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City Council Packet 08-24-2020 Special
City Council 1 of 1 August 24, 2020 CITY OF PLYMOUTH AGENDA Special City Council August 24, 2020, 5:00 PM 1. CALL TO ORDER 1.1 Instructions to participate in the Virtual Council Meeting 2. TOPICS 2.1 City Center 2.0 Workshop Plymouth MN Interim Market Analysis Report City Center Social Pinpoint Summary City Center Boundary Map 3. ADJOURN 1 Special City Council August 24, 2020 Agenda Number:1.1 To:Dave Callister, City Manager Prepared by:Sandy Engdahl, City Clerk Reviewed by:Laurie Hokkanen, Administrative Services Director Item:Instructions to participate in the Virtual Council Meeting 1. Action Requested: The Mayor provides instructions for the public to observe the meeting by phone or online. 2. Background: Council meetings will be conducted virtually (via Zoom webinar/conference call) due to the state of local emergency for the COVID 19 pandemic. To observe/listen to the meeting, please register in advance at: https://us02web.zoom.us/webinar/register/WN_R_zQgc51Tj-PLaQ5WVi0tg No public comments are taken at study sessions. Comments can be emailed to Mayor and City Council at council@plymouthmn.gov or to the City Manager at dcallister@plymouthmn.gov. Contact City Clerk Sandy Engdahl at sengdahl@plymouthmn.gov with additional questions. 3. Budget Impact: N/A 4. Attachments: 2 Special City Council August 24, 2020 Agenda Number:2.1 To:Dave Callister, City Manager Prepared by:Danette Parr, Economic Development Manager Reviewed by:Laurie Hokkanen, Administrative Services Director Item:City Center 2.0 Workshop 1. Action Requested: Provide feedback regarding the presentation material discussed. 2. Background: In 2019, the Council adopted a goal to explore options for continued development and redevelopment of Plymouth's City Center. While citywide development and redevelopment is listed among Council goals, the Council added specific goals to focus on the city's central corridor. The two 2019 goals pertaining to City Center are: 1) Consider Development and Redevelopment Requests. Continue to carefully consider land use related to development and redevelopment to ensure a well-planned community with a varied tax base. 2) Develop a Renewed Vision for City Center. Explore options for continued development and redevelopment of City Center. This would include place-making efforts, beautification and safety. Pursue public-private partnerships to bring additional community activities and uses to City Center. In response to these Council goals, city staff, in partnership with Hennepin County (with the assistance of a corridor study grant), worked with consultants from Graef, Zan Associates, Business Districts Inc (BDI) and Community Design Group to undertake a City Center study. The scope of the City Center 2.0 Study involves the following: - Provide a market and development feasibility analysis. - Review the existing boundaries of City Center and provide any recommendations for expansion. - Update the economic constraints that developers operate under and recommend tools to realize the potential redevelopment and infill. - Review and identify potential redevelopment sites. - Review and recommend modifications to the zoning and subdivision regulations for proposed standards to aid the implementation of the plan. The primary elements that have been utilized to establish the consultants study findings have included interviews with Councilmembers, staff and City Center stakeholders (business owners and landowners, previous tenants in City Center, developers etc), a FlashVote survey, a Social Pinpoint website, and a market analysis. Additional information related to a number of these elements are below: 3 • The City Center 2.0 FlashVote Survey took place on June 16-17th. We had 1,134 respondents. Results can be found at: https://www.plymouthmn.gov/home/showdocument?id=20994 • The City Center 2.0 Social Pinpoint site was launched to allow citizens/stakeholders additional ways to provide input through survey questions, a map to pin comments that are site specific, and a chat area to exchange thoughts. A summary of the site feedback is attached. The site had a good volume of public engagement, which can be found at: www.plymouthcitycenter.com • The consulting group Business Districts, Inc (BDI) conducted a market analysis to determine the conditions of the City Center 2.0 market and opportunities for future growth. The market analysis was previously forwarded to the Council and is also attached. The August 24 City Center 2.0 Workshop is anticipated to contain the following: 1. Virtual Tour (City Center map attached) 2. Summary of Engagement Process: What was heard from the community 3. Summary of Market Research: What was heard from the market 4. The Analysis 5. The Future 6. Discussion 7. Wrap Up In addition to Councilmembers, city staff, and the consultant team, the workshop will include the City Center 2.0 Taskforce members (made up of Plymouth business owners, property owners and developers). The City Center Taskforce members and consultant participants are anticipated to include the following: - Cindy Leines - CEL Marketing/PR/Design - Chad Zejdlik - Center National Bank - Mike Polis - Everidge - Eric Bjelland - Midwest Retail Ventures - Michael Mann - Plymouth Grand Theater - Michelle Mann - Plymouth Grand Theater - Gordy Engel - The Foursome Fine Menswear - Nicole Chose - The Foursome Fine Menswear - Michael Engel - The Foursome Fine Menswear - Paul Bakken - The Valuation Group - Jim Waters - Quest Development Consultants: - Diane Williams, Business Districts Inc - Antonio Rosell - Community Design Group - Ed Freer - Graef - Craig Huebner - Graef - Pat Kressin - Graef - Kristan Sanchez - Graef - Patty Day - Zan Associates - Charleen Zimmer - Zan Associates Nathaniel Hood - Hennepin County staff 4 3. Budget Impact: N/A 4. Attachments: Plymouth MN Interim Market Analysis Report City Center Social Pinpoint Summary City Center Boundary Map 5 Market Analysis Interim Report May 2020 Prepared by: Business Districts, Inc. Plymouth City Center 2.0 a new community vision 6 Plymouth City Center 2.0 2 a new community vision Introduction This interim Market Analysis report for Plymouth’s City Center reflects what is currently known about City Center’s markets and the study area’s opportunities for future growth. Most important for City Center’s future, this interim report directly addresses the challenges and uncertainties that will affect City Center in the short-term. The coronavirus pandemic and Minnesota’s Stay At Home order present a series of economic uncertainties not apparent since the 2008 Global Financial Crisis. In early 2020, the economy was strong. Within months, millions have lost jobs. Most businesses were closed, and most remain closed now. This has been an unprecedented turn of events, and how local, state, and national economies will ultimately recover is unknown. Though re-start is beginning in Minnesota and elsewhere, major challenges remain. Businesses are unsure how to re-open and when. Offices and hair salons are considering staggered shifts, potentially operating all week. Dental practices now need personal