THE FUTURE OF CITIES - Reenvisioning Retail - NATIONAL LEAGUE OF CITIES
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NATIONAL
LEAGUE
OF CITIES
THE
FUTURE
OF CITIES
Reenvisioning Retail
TO PREPARE THEIR CITIES
FOR UNCERTAINTY AHEAD,
LOCAL LEADERS HAVE
HAD TO REENVISION THEIR
NATIONAL CITIES IN REAL TIME AS THE
PANDEMIC PRESENTED NEW
LEAGUE
OF CITIES
DIFFICULTIES AND POTENTIAL
About the National League of Cities Acknowledgements
FUTURE CHALLENGES.
The National League of Cities (NLC) is the The authors would like to acknowledge:
voice of America’s cities, towns and villages,
Christiana K. McFarland, Ph.D., Research Director,
representing more than 200 million people. NLC
Center for City Solutions; Jenn Steinfeld, Director,
works to strengthen local leadership, influence
Entrepreneurship and Economic Development,
federal policy and drive innovative solutions.
Center for City Solutions; and Cooper Martin,
NLC’s Center for City Solutions provides Director, Sustainability and City Solutions, Center
research and analysis on key topics and trends for City Solutions at the National League of
important to cities, creative solutions to improve Cities, for their contributions to this paper.
the quality of life in communities, inspiration
and ideas for local officials to use in tackling Clay Dillow for guidance and copyediting.
tough issues, and opportunities for city leaders
Evan Potler of Factor3 Digital for design.
to connect with peers, share experiences and
learn about innovative approaches in cities. See page 92 for additional acknowledgements.
About the Authors
Lena Geraghty, Urban Innovation Program
Director, Center for City Solutions
Tina Lee, Senior Research Specialist,
Center for City Solutions
Brooks Rainwater, Senior Executive and
Director, Center for City Solutions
2021 ©National League of Cities. All Rights Reserved.
All photo credited to Getty Images, 2021.
CONTENTS
5 Introduction 45 Prioritizing workforce development
48 Hard and soft skills training
7 The City of the Future Is Now
49 Aligning labor supply and demand
9 Changes in the Retail Environment
51 Recommendations: Workforce development
11 Revenue and sales
52 Promoting a diverse local business economy
13 E-commerce
52 Inclusive entrepreneurship
17 How Cities Can Support the Retail
Environment to Benefit Their Communities 55 City of Rochester, NY:
Prioritizing Community Wealth Building and
19 Land Use, Planning and Zoning Workforce Development
21 Focusing on flexible land use codes 57 Helping businesses scale
21 Adaptive use of public space 58 Recommendations: Supporting a strong local
business economy
22 Adaptive use of the built environment
59 Emerging Technology
24 Recommendations: Flexible land use
62 Accelerating solutions for digital access
25 Anticipating a blend of brick-and-mortar and online retail
63 Digital equity
25 Online presence versus
in-person activity 64 Recommendations: Digital equity
26 Mixed-use operations 65 Embracing technology and data
27 Recommendations: Blend of retail operations 65 Emerging technology
28 Creating community hubs 66 Data sharing
28 Decentralized retail 67 City of Charlotte, NC:
Harnessing Emerging Technology for Good
30 Realigning space with needs
69 Policy and guidance
31 City of Los Angeles, CA:
Clearing Land Use Hurdles to Support Retail 70 Recommendations: Technology and data
34 Recommendations: Community hubs 71 Conclusion
35 Economic Opportunity and Jobs 73 Appendix
39 Ensuring wage and workplace fairness 92 Acknowledgments
39 Minimum wage 93 Citations
44 Recommendations: Wage and workplace fairness
INTRODUCTION
C NOW MORE
OVID-19 forever changed our world in To prepare their cities for uncertainty ahead,
so many ways. The pandemic created local leaders have had to reenvision their cities
enormous public health impacts as
nearly 600,000 Americans perished, a human
in real time as the pandemic presented new
difficulties and potential future challenges.
THAN EVER, CITY
toll that has been felt similarly all around the
world. At the same time, cities and towns of all
Some areas provide a clearer picture of what
the future holds than others. Changes in the
LEADERS HAVE AN
sizes and locations throughout the country have
struggled to weather the economic impact of
retail sector, already accelerating previously,
have been expedited even more due to the
OPPORTUNITY TO
shutdowns and a prolonged period of financial
distress. The pandemic year has been a time
COVID-19 pandemic, making it difficult to
plan for what comes next. The future of cities
HELP SHAPE THE
of firsts: students joined teachers in virtual
classrooms at school; many brick-and-mortar
may be continually in flux, but ultimately our
great urban places will thrive in the years
RETAIL LANDSCAPE
businesses quickly pivoted to online retail and
curbside pickup; workers across a range of
ahead with a robust retail environment — and
local governments’ ability to support it — at
IN WAYS THAT
industries wore personal protective equipment; its core. Retail — whether online, at brick- REALIZE THEIR
COMMUNITY’S
and numerous government services went digital and-mortar locations, or increasingly via a
instead of requiring a trip to city hall. The rapid mix of both — forms the foundation for local
VISION FOR THE
changes and adaptation required to respond economies, our workforce and community
to the pandemic tested cities across the U.S. main streets across the country. Now more
FUTURE.
as city leaders had to become public health than ever, city leaders have an opportunity to
experts while supporting residents, businesses help shape the retail landscape in ways that
and workers financially during this time of great realize their community’s vision for the future.
transition.
