Transit-station retail, once limited to coffee carts and newsstands, is quickly taking on a new form across the U.S. Expanded retail arcades are nothing new for crowded train stations in New York City or Washington, D.C., but transit hubs in other cities are layering on their own custom blends of restaurants, retail, concerts and other events, in hopes of transformation into 24-7 destinations with a distinct sense of place.
The 123-year-old Denver Union Station, with its high ceilings, heavy chandeliers and white pillars, is a prime example. Following a major restoration in 2014, the station has added about a dozen restaurants, among them Acme Delicatessen, Next Door American Eatery, Snooze and seafood house Stoic & Genuine. Travelers wanting a cold one can duck into Terminal Bar, which occupies the station’s former ticket office, or the mezzanine-level Cooper Lounge. “The better food and drink you have, the more likely the traveler is going to get there earlier and make other purchases,” said Andrew Poncher, director of retail strategy for Washington, D.C.–based Streetsense, a full-service retail strategy firm.
Transport hubs are putting their concourses and dormant spaces to greater use in part to subsidize their often cash-strapped transit operations, says Jim Harkin, a senior vice president and principal at Cincinnati-based FRCH Design Worldwide who has worked on several transit-oriented projects. “The concourse is not just a pass-through anymore, much like the lobby of a hotel is no longer just a pass-through,” Harkin said. “These spaces are being used to engage people.” But retail offerings in such stations must resonate with the locality to draw visitors along with the regular commuters, he says. “If you’re in Denver, you want people to feel like they really are in Denver,” he said. “The design has to be authentic, with real depth; otherwise, people will get bored.”
Several new or overhauled transit stations have been pegged for California, including the newly renovated, 90-year-old Sacramento Valley Station, whose first expansion phase in February rolled out some 25,000 square feet of new restaurants, retail and office space. The first tenant in was The McClatchy Co., publisher of The Sacramento Bee and other newspapers. The company teamed up with Google and YouTube to create a 10,000-square-foot technology incubator to help entrepreneurs improve their video storytelling. An urban-style transit village is also slated for future development at the Sacramento hub.
Union Station, in Los Angeles
Auntie Anne’s, The Lost Bean, The Oyster Bar SKC, Pinkberry and a few others have come aboard at the 3-year-old, 67,000 square-foot Anaheim Regional Transportation Intermodal Center, though leasing at this LEED Platinum facility has been slowed by lower-than-projected transportation usage, according to the Orange County Transportation Authority. There are reasons to think those numbers may improve, however: The hub serves the city’s resort district as well as linking up commuter, regional and Amtrak rail service and bus systems. This will become the southern terminus for the first phase of the state’s high-speed rail system, now under construction and slated for completion in 2029.
Even transit agencies that have long barred retail activity are now reconsidering, to help balance strained budgets, according to Charles Di Maggio, head of U.S. leasing for New York City–based Greystone Management Solutions and a specialist in transit-station concessions. With some exceptions, transit systems do not lease space by direct brokerage, instead using public RFPs (request-for-proposals), he notes. This “involves a paper-heavy proposal process and thorough vetting,” said Di Maggio, who has worked with transit authorities in Atlanta, Boston, New York and other cities and in New Jersey.
Public-private partnerships between transit districts and developers or advisers seem to create the best tenant mixes, Di Maggio says. Third-party managers such as JLL, which redeveloped the huge retail component at Washington, D.C.’s Union Station and manages retail in the Bay Area Rapid Transit system, in the San Francisco region, often assist transit authorities in their vending programs, he says. One challenge for transit retailers is to match retail and restaurant programs with transit-user consumer profiles. “Retailers need to know whether to target customers that have time to browse and impulse-buy, or to target the harried commuter with necessity buys directly related to the commute,” said Di Maggio. Where rider dwell time is limited, the most successful concepts provide convenience items and grab-and-go foods, he points out.
A common mistake retailers make is to compare their portfolios’ airport location sales — where passenger dwell time averages 137 minutes, according to U.K.-based Nigel Dolby Consulting — with projected sales at transit hubs, says Di Maggio. “Dwell time at train and bus facilities is frequently measured in seconds,” he said. On average, airport passengers spend roughly $9 per trip on purchases, as compared with less than $3 for commuter-rail passengers, he observes.
Washington, D.C.’s Union Station, America’s fourth most-visited attraction, is being expanded
Union Station in Los Angeles is undergoing a multimillion-dollar restoration intended to breathe new life into that 78-year-old facility through better retail and food offerings as well as event space. The Los Angeles County Metropolitan Transportation Authority is anticipating at least 200,000 rail trips per day over the next 20 years or so, more than twice the present number, as it connects to as many as 10 additional cities. The Los Angeles hub has featured pop-up bars and pop-up barbershops and last June added an Oto-Oto Express izakaya Japanese restaurant (a condensed version of Monrovia, Calif.–based Oto-Oto Izakaya Japonaise). Entertainment offerings have included a science-fiction movie series, opera and classical music performances and art exhibits.
To the north, San Francisco is preparing to open one of the preeminent transit stations in the world next year: the $2.3 billion Transbay Transit Center, at First and Mission streets. Transbay, which is to become the northern terminus of the aforementioned high-speed rail system, includes a four-block-long rooftop park and will lease about 100,000 square feet of retail space throughout its phased opening.
Chicago’s 100,000-square-foot MetraMarket complex, beneath the Ogilvie Transportation Center, in the West Loop, made a savvy move in 2009 with the addition of the Chicago French Market. In 2015 Zagat rated this fully leased, 32-vendor market one of nearly a dozen must-visit food halls in the U.S. Tenants here include Da Lobsta, Flip Crepes, The French Lunchbox, Le Pain Quotidien and Street Smoke & Steam. CVS and other necessity retailers have leased street space at MetraMarket as well.
Millennials in particular gravitate to these urban food-and-beverage enclaves, says Harkin. “They don’t mind if they’re crowded, because that’s part of the experience,” he said. “They want a place where they can take a selfie and say, ‘Look where I am!’ on Facebook.”
Chicago’s stately Union Station is also getting a face-lift, at least tentatively. The 92-year-old travel hub is planning new street-level retail, a food hall, a hotel, three office buildings and some pedestrian plazas. The developers are working to secure $1 billion in federal and private funding for the project.
Then there is the World Trade Center Transportation Hub, in New York City’s lower Manhattan. There the $3.9 billion, dove-shaped Oculus complex, home to the 2-year-old, 100-plus-store Westfield World Trade Center, features such tenants as The Apple Store, Pandora and Eataly. The Westfield retail development replaces the retail concourse destroyed in the Sept. 11, 2001, terrorist attacks, and the transit section now serves as the main connection between New York City’s subway system and the New Jersey PATH trains.
Philadelphia’s 30th Street Station is in the process of securing some $2 billion in public funding and an additional $4.5 billion in private investment to turn the facility into a multimodal transportation development with new retail, restaurant, office and residential space. Washington’s 100-year-old Union Station, meanwhile, the fourth most visited attraction in America (with some 40 million visitors annually), is expanding as well. The site already has about 130 stores and restaurants operating.
Many major chains are figuring out how to peddle their offerings with quicker checkout for both transit hubs and airports, Harkin says. And this, notes Poncher, includes their street locations around the smaller transit-oriented developments that tend to lease to more-conventional-format retailers. In fact, a 2016 CBRE report noted that about 20 percent of retailers from the Americas and from the EMEA region are targeting transit stations for expansion.
“The retail and restaurant programs in these transit hubs are a good growth vehicle for companies that do their homework,” Harkin said. “It’s what consumers want.”
By Steve McLinden
Contributor, Shopping Centers Today