s t and second columns to the right of the i n t e r e s t groups contain an estimate of the number of individuals affected i n the group by each project. The t h i r d column 15 8 c o n t a i n s the i n s t r u m e n t a l o b j e c t i v e s a g a i n s t which c o s t s and b e n e f i t s are measured. The f o u r t h and f i f t h columns s p e c i f y the u n i t s i n which c o s t s and b e n e f i t s are t r a n s a c t e d . C a p i t a l t r a n s a c t i o n s are s p e c i f i e d w i t h a c a p i t a l l e t t e r , w h i le p e r i o d i c t r a n s a c t i o n s are s p e c i f i e d w i t h a s m a l l l e t t e r . Measurable q u a n t i t i e s are s p e c i f i e d w i t h an Mm', T t , Pp. (money, time, p h y s i c a l u n i t s ) Unmeasurable q u a n t i t i e s are s p e c i f i e d as I i . ( i n t a n g i b l e s ) Costs and b e n e f i t s o f op e r a t o r s can u s u a l l y be measured, even i f i n d i r e c t i n the sense used here, but consumer c o s t s and b e n e f i t s are o f t e n i n t a n g i b l e . Because of the g e n e r a l i t y o f the p l a n s , no q u a n t i t i e s are s p e c i f i e d i n t h i s a n a l y s i s . S u b j e c t i v e judgement i s a p p l i e d t o f o r e c a s t the extent t o which the plans w i l l achieve the o b j e c t i v e s o f each i n t e r e s t group. Only net b e n e f i t s and l o s s e s f o r each p r o j e c t are given. O b j e c t i v e s are weighted on a s c a l e o f one to three and achievement of goals i s ranked on a s c a l e o f minus three to p l u s t h r e e . These are m u l t i p l i e d together to achieve a p r o j e c t score f o r each o b j e c t i v e . Scores are then aggregated t o achieve a f i n a l p r o j e c t score f o r each i n t e r e s t group. T h i s example d i f f e r s from L i t c h f i e l d ' s o r i g i n a l P l a n n i n g Balance Sheet as d i s s i m i l a r measurement u n i t s are aggregated t o produce a f i n a l r e d u c t i o n . In the o r i g i n a l example only known money t r a n s a c t i o n s were 4 aggregated. Other t r a n s a c t i o n s were grouped to g e t h e r 159 i n a r e d u c t i o n column. Equal c o s t s and b e n e f i t s f o r each p r o j e c t were omitted to s i m p l i f y the a n a l y s i s . An estimate of the magnitude of the o u t s t a n d i n g balance was then made to determine which p r o j e c t was s u p e r i o r . While t h i s approach i s m e t h o d o l o g i c a l l y more c o r r e c t , i t r e s u l t s i n a c l u t t e r e d balance sheet which i s d i f f i c u l t to i n t e r p r e t . The use of numbers to weight and rank o b j e c t i v e s permits a much c l e a r e r p r e s e n t a t i o n . A p p l i c a t i o n of the P l a n n i n g Balance Sheet The major i n t e r e s t groups c o n s i d e r e d i n the a n a l y s i s are shown i n the f o l l o w i n g l i s t : Producer/Operators Consumers 1.0 Developers 2.0 New Users .. 1.1 P r i v a t e Developers 2.2 Occupiers of New B u i l d i n g s 1.3 Urban Renewal C o r p o r a t i o n 2.4 Shopping P u b l i c 2.6 Motor V e h i c l e Users 2.8 P u b l i c a t Large 3.0 Current Landowners 4.0 Current Occupiers 3.1 D i s p l a c e d 4.2 D i s p l a c e d 3.3 Not D i s p l a c e d 4.4 Not D i s p l a c e d 5.0 M u n i c i p a l i t y 6.0 Ratepayers 5.1 M u n i c i p a l Costs 5.3 M u n i c i p a l Revenues The r a t i o n a l e f o r determining the a l l o c a t i o n of c o s t s and b e n e f i t s from the two a l t e r n a t e schemes i s d i s c u s s e d i n the f o l l o w i n g s e c t i o n . The redevelopment and r e v i t a l i z a t i o n plans are r e f e r r e d t o as P r o j e c t s A and B, r e s p e c t i v e l y . 160 Developers Two classes of developers would be involved i n either scheme. Private developers would construct the bulk of the new projects i n exchange for a return on t h e i r investment. That return i s a function of the instrumental objectives s p e c i f i e d i n Table XI. More developers would be involved i n Project A than Project B. Development i n Project A would be predominantly large scale highrise structures, as opposed to small scale redevelopment and r e h a b i l i t a t i o n i n Project B. Large scale projects o f f e r a greater p o t e n t i a l for p r o f i t as there i s less competition from other developers. However, the r i s k of loss of the i n i t i a l investment during the construction period i s greater than for small scale development due to the increased complexity of the project and the longer lead time necessary for completion. Higher overhead expenses are an additional problem. These d i s -advantages are compensated by a higher return on investment for the completed project due to economies of scale i n the construction process and the more e f f i c i e n t use of fixed cost resources such as land. The completed project i s a more secure investment for creditors and generally receives a lower mortgage rate. The projected income stream i s also longer than for small scale redevelopment or r e h a b i l i t a t i o n . Overall, Project A has the potential for generating more benefits for developers than Project B, 161 although they would be d i s t r i b u t e d among a s m a l l e r group. The urban renewal c o r p o r a t i o n i s the second developer i n v o l v e d i n the s i t e . I t s o b j e c t i v e s are to recover a s u f f i c i e n t p o r t i o n of the c o s t to assemble and c l e a r the urban renewal s i t e and to maximize the t o t a l b e n e f i t s which accrue to the area from the p r o j e c t . O v e r a l l , the c o s t c o n s t r a i n t outweights o t h e r c o n s i d e r a t i o n s and the c o r p o r a t i o n would favour P r o j e c t A. New Users P a i r e d w i t h the development i n t e r e s t group i n Table A are the new u s e r s . Most s i g n i f i c a n t of these are the o c c u p i e r s of new b u i l d i n g s . T h e i r b e n e f i t s d e r i v e from four main i n s t r u m e n t a l o b j e c t i v e s - - l o c a t i o n , s u i t a b i l i t y of the premises f o r the intended purpose, s e r v i c e s a v a i l a b l e i n the area, and the g e n e r a l environment. These are i n t a n g i b l e s . A rough measure of the d i f f e r e n c e i n b e n e f i t s f o r a p a r t i c u l a r premises<;ean be determined by examining market r e n t s . I t i s assumed t h a t the b e n e f i t s d e r i v e d by any o c c u p i e r w i l l exceed h i s c o s t s . A comparison of the two schemes can be made by c o n t r a s