Downtown Conway Real Estate Redevelopment Strategy Conway Downtown Partnership November 2018
Created by Place & Main Advisors, LLC with funding provided by Main Street Arkansas
November 2, 2018 Ms. Kim Williams Director Conway Downtown Partnership Main Street Conway 900 Oak Street Conway, AR 72032 Dear Ms. Williams: On behalf of Place & Main Advisors, LLC, I am pleased to present you with this Real Estate Redevelopment Strategy for the Conway Downtown Partnership. This real estate strategy is part of technical assistance services to Main Street Conway provided and paid by Main Street Arkansas, a division of the Department of Arkansas Heritage. This strategy was created from advanced and follow up information provided by you and your team as well as direct input and information gathered from on-site field work. Downtown Conway has tremendous potential to go along with its numerous high quality assets. We hope you find this strategy useful as you take on real estate opportunities in your community. Thank you for the opportunity for our firm to work with you. We have truly enjoyed our time with the Conway Downtown Partnership and have high expectations for its future. Sincerely,
Joe Borgstrom, Principal Place & Main Advisors, LLC
Downtown Conway Real Estate Redevelopment Strategy
3
Table of Contents I. District Overview 4 District Map Location Anchors II. Purpose 8 Competition Changing Market Forces Maximizing Existing Public Investment Engagement III. Strategic Actions 12 Short Term (6-12 months) Mid Term (12-36 months) Long Term (3-5 years) IV. Key Sites
19
Downtown Conway Real Estate Redevelopment Strategy
I. District Overview
4
Downtown Conway Real Estate Redevelopment Strategy District Overview District Map
5
Downtown Conway Real Estate Redevelopment Strategy
6
Location Conway, Arkansas is a city with a population near 60,000, is located approximately 30 miles northwest of Little Rock and is the county seat of Faulkner County (pop. 113,000.) The city’s population average age is 29.3 years old, primarily due to the presence of three higher education institutions. Median household income in 2018 is $50,006 and projected to increase to $56,080 by 2023. Median home value for the city is $169,007 in 2018 and projected to increase to $184,016 by 2023. A very large portion of the workforce (63.7%) works in white collar occupations, with 18.5% working in service jobs, and the remaining 17.8% working in traditional blue-collar professions. At the heart of Conway, is its traditional downtown core. A large portion of downtown is recognized as a historic district in the National Register of Historic Places. The Main Street district is significantly larger than the historic district, consisting of more than 40 blocks.
Anchors Downtown Conway has several anchors both within its boundaries as well as several within a mile that serve as drivers of pedestrian and vehicle traffic. These anchors are both public and private sector entities with vastly different clientele and needs. The most impactful (and those with yet unrealized potential) in downtown are: University of Central Arkansas (1,500 Employees; 11,750 students): Located within one mile of downtown, this is the largest employer in the community as well as a continuing source of new residents and customers. Its campus is due west of downtown and has a small gallery/meeting space in the downtown core. Hendrix College (350 Employees; 1,238 students): Located at the northern end of the downtown district, this college is smaller than UCA, but has a significant impact on downtown much like its fellow higher education colleague. Furthermore, adjacent to Hendrix is the home to a new urbanist commercial and residential area called The Village at Hendricks, which includes mixed-use buildings and a charming adjacent traditional urban format neighborhood.
Downtown Conway Real Estate Redevelopment Strategy
7
Anchors (Cont.) Central Baptist College (60 employees; 881 students): The smallest of the three institutions of higher learning, this campus is located to the southwest of downtown and is within one mile of the core downtown. Conway Regional Hospital (1,300 employees): The second largest employer in the community has its main campus west of the downtown district, also within the one-mile radius. This regional hospital both draws a significant amount of traffic from patients but is also numerous medical professionals ranging from doctors and administrators to nurses and other staff. This entity, along with UCA, represent the two organizations who can have the greatest impact on the future of downtown retail, restaurant, and residential growth. Home BancShares (500 employees): This parent company of Centennial Bank has a significant office presence in the southern end of the downtown district. With 500 employees in higher paying professions who spend their work day downtown, this company has a tremendous impact already on the district from primarily lunchtime spending in local restaurants and retail establishments. These employees would also be primary targets for any new housing as well as a potential financial partner on its corporate side. Conway Corp (250 employees): The publicly-owned utility company has its main customer service center in the southern end of the downtown district. As the second largest employer in the downtown proper, it too has a large impact on the retail and restaurant sectors downtown.