5 NATIONAL LEAGUE OF CITIES
THE CITY OF
THE FUTURE IS NOW
C
ities are ever growing and changing, increased street closures and creating more near the bottom have not felt the same technology must be seen as a means rather
with great shifts precipitated by health, space for people in cities and suburbs — positive impacts on their financial bottom than an end in the retail environment and
environmental and economic factors will continue to expand. What this means lines. At the intersection of low-paid work, our cities. Too often there is a singular focus
throughout history. The COVID-19 pandemic for how we view distinctions between race, educational opportunities and disparate on technology — as an output rather than
has simultaneously delivered a health crisis, retail, housing and commercial building impact of the pandemic, a broad swath of as infrastructure — in conversations about
economic crisis and racial crisis. Vaccinations space will be central to future community Americans has decidedly bore the brunt the future of cities. Technology will be a key
and government economic support are growth. Mixed-use development within of this health crisis. Therefore, government component of cities’ ability to move forward.
creating space for the pandemic to recede cities and in surrounding suburbs becomes policy tied together with forward-leaning We may even see further integration of a wide
and economic growth to accelerate to levels even more normalized as people demand corporate policy that centers low-wage array of personal mobility devices, autonomous
not seen in decades. But even with growth expanded service availability in neighborhood workers in civic and corporate decision vehicles, drones and sidewalk robots
projected for 2021 and beyond, the pandemic walksheds and through speedier delivery. making is so important. People need a living delivering packages near and far, bringing
has reoriented decision making both within wage. Although there has clearly been a shift on-demand everything at our beck and call.
cities and the wider country, accelerating The macro-level economy has strongly within some segments of the retail space to
existing trends within the retail environment. bounced back from the initial plummet seen provide this in recent years, a great deal of These shifts in thinking about land use,
during the pandemic-led downturn in the the retail economy does not pay wages that economic opportunity and technology will
The pandemic has forever changed when middle of 2020 due to government support, support workers. The economic impact of this intersect with the broader movement toward
and where consumers access retail with renewed economic strength, vaccines and can be felt in communities across America. creating people-centered places. This is where
e-commerce and neighborhood retail fortified the reopening of much of the economy. It retail will prove key. City leaders are working
and expanded. The increased integration of has been an uneven recovery however, with Far-reaching technology with the power to hard to build next generation spaces that
online commerce and physical retail is only those at the top in many cases thriving both create and destroy jobs sits at the center incorporate and accelerate trends that draw
accelerating as the boundaries between financially throughout the pandemic. As we of all of these trends. At its best, technology people into cities and grow local economies.
these spaces become more fluid. Land use parcel out the economic impacts of those can help to upskill work, raise productivity and The future of cities and the future of retail
trends that accelerated during the pandemic at different quartiles of the economy it generate better wages. Wholesale automation are intertwined as we rebound and rebuild
— movements toward 15-minute cities, becomes very apparent that those workers can also displace people and jobs. This is why in the wake of the COVID-19 pandemic.
7 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 8
CHANGES IN THE
RETAIL ENVIRONMENT
R
etail is the foundation of local for workers and business owners. Retail is Retail Sectors Examined1
economies, making up the main streets constantly evolving to meet current needs, from
and commercial corridors that supply the rise of buying on credit in the 1920s to the
essential goods and services, and neighborhood rapid ascent of shopping malls in the 1950s to
shops that provide amenities and character the arrival of big box stores in the 1960s and
to the places we live. Employing 16 percent of e-commerce in the 2000s. As the pandemic
the American workforce, the retail sector is a recedes, we are again at a critical inflection
Motor Vehicle Food and Sporting Goods, Hobby,
critical source of income and wealth generation point in the way retail takes shape in our cities.
and Parts Dealers Beverage Stores Book and Music Stores
Furniture and Home Health and Personal General
Furnishings Stores Care Stores Merchandise Stores
Electronics and Gasoline Miscellaneous
Appliances Stores Stations Store Retailers
Building Material Clothing and Clothing Non-store
and Garden Equipment Accessories Stores Retailers
and Supplies Dealers
9 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 10
Changes in the Retail Environment
Revenue and sales Chart I. Retail sector sees uneven growth since the Great Recession.
The pandemic has shifted areas of expansion and contraction.
Sales by retail sector in thousands of dollars
VIEW INTERACTIVE
For the last 15 years in particular, many retail and retail chains, such as Borders Books,
operations have struggled to find their place. Blockbuster and Toys “R” Us, go defunct, Motor Vehicle and Parts Dealers Electronics and Appliances Stores Non-store Retailers
The Great Recession and ensuing market unable to compete with the rise of Amazon,
Food and Beverage Stores Clothing and Clothing Accessories Stores Building Materials and Garden
disruptions and job losses redefined what it eBay, Shopify and other online retailers. Equipment and Supplies Dealers
took to be a successful retail business. Revenue 160,000
Great Pandemic
sales data from 2007 to 2021 demonstrates this Increased trade and lower wage costs Recession Recession
shift in how Americans were shopping and what internationally, the continued movement away 140,000
they purchased.2 Prior to the pandemic, retail from U.S. manufacturing and factory work,
120,000
sectors like electronics and appliances stores, the rise of the technology sector and the
clothing and clothing accessories stores and acceleration of e-commerce all have a part in
100,000
gasoline stations were already experiencing a explaining the pre-COVID-19 retail environment.
steady decline in year-over-year sales. Other Many sales trends across retail sectors have 80,000
retail sectors like furniture and home furnishings carried through the pandemic and are now
stores, and sporting goods, hobby, book and reflected in the spending recovery. Overall, 60,000
music stores saw an increase in year-over-year the retail sector has seen an approximately
sales but at a diminishing rate. Businesses slow 10 percent increase in dollars spent in 40,000
to evolve to new norms of retail and customer February 2021 compared to February 2020.
needs either shut down operations or stepped However, this rebound has proved uneven. For 20,000
back to refine their business models. Examining example, clothing and clothing accessories
the rate of business openings versus closures stores and the electronics and appliances 0
Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan. Jan.
shows that for every sector except for food and sectors still have not regained their pre- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
beverage stores and health and personal care pandemic levels, hovering at 87 percent
Source: U.S. Census Bureau. (2021). Advance monthly retail trade report [Data set]. www.census.gov/retail/index.html
stores, the rate of business closures surpassed and 96 percent of spending compared with
the rate of business openings during the Great monthly spending from February 2020.4
Recession. Sectors like gasoline stations, and sporting goods, hobby, book and music The strongest growth across retail is
general merchandise stores and non-store Interestingly, several sectors experiencing stores, have seen a sharp increase in sales, seen in the non-store retail sector, which
retailers were relatively quick to recover, but modest year-over-year growth in sales prior surpassing pre-pandemic spending levels. experienced a 27 percent increase in sales
sectors like electronics and appliances stores to the pandemic such as food and beverage This reflects changing consumer preferences in the last year driven largely by the rise of
have seen a higher rate of yearly business stores, building material and garden equipment in response to the pandemic as household e-commerce. As the vaccination rates continue
closings than openings in the past decade.3 and supplies dealers, motor vehicle and parts purchases are geared more toward home- to increase, sales across the retail industry will
The 2010s saw many independent stores dealers, furniture and home furnishings stores, improvement and hobby-related purchases. continue to rebound, albeit at varying rates.
