Monday, November 13, 2017

The Retail Apocalypse and Richardson

I have long been a fan of mixed-use development, even though I have had criticism about how it's been done in Richardson. Except for the single two block stretch of State Street in CityLine that is walkable, Richardson's so-called mixed-use developments have been mostly the same-old 1980s model of apartments and strip shopping centers. Instead, I wanted to stuff ground-floor retail in all those new apartment developments. And upper-story apartments in all those new restaurants. Now, changes in the retail environment might mean I have to rethink my enthusiasm for mixed-use.

America is experiencing a retail apocalypse (yes, it's a thing; there's even a Wikipedia page). We've seen it coming for a long time in the form of mall closings (Richardson Square Mall, long gone; Collin Creek Mall, dying). I had thought that what shoppers were rejecting was the form of the retail — islands of stores surrounded by seas of parking. I had thought modern consumers wanted more walkable forms of retail (Garland's Firewheel Town Center, such as it is).

Now I have to wonder if it's retail itself that is in trouble. Online shopping (Amazon, d'oh) has been stealing brick and mortar retail's customers for two decades. We all saw it coming, but few people took advantage. A $1,000 investment in Amazon stock twenty years ago would have made you a millionaire today.

There's still another factor at work in 2017 that is equally unforgiving — retail debt. According to Bloomberg, "The root cause is that many of these long-standing chains are overloaded with debt — often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder — even for healthy chains." Whatever the causes, retail store closings are outnumbering openings by a frightening pace.

Back to Richardson. Despite a few signs of hope (e.g., Richardson Heights Village with Alamo Drafthouse as the anchor tenant), filling those aging, emptying strip shopping centers is only going to get harder. New retail development in Richardson is dominated by more restaurants. How quickly will we saturate that market? (Tokyo Joe's in Canyon Creek Plaza between Torchy Tacos and Snuffers opened and closed before most people even knew it was there; same with Pollo Tropical in the same shopping center.) Maybe the developers who have shown little interest in building more restaurants on the ground floors of all those new apartment buildings were right. Maybe we do need more apartments, but not more retail. The future for mixed-use development no longer seems to be as bright as I once thought.

Tell me what form future employment will take and I might be able to predict what form our future cities will take. All those thousands of State Farm jobs in CityLine? They look ripe to be replaced by artificial intelligence in coming years. If they go, how many restaurant jobs will be needed in CityLine? Even if new jobs emerge, what will our cities look like when everyone buys everything online, to be shipped from a distribution center in, say, Coppell, and delivered by self-driving delivery vehicles or drones? The impact of the retail apocalypse not just on our jobs, but on our cities, is bound to be huge. We need to start figuring out what will emerge in its wake.

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