Downtown Conway Real Estate Redevelopment Strategy
II. Purpose
8
Downtown Conway Real Estate Redevelopment Strategy
9
Location Downtown Conway has been in existence for more than a century. Why would it need a real estate strategy now after more than a hundred years of letting the market dictate downtown’s condition? Since 2001, the Conway Downtown Partnership has sought to help make downtown Conway a destination for businesses and visitors alike. With increasing competition from a growing number of commercial corridors, the Conway Downtown Partnership must be more proactive in the redevelopment of the district. Competition For several decades, downtown’s only real competition was the Conway Towne Center, nearly a mile and half away. However, an additional competitor, Conway Commons, came to the area in 2003 and in the last five years three additional projects have been announced, Lewis Crossing, the Village at Henrdix, and Central Landing. The latter two being billed as a mixed-use lifestyle center, mixing national chains with residential offerings. The influx of the three new retail centers resulting in almost 1.5 million square feet of new commercial space will create more absorb a significant amount of retail spending. To compete, downtown Conway, through the Conway Downtown Partnership, must become more strategic in its approach to real estate in the district.
Downtown Conway Real Estate Redevelopment Strategy
10
Changing Market Forces While increased competition for retail is a threat to the district, the increasing demand for housing, and in particular, housing in or near a walkable downtown district can play to Downtown Conway’s advantage. Two major markets are fueling this demand for downtown living: Millennials and Baby Boomers. For at least the last ten years Millennials have held the reputation as being the primary drivers of traditional commercial district living, or within reasonable walking distance. The long-held belief this generation would trade this urban style neighborhood living once they had children has largely not come to fruition. One reason is they are either having children later or not at all. The national average of households without children is currently at 70%, with the City of Conway very close to that number at 69.1%. Another reason is this generation is extremely environmentally conscious and are seeking to be less reliant on cars, wanting to be more able to walk or bike to work, school, or entertainment options. Perhaps more surprising is that Baby Boomers have emerged as a growing secondary market. These Boomers have begun to retire and are looking more and more to these areas as they look to downsize and give up yard work. They are also starting to make major considerations as they recognize their ability to drive may soon be limited and want to live somewhere they can still be able to live independently without a vehicle. Downtowns and nearby neighborhoods are ideal choices for both groups. The success of the housing connected to the Village at Hendrix is a testament to these trends.
As the chart above shows, Millennials and Baby Boomers make up ccount for 154,930,000 Americans, or a whopping 48% of the total number of people. The housing needs of the largest generation, the Millennials, would already dominate housing markets. But with Boomers retiring wanting many of the same amenitites, it creates a massive market.
Downtown Conway Real Estate Redevelopment Strategy
11
Maximize Existing Public Investment With every new commercial center new infrastructure (roads, water, and sewer) need to be extended to these sites. General construction estimates put the extension of these utilities at approximately $1 million per mile, not including the cost to extend electric and broadband service. This cot also does not consider the ongoing upkeep of these utilities. But, with downtown developments, the infrastructure is already in place, long since paid for, and helps generate additional taxes. Maximizing the public resources already in downtown is a wise fiscal move to support existing public investment.
