The Art of Balancing Retail

Diversity is important to neighborhood commercial areas, but getting the right balance of retail and restaurants without disincentivizing the former is not so simple.

"Restaurants, especially those allowed to serve alcohol, can afford higher rents than neighborhood-serving businesses, like grocery stores, hardware stores, pharmacies and dry cleaners. As bars and restaurants become successful, an area draws more foot traffic, attracting more of those businesses. Landlords can charge higher rent, which pushes out the local businesses. This is basically an economic game theory problem: the most natural equilibrium states are a mostly-vacant corridor on the one hand, and nothing but bars on the other.

Can zoning or other regulations help keep corridors in more of a balance? Is that desirable? One options is to allow market forces to determine the retail mix. But many residents are concerned about their neighborhoods becoming "another Adams Morgan." At the same time, regulation also hampers business, leading to more vacant storefronts. Is there a way to strike a balance, encouraging free enterprise while also maintaining some diversity of store types? "

Full Story: Balancing neighborhood retail, part 1: The 25% rule

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