protective equipment, or PPE, which is difficult to source. Restaurants in City Center and elsewhere are considering varied models for reopening--most mean fewer tables, fewer customers, and significant revenue reductions. City Center will likely have increased vacancies as re-start begins. With many of the Twin Cities’ early stage development projects on pause, potential City Center redevelopment opportunities will now emerge after markets stabilize. So, with these many uncertainties, what will the ‘new normal’ be? For City Center, the larger opportunity is how to emerge stronger and better as Plymouth’s central place. City Center continues to serve routine consumer needs, it is Plymouth’s civic space, and it is the place where residents celebrate holidays and attend hockey games. Businesses have and will again succeed in City Center, and nearby residents have and will again attend Plymouth’s many community events in City Center. The following report addresses three (3) sets of market issues—City Center’s current market conditions, the implications of broader market trends and market uncertainties for City Center, and how City Center’s many market strengths and opportunities support this stronger and better future. This interim report’s data and analyses serves as the basis for the final market and development-related recommendations in the final City Center 2.0 Plan. 7 Plymouth City Center 2.0 3 a new community vision Market Data Review City Center’s Markets Plymouth’s market demographics are displayed in Table 1 below. Table 1: City Center’s Markets Selected Demographics .5 Mile Pedestrian 5-Minute Drive Convenience Custom Market City of Plymouth Total Population 2,877 17,143 49,752 78,768 Total Households (HHs) 1,456 7,377 19,032 31,917 HH Size 1.98 2.32 2.6 2.5 Population Density (per Sq. Mi.) 3,653.12 2,578.71 499.43 2,234.17 Median Age 38.7 39.1 41.3 39.9 Projected Total Population Change by 2024 3.0% 8.5% 8.2% 5.5% Renter Occupied Housing Units 57.5% 33.5% 20.8% 28.2% Average HH Income $111,610 $139,748 $150,483 $141,410 Median HH Income $73,157 $95,754 $107,351 $99,661 Per Capita Income $56,590 $60,230 $57,619 $57,497 Total Employees 2,601 17,267 30,265 55,432 Jobs per HH 1.8 2.3 1.6 1.7 © 2017 Experian, Inc. All Rights Reserved, Alteryx, Inc. The study area markets shown above are defined as: • Pedestrian market, or .5-mile radius. These customers, whether residents or employee, are able to walk to the businesses in any commercial area, typically the most frequent users of the commercial area. • Convenience drive time, or 5-minute drive or 10-minute bike ride. Depending upon the mix of businesses in any commercial area, nearby residents and employees are routine users of the area’s 8 Plymouth City Center 2.0 4 a new community vision businesses. Convenience businesses, such as grocers, often influence how often customers visit the commercial area. For City Center, the grocers and Lifetime Fitness, represents routine uses. • Custom market, identified by City Center stakeholders. Business owners and commercial brokers uniformly described this market geography as City Center’s core market. Basically, these market boundaries parallel Highway 55, extending from I-494 to just west of Rockford. A map of this Custom Market and its regional context comprise Illustration 1 below. • City of Plymouth. The City is an important market for City Center, particularly as the major local venue for community and school events. City Center’s multiple uses function similarly to a traditional downtown in communities with different growth patterns than Plymouth’s. Each market shown also has a significant employment base. The strongest is City Center’s 5-minute drive time, with 2.3 jobs per household. The number of employees in this market exceeds its total population. Rental occupied housing units represent 57.5% of housing units within the pedestrian market, the result of the multiple senior housing projects near City Center. The percentages of rental units in the other markets, including the City of Plymouth, are much lower. Overall, Plymouth’s markets are growing and have high incomes—average, median, and per capita. Plymouth also has welcomed new residents, including the local Russian and regional Somali immigrant populations, and continues to experience population growth. Population growth by 2024 is projected at 5.5% for the City and over 8% for City Center’s Custom and Convenience Markets, as shown in Table 1 above. This Custom Market has the least population density, reflecting the lower population density to Plymouth’s northwest but has the highest average and median incomes of any markets shown. With the exception of the .5-mile market, household sizes reflect large percentages of family households, and these households will continue to make routine visits to City Center. 9 Plymouth City Center 2.0 5 a new community vision Illustration 1: Map of Custom Market (with the Custom Market’s Regional Context) © 2017 Experian, Inc. All Rights Reserved, Alteryx, Inc. City Center’s Business Mix Illustration 2 below shows City Center’s business mix, based upon business units, as of February 2020. 10 Plymouth City Center 2.0 6 a new community vision Illustration 2: City Center’s Business Mix by Business Unit Source: City of Plymouth Business List 2020. Within the overall mix, service-related uses dominate, encompassing over 75% of current business numbers. About 1/3 of the service uses are medical and dental-related. The remaining services businesses are comprised of a diverse range of business types. The employees of these service businesses are active users of City Center, according to City Center business owners. These employees, when combined with the employees from City Center’s Civic uses and from businesses south of Highway 55, represent an important source of regular City Center customers. The dominance of these service businesses, particularly professional practices, in City Center indicates that much of City Center’s employment base will likely remain, given that many of those employees cannot readily work from home. An estimated 18.5% of businesses represent retail/restaurant uses. Based upon information provided by the City of Plymouth, these retail/restaurant uses occupy an estimated 24% of City Center’s estimated commercial footprint. As noted above Cub Foods and the study area’s nearby grocers remain important anchor tenants. (City Center’s Cub Foods is now open 24 hours to serve shoppers during the pandemic, according a recent report.1) City Center’s mix also includes multiple destination businesses, such as India Bazaar. The short-term question for all commercial districts, including City Center, is what businesses will remain? Vacancies will occur, whether businesses need to close for financial reasons or certain owners choose to retire. 