11 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 12
Changes in the Retail Environment
In 2020, e-commerce
accounted for 14 percent of 2020 14%
total revenue sales compared 2019 11%
to just 11 percent in 2019 and 2018 10%
10 percent in 2018.
E-commerce grown, but the share of e-commerce sales has
outpaced that overall growth. In the last 10
e-commerce.8 E-commerce sales reached levels
anticipated in 2022 in 2020 due to pandemic-
Recession has greatly impacted both brick- 2020 due to major chains closing.6 Although years, while the rate of e-commerce growth driven growth.9 As more people rely on these
and-mortar and e-commerce retail. Eighty- overall retail sales decreased dramatically in far outpaced the growth of the overall retail online retail services, e-commerce will continue
seven million square feet of retail space went response to the Great Recession, e-commerce industry — 15 percent year-over-year growth growing in the post-pandemic environment.
dark in 2008.5 For context, it is estimated rebounded more rapidly than brick-and-mortar compared to 5 percent — year-over-year The shift to e-commerce had a less significant
that 159 million square feet was emptied in stores. Year-over-year overall retail sales have growth remained relatively consistent for both. impact on cities during COVID-19 than the
Great Recession when sales tax revenues
The pandemic dramatically expedited the declined rapidly. In 1967, National Bellas Hess
growth of e-commerce. Faced with stay-at- v. Department of Revenue of Illinois held that
Chart II. The growth of e-commerce accelerated dramatically because home orders and store closures, millions of state and local governments cannot require
of COVID-19. What was expected in 2022, we experienced in 2020. Americans turned to online shopping, leaving businesses to collect sales tax unless the
Percent change in year-over-year quarterly e-commerce sales businesses without an already-established business has a physical presence in the state.10
VIEW INTERACTIVE
online presence scrambling to create or This rule was not overturned until 2018 in South
50% strengthen their existing presence. Sales in Dakota v. Wayfair when local governments
the non-retail sector, which mainly consists of gained the ability to collect most taxes due
40%
e-commerce sales, have recovered back to pre- on sales from out-of-state vendors.11 City fiscal
January 2020: First confirmed pandemic levels and have grown significantly conditions would be in a much more dire
case of COVD-19 in the US — 2020 Q2 saw a 44.5 percent increase in state now without that change in case law.
30%
sales from the same quarter a year ago.7 In
2020, e-commerce accounted for 14 percent of Although the hardest hit industries during the
20% E-COMMERCE total revenue sales compared to just 11 percent pandemic, such as the restaurant and tourism
in 2019 and 10 percent in 2018. It is clear just industries, have experienced some of the largest
10%
how quickly the pandemic fueled the rise of curtailing of interest and sales, rising rates of
RETAIL SALES
0%
IT IS CLEAR JUST HOW QUICKLY
-10% THE PANDEMIC FUELED THE RISE OF
Great
Recession
Pandemic
Recession
E-COMMERCE. E-COMMERCE SALES
-20%
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
REACHED LEVELS ANTICIPATED IN 2022 IN
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 DUE TO PANDEMIC-DRIVEN GROWTH.
Source: U.S. Census Bureau. (2021). Quarterly e-commerce report [Data set]. www.census.gov/retail/index.html
13 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 14
Changes in the Retail Environment
ALTHOUGH MANY HEADLINES HAVE The retail industry is consistently changing.
WARNED OF THE “DEATH OF RETAIL,” In the future, successful retail operations Demand for experience-based retail will
THE REALITY IS MORE NUANCED. will have a few key components: continue to grow with some retailers.
Sales for many businesses like restaurants,
Retail will meet people where they are,
bars or car dealerships will remain strong
whether that is online from their homes
vaccinations and increasing fiscal confidence to online shopping. They have seen a decline in the shift to e-commerce because of
or in brick-and-mortar storefronts in
will drive demand back toward pre-pandemic in year-over-year sales and a lagged recovery their ability to capitalize on the customer
their neighborhoods or city centers. The
levels sooner than initial projections. Even during the pandemic, suggesting they may experience. Consumer trends show a
flexibility of shopping from the location
though this pent-up demand may initially not ever recover and must adapt to changing preference in spending for experiences
most convenient for the customer will
boost consumers’ preferences for in-person consumer preferences to stay in business. more than physical goods. The global
remain a primary driver of sales.
shopping and dining experiences, customers economy means access to consumer
will continue to value the convenience of Retailers with an existing online presence Mixed-use development will continue goods is less place-specific, so customers
things like buy online, pick up in-store. were poised to meet the pandemic-fueled to grow throughout metro regions. focus on unique experiences instead.
shift toward e-commerce. As of August 2020, The pandemic accelerated inter-
The types of retail jobs will greatly
Although many headlines have warned of the 121 retailers in Digital Commerce’s “top 500” metro movement, with data pointing
change as successful retailers proactively
“death of retail,” the reality is more nuanced. offered curbside, compared to only 19 retailers to a resurgence in the growth of
plan for a shift in their business model
The retail industry is incredibly diverse, with that offered the service in 2019.13 The shift to suburbs and a preference for walkable,
and with their workforce. Cashiers and
certain sectors better set up to weather the rise e-commerce has been a major win for retailers amenity-rich communities. Cities
retail salespersons may be supplanted by
of e-commerce. For example, businesses like like Amazon and Walmart. Many small and will need to mesh these factors with
drivers, stock clerks and order fillers due
motor vehicle and parts dealers, gas stations, micro businesses were left trying to quickly retail demands, co-working spaces
to changing consumer preferences and
and food and beverage stores are largely establish an online presence with lower profit and other experiential spaces.