Engagement During our field visit we conducted several tours of the downtown and conducted several one-on-one interviews with stakeholders, city staff, institutions, and businesses. These individuals and institutions have a strong affinity for the downtown and provided poignant and genuine ideas that have been integrated into this strategy. Walking Focus Group The most interactive of our engagement consisted of a “walking focus group” with several stakeholders in downtown Conway. The group conducted a visioning exercise that solicited potential uses for the vacant spaces at 824 Front Street, 1100 W. Oak Street, 1015 W. Oak Street, 1017 & 1023 W. Oak Street, including upper floors (if the building had them.) Of the many uses discussed for the buildings, several were repeatedly mentioned: • Apartments • Restaurants • Brew Pub/Wine Bar • Meeting Space/Hall • Pop-Up Shops • Micro-Restaurants (Food Hall) There was wide recognition that Faulkner County’s prohibition on all retail alcohol sales makes restaurants more difficult and breweries, wine bars, and distillery tasting rooms impossible. The Partnership should explore working with the county and appropriate legislative bodies to amend tis prohibition and allow specific uses in specific areas, such as downtown.
Downtown Conway Real Estate Redevelopment Strategy
III. Strategic Actions
12
Downtown Conway Real Estate Redevelopment Strategy
13
Strategic Actions There are a number of actions the Conway Downtown Partnership can undertake to improve the real estate usage and value in the downtown district. This strategy organizes these actions into three categories: Short, Mid, and Long Term. Short term are those actions that can be undertaken in the next 6-12 months, while Mid term is designed to be projects undertaken in the next 12-36 months, and Long term are projects intended to be 3-5 years (or more.) Short-Term Better utilization of the Partnership website: The vast majority of real estate searches start online. The Partnership has a good looking, functional website. However, there are several areas where the website could be a better tool for promoting Downtown Conway. Promotion of Existing Vacancies: when it comes to available commercial and residential property in the district, the website currently points to the director’s email to contact for more information. A review of web statistics of page hits compared to the number of emails received would be a good indicator of how many opportunities may be missed. Both the “Working in Downtown” and “Living in Downtown” sections should contain information about available properties in the district, with strong preference for the availability of a downloadable PDF one to two-page summary of available information including interior photos of the property, leasing or sale information, and contact information for the property owner or management company. The Partnership should also work with the property managers to include a sign with a QR code that directs interested passersby to either the Partnership’s website and information on the property or to the management company or realtor’s listing. The Louisiana Main Street program provides a template to its communities and a digital copy will be included with this document. Data & Transformational Strategy Info: While we understand the transformational strategy the Partnership did with Main Street America is waiting to be finalized, it will be important to make sure it is posted online. Specifically, the retail market information. A placeholder on the Partnership website already exists for the strategy, but the rest of the market information should be made readily available and downloadable in a PDF format as well for prospective businesses. Façade Improvements: The Partnership should continue to work with the Main Street Arkansas Program Preservation Designer and Architectural Historian to improve facades of several buildings in the downtown district. The Partnership should also explore the possibility of a low-interest loan program with the City of Conway and local banks. Providing both renderings and a financing vehicle could dramatically increase participation in the improvement of the district’s exteriors.
Downtown Conway Real Estate Redevelopment Strategy
14
Mid-Term Increase Connectivity to Anchors and Neighborhoods: Downtown Conway’s central location to surrounding anchors and neighborhoods is a tremendous strength. These anchors and neighborhoods supply the district with a ready supply of customers for the retail and restaurants in the downtown. Improving the physical connectivity to these places will encourage greater utilization of the district. Furthermore, by creating stronger physical connections as well as creating more housing opportunity (below) would create not just a one-way flow of customers from the anchors but could tap into residential opportunity for people to live downtown and shorten commutes to the anchors. The Conway 125 Campaign (www.conway125.com) hits on many of the key areas related to the below: Wayfinding- Improving the ability for people to find key areas of the downtown, like parking, city hall, and other assets are critical to increased utilization. Additionally, this wayfinding should extend to the anchors and key employers in the area to help direct employees and students from their respective educational or corporate campuses to the downtown. This wayfinding can include distance or average walking time to key points to encourage non-motorized traffic as well. Bike Paths/Walking Paths- The Conway 125 Campaign proposes the increased investment in bike and walking paths throughout the community. Chief among these Wayfinding proposed by the Conway125 campaign is the path dubbed “The Promenade.” This path would would be an excelllent addition to the downtown and extend from downtown and connect key institutions to nearby anchors. the west of downtown such as UCA, the High School, and Conway Regional Health System. This pathway should be a priority for connecting these anchors to the downtown. A similar, but possibly smaller one should also be considered extending north to Hendrix College. These pathways would provide for a pleasurable walking or biking experience and