1 John Ewoldt, “Cub Bucks Trend, Making 11 More Stores Open 24 Hours.” StarTribune.com, published April 20, 2020 at 7:39PM. Entertainment 1% Institutional 6% Medical/Dental Office 21% Personal Services 7% Retail 9% Food and Beverage 9% Service 47% City Center's Business Mix 11 Plymouth City Center 2.0 7 a new community vision Those small businesses with access to capital or with reserves and those applying technology to generate sales and gain operating efficiencies are considered the most likely to survive. A recent national survey was conducted by the National Main Street Center on the impact of the pandemic on small businesses.2 Two (2) survey results support these likely business survival characteristics—63.3% of the small business respondents had no online sales component, and nearly 32% indicated that their business would survive 2 months or less of business disruption from the pandemic. Regional Real Estate Before Minnesota’s mid-March Stay at Home order, City Center’s commercial lease were estimated at $15-20 per square foot, or PSF, with negotiable tenant improvements and expenses. Regional rents for newly constructed commercial lease spaces were an estimated $30-35 PSF. City Center’s vacancy rate was low, estimated at about 6%, and prospective tenants were interested in available City Center lease space. Overall, City Center, as a commercial area, was performing well for property and business owners. Given the emerging market factors described in the Market Trends section below, significant percentages of independent retailers and restaurants may never re-open. The range of regional real estate predictions range from quick re-openings by small businesses to a long period of sustained vacancies, meaning that lease space currently occupied by these closing businesses will remain unoccupied for 2-3 years. Also, retailers and restaurants, previously considering or recently having leased new or additional space, are cancelling those lease commitments. This is particularly affecting leasing ground level space in mixed-use developments. Despite the challenges facing the Twin Cities and the broader economy, two (2) positive local real estate conditions exist that will help City Center: • Some residential rental and most industrial developments are proceeding in the region, despite the pandemic’s economic impact. Those residential projects that are proceeding have sufficient equity and are in compliance with financing covenants. Those residential projects are more preliminary development stages or are now non-compliant with any loan covenants are considered paused. • Development costs have decreased. Interest rates are low. In certain instances, project contractors have reduced their fees to ensure construction work for their employees. No construction-related supply chain issues have been experienced in the Twin Cities to date. 2 “The Impact of COVID-19 on Small Businesses: Findings from Main Street America’s Small Business Survey.” April 2020. This online survey was conducted from March 25 through April 6, 2020 with 5,580 responses from small businesses with 20 or fewer employees in commercial districts of all sizes throughout the U. S. 12 Plymouth City Center 2.0 8 a new community vision Stakeholder Input Summary To initiate this Market Analysis component of the City Center 2.0 Plan, stakeholder interviews were conducted on site in Plymouth on January 31, 2020. Ten (10) additional phone interviews were completed in late February and early March 2020. These interviewees included City Center business owners, property owners (or their representatives), regional commercial real estate brokers, and regional real estate developers. All of these interviewees understand Plymouth’s commercial and residential markets; many were also Plymouth residents. Each interviewee was informed that their observations were confidential and that the goal of the interview process was to identify common themes—whether market conditions, opportunities or challenges— specific to City Center’s future. A summary of these interview results was provided to City staff and is included as Appendix 1 of this interim report. This summary describes common themes and issues identified during the interviews. Either all or most of the interviewees cited these common themes. While interview details are provided in Appendix 1, key points include: • Interviewees generally liked City Center as is. Most believed the area functioned well as a commercial district, and several referred to City Center as ‘downtown Plymouth.’ Interviewees felt that signage (business and wayfinding), connectivity or circulation, and parking management needed improvement. Overall, they appreciated the ‘community’ feel of City Center, its businesses, and its amenities. • The potential for new, larger scale redevelopment in the area is unlikely. Given City Center’s history of strong tenancies and number of property owners, acquisition and redevelopment costs would be prohibitive. In addition, successfully tenanting any new commercial space would be difficult given the rents needed to justify redevelopment. • The redevelopment opportunity identified by interviewees was residential infill, given City Center’s many amenities and potential Bus Rapid Transit (BRT) access. In addition, Zan Associates, the public engagement member of this Plan’s consultant team, identified similar themes in their interviews with City and County officials. 13 Plymouth City Center 2.0 9 a new community vision Competitive Review During project initiation, five (5) commercial areas were identified as competitive locales for City Center and as potential models for success. These five (5) commercial areas were: Arbor Lakes in Maple Grove; Southdale in Edina; downtown Wayzata; Ridgedale in Minnetonka; and West End in St. Louis Park. Four (4) of the areas were identified by City staff, with West End noted by multiple stakeholder interviewees during the on- site interviews. Each of these commercial areas serves Minneapolis and its suburbs. Each also has a well-established market position. The current status of redevelopment in these areas is: • At the two (2) long established shopping malls, Ridgedale and Southdale, redevelopment is occurring. Similar to that of many malls, these redevelopment projects include residential housing, dining, and entertainment uses. This includes the planned residential development at the Lifetime/Southdale location--part of the envisioned athletic resort. The emphasis at Ridgedale has been primarily residential development. Depending upon the status (and financing position) of either on-site or nearby redevelopments, these projects are now paused due to the pandemic. • Located at the intersection of three (3) major interstates, the expansive commercial area encompasses all commercial uses—retail/restaurant, hospitality residential, and employment. Arbor Lakes has a new residential development in process. This development concept was recently altered from market rate to senior housing. • West End’s development, dating from 2009, emphasizes retail and restaurant uses, had significant vacancies in February; vacancies will likely increase resulting from pandemic-related closures. Construction on a nearby office development began in late 2019. • Downtown Wayzata, often characterized as a regional day trip destination, will likely experience additional vacancies among its retail/restaurant tenants. This includes tenants in the mixed-use lease space in downtown’s Presbyterian Homes complex. The City of Wayzata’s planned streetscape project along Lake Street in the downtown core is scheduled for summer 2020. This project will also present an additional challenge to re-openings by downtown’s retailers and restaurants. Overall, regional real estate professionals characterize the Minneapolis area as a ‘very fluid’ market for purchasing, dining, and entertainment. Regional consumers are accustomed to driving to shop, dine, or be entertained. These same consumers, including Plymouth residents, have easy access to a wide range of commercial locales. Four (4) of these competitive areas are located within a 15-minute drive time from City Center. (West End is an estimated 17-minute drive per Google Maps.) These overlapping 15-minute drive time 14 Plymouth City Center 2.0 10 a new community vision markets are shown in Illustration 3. Selected demographics for those same markets are presented in Table 2. The demographics for all of the areas are also similar, reflecting larger overlapping markets. Illustration 3: 15-Minute Drive Time Map © 2017 Experian, Inc. All Rights Reserved, Alteryx, Inc.; GRAEF. 