t i n g the q u a l i t y of o c c u p i e r s ' b e n e f i t s . Mass Reta i l e r s - ' As was shown i n Chapter I I , the primary l o c a t i o n a l concern of r e t a i l e r s i s the presence of ..an adequate trade 162 area. While the analysis of Chapter III shows that neither scheme w i l l produce enough population growth to a t t r a c t the largest mass r e t a i l e r s , Project A i s somewhat more att r a c t i v e since i t places the largest group of people near the r e t a i l core. Modern f a c i l i t i e s would be a further incentive, as would improved services such as more o f f -street parking and improved loading f a c i l i t i e s . The extensive redevelopment would permit mass r e t a i l e r s to est a b l i s h t h e i r own i d e n t i t y i n the area rather than having to overcome the area i d e n t i t y established by the r e v i t a l i z a t i o n program of Project B. Clearly, mass r e t a i l e r s would favour Project A. Independent Retailers Independent r e t a i l e r s are smaller and do not require as large a market as do mass r e t a i l e r s . They benefit from the presence of other complementary businesses i n an established r e t a i l area. Rehabilitation generally provides suitable space at lower cost than does redevelop-ment. New businesses also benefit from the presence of useful services established to serve the e x i t i n g business sector. The environment of an exis t i n g r e t a i l d i s t r i c t i s generally more suited to the independent r e t a i l e r than i s a redevelopment project. Consequently, Project B i s the preferred alternative for independent r e t a i l e r s . 163 New Residents New r e s i d e n t i a l development i s an important part of both plans. Highrise r e s i d e n t i a l development would displace much of the ex i s t i n g ribbon commercial development i n Project A, while lower density r e s i d e n t i a l development would be dispersed throughout both the e x i s t i n g r e s i d e n t i a l and commercial d i s t r i c t s i n Project B. The highrise development i n Project A would o f f e r a more central location and better transport and recreational services to new residents. However, the variety of d i f f e r e n t types of lowrise accomodation shown i n Project B i s more suitable for the bulk of the expected new population. The environment away from the noise and heavy t r a f f i c on Hastings Street i s also more acceptable. Overall, the benefits of Project B outweigh those of Project A, although fewer people would be affected. The Shopping Public This i s the second important group of users of the two projects. Its primary aim i s to exchange money (cost) for goods and services (benefits). Both d i r e c t and i n d i r e c t costs and benefits are involved i n the transaction. A p a r t i a l l i s t of instrumental objectives includes selection, service, economy, environment, convenience, and safety. The extent of the benefits derived by customers depends on the type of r e t a i l 164 o r g a n i z a t i o n developed i n the area. Independent r e t a i l e r s would g e n e r a l l y p r o v i d e b e t t e r s e l e c t i o n and b e t t e r s e r v i c e because t h e i r e f f o r t s are d i r e c t e d a t a more s p e c i a l i z e d market. Mass r e t a i l e r s , on the other hand, p r o v i d e a narrower s e l e c t i o n of a p a r t i c u l a r good but a wider t o t a l range of goods t o c a t e r to the l a r g e s t market. They tend to have lower p r i c e s due to more e f f i c i e n t use of c a p i t a l and labour, w h i l e convenience i s s u p e r i o r due to l a r g e r , more e f f i c i e n t f a c i l i t i e s . The d i f f e r e n c e i n bene-f i t s . to consumers i s very s m a l l , but the f i n a l r e d u c t i o n shows P r o j e c t B having a s l i g h t advantage f o r the shopping p u b l i c due to b e t t e r s e l e c t i o n and b e t t e r s e r v i c e from independent r e t a i l e r s . Motor V e h i c l e Users While not intended as t r a n s p o r t a t i o n improvements, both p r o j e c t s would have a s i g n i f i c a n t impact on t r a f f i c flow. Two b a s i c types of t r a f f i c use Hastings S t r e e t - -through t r a f f i c and sto p p i n g t r a f f i c . The amount of t r a f f i c would remain approximately the same i n both p r o j e c t s . Through T r a f f i c The o b j e c t i v e s f o r through t r a f f i c are to maintain a reasonable speed, t o be f r e e o f b o t t l e n e c k s which cause congestion, and to be s u b j e c t t o minimal a c c i d e n t hazard. 165 The balance of c o s t s on a l l three o b j e c t i v e s favours P r o j e c t A s i n c e i t i n c l u d e s measures f o r channeling l o c a l t r a f f i c on t o A l b e r t and Pender S t r e e t , c l o s i n g two c r o s s s t r e e t s , p r o v i d i n g more o f f - s t r e e t p a r k i n g i n new p r o j e c t s , and p o s s i b l y c o n s t r u c t i n g one or more p e d e s t r i a n overpasses between major r e t a i l developments. Most of the improvements undertaken f o r P r o j e c t B would tend to accentuate through t r a f f i c problems. Stopping T r a f f i c The o b j e c t i v e s f o r t r a f f i c w i s h i n g t o stop i n the area are low c o s t , ease of i n g r e s s and egress, and p r o x i m i t y . In g e n e r a l these goals are probably b e s t met by P r o j e c t B, which would d i f f e r very l i t t l e from the pr e s e n t s i t u a t i o n . New developments would be r e q u i r e d to pr o v i d e adequate pa r k i n g , but most e x i s t i n g ..businesses would r e l y on, o n - s t r e e t p a r k i n g . Due to the s m a l l s i z e of the core area, there would l i k e l y continue t o be s u f f i c i e n t f r e e o n - s t r e e t p a r k i n g i n the commercial r i b b o n to s a t i s f y most of the demand. In c o n t r a s t , P r o j e c t A would i n t e n s i f y p a r k i n g p r e s s u r e i n the area from l o c a l r e s i d e n t s and r e q u i r e the c o n s t r u c t i o n of underground p a r k i n g f a c i l i t i e s . There would l i k e l y be some c o s t t o the consumer and the s m a l l s c a l e of the p a r k i n g s t r u c t u r e s would make i n g r e s s and egress d i f f i c u l t . In the r e d u c t i o n , the net advantage l i e s w i t h P r o j e c t B. 166 The P u b l i c a t Large T h i s i n t e r e s t group would b e n e f i t from improved a e s t h e t i c s of the area. The two i n s t r u m e n t a l o b j e c t i v e s r e l