the rise of automation. Women and people
impervious to online encroachment. These margins and less capital and expertise to make Retailers will integrate more into the of color will be most vulnerable to shifts
sectors are largely still driven by experience- the transition seamlessly. As of April 2021, the community. Retail operations shifted in occupation driven largely by changes
based shopping that requires a brick-and- number of open small businesses decreased into the public space during COVID-19 in consumer preferences and the rise of
mortar presence. This means that the 14 by 33.6 percent compared to January 2020.14 with outdoor dining and retail becoming automated warehousing operations.
percent of total retail sales accounted for by Despite many business closures, for the first commonplace in cities. Leading cities will
e-commerce is more heavily concentrated time in years retailers across the country are Emerging technologies and expanded
enshrine outdoor dining, retail and people-
in other sectors. For example, e-commerce planning to open more stores than they are access to data have the potential to
friendly streets into their visions for the
penetration — the percentage of all retail closing.15 To ensure a continued, inclusive revolutionize the retail industry. Retailers
long-term success of their communities.
purchases made online — in the electronics recovery from COVID-19 across the retail will embrace them, working with their local
Retail will continue to expand beyond governments to determine proper use and
sector was nearly 10 percent, highlighting that sector, cities need to actively create solutions.
storefronts in business districts and community benefits. Cities have already
brick-and-mortar retailers that do not prioritize
into other parts of the community. The enabled personal delivery device operations
33.6%
offering an experience or point of differentiation
success of “buy local” movements during for delivery of groceries and food, self-
will have a difficult time surviving.12 A store
the pandemic and an emphasis on hiring service kiosks, and semi-autonomous delivery
like Apple is an outlier but demonstrates the The number of open small businesses local workers will persist as many retailers vehicles. As consumers get more comfortable
growing consumer demand for experience-
decreased by 33.6 percent from look to participate more fully in their cities
based shopping and a blend of in-person and with them, these emerging technologies
January 2020 to April 2021. and build strong business communities.
online offerings. Clothing and electronics are will play a larger role in retail operations.
two sectors heavily susceptible to this shift
15 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 16
HOW CITIES CAN SUPPORT
THE RETAIL ENVIRONMENT TO
BENEFIT THEIR COMMUNITIES
C
OVID-19 put a spotlight on areas of the future looks like and how it can support its WITHOUT MUCH, IF ANY, FINANCIAL
needed improvement in cities, elevating
certain services and supports for
residents, businesses and workers and enable
them to thrive.
SUPPORT FROM STATES AND THE FEDERAL
residents, businesses, and workers from nice- GOVERNMENT, CITIES EXPEDITED THEIR
to-haves to must-haves. U.S. cities took the Even though the vision of the city of the future PLANS AND RESHAPED THEIR VISIONS
lead on addressing a global pandemic and
the ensuing shutdown of business activities,
is consistently changing, the centrality of the
retail environment and local governments’
ABOUT WHAT THE CITY OF THE FUTURE
severe revenue losses across most sectors and ability to support its operations will prove a key LOOKS LIKE AND HOW IT CAN SUPPORT
job losses not seen since the Great Recession; component in cities’ recovery from COVID-19’s ITS RESIDENTS, BUSINESSES AND
a nationwide reckoning with systemic racial
injustice; and contentious elections at all
devastation and their preparations for what
comes next. COVID-19 reinvigorated cities’
WORKERS AND ENABLE THEM TO THRIVE.
levels of government. Without much, if any, focus on land use, planning and zoning;
financial support from states and the federal economic opportunity and jobs; and the
government, cities expedited their plans and best ways to deploy technology to support
reshaped their visions about what the city of their communities now and in the future.
17 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 18COVID-19 PROVIDED
THE OPPORTUNITY TO
REFLECT ON HOW PUBLIC
AND PRIVATE SPACES
RETAIL YEAR 1 REPORT
SHOULD SERVE THE
RESIDENTS, BUSINESSES
AND WORKERS THAT
RELY ON THEM.
LAND USE,
PLANNING
AND ZONING
T
he planning process, land use 60 percent of retail square footage
regulations and zoning codes are in the U.S. was forced to temporarily
the main levers cities can pull to close due to COVID-19.16 It is unclear
define how communities use public and exactly how much of this closure will be
private space. Changes, minor or major, permanent, but the clothing and clothing
take time to discuss, build agreement on accessories stores, and electronics and
and enact. COVID-19 quickly overturned appliances stores that were already
this norm. Downtowns, once the centers experiencing pre-pandemic declines
of their communities, became ghost in year-over-year sales may constitute
towns. Revenues plummeted across a large portion of these closures.
the retail industry. “For lease” and “for More than 12,200 major retail chain
sale” signs replaced vibrant window store locations permanently closed in
displays. Cities had to jump into action 2020 alone, translating to 159 million
to mitigate the devastation, forever square feet of emptied retail space.17
changing the conversation around land
use in the process. What will happen to these redefined
public spaces and all these vacant
Residents have come to appreciate storefronts? COVID-19 provided the
some aspects of these land use changes. opportunity to reflect on how public
Pop-up plazas, streets closures, curbside and private spaces should serve the
pickup and increased options for residents, businesses and workers
outdoor dining have become mainstays that rely on them. Now it is up to city
in their lives that they do not want leaders to make sure these spaces will
to give up. At the same time, almost continue to meet community needs.
NATIONAL LEAGUE OF CITIES 20Land Use, Planning and Zoning
110,000
restaurants and dining establishments have closed permanently
or shut down for the long-term since March 2020.