15-Minute Drive Time Map Key: Arbor Lakes ; Ridgedale; Southdale; Downtown Wayzata; West End. 15 Plymouth City Center 2.0 11 a new community vision Table 2: Competitive Area Market Demographics Selected Demographics: 15 Minute Drive from Competitive Areas City Center Arbor Lakes DT Wayzata Southdale Ridgedale West End Total Population 240,508 362,737 192,563 333,647 248,496 628,981 Total Households (HHs) 98,787 139,923 82,192 147,238 110,467 274,581 HH Size 2.4 2.6 2.3 2.3 2.2 2.3 Population Density (per Sq. Mi.) 1,805.20 2,449.62 1,625.92 3,368.07 2,244.06 4,141.70 Median Age 40.5 36.6 42.9 38.2 40.3 34.5 Projected Total Population Change by 2024 5.4% 4.0% 4.3% 1.9% 3.2% 2.8% Renter Occupied Housing Units 28.4% 29.4% 31.0% 37.0% 37.7% 48.8% Average HH Income $130,657 $104,400 $135,063 $110,513 $120,443 $97,893 Median HH Income $90,971 $76,793 $90,924 $76,412 $81,089 $63,159 Per Capita Income $53,835 $40,376 $57,856 $48,916 $53,770 $43,209 Total Employees 176,560 199,726 182,035 278,197 254,244 543,186 Jobs per HH 1.8 1.4 2.2 1.9 2.3 2.0 © 2017 Experian, Inc. All Rights Reserved, Alteryx, Inc. Specific to City Center, two (2) market opportunities emerge from this competitive review. In each of these commercial areas, residential multi-unit development has succeeded. Housing units within each area are readily leased and include varied housing types, all capitalizing on nearby amenities. Housing has also been identified as City’s Center’s most likely redevelopment opportunity, according to the regional real estate professionals interviewed for this Plan process. City Center’s many amenities, including access to parks, natural features, and recreation, can reinforce Plymouth’s image as a great place to live and contribute to City Center’s quality of place. Given the evolving business mix and regional market positions of the competitive areas, City Center differs from these commercial areas in one important way—City Center’s sense of community identity and appeal. How nearby consumers use City Center reflects a different set of behaviors structured around family activities, convenience shopping or dining, and routine tasks (such as dental appointments or fitness classes). While the broader impact of COVID 19 exposure and social distancing on consumer behaviors remains unknown, consumers will initially want to feel safe and comfortable. City Center, as a familiar place, can cultivate a ‘new normal’ experience. Over time, Plymouth and City Center can begin to emphasize and capitalize on this differentiated appeal to attract new residents and businesses. 16 Plymouth City Center 2.0 12 a new community vision Market Trends—All Uses Traditional market analysis examines past success and projects into the future, assuming the future will, with modest impacts from emerging trends, offer similar opportunities. When there is a significant change such as the unprecedented global pandemic, that approach can create wildly inaccurate predictions. Although today's very uncertain future presents a planning challenge, direction can come from consensus that safety and continued social distancing will be important market trends. Near term, there will be pent-up demand for healthy, outdoor activities and new experiences that are close to home. By examining the potential impact of behavior changes caused by the pandemic response, the Plymouth City Center plan can capitalize on this evolving new market. Residential With regional real estate professionals identifying housing as City’s Center’s most likely redevelopment opportunity, the City Center Plan must recognize that the safe, socially distant post pandemic market is likely to be impacted by these trends3 • New homes equal healthy homes: Currently, buyers are pushing for builders to finish early so they can move in; some are willing to pay a premium to expedite the process. Seamless transitions into outdoor space, fresh air, open spaces, and oversized windows to bring in natural light are all in strong demand. • Surban™ instead of urban: Surban environments (communities that combine the services and density of urban locales with the safety and affordability of the suburbs) will continue to attract urban dwellers looking for more privacy and open space. • Health and wellness: Healthy and sustainable living has been among the fastest-growing trends in home building and community design in recent years. Think: The rise of the community gardens, the farm to table movement, and fitness on demand. Expect the current pandemic to rapidly accelerate that trend, with a particular emphasis on the home. • Working from home: One certain result of this pandemic will be more working from home. Some homebuyers prefer a more generic office at the front of the home with optional doors for privacy, while others embrace space, quiet, and privacy wherever they can. • Living multi-generationally: With family more important than ever, both parents and children will accept space in the middle generation’s home. This multigenerational trend will involve homes that include separate living areas and kitchens and feature private entrances. It will also involve the concept of the multigenerational suite within the home (private living areas and kitchenette, but no private entrance) will. Full studios over the garage will be another popular option. 