a t e to o v e r a l l a r c h i t e c t u r a l form and the nature of the g e n e r a l surroundings. C e r t a i n l y , the redevelopment p l a n of P r o j e c t A p r o v i d e s a b e t t e r o p p o r t u n i t y t o c r e a t e a c l e a r e r nodal i d e n t i t y f o r the area. However, i t would i n v o l v e a long process to achieve t h a t i d e n t i t y , and there would be many unpleasant consequences f o r the surrounding environment. The purpose of P r o j e c t B i s to strengthen the i d e n t i t y of the area by improving the p r e s e n t surroundings. B e n e f i t s of the p r o j e c t are immediate, whereas the b e n e f i t s of improved urban form take a long time to achieve and are l e s s t a n g i b l e . O v e r a l l , the net advantage to the g e n e r a l p u b l i c l i e s w i t h P r o j e c t B. Current Land Owners and Occupiers General In order f o r redevelopment to proceed under e i t h e r P r o j e c t A or B, l a n d would have to be bought from c u r r e n t land owners. Consequently, they and c u r r e n t o c c u p i e r s would i n c u r c o s t s and b e n e f i t s . In a d d i t i o n , c e r t a i n l a n d owners and o c c u p i e r s not d i s p l a c e d would a l s o be a f f e c t e d . Each category i s c o n s i d e r e d i n t u r n . Land Owners D i s p l a c e d Land owners w i l l b a r g a i n w i t h the developer f o r the b e s t p o s s i b l e p r i c e on t h e i r p r o p e r t y . T h i s i s 167 assumed to at least equal the present value of the stream of future benefits expected frOm the property, otherwise the owner would not s e l l . It does not necessarily compensate for the distrurbance to the future income stream pre c i p i t a t e d by the development i t s e l f . Whether the owner receives compensation for disturbance i s dependent upon whether or not he i s i n a p o s i t i o n to exert leverage on the developer attempting to acquire a viable s i t e . In general a land owner would have the greatest chance of obtaining a high return from his land with Project A. However, he also r i s k s receiving an inadequate return from his business while waiting for the purchase of the property due to the changing business environment brought about by Project A. Land values under Project B would be more stable since they would be^derived from r e a l improvements i n the productivity of businesses i n the area rather than from redevelopment p o t e n t i a l which might not be r e a l i z e d . In the reduction, the net advantage l i e s with Project B due to the greater security of return. Occupiers Displaced Occupiers w i l l face the costs of d i s t u r b a n c e — l o s s of p r o f i t , moving expenses, time l o s t — w i t h o u t the prospect of compensation unless they are land owners. More occupants w i l l be displaced under Project A, so the advantage l i e s 168 w i t h P r o j e c t B. Land Owners arid Occupiers Not D i s p l a c e d When redevelopment takes p l a c e , the owners and o c c u p i e r s of p r o p e r t y which i s not demolished may i n c u r i n d i r e c t c o s t s and b e n e f i t s . These c o n s i s t of three main types. Real ( t e c h n o l o g i c a l ) changes are changes i n the q u a l i t y of s e r v i c e s enjoyed by e x i s t i n g occupants as a r e s u l t of the development p r o j e c t . An example a r i s e s when the s t r e e t environment of a l o c a l commercial area i s d i s r u p t e d by the c o n s t r u c t i o n of a l a r g e apartment complex. Such changes i n r e a l value e v e n t u a l l y l e a d to changes i n r e n t a l value, s i n c e the market r e l a t i o n s h i p w i t h other r e n t a l stock i s a l t e r e d . On adjustment, the o c c u p i e r w i l l f i n d t h a t changes i n b e n e f i t match changes i n c o s t w h i l e the p r o p e r t y owner's a s s e t value w i l l r i s e or f a l l a c c o r d i n g l y without h i s i n c u r r i n g or b e i ng r e l i e v e d of any r e a l c o s t . The impact of the two p r o j e c t s on commercial and r e s i d e n t i a l land uses must be e v a l u a t e d s e p a r a t e l y . The i n s t r u m e n t a l o b j e c t i v e s i n both cases are the e f f e c t s of l o c a t i o n , amenity, and s e r v i c e s . For commericla uses, the net d i f f e r e n c e i n l o c a t i o n a l b e n e f i t s from the two p r o j e c t s would be n i l . Under P r o j e c t A, e x i s t i n g merchants would b e n e f i t from a l a r g e r market, but they would face i n c r e a s e d competition from new development. 169 Under Project B, the increase i n the market would be smaller, but there would be less threat of competition-.- The two streams of benefit and cost are assumed to cancel out. The major differences between the two projects relate to the amenity and service objectives. E x i s t i n g occupants would v i r t u a l l y receive no benefits from Project A>-whereas the benefits of Project B would be considerable. In the reduction, the net advantage i n r e a l benefits for both property owners and e x i s t i n g occupants l i e s with Project B. Pecuniary changes r e s u l t s o l e l y from a difference i n the supply of space i n the two projects. The e f f e c t would primarily be f e l t by e x i s t i n g commercial occupants and land owners due to the l o c a l i z e d nature of the demand for such space. The price of r e s i d e n t i a l space i s determined by a larger market. While i t i s d i f f i c u l t to judge what the future actions of developers might be, the threat of loss to e x i s t i n g land owners and occupants i s greater under Project A. The higher p o t e n t i a l return from commercial uses may tempt developers to b u i l d a greater amount of r e t a i l space than the market can absorb. This would have a negative impact on the market values of e x i s t i n g r e t a i l space in the area. Under Project B, only obsolete r e t a i l space would be redeveloped, and there would l i k e l y be a net increase i n the value of e x i s t i n g space due to increased demand following the street 170 b e a u t i f i c a t i o n program. T r a n s f e r changes ( p o t e n t i a l development value) stem from the p o t e n t i a l l y h i g h e r p r o p e r t y income t h a t would r e s u l t i f the lan d were developed f o r a more i n t e n s i v e use. Though only a l i m i t e d amount of lan d w i l l ever be developed, the p r o s p e c t of development has an e f f e c t on a l l p r o p e r t y values i n the area. P r o j e c t A f e a t u r