Focusing on flexible land use codes
Flexible land use codes will lead to fewer shocks and stressors in the retail sector. COVID-19 brought disparate changes to the many of these changes are time limited, it
retail sector in cities. The National Restaurant is likely that cities will extend some to meet
Cities rarely have an opportunity to make broad From just a small handful of cities at the vanguard Association estimates that 110,000 restaurants the ever-changing requirements of safe retail
sweeping changes to how public space and the of the street closure movement — led by New York, and dining establishments have closed operations and community needs. These
built environment serve the community. Land use NY, and San Francisco, CA — to dozens of cities permanently or shut down for the long-term short-term recommendations, discussions and
codes are heavy tomes of jargon-filled edicts on by late 2020, these policies have helped to open since March 2020.21 The City of Washington, DC, approvals from elected officials need to give
what can be done, where it can be done and how space to people. Many of these cities have turned to lost more than 235 brick-and-mortar businesses way to longer-term decisions about public
it can happen. Cities can go decades without car-free streets as a way to support small business to permanent closure and approximately 100 spaces in our communities. Will people continue
making any significant changes to these policies. operations during the pandemic, particularly those more closed temporarily due to COVID-19.22 to take precedence over cars at the curb?
The comprehensive planning process is similar in the restaurant industry. The National Association The significant shifts in travel and spending Should streets stay closed to promote outdoor
in many respects. Although the creation of the of City Transportation Officials estimates that habits are affecting commercial areas of the retail operations? How long will curbside
comprehensive plan enables more community in 2020 at least 100 U.S. cities created curbside city differently. While restaurants downtown pickup parking spots be necessary? Are these
involvement, it is a snapshot of the future of pickup zones for restaurants.19 Although it is and high-end shopping and dining in the changes making a difference and encouraging
the city, seldom adapting as the needs of the unclear whether all these changes will be made city’s Georgetown neighborhood have been economic activity across the city?24 City
community change. COVID-19 shook up the permanent, cities were exploring loading and negatively impacted, some residential areas leaders with adaptable land use regulations
land use discussion in many cities, encouraging pickup zones prior to the pandemic. COVID-19 has have experienced less disruption because work- will be equipped to lead these conversations
leaders to think more creatively about how accelerated the degree to which cities have been from-home workers have shifted their spending in their communities and support their retail
public space and the built environment can thinking about instating these changes, suggesting to neighborhood businesses. These trends environments more easily than those without.
fulfill community needs more responsively. that curbside pickup will become a more permanent are reflected in cities across the country. It is
fixture in years to come.20 With deliveries to retail easy to imagine how much worse the situation Adaptive use of the
Adaptive use of public space and residential locations increasing, cities — could have been if cities had not adjusted built environment
COVID-19 changed the way in which public space already no stranger to the parking requirement current code requirements to create space for As the public health crisis response to COVID-19
is used in cities and redefined how the built conversation — had to navigate how to equitably dining in parking lots and parking spaces or becomes more routine, cities are returning to
environment can serve community members. manage competition for the curb. Many cities helped set up streateries and retail operations conversations on how best to plan and design
Worries about transmission of the virus in seized the opportunity to repurpose the curb in roadways shut down to vehicular traffic.23 public spaces. With demand and interest in
enclosed spaces brought Americans back outside and public space, putting people before cars. public space access high, it is not too late to shift
for walking, dining, shopping and socializing.18 These land use changes required quick action to a more flexible planning and design model to
Cities jumped to carve out space for safe retail to meet transitional needs of retailers and meet these continuing needs. The colocation
operations in a variety of ways, from reallocating their customers and adjust to evolving state of retail, public and residential space benefits
metered parking spaces as curbside pick-up STREATERIES OR STREET EATERIES: and local state of emergency declarations. all. Currently there is increased and significant
zones to closing streets and sidewalks to vehicular Outdoor dining locations in public However, in the absence of existing, flexible demand for pedestrian-friendly, outdoor public
traffic to enable outdoor dining and shopping. spaces, such as streets, sidewalks or zoning ordinances, this meant waiting for space.25 Cities should continue these shorter-
Cities already practiced with the street closure parking spots, to enable COVID-19 a city council meeting to present city staff term public space pilots while also considering
movement were able to adopt a similar process conscious dining operations. recommendations and gain elected officials’ policies around incentivizing privately owned
more quickly for creating more space outside. approval for temporary changes. Although public spaces, improving access to public
21 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 22Land Use, Planning and Zoning
RECOMMENDATIONS:
5.7% FLEXIBLE LAND USE
In 2021, the average retail vacancy rate will rise to 5.7 percent,
FOR SALE
the highest since 2015 and up from 5 percent last year. The city of the future will continue to prioritize people in public spaces. After seeing the rapid
actions city leaders took to support the retail environment, provide access to goods and
services for residents and ensure safe ways to enjoy the outdoors during the height of
COVID-19, there is no going back to the way things were. Cities should consider ways to
buildings and reimagining community spaces employees making good wages, require smaller support more flexible land use, enabling quick changes to meet evolving needs.
after hours.26 The City of New York, NY, has spaces for operations, draw in customers
experimented with different ways to encourage interested in seeing the production process Ensure zoning regulations are designed with flexibility of use in mind and that changes
walkability, create accessible public space and and are quiet, clean neighbors to traditional can happen administratively during times of need. Disasters and emergencies will always
spur economic activity. Although dated, a 2013 retail establishments. In 2015, Nashville, TN, bring along unexpected situations and conditions. Having a foundation of zoning
principles centered on safety and well-being — but flexible in other regards — gives cities
New York City Department of Transportation added artisan manufacturing as a permitted
the chance to pivot and meet emerging needs. Broader, more accommodating definitions
(NYC DOT) study analyzed sales tax receipts land use to its code to accommodate this type
of commercial uses has helped cities ensure responsiveness to market adjustments and
to compare retail activity before and after of business in more places around the city. The
encourage shorter periods of vacancy during COVID-19. City staff, property owners and
several street redesigns and improvements. ordinance enables artisan manufacturing in all
retailers who were able to work together, without being restricted by things like temporary
When comparing the results to similar places mixed-use zones, many commercial zones and sign ordinances, the need for change-of-use permits or parking adequacy studies with
nearby with no street design changes, NYC the downtown core zone, while laying out how each change in tenancy were able to better support their communities’ needs during this
DOT found a 49 percent increase in retail sales it can be permitted in industrial zones as well.30 unprecedented time.32
and a 49 percent drop in commercial vacancies Cities can also turn vacant retail storefronts
surrounding areas with new pedestrian into pop-up spaces for businesses just starting Focus longer term land use code adjustments on efforts that put people’s use of public
plazas and bike lanes from 2007 to 2012.27 out that might not be ready for a long lease or space first. Assume that the desire to physically distance will continue. Longer term
infrastructure upgrades for indoor-outdoor operations will be necessary. Consider
that have a limited amount of product for sale.