3 The Light: 5 Key Consumer Shifts By Ken Perlman, Principal, and Lesley Deutch, Principal; https://www.realestateconsulting.com/ 17 Plymouth City Center 2.0 13 a new community vision Implications specific to City Center With both the project interviews and trend watching pointing toward adding housing as a key City Center objective, one must note the implications of these trends. With very limited existing housing, a new community vision that adds residential units will offer very desirable new product. The addition of a suburban product that likely will attract new residents leaving the denser urban places to City Center, with its mixed-use character and more urban feeling. The presence of nearby parks, fitness centers and healthy restaurants will also be appealing. Working from home and multigenerational living suggests more attached single-family products with individual entrances, open layouts, and purposeful home offices. Provision for “second units,” such as in-law suites, basement rental units, and 2nd story residential over garages, would add both density and investment income that expands market appeal. These trends all point toward a strong housing market in City Center that could emerge resulting with pent up demand from the pandemic. Commercial Commercial development post pandemic is likely to be very challenging for both office and retail. The pandemic required online ordering and curbside delivery, accelerating the pre-pandemic trend of replacing spaces built for stores with services in offices. As consumers seek safety in social distancing, there is a possibility that stores and services will demand more space to separate customers. Unfortunately, while social distancing requires more space, it does not bring more income to cover additional rent. The result likely will be downward pressure on rents per square foot. New experiences with telemedicine could further reduce demand for medical space, a typical replacement for ground floor retail space, as routine visits to doctor’s offices decline. Second story and multi-tenant office space face mixed demand changes in a post pandemic market. Instead of today’s allotment of less than 200 SF per person, the newly reopened offices of the post-pandemic era may return to the 1990s-era standard of around 250 SF per person, enough space to allow for the recommended 6 feet of social distance.4 A Colliers report, released April 16, 2020, said 84% of 3,000 workers it surveyed around the world would like to keep working remotely at least one day a week when the pandemic fades. Of those who hadn't worked from home prior to the coronavirus' spread, 71% would like to work remotely at least once a week in the future. As they reopen, independent retail stores and restaurants face the challenge of providing social distancing and retaining the customers who converted to online ordering and pick-up. Easy delivery options will require new 4 https://www.bisnow.com/chicago/news/office/office-workers-will-return-with-radically-different-expectations-and-worries 18 Plymouth City Center 2.0 14 a new community vision store configurations, pickup windows, and drive thru lanes. At the time of this analysis, most independent businesses are closed or operating in such a limited way that sales are less than 30% of pre pandemic levels. Trade associations are projecting that as many as a third will never reopen because reopening costs are high and Federal rescue programs cannot accommodate their small scale. 5 For in-line, multi-unit stores, there will be mixed results from the pandemic market shift, with grocery and pharmaceutical anchors seeing higher sales while fashion, restaurants and gyms experience significantly lower sales. Sales in grocery and pharmacies are up by as much as 30%, as customers both stockpile and eat at home more.6 With gyms and fashion retailers being closed while restaurants are limited to carryout, their sales are very limited. Fashion labels are selling directly to consumers, by passing stores. Gym members are finding online classes and creating home exercise spaces. Because the profits of stores, restaurants and gyms come from marginal sales after fixed costs are covered, a 10% to 20% sales reduction has proportionally greater impact on profits. Multi-unit businesses make the decision to continue operating at a specific location based on its contribution to overall company profits. If the population continues shopping and exercising at home, it is expected that multi-unit businesses will respond by reducing the number of units. Implications specific to City Center The City Center plan must consider existing ground floor commercial uses as flexible components of the product mix. Although there are few vacancies today, it is likely that some ground floor businesses will not reopen causing available space. To succeed in attracting new stores and restaurants, these spaces will need easy grab and go access. Grocery and pharmacy businesses will be strong but need drive thru traffic accommodations to reach their full potential. With other communities competing for multi-unit businesses, the plan’s ability to accommodate this new drive thru, socially distant normal will be critical to keeping existing tenants and attracting new tenants. Appealing to new fast casual restaurants will also be dependent on drive thru access. The weakest market is likely to be offices. Options for converting office space to residential uses should be considered. 5 https://www.usatoday.com/story/news/politics/2020/04/19/coronavirus-closures-restaurants-say-they-need-more-financial-help/2982201001/ 6 https://www.supermarketnews.com/retail-financial/kroger-sees-march-identical-store-sales-jump-30-due-coronavirus 19 Plymouth City Center 2.0 15 a new community vision Framework for Development Alternatives As this framework for development alternatives is being drafted, the economy, impacted by a global pandemic, is very volatile and experiencing uncertainty that could significantly delay investment. Key Market and Real Estate Factors to consider include: o Today’s real estate market return on total investment is lower than historic averages because underlying interest rates are quite low and there was confidence in the market. o The post pandemic market is likely to see higher required returns because there is so much uncertainty. This uncertainly will be mitigated somewhat by low interest rates but, if the required return on total investment rises, any project would need to generate more income (either sales or rents) to provide that return. Alternatively, the project can be delayed, until the market dynamic become more certain. o When businesses open at 50% of capacity, they expect 50% of volume and therefore cannot stay profitable unless non-variable expenses, such as rent, are significantly lower. This downward pressure on rent is likely to further reduce return on investment and therefore the amount investors will pay for property. 