e s a much g r e a t e r amount of redevelopment so w a l l generate the l a r g e s t amount of p o t e n t i a l development value f o r e x i s t i n g l a n d owners. The M u n i c i p a l C o r p o r a t i o n of Burnaby As a r e s u l t o f the adoption of e i t h e r of the p r o j e c t s , the m u n i c i p a l c o r p o r a t i o n w i l l be faced w i t h a d d i t i o n a l expenses and a changed revenue s i t u a t i o n . These items are d e a l t w i t h s e p a r a t e l y . M u n i c i p a l Costs The t h r e e most c r i t i c a l expenses a r i s i n g from redevelopment of the area are l o c a l improvement c o s t s , s t r e e t maintenance, and g e n e r a l a d m i n i s t r a t i o n . P r o j e c t A would c r e a t e the fewest expenses f o r the m u n i c i p a l c o r p o r a t i o n . Most l o c a l improvements would have to be p r e p a i d by the developer as p a r t of the s i t e p r e p a r a t i o n p r o c e s s . The renewal of area f a c i l i t i e s would reduce annual maintenance c o s t s . Once the p r o j e c t was complete i t i s assumed t h a t there would be few 171 problems r e q u i r i n g the a t t e n t i o n of m u n i c i p a l a d m i n i s t r a t o r s . The s i t u a t i o n would be q u i t e d i f f e r e n t w i t h P r o j e c t B. The m u n i c i p a l c o r p o r a t i o n would be more i n v o l v e d i n the redevelopment p r o j e c t . Implementation of the s t r e e t b e a u t i f i c a t i o n would r e q u i r e m u n i c i p a l f i n a n c i a l a s s i s t a n c e . Maintenance c o s t s f o r l a n d s c a p i n g and the new s t r e e t f u r n i t u r e would be higher,zand the on going nature of r e v i t a l i z a t i o n programs would r e q u i r e more a c t i v e support by the m u n i c i p a l i t y through i t s a d m i n i s t r a t i v e departments. Costs to the m u n i c i p a l i t y would be g r e a t e r under P r o j e c t B. M u n i c i p a l Revenues D i f f e r e n c e s i n revenue f o r the two schemes would o r i g i n a t e from three sources- -development'-levies;, l o c a l improvement charges, and p r o p e r t y t a x e s . Again, P r o j e c t A would have the advantage. L o c a l improvement charges would be p r e p a i d by developers t o g e t h e r w i t h development l e v i e s t o cover the c o s t of park and r e c r e a t i o n f a c i l i t i e s . To implement P r o j e c t B, the m u n i c i p a l i t y would l i k e l y have to pay a share of l o c a l improvement c o s t s to induce p r o p e r t y owners to pay f o r the s t r e e t b e a u t i f i c a t i o n program. Tax revenues would a l s o be g r e a t e r with P r o j e c t A due to more i n t e n s i v e use of land and reduced d e p r e c i a t i o n of a s s e t s . 172 Ratepayers Since ratepayers must bear the cost of increased municipal expense, Project A provides them with the greatest advantage. Other non-monetary benefits derived by ratepayers have already been accounted for i n previous sections. F i n a l Summation of Benefits Table X provides a summary of the Planning Balance Sheet shown in Table XI. I t indicates that two out of f i v e producer/operators and eight out of twelve consumer i n t e r e s t groups would benefit more from the Project B than from . Project A. Of current occupiers and owners of land i n the area, only r e s i d e n t i a l owners and occupiers displaced by development would benefit more from Project A. Other int e r e s t groups be n e f i t t i n g from the Project A originate from outside the area. Any benefit for r e s i d e n t i a l owners and occupiers displaced by Project A would come from transfer changes of po t e n t i a l development value. These gains would have to be heavily discounted since they would not be f u l l y r e a l i z e d u n t i l the area was completely developed. In contrast, the benefits of Project B would be apparent shortly a f t e r implementation. They would i n the main be r e a l benefits, a product of the more e f f i c i e n t use of ex i s t i n g f a c i l i t i e s i n the area. Unlike Project A, no 173 TABLE X SUMMARY OF COSTS AND BENEFITS: HASTINGS STREET Producer/Operators P r e f e r r e d P r o j e c t Consumers P r e f e r r e d P r o j e c t 1.0 Developers 2. 0 New Users 1.1. P r i v a t e Developers A 2. 2 Occupiers of New B u i l d i n g s 1.3 Urban Renewal A C o r p o r a t i o n 2. 2. 21 22 Mass R e t a i l e r s Independent R e t a i l e r s A B 2. 23 Residents B 2. 4 Shopping P u b l i c B 2. 6 Motor V e h i c l e Users 2. 6. 1 Through T r a f f i c A 2. 6. 2 Stopping T r a f f i c B 2. 8 P u b l i c a t Large B 3.0 Current Land Owners 4. 0 Current Occupiers 3.1 Land Owners D i s p l a c e d B 4. 2 Occupiers D i s p l a c e d 4. 2. 1 Business B 4. 2. 2 R e s i d e n t i a l A 3.3 Land Owners Not B D i s p l a c e d 4. 4 Occupiers Not D i s p l a c e d 4. 4. 1 Commercial B 4. 4. 2 R e s i d e n t i a l B 5.0 M u n i c i p a l i t y A 6. 0 Ratepayers A 5.1 M u n i c i p a l Costs 5.2 M u n i c i p a l Revenues 174 i n t e r e s t group would experience n e g a t i v e b e n e f i t s . B e n e f i t s would be spread more e q u i t a b l y throughout the v a r i o u s i n t e r e s t groups i n the area. A d e c i s i o n maker c o n s i d e r i n g the r e s u l t s of t h i s a n a l y s i s would have to weight the importance of the v a r i o u s i n t e r e s t groups. I t i s l i k e l y t h a t he would g i v e g r e a t e r importance to producer/operators than t o consumers. T h i s i s reasonable g i v e n the importance of producers t o our economic system. At t h i s p o i n t , i t i s u s e f u l t o look a t the magnitude of the gains a v a i l a b l e from P r o j e c t A. The a n a l y s i s c ontained i n the p r e v i o u s chapter shows t h a t under prese n t economic circumstances, the p o t e n t i a l f o r redevelop-ment i s marginal due to the low r e t u r n a v a i l a b l e . In c o n t r a s t , the gains from r e v i t a l i z a t i o n appear r e l a t i v e l y c e r t a i n . The a n a l y s i s p r o v i d e s a s t r o n g case f o r r e v i t a l i -z a t i o n . Summary and C o n c l u s i o n The purpose of t h i s chapter has been to pr e s e n t a method f o r the e v a l u a t i o n of a l t e r n a t e development p l a n s . A m o d i f i e d v e r s i o n of N a t h a n i e l L i t c h f i e l d ' s p l a n n i n g Balance Sheet was used to t r a c e the i n c i d e n c e o f c o s t s and b e n e f i t s t o v a r i o u s i n t e r e s t groups from a l t e r n a t e development p r o j e c t s . The t e n t a t i v e c o n c l u s i o n s based on the a n a l y s i s c o n t a i n e d i n pr e v i o u s chapters favour r e v i t a l i z a t i o n o f the Hastings S t r e e t commercial area. 175 P r i n c i p a l advantages i n c l u d e more e q u i t a b l e d i s t r i b u t i o n of b e n e f i t s , p a r t i c u l a r l y to l o c a l i n t e r e s t groups, and g r eater c e r t a i n t y of implementation of the p r o j e c t . These conclusions are l i m i t e d i n t h e i r a p p l i c a t i o n because they are based on a h y p o t h e t i c a l set of a l t e r n a t i v e s . However, the e x e r c i s e shows that the methodology i s a v a l i d and p o t e n t i a l l y u s e f u l t o o l to forecase the impact of a l t e r n a t e development plans i n a r e a l planning s i t u a t i o n . 