be a valuable connector for downtown and the anchors. Expand Bikeshare- Institutions and employers in Conway have already implemented a bike share program (bike.zagster.com/Conway/) that can connect users to downtown from UCA, Baptist Health, and other locations. These locations should be expanded to include Hendrix College, Central Baptist College, and Conway Regional Health System as well. Expanding the program will allow the employees and students of these organizations to more easily move between their institution and downtown without having to worry about where to park a car. E-Scooters- These electric scooters, or E-Scooter, have recently become very popular in college towns and larger cities across the country. Conway should be prepared for them to arrive unannounced in the not-too-distant future. The major two companies in this space are Bird (www.bird.co) and Lime (www. li.me). Much like the early arrivals of ridesharing services like Lyft and Uber, they often arrive in a market before a community has a chance to create any regulations around them. The Partnership should be proactive and begin to have conversations with the City of Conway on how it will plan to regulate these vehicles. While their business model is similar to bikeshare programs, they do not require docks and are intentionally left on sidewalks and street corners. Having a plan ready will prepare the community for their arrival and provide for a smooth relationship.
Downtown Conway Real Estate Redevelopment Strategy
15
Housing – Upper Floor & Infill: Increasing the amount of housing supply will have dramatic positive affects for the downtown district. By having more potential customers in the district 24 hours a day will help make an economic case for later store hours as well as more demand for retail, restaurant, and entertainment options. The charts below show the increase in spending in several key areas and how that expands based on the number of new units. Two scenarios are given, one conservative and the other more moderate.
The first, simply increases the number of units with the same household income that is currently in the district. The second uses the median household income for the City of Conway. Doubling the number of units at the existing income levels doubles the need for restaurants and retail. However, using the Conway Median Household numbers (and assuming a better housing product than what largely currently exists) nearly quadruples the amount of household spending in the district. Having some many customers with good spending power nearby will dramatically increase demand for retail and restaurants in the district.
The chart above shows the potential increase in spending that would be the result of increating the number of residential units both at the current income level and at the median household income of Conway.
Downtown Conway Real Estate Redevelopment Strategy
16
Those buildings on the National Register (appendix B) qualify for both federal and state historic tax credits. This powerful incentive can provide credits for a combined 45% of qualifying improvements to these historic structures. These tax credits can be used to generate equity for their respective projects, reducing the need for financing and improving their profitability. Available buildings on the register in the district should be promoting these tax credits as possible incentives. New construction of single-use housing like apartments or attached condos should also be considered, but more on the fringe of the district, particularly the northern area.
New housing options, like the newly opened JLofts apartments will be critical n getting more households into and around the downtown distrcit. The JLofts does an excellent job of integrating parking on-site by using the lower level. For sites on the outter edge of the district, this is a creative use and way to hide parking.
Subdistrict Approach: Downtown Conway has a very large district. Some of the areas, like Front Street, seem to have more restaurants than others. Meanwhile, Oak Street, acting as the main artery through downtown, has become established as a healthy and diverse retail district. Adjacent streets to Oak like Von Runkle and Court Streets have become the places where retail is starting to emerge. And still to the southern end of the district is home to some anchor employers Home BancShares and Conway Corporation’s Customer Service Center. The Conway Downtown Partnership should consider apply a Subdistrict approach, dividing the larger district into smaller more focused areas: Prime Retail District (Oak Street)- The main artery through downtown, this is clearly the most established shopping area, with several retailers being destinations. Established retailers who may be looking to established themselves in Conway from other areas, or those who’ve outgrown their initial spaces should be targets for this area. Emerging Retail District (Von Runkle & Court Streets)- Typically these buildings have slightly lower rents and lower visibility than Oak Street, these lower rents provide a lower barrier of entry for potential retailers. These spaces should be targeted for new retailers or those graduating from home-based businesses to a brick and mortar storefront. Restaurant Row (Front Street)- Home to several restaurants or potential restaurants already, this district acts as a counterbalance to Oak Street and an entryway to downtown from Hendrix College to the North. This should be positioned as the place to be after work. Office District (South End)- This district is home to primarily office uses and headquarters. Connecting this district to Restaurant Row and Emerging Retail will be key. As more interest in office space comes to downtown, this area and its parking lots and single-story buildings should be targeted for redevelopment including parking decks multi-story buildings. Important Note: There are both retail shops and restaurants locates in areas other than the subdistricts above. These businesses should still be equally promoted. The subdistrict strategy is intended to help bring focus to recruitment efforts and build clusters that are beneficial to o new and existing businesses and as well as property owners.