20 Plymouth City Center 2.0 16 a new community vision Plymouth’s City Center: Strengths, Challenges and Opportunities In examining the study area’s markets and local and regional market trends, the identification of City Center and Plymouth’s strengths, challenges and opportunities supplements the development framework for translating market realities into future recommendations to strengthen City Center’s quality of place over time. While these factors reflect current conditions and pandemic-related uncertainties, many these factors will remain when the City Center 2.0 Plan is completed, and implementation begins. Strengths: These strengths represent both City Center and Plymouth’s assets and competitive advantages. These strengths support business growth and future investment, including redevelopment, in City Center. • City Center has strong and growing local markets, and related, an important daytime population that actively uses the area. • Multiple destination businesses and multiple routine traffic generators—Lifetime and grocers; few vacancies and other businesses were performing well, pre-pandemic. • City Center is family friendly and perceived by many as Plymouth’s central place. Residents love the special events. • City of Plymouth has extensive experience with new development. Challenges: Challenges can either constrain or impede economic success or investment in any commercial area. Some challenges may inhibit Plymouth’s ability to capitalize on City Center’s identified market strengths and opportunities. Other challenges will likely remain and may require alternative strategies to ensure City’s Center’s success. • The many economic uncertainties created by the pandemic--What will re-start look like? What is the impact on any overall vision for City Center? How will social distancing and telecommuting changing demand for commercial space? How will the residential development sector be affected? • City Center development sites are limited in size, and the costs to redevelop the optimal sites, given the success of City Center businesses, will be high. Property ownership throughout City Center is fragmented, including multiple commercial condos, ensuring higher acquisition costs. 21 Plymouth City Center 2.0 17 a new community vision • Recent market rents in new constructed commercial developments throughout the region are significantly higher than City Center’s current market rents. Many of these newly constructed developments in nearby communities also have significant vacancies. This disparity in market rents and competition for tenants inhibits real estate investor interest in constructing new commercial space. • Local developers perceive other Plymouth sites as “better” commercial redevelopment opportunities. These sites have better market characteristics, including better highway access and visibility. • City Center includes some aging, possibly obsolete, commercial buildings requiring improvements by existing owners. Collaborating with existing owners to improve their properties and to retain strong, existing tenants can create an opportunity. • The implications for new road construction at Highway 55 in City Center locations also foster uncertainty. • Property owners and developers expressed concerns about those regulations (City or regional) affecting City Center’s stormwater and soil issues and their implications for redevelopment. Opportunities: City Center’s opportunities are fundamental to sustaining and enhancing City Center’s importance for Plymouth. Each of these opportunities builds upon City Center’s assets and strengths to adapt to the new ‘normal,’ creating a singular City Center and Plymouth experience. • Making City Center better can be the new ‘normal.’ This is a multi-faceted opportunity. City Center can become Plymouth’s central place, reinforcing the City’s family friendly identity. City Center already serves as Plymouth’s civic center, as the location for City government, the Hennepin County Library, and multiple community events. Creating Plymouth’s central place at City Center also reinforces its market position and function as the City’s ‘downtown like’ commercial area. Future redevelopment sustaining this ‘better’ place will also support increased developer and investor confidence. • City Center’s potential BRT Station could improve connectivity and circulation and add to Plymouth’s reputation as a great place to live. • Improving connectivity and circulation throughout City Center will enhance how residents and visitors find and experience the area. This encompasses access, visibility, signage and parking management for the area and its businesses. • Engaging and partnering with the regional developer community to share this study’s resulting vision for City Center and to work with these developers to integrate their project into this City Center vision, versus prescribing individual project visions through regulation. Engaging City Center’s businesses is also part of this effort to understand how businesses are used versus their use. • Emerging housing types offering greater density will fit well with City Center’s potential sites, particularly as infill housing is identified City Center’s best redevelopment opportunity. 22 Plymouth City Center 2.0 18 a new community vision • With greater interest in “surban” places, those places offering walkability with less density than in cities, City Center and Plymouth can capitalize on this trend. City Center’s market strengths and potential for future development will remain, despite the current uncertainties and unknowns. The City of Plymouth is committed to City Center’s success by supporting a successful mix of commercial uses in the area. New types of residential development and successful new and existing commercial uses can complement City Center’s many amenities and distinct local character. The next steps, to be described in the final City Center 2.0 Plan, will determine how best to capitalize on opportunity and uncertainty. 23 Plymouth City Center 2.0 19 a new community vision Appendix 1: Stakeholder Interview Summary Plymouth’s City Center 2.0 Market Analysis: Interview Themes The following summary describes the common market-related themes identified in confidential interviews with City Center stakeholders conducted by BDI consultants. These interviews were conducted on-site in Plymouth on January 31, 2020. Ten (10) subsequent phone interviews were also completed during the weeks of February 24 and March 2, 2020. Interview participants included City Center business and property owners/representatives and regional real estate brokers and developers. Among these stakeholders, most were Plymouth residents or regular users of City Center’s businesses and institutions. The following market-related themes were identified in these on-site and phone interviews. o Plymouth’s market differentiation from nearby communities is rooted in family friendliness and overall quality of life. The schools are excellent, and the City is perceived as well managed. o City Center can be the right place for ‘experiential’ businesses and uses within Plymouth’s trade area, in addition to serving routine consumer needs, such as grocery shopping. o Connectivity throughout City Center and its nearby commercial centers needs to be improved for cyclists and pedestrians. Better connections across Highway 55, particularly for cyclists, are needed. Changes to Plymouth Boulevard also present opportunities for improving circulation, visibility, and parking on City Center’s north-south axis. o The City Center area vacancy is low, estimated at well below 10%. Interest in available lease space exists, particularly among small, independent businesses. These businesses comprise office and medical uses and regional entrepreneurs. Though lease rates vary depending upon property type and condition, rents in City Center are significantly below the $32-35 PSF net rents needed to support new development. o Investment opportunities in City Center include: o Improving the area’s oldest buildings; o Incenting partnerships between current property owners and their tenants to improve lease space to support business expansions; o Acquiring and developing pocket, or infill, sites to serve as catalysts in strengthening City Center. Interviewees indicated market-rate residential development is the best current opportunity; o Improving access and egress to and from City Center’s multiple strip centers and buildings. Patronizing businesses in these locations is confusing and difficult. 