176 TABLE XI PLANNING BALANCE SHEET: HASTINGS STREET CONSUMERS Number Item No. Sector 770 New Users 2.2,1. Mass Retailers Instrumental Measurement Project Score Objectives Units Plan A Plan B Cost Benefit Wt. Rank Score Rank Sc< Location m i 3 2 6 1 3 S u i t a b i l i t y m i 3 2 6 0 0 External f a c i l i t i e s m i 2 2 4 1 2 General environment m i 1 2 2 1 1 18 6 Location m i 3 1 3 2 6 S u i t a b i l i t y M i 2 1 2 3 6 External f a c i l i t i e s M i 2 1 2 2 4 General environment M i 3 1 3 3 9 10 25 Location M,m i 1 2 2 3 3 S u i t a b i l i t y M,m i 2 3 6 3 6 External f a c i l i t i e s M,m i 2 2 4 3 6 General environment M,m i 3 1 3 2 6 15 21 Selection m i 3 2 6 3 9 Service m i 3 2 6 3 9 Economy t m 3 3 9 2 6 Environment i - 2 1 2 2 4 Convenience m t 2 2 4 1 2 Safety i - 2 2 4 1 2 31 32 Speed t 3 2 6 1 3 Congestion i 1 2 2 1 1 Accident hazard i 2 2 4 1 T 12 Low cost m 2 2 4 3 6 Ingress and egress t 1 1 1 2 2 Proximity t 2 2 4 3 6 9 14 Form i 2 3 6 2 4 General surroundings i 3 1 3 3 9 9 13 Pr o f i t m 3 -2 -6 0 0 Security i 1 -1 -1 0 0 Time t 1 -1 -1 0 0 Earnings m 3 -2 -6 0 0 -14 0 Pr o f i t M 3 3 9 2 6 Security i 2 -1 2 1 2 Environment i 2 -1 2 1 2 Security i 2 -1 2 1 2 15 12 Location i 3 1 3 2 6 Amenities i 2 -1 -2 3 6 Services i 2 1 2 2 4 3 16 Location i 2 3 9 2 6 Amenities i 3 -1 -3 3 9 Services i 3 -1 -3 2 6 3 21 Minimize costs m 3 2 6 1 3 Maximize revenue m 3 2 6 1 3 12 6 Net Advantage 2.2.1. 2.2.2. Reduction Independent Retailers 2.2.2. Reduction 2.2.3. Residents 2.2 .3. Reduction 2.4. Shopping Public 2.4. Reduction 2.6. Motor Vehicle Users 2.6.1. Through T r a f f i c 2.6.1. Reduction 2.6.2. Stopping T r a f f i c 2.6.2. Reduction 2.8. Public at Large 2.8. Reduction 4.0. Current Occupiers 4.2. Displaced-4.2.1. Business a) Proprietor b) Employees 4.2.1 Reduction 4.2.2. Residential a) Owner Occupiers b) Tenants 4.2.2. Reducation 4.4. Not Displaced Real Changes 4.4.1. Commercial 4.4.1. Reduction 4.4.2. Residential 4.4.2. Reduction 6.0 Ratepayers n+ -n+ -6.0 Reduction 177 TABLE XI PLANNING BALANCE SHEET: HASTINGS STREET PRODUCER/OPERATORS Number Instrumental Measurement Project Score Affected Objectives Units Plan A Plan B Item Net No. Sector A B Cost Benefit Wt. Rank Score Rank Score Advantage 1.0. Developers 1.1 Private Developers n n+ 1.1. Reduction 1.3. Urban Renewal Corporation n n 1.3. Reduction 3.0. Current Land Owners 3.1. Displaced N+ n 3.1. Reduction 3.3. Not Displaced 3.3.1. Real Changes a) commercial n n+ b) r e s i d e n t i a l n* n 3.3.2. Pecuniary a) commercial n n+ b) r e s i d e n t i a l 3.3.2. Reduction 3.3.3. Transfer Changes n+ n 3.3. Reduction S.O. Municipality 5.1. Municipal Costs a) Local Improvements n n+ b) Street Maintenance n n+ c) Administration n n* 5.1. Reduction S.2. Municipal Revenues a) Levies and Local Improvement Charges n n+ b) Property Taxes n n+ 5.2. Reduction Minimize competition M m Protect i n i t i a l investment M M Minimize overhead M M Return on investment M m Security M m Lif e of investment M M Return costs M m Security of investment M m Lif e of investment M M Maximize t o t a l benefits M M,i Maximize return M Minimize disturbance i Location M i Amenity M i Services M i Location M i Amenity M i Services M i Demand induced M price changes Potential M development value Minimize M Minimize m Minimize m Maximize M,m Maximize m 1 1 1 2 2 2>5 2 5 1<5 3 2 1 2 2 4 3 3 9 2 6 2 3 5 IH 3 2 2 4 1 2 28 20 3 3 9 2 6 2 3 6 2 4 1 3 3 1 1 3 2 6 _ 3 24 14 3 3 9 2 6 2 1 2 3 6 11 12 3 2 6 2 6 2 1 2 3 6 2 1 2 3 6 10 18 2 1 2 1 2 3 1 3 2 6 2 1 2 2 4 7 12 2 -1 -2 2 4 _ 0 _ 0 _ ~ 4 3 3 9 IH 24 38% 2 2 4 3 6 3 2 6 3 9 1 2 2 3 3 12 18 1 2 2 1 1 3 2 6 1 3 8 4 178 Footnotes Morris H i l l , "A Goals-Achievement Matrix for Evaluating Alternative Plans," J.A.T.P., XXXIV, No.l (1968), 19-29. 2N. L i t c h f i e l d , P. Kettle, and M. Whitbread, Evaluation i n the Planning Process (Oxford: : Pergamon Press, 1975), pp. 65-77. 3 I b i d . , p. 94 4 Nathaniel L i t c h f i e l d , "Cost Benefit Analysis i n Town Planning. A Case Study: Swanley," Urban Studies, III (1966), 215-249. 179 CHAPTER VII CONCLUSIONS I n t r o d u c t i o n The purpose of t h i s t h e s i s has been t o ex p l o r e conceptual frameworks and a n a l y t i c a l techniques which m u n i c i p a l planners can use to develop s o l u t i o n s f o r problem s t r i p commercial areas. The p r i n c i p a l components of the r e s e a r c h have been an e x t e n s i v e l i t e r a t u r e review and a case study of the Hastings S t r e e t area i n Burnaby, B r i t i s h Columbia, a s t r i p commercial area i n the e a r l y stages o f d e c l i n e . A summary of the p e r t i n e n t f i n d i n g s f o l l o w s along w i t h a b r i e f d i s c u s s i o n of the i m p l i c a t i o n s of the study f o r p l a n n i n g p r a c t i c e , a s h o r t comment on i t s l i m i t a t i o n s , and some d i r e c t i o n s f o r f u t u r e r e s e a r c h . Summary The l i t e r a t u r e review examined the nature and e v o l u t i o n of s t r i p commercial development r e l a t i v e t o i t s main competitor, the planned shopping c e n t r e . The purpose of t h i s review was to determine whether planned shopping c e n t r e s have made s t r i p commercial areas o b s o l e t e . S e v e r a l concepts w i t h i n the framework of c e n t r a l p l a c e theory were o u t l i n e d to p r o v i d e a b a s i s f o r a n a l y z i n g the d i s t r i b u t i o n and i n t e r n a l s t r u c t u r e s of s t r i p commercial areas. The 180 continued e v o l u t i o n and development of these areas i n response to changing s o c i a l and economic c o n d i t i o n s was a l s o examined. T h i s p r o v i d e d a basis f o r a comparisom:.of i t s present f u n c t i