adjustments, such as wider sidewalks, touchless pedestrian crossings and car-free streets
With businesses’ instability increasing due to
in future planning efforts. Acknowledge the importance that open space plays in mental
COVID-19 losses in revenue, many cities have In Los Angeles, CA, the city has worked
and physical health and the role that changes like car-free streets can play in giving space
ended up with unused or underused retail to enable the private sector and property
back to people. Prioritize the creation of open public spaces over parking, particularly in
space. In 2021, the average retail vacancy rate owners to more easily establish pop-up retail areas without adequate access currently.33 Pay particular attention to who is lacking
will rise to 5.7 percent, the highest since 2015 in empty stores to activate the area and access and work with community members to determine what amenities would best
and up from 5 percent last year. At the same enable businesses to see the potential of a serve their needs.
time average retail rents dropped 0.7 percent, currently vacant space they could be filling.31
the first decline in nine years.28 As cities begin Decrease regulatory hurdles for desired, community-beneficial development. With
to support the filling of empty storefronts or commercial vacancy rates still on the rise from COVID-19, property owners are willing to
do what they can to attract viable tenants.34 Sometimes that requires making changes to a
encourage distributed retail areas across the
POP-UPS: Temporary businesses that retail space to illuminate the possibilities and increase appeal to a wider audience of
community, they must consider whether zoning
may be new businesses appearing in potential retailers, especially if the new use is different from previous uses of the space. A
is too restrictive for potential low impact uses
full-sized retail spaces or in a small flexible building code and permitting process would enable commercial property owners
of the space. The foundation of flexible land
part of a larger store. Or they may to more easily and quickly ’fit-up,’ or transform, a space to meet the need of potential and
use codes means cities can more easily assist future tenants as use of the retail space evolves. Pop-ups and other short-term uses have
be existing businesses trying out a
in filling those spaces by reducing regulatory new location or looking to serve a proved beneficial ways to fill vacant store fronts, meet customer needs and provide
hurdles. Small-scale or artisan manufacturing temporary need. Pop-ups enable retailers a way to test their businesses for longevity. Starting a business is difficult and
— businesses creating a tangible product that experimentation and innovation in the expensive. Ensure the business licensing and permitting process is not standing in the way
can be replicated or packaged — can be great retail sector. of good retail activity.
additions to retail centers.29 They have a few
23 NATIONAL LEAGUE OF CITIES 24Land Use, Planning and Zoning
Consumers return
30 percent of
online sales,
30% 9%
Anticipating a blend of brick- compared with
just 9 percent of online sales in-store sales
and-mortar and online retail in-store sales.
A blend of brick-and-mortar and online retail is here to stay. Although an online presence continues to be businesses were not set up to operate at the
necessary for business, it does not negate the same scale and thus turned to online buying with
Although e-commerce has been trending place orders began, retail revenues ground to benefit of in-store operations. Consumers return in-store pick-up. Retail workers became shoppers,
up in recent years, COVID-19 was again a a halt for those businesses without an online 30 percent of online sales, compared with just gathering items and preparing them for pick
significant expediter.35 E-commerce spending presence. Businesses across the country 9 percent of in-store sales. A 2016-2018 analysis up. Stock rooms took over customer spaces to
increased 44 percent from 2019 to 2020. rushed to establish themselves and expand of consumer credit card transactions shows make it easier to fill these orders. From a land
Online spending represented 21.3 percent their customer bases online. Cities were right that customers who spend $100 online typically use perspective, the lines between warehouse
of total retail sales in 2020, compared with there to support them. The City of Mesa, spend an additional $171 in store within the next and retail establishment started to blur.44
15.8 percent the year prior.36 Online shopping AZ, used some of its CARES Act funding to 30 days.40 Similarly, customers who spend $100
and home delivery became the norm during establish a small business technical assistance in store will spend approximately $163 online With the increase of in-store operations, many
COVID-19 and a way for businesses with an program. Businesses who were within the city during the following 30 days. Many customers retail spaces will return to their previous uses.
