Case Study: Benicia, California
Background:
Benicia is home to one of California's original State Capitol buildings
(currently being operated by the California State Parks Department), a small U.S. Army Arsenal
(decommissioned in1964), and 75 artists, some of who garner national and international recognition.
Population is 28,000 with projections anticipating no significant growth for the next twenty years.
Average per household income is $80,000+. Approximately 5,000 residents are under the age of eighteen.
Benicia sits on a main northern California waterway, the Carquinez Straight, a confluence of the
Sacramento and San Joaquin rivers that feed the San Pablo and San Francisco Bay.
The town's early history includes shipbuilding, tenancy by Jack London and other famous transients
during the Gold Rush era, and a downtown red-light district whose notoriety shined well into the 1950's.
For almost one hundred years Benicia was the consummate industrial river town playing middleman and host
to the commerce of San Francisco, Sacramento, Stockton, and the San Joaquin valley. Today, its river front
port serves as an off-loading hub for automobiles from overseas as well as crude oil and other commodities.
Tenants of the shoreline include one major petroleum refinery and no less than a very diversified group of
five hundred heavy and light manufacturing companies.
The town's main highway connecting the five miles of stretch from the east side to the west is ten blocks
distance from the river bed and is T- connected to the city's major north-south artery, First Street.
First Street is approximately half way between the east and west borders of the town and ends at the water's edge.
First Street's ground floor occupancy has been almost exclusively merchant-based since Benicia's inception
while the adjoining side streets have been entirely residential, making the 'downtown' stores and services
'walking' accessible to those living in the downtown. Up until the early 1980's, almost 80% of the twenty
thousand residents lived south of the highway scattered over an east/west span of just two miles. Between
1980 and 2007 several thousand new residences were constructed causing Benicia's population to swell to
its present-day count of 28,000. Of the homes built during this period, over ninety percent were located
more than three miles from First Street in a region known as Southampton. The new home construction prompted
the building of the Southampton strip mall whose stores would offer much of the same products and services
offered by First Street merchants. By 1985 First Street merchants began to see a diminish in foot traffic
directly attributable to the new residential base; First Street merchants acknowledged that long-time
customers were now shopping more in the new shopping center.
As commerce began to slow on First Street in the mid-eighties stores began to close-up or move away.
Well-established businesses that included men's apparel and restaurants closed and gave way to a surge
of antique and collectible dealers looking for below market lease rates. First Street became so prolific
in antique stores that up until 2004 Benicia was acknowledged by national publications including the New
York Times as "one of the ten best towns in America to go shopping for antiques". But the acknowledgement
became dubious towards the late 1990's as increasing numbers of antique dealers sought refuge from inevitably
overdue rent increases and moved away. Buoyed by the construction of a few new office buildings in the downtown,
landlords anticipated an increase in demand for office space and started raising rents. The downtown's
emancipation of its antique and collectible dealers was quickly embraced and replaced by real estate offices
and title companies. By 2002, the remaining antique and antique collectives accounted for less than ten
percent of the aggregate retail activity and less than three percent of the overall commerce on First Street.
As financial services grew in the downtown during the late 1990's so did restaurant services. Including bars,
First Street saw an increase from less than a dozen restaurants to over thirty by the close 2003.
As restaurateurs saw the market grow for lunch customers entrepreneurs wanting to enter the retail market began
to claim ground-floor space vacated by older under-performing stores. Almost every new retail store opened after
1990 was under the helm of an inexperienced operator. Ironically, the occupancy rate for ground floor space in
Benicia's downtown would stand constant at 95 percent for the next decade and beyond.
Analysis:
In 2001, echoing Benicia's General Plan, Benicia's Economic Development Board identified
the downtown as an economic asset; a critical component of other city assets whose vitality was crucial in
sustaining the social and economic value of the community. In addition, the board acknowledged that First
Street was primarily a retail district having stores and restaurants whose footprint covered almost seventy
percent of the ground floor space. In addition, the board recognized the district to be largely under-performing
(as measured by sales tax revenue) compared with other California small downtowns. In discussions that carried over
into 2002, the board achieved unanimous consensus on key issues they felt were the cause of the below average
commercial activity in the downtown:
Unsupportable ratio of retail product mix to demographic
Poor retail practices: merchandise, customer service, marketing
Inconsistent or dwindling social value Ð loss of community support
Inadequate streetscape
Undefined vision for First Street
Limited marketing and promotion
In mid 2002 the Economic Development Board recommended to the city council that a downtown program addressing the key issues
would lead to improved and sustainable retail. The retail components Ð stores, restaurants, theater, and museums were
designated assets and the new program, Downtown Asset Management, was born.
Implementing the Program:
The Benicia Downtown Asset Management Program focused on work not being executed by another organization or
association. Hence, the focus of Benicia's program was on business recruitment, merchant education, and retention.
Business Recruitment consisted of internal and external business solicitations directed at entrepreneurs, existing businesses,
and business expansions. Marketing the downtown consisted of documenting streetscape improvements, business retention rates,
current demographics, First Street events, and other attributes designed to promote and sustain downtown commerce.
Merchant Education was provided to each storeowner on a one-on-one mentoring basis. This process proved to be the
hallmark of the program: each storeowner was offered personal business consulting on every facet of operating their business.
The program nurtured personal business relationships between the manager of the Asset Program and each business owner.
Nuances and confidential financial information was discussed on every level of business providing each storeowner with a
personal business confidant.
Retention was the result of balancing retail mix with consumer demand, overseeing the daily operations of marginal
businesses and building them into sustainable drivers, and constantly marketing the downtown to the local community.
Results:
20% annual increase in sales tax revenue for past five years Ð projections indicate continued sustainable growth.
30-40% increase in mid-day and early evening foot traffic
Reduction in business turnover
5-10% reduction in general retail leakage; negative leakage for restaurant services
Owner/landlord building improvements
75-100% increases in ground floor lease rates
Sustained 95% ground floor occupancy rate
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