o n to t h a t of the planned shopping c e n t r e . The c o n c l u s i o n was t h a t the planned shopping c e n t r e does enjoy a d e f i n i t e c o m p e t itive advantage due to i t s design and environmental q u a l i t i e s . However, there are s e v e r a l reasons f o r the r e t e n t i o n of s t r i p commercial areas. The high c o s t o f planned shopping c e n t r e s and the d e s i r e by developers to maximize p r o f i t s r e s t r i c t tenancy to a narrow range of high volume r e t a i l and s e r v i c e o u t l e t s . Businesses not meeting these requirements must seek f r e e s t a n d i n g l o c a t i o n s i n the c e n t r a l business d i s t r i c t or s t r i p commercial areas. Many of these areas p r o v i d e l o c a t i o n a l b e n e f i t s which planned shopping c e n t r e s cannot d u p l i c a t e . The lower r e n t s i n s t r i p commercial areas enable b u s i n e s s e s w i t h low s a l e s volume to stay i n o p e r a t i o n . Some s t r i p commercial areas have a d i s t i n c t i v e c h a r a c t e r which i s more condusive to the o p e r a t i o n of c e r t a i n types o f b u s i n e s s e s . These f a c t o r s have enabled some s t r i p commercial shopping d i s t r i c t s t o adapt to a new, a l b e i t more l i m i t e d r o l e , i n the c u r r e n t r e t a i l market. West Broadway, West Fourth Avenue, South G r a n v i l l e , and Main S t r e e t were mentioned as examples i n the Vancouver area.-that have adapted to a new r o l e w h i l e r e t a i n i n g t h e i r b a s i c d i s t r i c t commercial f u n c t i o n . 181 The concepts developed i n Chapter I I were f u r t h e r e x p l o r e d i n the case study. The purpose of the f i r s t s e c t i o n was to show how the f u n c t i o n of r e t a i l d i s t r i c t s can be analyzed f o r p u b l i c s e c t o r l a n d use p l a n n i n g , u s i n g r e a d i l y a v a i l a b l e p u b l i c i n f o r m a t i o n . The c o n c l u s i o n s p r o v i d e d a b a s i s f o r the second p o r t i o n of the study which c o n s i s t e d of an e v a l u a t i o n of a l t e r n a t e development plans f o r the area. Chapter I I I examined the supply of r e t a i l f a c i l i t i e s u s i n g a d e t a i l e d l a n d use survey as the b a s i c medium of a n a l y s i s . The f i r s t p a r t of the chapter looked a t the whole of North Burnaby and the h i e r a r c h a l r e l a t i o n s h i p between r e t a i l c e n t r e s was c l a r i f i e d , as were d i f f e r e n c e s by type of t r a d e , s i z e of establishment, and form of o r g a n i z a t i o n . The Hastings S t r e e t area was c h a r a c t e r i z e d as a d i s t r i c t commercial centre w i t h a l a r g e number of s e r v i c e s and s m a l l independent forms of b u s i n e s s . The nearby Lougheed Highway commercial area was c h a r a c t e r i z e d as a r e g i o n a l centre w i t h a s m a l l e r number of l a r g e chain s t o r e r e t a i l o u t l e t s . As a r e s u l t of these d i f f e r e n c e s , i t was concluded t h a t there was l i t t l e d i r e c t competition between the two c e n t r e s . A n a l y s i s of the s p a t i a l conformations of business i n the study area c l a r i f i e d the s t r u c t u r e of the commercial s t r i p . S e r v i c e s were widely d i s t r i b u t e d throughout the 182 area, but r e t a i l o u t l e t s showed a s t r o n g tendency to c l u s t e r . T h i s was a t t r i b u t e d t o c o m p e t i t i o n between businesses i n response to the d e s i r e of consumers to minimize the number of shopping t r i p s f o r r e t a i l goods. F u r t h e r a n a l y s i s o f the l o c a t i o n of r e t a i l b u s i n e s s e s enabled the i d e n t i f i c a t i o n of three d i s t i n c t areas. R e t a i l o u t l e t s w i t h the h i g h e s t l e v e l o f demand were l o c a t e d i n the core. These i n c l u d e d s p e c i a l t y food, drug, s o f t goods, and g e n e r a l merchandise o u t l e t s . The frame was o c h a r a c t e r i z e d by r e t a i l o u t l e t s w i t h a lower l e v e l of demand such as hard l i n e s and s p e c i a l t y l i n e s which b e n e f i t e d from p r o x i m i t y t o the high p e d e s t r i a n l e v e l s of the c o r e . The ribbon was c h a r a c t e r i z e d by l a r g e businesses able to a t t r a c t s u f f i c i e n t trade on t h e i r own and s m a l l b u s i n e s s e s dependent on p a s s i n g t r a f f i c . C o n f i r m a t i o n of a r e a l d i s t i n c t i o n s was p r o v i d e d by an a n a l y s i s o f l a n d v a l u e s . The core and the frame were desi g n a t e d as an unplanned shopping cent r e i n accordance w i t h Berry's S t r u c t u r e of Business and Commerce o u t l i n e d i n Chapter I I . A comparison of f a c i l i t i e s i n the unplanned shopping centre with those of Brentwood M a l l , a nearby shopping c e n t r e , showed s i g n i f i c a n t v a r i a t i o n i n the range of businesses p r e s e n t . The study area was dominant i n the range of convenience and s e r v i c e o u t l e t s while Brentwood M a l l was dominant i n most shopping goods o u t l e t s . T h i s comparison p r o v i d e d a b a s i s f o r the market share 183 a n a l y s i s i n Chapter IV. The purpose of the market a n a l y s i s was t o determine the v i a b i l i t y o f e x i s t i n g b usinesses and the prospects f o r f u t u r e expansion. The methodology used was adapted from the c l a s s i c a l approach to market r e s e a r c h . P r o j e c t e d income was a l l o c a t e d by c l a s s o f r e t a i l o u t l e t i n accordance w i t h r e g i o n a l averages, the amount of f l o o r space p r e s e n t i n the study area, and s u b j e c t i v e estimates of the convenience and q u a l i t y of f a c i l i t i e s r e l a t i v e to other competing c e n t r e s . Convenience goods, s e r v i c e s , and hard l i n e f a c i l i t i e s - - a l l c l a s s e s of r e t a i l space not w e l l r e presented i n Brentwood Mall--had the h i g h e s t estimated l e v e l of s a l e s . L i n e s i n d i r e c t c o m p e t i t i o n with s i m i l a r f a c i l i t i e s i n Brentwood M a l l had the lowest l e v e l due i n p a r t t o d e f i c i e n c i e s i n the q u a l i t y of r e t a i l f a c i l i t i e s . These estimates appeared to correspond reasonably w e l l t o the appearance of the area. P r o j e c t e d p o p u l a t i o n i n c r e a s e s were shown to generate only modest i n c r e a s e s