online presence to lessen the revenue losses limits and suffered negative financial impacts prefer to buy products that offer free in-store However, other businesses may need the
they were experiencing. Storefronts adapted due to COVID-19 were eligible to receive returns instead of customer-paid shipping returns. additional warehousing and distribution spaces
to suit this new mode of retail operations. Even education on a variety of topics from setting Sixty-two percent of shoppers are more likely to that enabled their COVID-19 operations. A 2014
now retailers continue to navigate this blend up a work computer and building a website shop online if they can return an item in-store.41 study shows that online retailers need about
of in-person and online operations with the to kickstarting an online store for digital-first Retailers will still benefit from having a storefront three times the warehouse and distribution
reopening of more businesses in the U.S. consumers to attracting leads and gaining to accept returns and encourage additional space as brick-and-mortar retailers to generate
customers with a point-of-sale system.38 sales. Twenty percent of customers who return the same kind of revenues.45 A 2020 Moody’s
Online presence versus an online purchase in-store make an additional Analytics analysis shows apartment, office and
in-person activity purchase.42 In this new hybrid environment, cities retail development has decreased anywhere
COVID-19 required businesses to have some need to consider their role in enabling a blend of from 10.0 to 15.7 percent while industrial
digital component to survive. 2020 was the CITY SPOTLIGHT brick-and-mortar and online retail. This will mean warehouse and distribution has increased 3.6
first time many businesses launched online providing a variety of types of commercial spaces percent, translating to more than 4 million
stores with point of sales systems or joined Akron, OH and more equitable access to storefronts for all square feet of new space.46 Depending on the
existing online platforms to reach larger The city supported its local business business types, no matter their stage of growth. land use code, cities may have to refine their
audiences than they had previously. This community by launching Akronite, a mobile definitions of warehouses — further clarifying the
app that offers incentives for residents to
proved an easier task for some individual Mixed-use operations differences between commercial and industrial
shop at local businesses while helping these
businesses and sectors than others. An April The push for same-day and even 30-minute use — to support this change. Some vacant
small businesses, in particular woman- and
2020 survey of 5,850 small businesses in the delivery during COVID-19 benefitted businesses commercial spaces, like shopping malls, may
minority-owned, recover from COVID-19
Main Street America network showed that with distributed warehousing and operations. be good candidates for repurposing to enable
revenue losses. This city-led app features 120
only 36.7 percent of respondents had an Employment in the warehousing and storage the blend of brick-and-mortar and e-commerce
small businesses, increasing awareness in
online sales component to their business while the community about opportunities to shop sector grew eight percent from January 2020 operations.47 City leaders will need to balance
36.5 percent were working hard to establish locally and expanding the customer base for to January 2021, as businesses like Amazon, Aldi the needs of the community and the retail sector
alternative modes of business operations (e.g., these businesses.39 and Lidl sought to increase their warehousing when making changes to current policies.
online, telephone, etc.).37 As the shelter-in- capacities and hire additional employees.43 Small
RECOMMENDATIONS:
25 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 26BLEND OF
RETAIL OPERATIONS
The mix of in-person and online operations is likely to continue in all aspects of
commerce. Retailers need the flexibility to meet these new needs and encourage Creating community hubs
sales through any channel they can. This may mean different needs regarding the
type and amount of physical space required to run both brick-and-mortar and
e-commerce businesses. Create community hubs by integrating retail into neighborhoods
to benefit residents and businesses alike.
Encourage the development or repurposing of commercial spaces to meet a
variety of retail needs. Cities have a role to play in encouraging retail spaces of
Even before COVID-19, cities were undergoing a This will have long-term effects on business
different sizes across all of their communities. Historically store sizes have ranged
change when it came to public and private districts or other areas primarily used for
in size: downtown stores are typically less than 1,000 square feet while a
spaces, realigning the prevalence of certain business operations. Cities with commercial
neighborhood grocery store might be 10,000 square feet. At the other end of the
spectrum, supercenters can be 180,000 to 250,000 square feet while free- types of spaces with the community need for hubs throughout the community will be better
standing chain drugstores are 11,000 to 15,000 square feet.48 To prepare for the those spaces. Transit-oriented development positioned to meet current and future needs.
city of the future, zoning should support multi-story, pedestrian-oriented districts — compact, pedestrian-centric mixed-use
that include a mix of small and large commercial spaces.49 communities with access to high-quality Decentralized retail
transportation — was on the rise.50 Studies Because many workers are spending more
Confirm zoning codes do not restrict home-based businesses and enable the signaled the imminent downfall of single- time at home in residential areas, their retail
transition to storefronts for businesses ready to make the leap. As the retail
purpose office parks and the decline of indoor needs have changed. It is no longer convenient
environment evolves and businesses continue to operate in both brick-and-
shopping malls.51 COVID-19 continued this shift for some retail activities, such as picking up
mortar and online, entrepreneurs need the flexibility to run their businesses from
in use of commercial spaces, creating the a prescription at the pharmacy, dropping off
whichever location makes most sense, financially and logistically. Focus on what
opportunity for those in certain sectors to work business attire at the dry-cleaners or grabbing
specific types of business activities should be prohibited based on the health and
safety impacts of those activities, instead of being too restrictive for all uses as from home. This in turn lessened demand for lunch to-go from the deli by the office, to
zoning codes have historically been. office spaces in city centers and increased the happen in the business district of a city. To meet
need for retail into areas where workers live. customer preferences, decentralized retail and
Consider land use code definitions of retail, warehouse and distribution as they These remote work operations demonstrated to the formation of neighborhood community
relate to commercial and industrial use. Cities need to look at how they are employers — many of whom did not allow for hubs needs to be prioritized. The 15-minute
classifying (and taxing) different types of land uses. Are current definitions
remote work previously — that work from home city in which most residents can meet their
working and enabling the types of economic activity the community needs?
or a blend of work from home and the office is needs within a short walk or bike ride from their
Land use codes are infrequently updated holistically, so city leaders will likely
a viable, productive model for future operations. home has been gaining traction again.52 Many
need to make specific changes to meet emergent needs. As the mix of online
Even as some operations return to in-person, cities are already working toward ensuring
and in-person operations persists, civic leaders need to evaluate whether or not
rigid land use codes discourage business operations. this combination of work from home and work easy access to groceries and healthcare for all
from office will continue. A recurring survey neighborhoods, houses of different sizes and
from Gallup shows the desire to continue levels of affordability, open spaces and the
working from home beyond the pandemic flexibility to work from home or remotely.53
shows no sign of decreasing (Chart III).
