Retail Concessions on Transit Properties

Speaker: Lorna Moritz, TRA President | 617.502.1418 | ljmoritz@TRAdvisors.com

Transit Retail Myths • Transit retail will solve your budget problems • ATMs are security problems • Cost of trash collection outweighs revenues • Tenant mix is impossible to control given the

public bid process • It’s not worth it --- it depends….

Pros • Provides goods and services wanted by transit riders • Provides convenience for transit riders • Creates non-fare revenue for transit agency • Provide opportunities for economic development • Provides opportunities for minority owned or other

small businesses • Provides additional eyes within the station for security

(“See something – Say Something”)

Cons • Creates additional trash in the station areas and on

trains • Certain types of businesses are management intensive • Poorly planned retail spaces can result in vacant and

unused space • Creates new management issues that require the

attention of the agency – you’re the landlord now! • If not properly executed revenues may not provide

expected returns

Access, Access, Access! Program approach and success differs based upon station design

– Subway • Soot, fumes, vibration • Requires high traffic counts

– Elevated • Consider load factors • Under-El presents potential leakage problems

– Concourse • Helps traffic flows to platforms • Easier retrofits

– Regional Multi-Modal Centers • Higher traffic • Longer dwell times • Neighboring community access

– Commuter Rail Depot • Business limited to peak times

– Beyond the turn style • Operating challenges for deliveries • Requires high traffic counts • Vending and ATMs

Subway In the subway or at the street level entrance:

Elevated • Track Bed Leakage Issues • Noise and Vibration • Street Access • Connected to Neighborhood

Concourse • Cleaner & brighter • More dwell time • More potential space

Regional Multimodal Centers

Commuter Rail Depots • Self contained • Peak hours • Village center

connections

Beyond the Turnstyle • Operating Issues

– Deliveries and trash removal – Queueing space – Noise, vibration, fumes, soot – Security – Vending

& ATMS

Developing a New Program • Master developer • Direct lease • DBE requirements • Fixed spaces vs kiosk or

pushcart • Popup stores & food

trucks – Trial program – Seasonal Opportunities

• Management – Staffing – Technology

Designing Retail into Station Plans • New stations • Modernization programs • Retrofitting existing stations for retail • Don’t forget need for power, water, & sewer!

Shiny new but no power or water! Tucked out of sight, out of mind!

The Kiosk Option • Lower capex, high quality, movable.

Pushcart Programs • Lower entry cost: ~$10,000 • Higher management involvement • DBE opportunity • Community Involvement • Storage

Financing a New Program • $500-800 per foot in stations for fixed space • $10-$100,000 for kiosks • $10,000 for pushcart • Modular construction • Developer paid program – give up 35-50% of

revenues towards capital costs – 20 + years – Incentives for options – Aligning of interests at the end of the term

• Tenant paid single locations build out – evaluate required build out to determine term

Hierarchy of Revenues per SF • ATMs • Branded Coffee (e.g. Dunkin

Donuts) • Branded Food & Beverage • Non-branded coffee/food

and beverage/news stands/sundries

• Specialty Vending e.g. Red Box • Beverage Vending • Snack Vending • The Exceptions

– Allowing Lotto, Cigarettes and Alcohol