How to Take Advantage of the Retail Apocalypse

This article first appeared in The Orange County Register.

Amazon’s stunning acquisition last week of Whole Foods signaled an inflection point in the development of retail, notably the $800 billion supermarket sector. The massive shift of retail to the web is beginning to claw into the last remaining bastions of physical space. In the last year alone, 50,000 positions were lost in the retail sector, and as many as 6 million jobs could be vulnerable nationwide in the long term. Store closings are running at a rate higher than during the Great Recession.

Yet, there’s an opportunity opening for cities and regions to take advantage of new space for churches, colleges, warehouse space and, most importantly, housing. Nationally, an estimated 15 percent of all mall space will need to find new uses within the next decade. As many as 275 malls, according to Credit Suisse, will close in the next five years — roughly a quarter of the total. America already has four to five times as much retail space per capita as countries such as the United Kingdom or Japan.

The Infill Opportunity

The biggest opportunity for Southern California lies in the production of new housing, which would help to make up for providing less than half the needed supply for the past decade. To date, misguided state policy has created a raft of poor outcomes — rising prices, low inventory, declining affordability, the second-lowest homeownership rate in the nation — in effect, chasing middle-class, younger families out of the state.

State policy has made things worse by putting ever more regulatory burdens on housing, particularly for those who build single-family homes on the peripheral areas, where lower-cost residences have historically been built. But the state’s policy of pushing “infill” development has also foundered, as the price of new apartments has shot up, in part due to the limited land for developments.

These policies understandably upset residents of many urban neighborhoods, who feel that developers are seeking carte blanche to make their areas ever more congested and uniform. In contrast, a strategy of focusing on redundant retail properties — think attached townhomes or detached townhouses — would actually produce fewer cars than even a poor-performing mall, and would appeal to such key demographics as first-time homebuyers, immigrants, minorities and downshifting baby boomers.

The Future of Retail: A Physical Community

Despite the grim predictions, physical retail does have a future, and a potentially bright one. In some cases, the more high-end malls, such as The Grove, South Coast Plaza or Fashion Island, will continue to thrive by attracting tourists and high-end customers. Primarily, it’s the low- and mid-range retailers, such as Sears, JCPenney and Macy’s, that are in the deepest trouble, while chains like Nordstrom seem to be able to maintain their businesses.

The real revolution will take place in declining older malls, as well as the ubiquitous strip malls. In these places, there’s already a noticeable trend toward those businesses that are hardest to duplicate online, such as restaurants, gyms, tutoring academies and professional services. Traditionally, these developments are anchored by food stores, an area of brick-and-mortar commerce that has shown more resilience, and part of the reason why Amazon decided to buy Whole Foods.

Savvy developers like LAB Holding’s Shaheen Sadeghi are now focusing largely on artisan-driven retail — which is far less vulnerable to online business — that will also include housing and workspaces in cities across Southern California. LAB is working to revive a small-town, communal feel to once interchangeable and utterly predictable developments. In many cases, such as the Haven City Market in Rancho Cucamonga, the focus is less on traditional retail, with a greater emphasis on food and dining, something that Amazon may not be able to provide.

A Need for a Historic Compromise

California now has a unique opportunity to address its deepening housing crisis by combining some peripheral development with bold infill of retail space. This would replace the current doctrinaire “cramming” approach that clearly has failed to reduce prices or rents, and has made it increasingly difficult to build the single-family product preferred by the vast majority of consumers, including older millennials.

This transformation would be greatly helped if cities were given incentives….

Read the rest of the article at The Orange County Register.

Photo credit: Coolcaesar via Wikimedia under CC 3.0 license

Want to be green? Forget mass transit. Work at home.

This article first appeared in the Los Angeles Times.

Expanding mass-transit systems is a pillar of green and “new urbanist” thinking, but with few exceptions, the idea of ever-larger numbers of people commuting into an urban core ignores a major shift in the labor economy: More people are working from home.

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Amazon Eats Up Whole Foods as the New Masters of the Universe Plunder America

This article originally appeared at The Daily Beast.

“We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” —Justice Louis Brandeis

With his $13.7 billion acquisition of Whole Foods, Amazon’s Jeff Bezos has made clear his determination to dominate every facet of mass retailing, likely at the cost of massive layoffs in the $800 billion supermarket sector.

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Where Manufacturing is Thriving in the U.S.

This article first appeared on Forbes.

Throughout the dismal presidential campaign, the plight of America’s manufacturing sector played a central role. Yet despite all the concerns raised about factory jobs leaving the country, all but 18 of the country’s 70 largest metropolitan regions have seen an uptick in industrial employment since 2011. And despite the slowdown in car sales, the job count continues to expand, albeit more slowly. Read more

The California economy’s surface strength hides looming weakness

Excerpt from an article that first appeared in the OC Register.

If you listen to California’s many boosters, things have never been so good. And, to be sure, since 2011, the state appears to have gained its economic footing, and outperformed many of its rivals.

Some, such as Los Angeles Magazine and Bloomberg, claim that it is California — not the bumbling Trump regime — that is “making America great again.” California, with 2 percent job growth in 2016, gained jobs more rapidly than most states. The growth rate was about equal to Texas and Colorado, but behind such growth centers as Florida, Nevada, Oregon, Washington, Utah and the District of Columbia.