i n the e s t i m a t e d volume of trade f o r e x i s t i n g f a c i l i t i e s . The necessary expansion of f l o o r space c o u l d e a s i l y be accomodated w i t h i n the e x i s t i n g r e t a i l f a c i l i t i e s of the area. No p o t e n t i a l f o r major expansion of r e t a i l f a c i l i t i e s was p r o j e c t e d due to inadequate market p o t e n t i a l . The b e s t s t r a t e g y f o r i n c r e a s i n g r e t a i l s a l e s was judged to be the upgrading of the q u a l i t y o f f a c i l i t i e s which appeared i n f e r i o r to those of Brentwood and modest expansion of the 184 number of s p e c i a l t y goods o u t l e t s t o s t i m u l a t e g r e a t e r i n t e r e s t i n the area by p e d e s t r i a n s . Two a l t e r n a t e means f o r accomplishing these improvements were e v a l u a t e d i n the f o l l o w i n g c h a p t e r s . Chapter V c o n s i s t e d o f a d e s c r i p t i o n o f the two development plans and an a n a l y s i s o f t h e i r economic f e a s i b i l i t y . The f i r s t scheme was the Hastings S t r e e t Community P l a n . A p r o p o s a l f o r h i g h r i s e r e s i d e n t i a l development was e v a l u a t e d u s i n g the land r e s i d u a l technique and was found t o generate inadequate r e t u r n s a t c u r r e n t market r a t e s to cover la n d assembly c o s t s . Major commercial development which might have made the p r o j e c t v i a b l e was shown to be u n r e a l i s t i c i n view of the demand f o r r e t a i l space p r o j e c t e d i n the pre v i o u s chapter. I t was concluded t h a t the p l a n had l i t t l e chance of implementation under c u r r e n t market c o n d i t i o n s . In the next s e c t i o n of Chapter V, the process of implementation of a r e v i t a l i z a t i o n p l a n was o u t l i n e d together with a proposed f o u r p a r t scheme f o r the study area. Implementation of a s t r e e t b e a u t i f i c a t i o n program and r e h a b i l i t a t i o n of e x i s t i n g b u s i n e s s premises were i d e n t i f i e d as a means to improve the q u a l i t y o f e x i s t i n g r e t a i l f a c i l i t i e s and a t t r a c t a d d i t i o n a l s p e c i a l t y o u t l e t s . The value of these improvements was shown by comparing t h e i r c o s t t o the a n t i c i p a t e d i n c r e a s e i n s a l e s . 185 Other programs i n c l u d e d the development of p o l i c i e s t o encourage s e l e c t i v e redevelopment of o b s o l e t e f a c i l i t i e s and measures to maintain the continued v i a b i l i t y o f the area. The l a n d r e s i d u a l technique was used to show the f e a s i b i l i t y o f lower d e n s i t y commercial and r e s i d e n t i a l redevelopment p r o j e c t s more i n harmony with- the area. The o v e r a l l c o n c l u s i o n of the a n a l y s i s was t h a t r e v i t a l i z a t i o n r e p r e s e n t e d a more f e a s i b l e p l a n f o r the area than d i d redevelopment. In Chapter VI, a complete e v a l u a t i o n of the c o s t s and b e n e f i t s of the two development plans was undertaken u s i n g L i t c h f i e l d ' s P l a n n i n g Balance Sheet. Costs and b e n e f i t s of a l l types were c o n s i d e r e d f o r both the producer/operators of the p r o j e c t and the consumers of the r e s u l t i n g s e r v i c e s . The purpose of t h i s a n a l y s i s was to assess the d i f f e r i n g i m p l i c a t i o n s of the two development p o l i c i e s f o r a f f e c t e d i n t e r e s t groups. Due to a l a c k of data, numerous assumptions had to be made r e g a r d i n g the nature of the c o s t s and t h e i r magnitude. Despite t h i s l i m i t a t i o n , i t was q u i t e e v i d e n t t h a t the d i s t r i b u t i o n of b e n e f i t s from the r e v i t a l i z a t i o n p l a n was more e q u i t a b l e . There was l e s s d i s r u p t i o n of the e x i s t i n g community and the b e n e f i t s were a t t a i n e d more r a p i d l y than w i t h the redevelopment p l a n . I t was concluded t h a t the r e v i t a l i z a t i o n p l a n represented the b e s t development a l t e r n a t i v e f o r the study area. 186 Implications for Planning Practice Planners cannot discount the importance of s t r i p commercial areas. Even though t h e i r role has been altered and c u r t a i l e d by planned shopping centre development, they s t i l l perform an important range of functions. The most basic function of s t r i p commercial areas i s as a location for convenience and service outlets serving the l o c a l market. These uses continue to remain viable despite the consolidation of the supermarket trade. Another function i s as a location for r e t a i l outlets with space or access requirements which preclude them from planned shopping centres. Regulation i s necessary to ensure that t h e i r operation i s compatible with other operations. Only the larger s t r i p commercial areas retain any selection of shopping goods outlets. Planned shopping centres have drained o f f much of the business. Some s t r i p commercial d i s t r i c t s have maintained a large number of shopping goods outlets by developing as specialty centres serving the whole of the urban area. They succeed by providing a range of r e t a i l f a c i l i t i e s which would be impossible to fi n d i n planned shopping centres. S t r i p commercial centres often contain a number of public f a c i l i t i e s u t i l i z e d by the community. Thus, decline of these centres has implications for the entire community. This j u s t i f i e s public i n t e r -vention to ensure t h e i r continued v i a b i l i t y as commercial 187 a r e a s . T h e t e c h n i q u e s p r e s e n t e d i n t h i s t h e s i s p r o v i d e a b a s i s f o r e f f e c t i v e l y a n a l y z i n g t h e p r o b l e m s o f s t r i p c o m m e r c i a l a r e a s . T h e c o r e o f t h e p r o g r a m i s t h e a n a l y s i s o f l a n d u s e d a t a u s i n g a c l a s s i f i c a t i o n s y s t e m s u f f i c i e n t l y d e t a i l e d t o r e f l e c t d i f f e r e n c e s i n t h e s p a t i a l c o n f o r m a t i o n o f c o m m e r c i a l o u t l e t s . T h i s p e r m i t s d i f f e r e n c e s b e t w e e n c e n t r e s t o b e c l a r i f i e d a n d t h e f u n c t i o n a l r e l a t i o n s h i p b e t w e e n b u s i n e s s e s i n a r e t a i l c e n t r e t o b e u n d e r s t o o d . T h i s k i n d o f a n a l y s i s i s n e c e s s a r y t o d e v e l o p m e a n s f o r i m p