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Entries in Downtown (1)

Sunday
Feb102013

Blame Downtown Fresno contraction on the Manchester Mall

I listened to several good discussions on the fate of Downtown Fresno last week on KMJ. Every local on-air personality covered it. Appleton spoke of getting medical interests Downtown to revitalize and the recent plan for 80 new residences. Parking and grocery stores were a topic on John and Jen. Chris Daniel has covered the topic numerous times.

Naturally, The Cured Ham has his take on Downtown, with the focus on food and the economics therein.

When a franchisee comes to a city to prospect potential locations to build or lease, they often look on a map at the number of homes, income levels and businesses in a 360 degree radius from the proposed property location. That 360 degree view is then broken down by ever expanding quarter mile circles and traffic patterns to measure everything from daily commutes to income levels within the ever expanding 360 circle. In Fresno, the expanding demographics analysis radius is very predictable, it’s 3 miles.

This 3 mile / 360 degree concept is analytical, yet obvious. Why does Fashion Fair have a Fleming’s, Cheesecake Factory, and BJ’s Brewery? Why does Riverpark have such a high concentration of franchisees? Why did TGI Friday’s pick that location on Herndon and First over 20 years ago? And why doesn’t Manchester Mall have any high-end restaurants?

Answers? Favorable density, traffic patterns, income levels, and other demographic patterns that increase the probabilities of success for the franchise. It comes down to analytics on demographics and the patterns of those demographics within 3 miles of where a franchise or large mall is being proposed.

Now, look at two other North Fresno strip malls/centers that have had less than favorable outcomes, Palm and Nees and Fort Washington and Friant. Neither center has 360 degrees of coverage with regards to population, cross-streets or traffic flow. Nearly a third of their surrounding real estate is open space or bluff space, not helpful to retailers. While income levels are generally high in both areas, these income levels can’t make up for giving away one-third of the real estate to useless dirt. Now, combine giving up 1/3 of the market to open space and dirt with high lease terms in both locations and you may begin to factor why the restaurant successes in both locations have been spotty at best.

After this critical and factual evaluation of North Fresno, it stands to reason that a more critical look at Downtown is in order. Traffic patterns alone would suggest to a mid to high level restaurant franchisee that a dinner crowd is limited at best. Secondly, income levels of residents are generally lower when compared to the area around Fashion Fair or River Park. Thirdly, within the 3 miles and 360 degrees of coverage, we examine each larger circle to the south and west are not favorable conditions, peppered with industrial complexes and low population density.

Now ask yourself a simple question, outside of a Subway or other fast food chain that tends to favor lunch crowds and lower incomes, have there been any other franchisees that located themselves in Downtown Fresno? The obvious answer is no. The franchisees understand that a high proportion of Downtown’s daytime population is municipal, hospital, and utility employees. Each of those particular professions has a demographic attached to them with regard to income and time allotted for lunch. It’s also highly likely that a high proportion of those Downtown employees just described live north of Downtown at least 3 miles away, which, quite predictably, puts them at around Manchester Mall and an entirely new 360 degree / 3-mile radial. Guess what other malls are exactly 3 miles away, Fashion Fair and Fig Garden Village. Coincidence? I think not.

Wait for it…

Can you guess what shopping center is 3 miles away from Fig Garden Village and Fashion Fair? River Park! Ask yourself the next obvious question? Where do you think the next big mall is going to go? While it may not be as perfect as before, the 3 mile pattern, it’s close. I would place bets near Valley Children’s Hospital and the push towards Millerton. Not next year, but soon. Rome wasn’t built in a day either.

Campus Point will be an interesting development to watch over the next 5 years as the campus itself is its own 3-mile circle, lots of farm land, a low on-campus student population with only a couple national franchisees, Buffalo Wild Wings, Marie Calendar’s, and Chipotle next to or on campus. Additional, Campus Point breaks the 3-mile rule. It’s only 2 miles away from Sierra Vista Mall and Fashion Fair, which means overlap. Stay tuned for how the new development works out and who is attracted to set up restaurants.

So go back to Downtown Fresno and ask yourself, who lives, commutes, sends their kids to school, the ages and incomes of people living within a 3 mile radius of Downtown and you have your answer for why franchisees don’t establish within the Downtown 360, 3 mile radius. It doesn’t pay for them to do so. 80 new lofts in Downtown won't change that and neither will 80 more lofts in another year. People come to Fresno and stay in Fresno for a house with a backyard, free parking, a large garage, Save Mart, Wal-Mart, Costco, Target, Home Depot, and lots of large restaurant franchises within 3 miles of their home.

If Fresnans wanted to pay $3 a square foot to live in a loft Downtown, they probably don't have kids, pets, gardens, or a BBQ. They work a lot because they have to pay $3/square foot to live in a cool loft Downtown! I should know, I lived in a loft in Sonoma County, a flat in SF, a townhome in Old Town Pasadena, and an apartment in Rockridge. Except I walked to the grocery store, laundry, gym, restaurants, clubs, and movie theatre. Things that aren't going to happen anytime soon in Downtown Fresno.

Why? Fresnans have been well trained to drive their cars for convenience. I wouldn't drive to Walnut Creek from Oakland to go to Target. All a Fresnan has to do is drive down the block for their slice of convenience. A Bay Area resident has to move to another town for Target or Wal-Mart.

My analysis is not biased, it’s a simple analysis of trend and basic historical analytics that should be obvious. The same reasons hold true in my analysis of Downtown for the two centers in the north, Palm/Nees and Ft. Washington/Friant; neither is at full capacity or fully utilized as completely efficient stores, fully one-third of their market is grassland and dirt, completely unproductive to a restaurant.

So the next time you’re having a discussion about Downtown revitalization, River Park isn’t your enemy Downtown Advocates. Blame it all on the Manchester Mall…they started the move north over 50 years ago. River Park is simply the natural outcome of an expanding city. Beachheads have already been established at Children’s Hospital north on 41, Brighton Crest towards Millerton, and east on Highway 180 toward Sanger; look to the conversation about expansion move in those directions, all moving away from Downtown…not towards it.