Bay Area: Still the tower of power

Over the past few years, the Bay Area has grown faster in terms of jobs than anywhere in the nation. But this year, according to the annual survey of the nation’s 70 largest job markets that I do with Pepperdine University public policy professor Michael Shires for Forbes, there is a discernible slowing in the region. For the first time this decade, San Francisco lost its No. 1 slot to Dallas, which, like most other fastest-growing metros, boasts lower costs and taxes, and has created more middle-class jobs than its California rivals.

The San Francisco area, which includes suburban San Mateo, remains vibrant. More troubling may be the weakening of the adjacent San Jose/Silicon Valley economy, which dropped six places to eighth — respectable, but not the kind of superstar performance we have seen over the past several years.

This partly reflects an inevitable slowdown in information job growth. As the startup economy has stalled, and the big players have consolidated their dominance, sector growth has dropped from near double digits to well under half that. Perhaps more telling has been a shift in domestic migration, which was positive in San Francisco earlier in the decade, but has now turned sharply negative. These are clear signs of a boom that is cooling off.

Southern California: Stuck in second gear

Southern California continues to lag. San Diego managed only a mediocre 29th-place finish. That’s better than Orange County, which managed an even less impressive 37th, and Los Angeles, by far the state’s largest job market, which reached only 40th place.

In Southern California, many seem to mistake high housing prices for economic vigor…. Read the rest of the article at OC Register.

‘Hillbilly Elegy’ author J.D. Vance, economic development experts discuss the heartland

This article first appeared in Cleveland.com

CLEVELAND — It was all about middle America at a City Club of Cleveland forum entitled, “The New American Heartland,” held at the Global Center for Health Innovation.

The big draw was author J.D. Vance, whose book, “Hillbilly Elegy: A Memoir of a Family and Culture in Crisis,” is in its 41st week on the New York Times Bestseller List.

Vance delivered a keynote address and was then followed by Michael Lind, co-founder of New America, who talked about an optimistic report he helped write called, “The New American Heartland: Renewing the Middle Class by Revitalizing Middle America.”

The “New American Heartland,” as defined in the report, extends from the Great Lakes and the upper Great Plains to the Gulf of Mexico, and is viewed by the report authors as the region that will drive the nation’s economy going forward.

The forum concluded with a panel discussion by economic development experts from around the country.

Watch the event:

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What Trump Has Wrought

This article first appeared in the OC Register.

Just a few short months ago, we seemed on the brink of a new political era. Donald Trump improbably was headed to the White House, while the Democratic Party, at near historic lows in statehouse power and without control of either house of Congress, seemed to be facing a lengthy period in political purgatory.

Today some progressive voices still see a “bleak” future, but it is increasingly the Republican Party, and its shattered conservative core, that is reeling. Bitterly divided among themselves, and led by a petulant president with record-low ratings, the Republicans seem to be headed to a major crash just six months after a surprising victory.

Gone from view now are visions of a renewed Republican Party uniting its traditional base with historically Democratic parts of Middle America. Rather than a realignment in the mode of Richard Nixon or Ronald Reagan, the Trump administration seems to be devolving into a remarkably early interregnum, a pause between alternating progressive eras.

Trump supporters, not Trump, the real losers

Donald Trump’s nationalist agenda started with a natural appeal to much ignored non-cosmopolitan America. Unlike the seemingly diffident and distant Barack Obama, Trump offered a laser-like focus on growing high-wage jobs for the declining middle and working classes. A reform agenda on everything from deregulation and taxes seemed to have the potential to escape the low-growth “new normal” and restore broad-based opportunity across the country.

Read the rest of the article at OC Register

Photo credit: Michael Vadon via Flickr under CC2.0 License

California’s War on the Emerging Generation

This article appeared in the OC Register.

It should be the obligation of older citizens to try to improve the prospects for their successors. But, here in California, as seen in a new report issued by the Chapman Center for Demographics and Policy, we seem to have adopted an agenda designed to make things tougher for them. Read more

One tax change that should be made — and certainly won’t be

by George F. Will

Attempting comprehensive tax reform is like trying to tug many bones from the clamped jaws of many mastiffs. Every provision of the code — now approaching 4 million words — was put there to placate a clamorous faction, or to create a grateful group that will fund its congressional defenders. Still, Washington will take another stab at comprehensiveness, undeterred by the misadventures of comprehensive immigration and health-care reforms. Consider just one tax change that should be made and certainly will not be….

Dismayed U.S. homebuilders foresee a 6.4 percent increase; U.S. lumber interests say that is an exaggeration. Even allowing for theatricality on both sides, lumber protectionism will certainly deepen two problems: Because the mortgage interest deduction enables higher housing prices, Americans will continue to pour too much wealth into housing. And inequality will be exacerbated. Homeownership is crucial to the accumulation of wealth. But as social scientist Joel Kotkin writes, millennials are caught in a pincer of low incomes — the Census Bureau estimates that even those with a full-time job earn $2,000 less in real dollars than the same age cohort did in 1980 — and high housing prices. Kotkin says “homeownership rates for people under 35 have dropped 21 percent” since 2004.

Excerpted from the Washington Post. Read the rest of the article here.

The Politics of Migration: From Blue to Red

by Joel Kotkin and Wendell Cox

Democratic “blue” state attitudes may dominate the national media, but they can’t yet tell people where to live. Despite all the hype about a massive “back to the city” movement and the supposed superiority of ultra-expensive liberal regions, people are increasingly moving to red states and regions, as well as to suburbs and exurbs. Read more