Downtown Conway Real Estate Redevelopment Strategy
Subdistrict Map
Re s tau
Eme rgin g
e
il
ail
w t Ro
Re t
ran
m Pri
a Re t
Office District
17
Downtown Conway Real Estate Redevelopment Strategy
18
Long Term This long-term action will take several years to accomplish and require the City of Conway to actively participate in its implementation. Increase Density: A large portion of Downtown Conway is single story. In addition, a significant portion of these single-story buildings are not historic, also referred to as “non-contributing buildings� to the historic district. There appears to be demand for additional downtown office space and housing, but not enough buildings with upper floors to service this demand. A long-term goal should be the replacement of single story buildings ith multi-story, mixed-use buildings. This is not to suggest every single story building should be demolished. As opportunities arise for increasing density, those buildings which are single story and non-contributing should be considered for replacement with multi-story and/or mixed-use buildings.
Replacing single story, single use non-contributing buildings with higher density mixed-use buildings will add additional space for residential and office uses on upper floors while providing additional retail space in the downtown.
Downtown Conway Real Estate Redevelopment Strategy
IV. Key Sites
19
Downtown Conway Real Estate Redevelopment Strategy
20
Key Sites While all vacant or underutilized sites are important, the key sites below are in our estimation the most important due to their size and/or location within the downtown. Their vacancy is notable and when they are filled appropriately will provide a dramatic impact on both the respective buildings’ productivity, but surrounding buildings as well.
EM Building- This split-story retail-only building sits at one of the major intersections in downtown Conway. This unusual design somewhat limits its reuse ability, but its on-site parking make it attractive. There should be careful consideration given to the possible replacement of this building with a higher density product that could go as high as four or five stories and could include additional office or residential units.
Former American Management Corporation Building- This traditional two story, mixed-use building has a wide range of potential uses including upper floor office or conversion to residential. The first floor is rather large and may be better suited to multiple users such as pop-up/micro-retail retail or a food hall type of approach, which would fit within the Front Street “Restaurant Row� concept.
Downtown Conway Real Estate Redevelopment Strategy
21
Key Sites (Cont.)
1015 & 1017 Oak Street- While these two buildings are separate, they along with 1019 Oak Street, form a significant line of vacant storefronts that detracts from the district. These buildings could have multiple uses such as retail or lunch counter-type restaurant, or possibly a wine bar if liquor laws are reconsidered. The upper floor of 1017 could potentially hold office spaces or two to three apartments.
Downtown Conway Real Estate Redevelopment Strategy
22
ACKNOWLEDGMENTS Place & Main Advisors, LLC thanks all of the citizens, businesses, and community stakeholders who participated in the creation of the strategy for their time and effort in various conversations, one-on-one meetings, or focus groups. Place & Main Advisors, LLC especially thanks the following individuals and organizations for their support in the creation of this strategy: Kim Williams, Director, Conway Downtown Partnership Greg Phillips, Director Main Street Arkansas Jack Bell, Chief of Staff, Mayor’s Office, City of Conway Conway Chamber of Commerce Main Street Arkansas & the Department of Arkansas Heritage City of Conway University of Central Arkansas