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Speakeasy Unlocking the secrets of the downtown of tomorrow

Kennedy Lawson Smith, co-founder and principal, Community Land Use + Economics Group.-(PHOTO BY AARON HOUSTON)

SpeakEasy is a running feature in NJBIZ in which we recap a presentation given by key business leaders around the state at one of New Jersey’s many conferences and events. This report is based on a speech given by Kennedy Lawson Smith, principal and co-founder of the Community Land Use Economics Group in Washington, D.C., at the 2015 Downtown…The photographs from Kennedy Smith’s collection read like the eclectic vacation reel of an artist.

But Smith — an expert on innovative economic development planning — isn’t just finding and documenting unique places and people for art’s sake.

She’s hoping all that she records will help historic downtown areas evolve and revitalize.

As principal and co-founder of the Community Land Use Economics Group in Washington D.C. (C.L.U.E.) — a private consulting firm for community leaders and downtown restoration — Smith delivered her keynote presentation in Rahway to share what she’s seen and spur creative thinking in the four areas that she believes will influence how downtowns develop over the next decade.

“One of the biggest factors is millennials,” Smith said. “They’re shopping in dramatically different ways than their parents did: They buy less stuff; they want to make sure that things are responsibly sourced; and they like to support locally owned businesses.”

Research, she said, has shown that the brains of people who’ve grown up using the Internet have actually formed differently than those who have ever had to learn it.

“They think deep and they think wide — very much like you would if you were researching something online,” Smith said. “So businesses are finding more creative ways to reach out to these customers and sell things.”

Welcome to the age of interactivity in downtown settings. What some might see as art installations could actually be opportunities for businesses to advertise and gain customers.

From bronze directional arrows embedded on streets in order to make pedestrians dance to moving picture window displays, Smith said it’s important that downtown businesses advertise using such “things that make you pay attention and look at what’s happening in your environment.”

“Interactivity is even seeping into the way that businesses are organizing themselves,” Smith said.

Take Bodega in Boston — a men’s clothing store hidden behind a Snapple machine.

“It is packed all the time because people love the secret of how you get in,” Smith said.

The second factor shaping downtowns, Smith said, is the environment.

“There is a growing concern for how much space we build and the impact of the things that we buy,” Smith said.

Millennials, for instance, are more inclined to repair and repurpose items instead of disposing of them — such as speakers made of vintage luggage.

They’re also more likely to share rather than buy — such as a company that rents designer handbags.

The millennial motto — local and lasting — will ultimately bring people back downtown, Smith said.

“They like to live near where they work; they like to work near where they live,” Smith said.

Which also contributes to the third factor shaping downtowns: the alternative economy.

“Crowdfunding is becoming a real significant factor in launching new downtown businesses,” Smith said. “Instead of waiting for the right business to come along and fill a vacancy, you can create the kind of business you want and crowdfund it.”

Community-owned businesses and crowdsourcing are also allowing communities to shape themselves.

Take the condemned Polaris Building in Fairbanks, Alaska. The Alaska Design Forum and the National Endowment for the Arts created the “Looking for Love Again” chalkboard campaign to get people thinking about the common spaces they share.

“On one chalkboard, people were asked to record memories they had at the Polaris Building; on the other, they were asked to specify what they’d like the building to become,” Smith said. “Over the course of two weeks, the community had reached consensus on how they’d like the building to be repurposed.”

Downtowns have always had eclectic uses, Smith said. The mistake was thinking they were supposed to be mainly retail.

“At the height of success of America’s downtown in 1945, what percentage of all downtown businesses were retail?” Smith said. “The answer is 18 percent.

“Small industries — from distilleries to wood shops — are now replacing retail,” Smith said.

It’s the fourth factor Smith believes will shape downtowns.

More location-neutral, small manufacturers — such as a concert harp shop in Rising Sun, Indiana — are locating downtown, creating a resurgence and celebration in handcrafted items.

It’s also creating more interest in specialized co-working spaces. Five years ago, Smith estimated there were about 100. Today, there are more than 8,000 in the U.S.

“After the economic downturn, many people turned to working independently,” Smith said. “And younger people prefer to work in a collaborative environment.”

Which means business accelerators — such as Y-Combinator, the popular Silicon Valley entity responsible for Airbnb, Reddit and Dropbox — also are on the rise.

“They bring together co-working spaces, a team of mentors and venture capital in boot camp-like training programs by competitively selecting people with business ideas that they can help develop over the course of eight to 12 weeks and take to market,” Smith said.

“And they’re all located downtown.”

The challenge in keeping downtowns alive, Smith said, is making sure we evolve to meet millennial innovation.

“We need to get more creative in designing effective incentives and financing tools to fund small businesses given that businesses are developing in new ways,” she said.

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On Twitter: @megfry3

Meg Fry

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