24 Plymouth City Center 2.0 20 a new community vision o Adding more restaurants to the current City Center business mix was noted. These interviewees also recognized that City Center presents multiple restaurant operating barriers, such as tenant build-out/improvement costs and few suitable locations. o One of City Center’s key assets is its strong daytime population. Area employees are active users of area restaurants and grocers and natural amenities, such as nearby trails. Lunch options are important to these employees. o City Center’s key destinations, cited in the interviews, were: o Foursome Fine Men’s Wear o Von Hanson’s Meats o Lettermen Sports o India Bazaar o Plymouth Ice Center o Aveda Reflect Salon and Spa o City Center’s key anchors, cited in the interviews, were: o Lifetime Fitness o Cub Foods o Lunds & Byerlys o Stormwater retention, building height limits, siting requirements, pick-up windows, higher fees, and parking regulations may make infill development difficult, and any new project often requires variances. o Zoning, permitting, and licensing can also support quality infill development and local business growth. To capitalize on the residential opportunity noted above, increased density will be needed to support quality market rate development. Allowing additional signage for City Center’s businesses to provide greater visibility was also noted. o Several City Center parking management issues cited by interviewees include: o The need for additional event parking, either within City Center or through shared parking arrangements; o The need for parking along Plymouth Boulevard; o The recognition that sufficient parking is critical for City Center’s anchors and destinations; o The need to accommodate stacked snow in on-site parking areas in the winter; o For office tenants (particularly medical), their ability to grow and remain within City Center depends upon access to more parking for business growth reasons--increasing numbers of patients and more employees. o City Center’s special events, such as the July 4th celebration, Kids Garage Sale, Music in Plymouth, and Entertainment in the Park, differentiate the area. Additional events, centrally located within City Center, could help activate the area to cultivate the City Center ‘experience.’ 25 Plymouth City Center 2.0 21 a new community vision o High school students provide a unique 3PM daypart, or after school audience, for the City Center area. o Careful consideration of the location of Plymouth’s Bus Rapid Transit (BRT) station could support additional parking, more residential, and regional entertainment venues. 26 Online Engagement Report Summary of activity on Social Pinpoint from June-July 2020 August 16, 2020 Prepared by Zan Associates Plymouth City Center 2.0 a new community vision 27 Plymouth City Center 2.0 2 a new community vision Contents Social Pinpoint Summary .............................................................................................................................................. 3 Overview ....................................................................................................................................................................... 3 Analytics .................................................................................................................................................................... 3 Interactive Map ...................................................................................................................................................... 4 Ideas Board............................................................................................................................................................... 5 Online Survey .......................................................................................................................................................... 7 Key Themes ............................................................................................................................................................... 12 Downtown Plymouth ......................................................................................................................................... 12 More Local Businesses and Restaurants..................................................................................................... 12 Access and Pedestrian Issues ......................................................................................................................... 12 Vision for Plymouth City Center ................................................................................................................... 12 28 Plymouth City Center 2.0 3 a new community vision Social Pinpoint Summary The City of Plymouth is developing a long-term vision for the existing Plymouth City Center site, in response to a vote by the City Council in 2019. The process includes exploring options for development, place making, beautification and safety through a market study, stakeholder involvement and community feedback. After the initial work was complete, which included a market study and interviews with business leaders and elected officials, a project website (www.plymouthcitycenter.com) was created on a platform called Social Pinpoint that utilizes interactive tools to gather feedback from the public. Overview The project team set up a project website using the interactive platform Social Pinpoint to conduct online engagement with the general public. This site was created and hosted at the site www.plymouthcitycenter.com. The site consists of the following components: o A project overview introducing the community to the project purpose and goals o An Interactive Map o An Ideas Board o A Survey Analytics The site was launched on June 16, 2020, in coordination with the City of Plymouth’s FlashVote survey. The site is still active and will continue to be available to the public through the remainder of the project. Between June 16 and August 3, the site saw: o 1,476 site visits o 361 unique users o 113 comments on the map o 52 comments on the ideas board o 192 survey respondents (survey closed on August 3) 29 Plymouth City Center 2.0 4 a new community vision Interactive Map The Interactive map was created to ask the community what they liked about City Center, what needs work, and what barriers there are to attract more people and business to City Center. Participants were able to select from the following icons: o Like it – Places in City Center that you like to go o Needs work – Places in City Center that you would like to see improved or changed o Walking barriers – Physical barriers that prevent you from walking to, from or within City Center o Biking barriers – Physical barriers that prevent you from biking to, from or within City Center o Places you go regularly – Places in City Center you visit more than once a month o Places to