r o v i n g t h e o p e r a t i o n o f r e t a i l d i s t r i c t s . T h e l a n d u s e s u r v e y a l s o p r o v i d e s a b a s i s f o r t h e m a r k e t a n a l y s i s w h i c h i s u s e d t o a s s e s s t h e v i a b i l i t y o f e x i s t i n g r e t a i l f a c i l i t i e s a n d p r o j e c t t h e p o t e n t i a l f o r n e w f a c i l i t i e s . R e a l e s t a t e f e a s i b i l i t y a n a l y s i s p r o v i d e s a t e c h n i q u e f o r a s s e s s i n g t h e f e a s i b i l i t y o f r e d e v e l o p m e n t p r o p o s a l s . O f p a r t i c u l a r i n t e r e s t t o p l a n n e r s i s t h e l a n d r e s i d u a l t e c h n i q u e d u e t o i t s s i m p l i c i t y a n d b r o a d r a n g e o f a p p l i c a t i o n . L i k e a l l m i c r o - e c o n o m i c t e c h n i q u e s , i t i s u s e f u l o n l y w h e n t h e e f f e c t o f t h e p r o p o s e d d e v e l o p m e n t o n t h e s u p p l y i s s m a l l a n d d o e s n o t i n f l u e n c e t h e m a r k e t p r i c e o n w h i c h t h e c a l c u l a t i o n s a r e b a s e d . T h i s l i m i t s i t s u s e t o r e s i d e n t i a l d e v e l o p m e n t s w h i c h g e n e r a l l y d o n o t h a v e a l o c a l i z e d m a r k e t a n d t o s m a l l s c a l e c o m m e r c i a l d e v e l o p m e n t s w h i c h h a v e a m i n i m a l e f f e c t o n l o c a l s u p p l y . 188 For larger commercial developments, a market survey i s necessary. Despite this l i m i t a t i o n , the land residual technique has value i n the assessment of d i f f e r e n t conceptual plans. Evaluation research i s also a useful t o o l for assessing the implications of alternate development schemes for the surrounding communities. Alternate development plans can have d i f f e r e n t implications for affected i n t e r e s t groups. Their incidence- i s c r u c i a l to the question of public intervention. While i t i s d i f f i c u l t to assess the various costs and benefits, the technique does allow a l l factors to be considered within a consistent framework. This can be useful for evaluating alternate plans or resolving disputes between various i n t e r e s t groups. Criticisms of the Methodology and Areas for Future Research There are numerous areas where th i s analysis could be improved. Due to the scope of the subject and time and resource constraints on the project, none of the analysis i s state of the art. A b r i e f c r i t i q u e of each section follows. The land use survey i s the most complete section, though there were some problems i n obtaining adequate data. Published sources of data were too highly aggregated, and the need to c o l l e c t f l o o r space data limited the scope of the project. A better picture of the evolution of the 189 study area c o u l d have been a t t a i n e d from a time s e r i e s l a n d use survey. Adequate data i s a v a i l a b l e from the C i t y D i r e c t o r y . The presen t a n a l y s i s shows t h a t the study area f i l l s a l a r g e l y complementary r o l e r a t h e r than a com p e t i t i v e one v i s - a - v i s the l a r g e r Lougheed r e g i o n a l c e n t r e . I t would have been u s e f u l to determine how t h a t r o l e developed. The major l i m i t a t i o n o f the trade area a n a l y s i s i s the l a c k o f a consumer survey. T h i s would have confirmed the s i z e of the trade area and made e s t i m a t i o n o f the p o t e n t i a l market more acc u r a t e . There are a l s o more advanced methods of f e a s i b i l i t y a n a l y s i s u s i n g the Pre s e n t Value and I n t e r n a l Rate o f Return c a l c u l a t i o n s which c o u l d have been used to assess the f e a s i b i l i t y o f development a l t e r n a t i v e s . S e n s i t i v i t y a n a l y s i s c o u l d a l s o have been a p p l i e d to the v a r i o u s f a c t o r s t o develop a range of v a l u e s . T h i s data c o u l d have been used t o make the Pl a n n i n g Balance Sheet more meaningful. Any of these s e c t i o n s c o u l d have been expanded i n t o a t h e s i s . The purpose of t h i s study has been t o cover t h i s broad t o p i c i n as g r e a t a depth as c o u l d be reasonably expected of a sm a l l p l a n n i n g team. 190 APPENDIX A CLASSIFICATION OF BUSINESS TYPES Business type headings adapted from c l a s s i f i c a t i o n s suggested by the Urban Land I n s t i t u t e f o r shopping c e n t r e development. The Community B u i l d e r s ' Handbook. (Washington: Urban Land I n s t i t u t e , 1968), p. 274. Business a c t i v i t i e s under each heading adapted from Bureau of the Budget. Standard I n d u s t r i a l  C l a s s i f i c a t i o n Manual. (Washington: Government P r i n t i n g O f f i c e , 1957)> 1. Food 5411 5410 5422 5423 5 4 31 5441 5451 5462 5491 5499 2. Drug 5912 3. Automotive 5511 5521 5531 5541 5599 5936 4. Restaurant 5812 5. General Merchandise 5311 5322 5323 5331 5341 5351 5392 5393 6. C l o t h i n g and Apparel 5612 5613 5621 5631 5632 5633 5634 5933 5641 5651 5662 5663 5664 5665 5671 5681 5699 191 APPENDIX A 7. Dry Goods 5714 5699 5998 8. Furniture-Household 5712 5713 5715 5719 5722 5732 5932 5934 9. B u i l d i n g S u p p l i e s 13, 10 14, 5211 5212 5221 5231 52 41 5251 Other Goods R e t a i l 5733 (Music) 5942 (Book) 5943 (Sta t i o n e r y ) 5952 (Sports) 5953 ( B i c y c l e ) 5962 (Feed) 5969 (Garden) 5971 (Jewellery) 5992 ( F l o r i s t ) 5993 (Cigar) 5994 (News) 5996 (Photo Supply) 5997 ( G i f t , Novelty) 5999 (Miscellaneous) 15, 16, 17, 11. Finance and Real E s t a t e 60 — t o 66 — 12. P e r s o n a l S e r v i c e 701- (Hotels and Motels) 7211 to 7299 7511 (Auto Rental) 18, 19 Business S e r v i c e 731-to 739— 811-891-893-899-(Legal) (Engineering, A r c h i t e c t u r a l ) (Accounting) (Miscellaneous) Household Repair 7531 to 7699 R e s i d e n t i a l Entertainment 783-7911 to 7949 5813 (Liquor Other O f f i c e 801-to 809-2 7 — 62 — 67 — (Medical) ( P r i n t i n g , P u b l i s h i n g , and A l l i e d I n d u s t r i e s ) L i q u o r Store 5921 Non-Commercial 8 2 — (Education) 866- ( R e l i g i o u s ) 867- ( C h a r i t a b l e O r g a n i z a t i o n ) 9 1 — to 9 3 — (Government) 192 BIBLIOGRAPHY Aregger, H., and Claus, 0. H i g h r i s e B u i l d i n g and Urban Design. New York: F r e d r i c k A. Praeger, P u b l i s h e r , 1967. Assessment A u t h o r i t y of B r i t i s h Columbia. Burnaby Assess- ment R o l l , 19 78. B a r f o r d , Jeromy C. "Environmental T r a f f i c Standards." 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