The percentage of those who want to continue An August 2020 survey found that 56
Downtown stores Supercenters to work remotely are more driven by percent of respondents are both shopping in
1,000 square feet
250,000
square feet
preference than fears stemming from the
pandemic.
neighborhood stores and buying more locally
sourced products. These consumers anticipate
27 NATIONAL LEAGUE OF CITIES 28Land Use, Planning and Zoning
ADAPTIVE REUSE OF SPACE
WORKS BEST IF IT IS DRIVEN BY
COMMUNITY NEEDS AND VISION.
these trends to grow in the future with 79 percent of retail from the city center into neighborhoods. goals. Chicago notes that there has been retail spaces in previously underutilized
shopping in their neighborhoods more and 84 In September 2020, the City of Chicago, IL, significant job growth in construction, retail, buildings or clearing permitting hurdles to help
percent focusing on local products.54 Given the announced its first equitable transit-oriented accommodations and food services sectors in businesses open their doors more quickly.
need to enable a mix of work from home and development plan. It includes a comprehensive areas with transit-oriented development. City
work from the office, cities have a role to play in set of actions to advance racial equity, wealth leaders anticipate that new transit-oriented Adaptive reuse of space works best if it is
supporting and encouraging the decentralization building, public health and climate resilience development projects will support walkable, driven by community needs and vision. The
livable communities by increasing neighborhood comprehensive planning process has evolved
access to retail, job opportunities and affordable to include more voices in the creation of
Chart III. Remote work is here to stay; how much is still in question. housing.55 In the absence of formal transit- community development goals. However, to
oriented development plans, cities should make avoid the gentrification and displacement of
U.S. remote workers’ preferred work arrangement once restrictions
VIEW INTERACTIVE sure their zoning code promotes a healthy mix residents that changes to the retail environment
are lifted.
of residential and commercial activity in all like these can bring, city leaders need to ensure
% Return to Working in Office % Work Remotely Because Prefer To % Work Remotely Because of COVID-19 areas of need to better serve their residents. that equity is at the forefront of these decisions.
50%
Realigning space with needs
44% 44% With continuing changes in the demand
41% 40% for commercial space and the desire for
40% 39% decentralized retail, cities will have to take the
37% 37% 37%
35%
36%
35%
35% lead in developing solutions. Some cities will CITY SPOTLIGHT
33% have to address underutilized office and retail
35%
34% 31% spaces, especially in their core business areas. Seattle, WA
30% The city made equitable development a
30% 31% 31% When paired with a continued reduction in
business travel to these places and lessened priority to ensure “economic vitality can
28% 28% be enjoyed by all its residents.”56 Since
demand for related retail services (e.g., hotels,
the 1990s city leaders have worked with
24% restaurants, car rentals, etc.), these cities
residents across 38 neighborhoods in
20% must be active in repurposing spaces to serve
Seattle to develop community-driven
19% community needs. This could mean transitioning
visions of how each area could grow and
17% commercial office spaces to residential and change in a beneficial way. During this
encouraging residents to move back downtown. time of rapid change from COVID-19, cities
10% In contrast, other cities will have to adapt to should prioritize equity in their economic
May June July August September October November December January
2020 2020 2020 2020 2020 2020 2020 2020 2021 assist retail moving into their communities. This recovery to ensure changes in the retail
could mean support in infrastructure upgrades sector are aligned with community needs.
Note: Survey was not conducted in November 2020. and facade projects to create welcoming
Source: Saad, L., & Hickman, A. (2021, February 12). Majority of U.S. works continue to punch in virtually. Gallup. news.gallup.
com/poll/329501/majority-workers-continue-punch-virtually.aspx
29 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 30City of Los Angeles, CA
EQUITY HAS BEEN AT
THE FOREFRONT OF THE
CITY’S RESPONSE.
from the pandemic response and clear up program and many other land use policy
inconsistencies in the current code so that changes will likely continue. Currently,
it is easier for residents and businesses alike Los Angeles is working to pass a Local
CASE STUDY
to create the built environment and public Emergency Ordinance that extends
spaces that best serve them. Los Angeles parking relief options for businesses that
wants use to be by-right without excessive have outdoor dining, are undergoing a
bureaucratic hurdles and paperwork to change-of-use, or currently have off-side
help communities create vibrant places parking conditions. The ordinance will also
that meet their long-term needs.58 provide extensions for conditional uses,
giving businesses more time to pay fees
Streamlining operations associated with discretionary approvals.59
The pandemic also brought with it a
renewed recognition that businesses need Equity has been at the forefront of the
City of Los Angeles, CA: the ability to do what works for them to city’s response. The first round of grant
quicken their recovery as long as it does not and loan programs were operated on a
Clearing Land Use Hurdles to Support Retail affect health and safety. In May 2020, Mayor first-come-first-served basis. Once the city
Eric Garcetti launched LA Al Fresco, an realized that businesses without existing
History of Los Angeles Once seen as a disadvantage, the outdoor dining program, which streamlined connections to the city and those with
The City of Los Angeles, CA, knows how decentralized nature of the city is a huge permitting for dining on sidewalks and in language or digital access barriers were not
to handle an earthquake. City staff are asset in its continued recovery from private parking lots, parking spaces and applying for funding, city staff switched the
trained to respond, following tried and COVID-19, enabling community-based within lane and street closures. Instead program model and rethought outreach
true policies and procedures. Residents development that meets localized needs. of waiting for administrative review or efforts. The city has been releasing
even have an app to help them prepare going to a meeting in a city building to information in multiple languages to ensure
their homes and neighborhoods for natural New zoning code discuss options, applicants get immediate that all Angelenos can benefit from these
disasters.57 Like many other cities, Los COVID-19 expedited many of the plans Los approval for most requests. The city is new programs and policies. Even technical
Angeles did not feel ready for the COVID-19 Angeles already had in place, encouraging doing the internal work, coordinating assistance programs for businesses are
CASE STUDY
pandemic. Through the city’s multilayered flexibility with rules and regulations to ensure between departments to make programs expanding their language access. The move
response, two things have become clear: resilience. With a zoning code that has not like these successful. Bringing Economic to online services in response to COVID-19
It is Los Angeles’ people and places that been updated comprehensively since 1946, and Workforce Development, City Planning has opened up access to business owners
make the city great. Preparations for the city is moving toward a hybrid form and and the Department of Transportation who could not make it to a city building
the city’s future and for recovery from use-based code that considers types of uses, together to work on the framework for LA to process their transactions. Increased
unforeseen or unpredictable challenges building form and neighborhood character Al Fresco meant that applicants got one automation in project applications and
begins with building up the resilience in decision making. re:code LA is a five-year set of instructions with all the necessary the new automatic payment system
of residents, businesses and workers. endeavor that will incorporate learnings information in their native language. This have made it easier and more equitable
31 NATIONAL LEAGUE OF CITIES NATIONAL LEAGUE OF CITIES 32You can also read