gather and socialize – Places in City Center you go to meet other people or socialize Participants were also able indicate whether they liked or disliked existing comments left by others on the map of Plymouth City Center. A total of 113 comments were left on the map in the following categories: Needs work 53 Driving/parking Issues 18 Places to gather & socialize 16 Like it 14 Walking barriers 7 Places you go regularly 4 Biking barriers 1 Transit opportunities 0 Figure 1 Comment map 30 Plymouth City Center 2.0 5 a new community vision Many of the comments focused on the southwest corner of the Plymouth City Center site. The predominant issue raised focused on the difficulty for pedestrians crossing Highway 55 on Vicksburg Lane, with many seeing this as a barrier to entry. Four people suggested building a pedestrian bridge or overpass across the busy Highway 55 intersection. Other comments highlighted the southwest parking lot as an underused space that could be developed. Additionally, congestion, parking and signage issues were identified in this part of City Center. The “most liked”e comments focused on the desire to have a brewery or new local restaurant, and the value of current amenities such as the movie theater, Lifetime, and Hennepin County library. Comments on “needs work” focused on pedestrian crossings across Highway 55, the issues with access in and out of the parking lot, and the desire to have less chain restaurants and businesses. Figure 1 Heatmap showing map comments Ideas Board The prompt on the virtual ideas board asked people to share what they like about City Center, what their concerns are, and what they think would improve City Center. Participants were asked to click on the icons at the top of the page to see the questions and share their responses. The comments were posted publicly on the board and others were allowed to comment and “like” or “dislike” the comments if they agreed or disagreed. 31 Plymouth City Center 2.0 6 a new community vision The questions posed on the site included: o Value – What do you value most about the existing City Center? o Serious concern – What do you think is the biggest problem that needs to be addressed in City Center? o Big change – What big change would have the most impact on a quality experience at City Center? o Vision for 2050 – If you visited City Center in 2050, what would you want it to be like? A total of 52 comments were left on the ideas board in the following categories: The most popular comments centered around the future vision of Plymouth City Center. Some of the most frequently “liked” suggestions included: o Creation of a family friendly community center or plaza (i.e. splash pad, restrooms, concessions, picnic space, a playground, gardens) o Creation of a main street o Addition of theater or concert spaces o Independent restaurants or breweries Many of the discussions indicate a desire to have a centrally located community space with amenities that draws people in, allows for better access and entry into the space for both cars and pedestrians, and hosts a thriving local restaurant and retail environment. 32 Plymouth City Center 2.0 7 a new community vision Online Survey In conjunction with the City of Plymouth’s FlashVote, the project team launched a longer form survey on June 16. The survey was closed on August 3. The survey was composed of 19 questions, five of which were repeated from the FlashVote survey. During the month and a half that the survey was open, 192 responses were received. As part of the survey, participants where asked what three words they would use to describe Plymouth City Center. The following word cloud represents the most used words in responses to an open-ended question in the survey asking people to describe the existing City Center. Additional questions asked as part of the survey: 1. In an average month before the pandemic, how often did you visit the following commercial areas (Plymouth City Center, downtown Wayzata, Arbor Lakes in Maple Grove, West End in St. Louis Park, Ridgedale and Southdale)? (more than once a week, once a week, twice a month, once a month, less than once a month, never) Suburban Clean Congested BoringConvenient Disjointed Dated Small Dull 33 Plymouth City Center 2.0 8 a new community vision 2. What was the main reason for visiting these commercial areas? 3. How would the addition and/or improvement of these features affect the amount of money that you spend in Plymouth City Center? 34 Plymouth City Center 2.0 9 a new community vision 4. How would the addition of these restaurants affect the frequency you visit Plymouth City Center? 5. If housing were added to the Plymouth City Center area, how important would these items be to you? 35 Plymouth City Center 2.0 10 a new community vision 6. If you were planning to move in the next 5-10 years, what would your preference be for your next home? Demographics The survey asked for several pieces of demographic data to better understand the background of the respondents. 1. Where do you live? 36 Plymouth City Center 2.0 11 a new community vision 2. How old are you? 3. Do you rent or own? 37 Plymouth City Center 2.0 12 a new community vision Key Themes There are a few themes that have emerged from the survey, interactive map and idea board that highlight the current perceptions and future hopes for the Plymouth City Center. Downtown Plymouth The comments and survey results, in combination with earlier interviews that were conducted during the initial project phase, identify the desire for an identifiable downtown Plymouth. In addition, there was a lack of recognition that the project area referred to as Plymouth City Center used this moniker. Furthermore, there is a clear desire to create a central community space that acts as a downtown to those in Plymouth. Many respondents in the community suggested different ways that this could look in the future, but the sense of creating a vibrant active space for community to gather was prevalent among respondents. More Local Businesses and Restaurants Many members of the community voiced their desire for more local restaurants, breweries and retail establishments. The idea of having a typical suburban strip mall is unpopular among residents and many want to see Plymouth City Center as a unique destination shopping and eating area. Access and Pedestrian Issues Respondents identified a number of issues at the intersection at Vicksburg Lane and Highway 55 with regard to traffic and pedestrians. Many felt the intersection is too dangerous and represents a barrier to people wanting to enter City Center. Additional issues around entry in and out of parking lots, signage and use of land for parking were also identified as common themes by participants. Vision for Plymouth City Center Themes that emerged from the online engagement process included a number of ways that the community felt that Plymouth City Center could be reimagined in the future. Common elements of a future envisioned incorporated the following elements: more green space, places to gather, more sidewalks, more seating or places to sit, the addition of housing, and the incorporation of events, festivals, music and activities. 38 39