How to Measure the Economic Effect of Livable Streets

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Retail sales on the section of Columbus Avenue with a protected bike lane (the green line) outperformed retail sales on a parallel stretch of Amsterdam Avenue and an adjacent part of Columbus with no bike lane (the pink line). Image: NYC DOT

When a street redesign to prioritize walking, biking, or transit is introduced, the headlines are predictable: A handful of business owners scream bloody murder. Anecdotes from grumpy merchants tend to dominate the news coverage, but what’s the real economic impact of projects like Select Bus Service, pedestrian plazas, road diets and protected bike lanes? How can it be measured?

A report released by NYC DOT last Friday [PDF] describes a new method to measure the economic effect of street redesigns, using sales tax receipts to compare retail activity before and after a project is implemented. DOT and consultants at Bennett Midland examined seven street redesigns — including road diets, plazas, protected bike lanes, and Select Bus Service routes — and compiled data on retail sales in the project areas as well as similar nearby streets where no design changes were implemented.

While the authors do not claim that all of the improvement in sales is directly caused by street redesigns (there are a lot of factors at work), they did conclude that a street’s “gain in retail sales can at least in part be attributed to changes stemming from the higher quality street environment.” The study also found that the impact becomes apparent relatively quickly: Retailers often see a change in sales within a year of a project being implemented.

While it makes intuitive sense that a better pedestrian environment and high-quality transit and bikeways will draw more foot traffic in a city environment than a car-dominated street, evidence that livable streets are good for business tends to be indirect. Customer intercept surveys have shown that most people in urban areas (including New York) walk, bike, or take transit to go shopping. While customers who drive spend more per trip, they also visit less often than shoppers who don’t drive. The net result: Car-free shoppers spend more than their driving counterparts and have a bigger impact on the bottom line of local businesses. Nevertheless, merchants tend to overestimate the percentage of customers arriving by car and insist on the primacy of car parking as means of access.

With this study, DOT used a third-party data source to see how well sales are actually doing in two large categories: retail outlets like grocery stores, clothing stores and florists, and hospitality services like bars, restaurants, and hotels. The study uses state sales tax receipts because they are available on a quarterly basis can be categorized by business type, allowing for an up-to-date and detailed understanding of how retailers are faring on a particular street. Results can be examined before and after a street design change, and compared with sales trends both borough-wide and and on “control streets” nearby that did not receive street design changes.

The project included seven case studies — three plazas, one Select Bus Service corridor, and three bicycle- and pedestrian-focused redesigns in Brooklyn, Manhattan, and the Bronx. The case studies are: Vanderbilt Avenue from Plaza Street to Dean Street, Saint Nicholas Avenue at Amsterdam Avenue, Bronx Hub, Willoughby Plaza, Columbus Avenue from 77th Street to 96th Street, Fordham Road, and Ninth Avenue between 23rd and 31st Streets.

The 20 blocks of Columbus Avenue that received a protected bike lane and pedestrian safety islands saw sales increase 20 percent over two years, while adjacent sections of Columbus that did not get a bike lane saw sales increase by only 9 percent. On the parallel stretch of Amsterdam Avenue, where neighborhood residents want to add a protected bike lane, sales only went up 12 percent.

On Fordham Road near Grand Concourse, merchants complained that the removal of on-street parking for Select Bus Service was killing their business. But the numbers tell a different story: Sales increased 71 percent over three years after the introduction of SBS, outpacing both the Bronx-wide average and three of four nearby comparison sites.

On Vanderbilt Avenue in Prospect Heights, retail sales more than doubled in the three years after a road diet brought bike lanes and pedestrian islands to the street. While some of the increase on Vanderbilt is due to neighborhood change in a gentrifying area, it outperformed not only the borough at large but also nearby comparison sites along Seventh, Flatbush and Washington Avenues.

The intersection of St. Nicholas and Amsterdam Avenues in Manhattan saw a similar, if less dramatic, boost. Sales increased 48 percent over two years, outpacing the borough and nearby comparison sites along Broadway and Amsterdam Avenue.

Sales along Ninth Avenue in Chelsea were lagging when compared to similar nearby retail streets, but after a protected bike lane and pedestrian islands were installed in 2007, sales increased 49 percent over three years, outpacing both its neighbors and the rest of the borough.

DOT said it is looking to use sales metrics in project assessments more regularly, and this data will help it better plan streets with economic development in mind, just as it considers safety, mobility, and health when designing a project.

In the meantime, New Yorkers now have some hard numbers to assuage local retailers who might be skittish about street designs that improve conditions for pedestrians, cyclists, and bus riders.

  • Kevin Love

    Meanwhile, in the rest of the world…

    Here’s a clip of a local news station with business owners complaining about a local government initiative that could result in less bicycle traffic going by their business.

    http://www.aviewfromthecyclepath.com/2013/09/dealing-with-overcrowded-cycle-routes.html

  • David Bergman

    This is well and fine in terms of overcoming business objections, but I think we have to ask if retail business is the right gauge to judge livable streets by. Isn’t it quality of life that we’re after?

  • What I’m really interested in is understanding why some businesses seem to be working against their own interests here. I completely get why businesses might be scared that changes will reduce their sales, but I’m baffled that businesses would object AFTER the fact, when sales have increased by 71 percent. I suspect that some businesses really are harmed by the changes (certainly not all businesses are equally dependent on car traffic), so I hope this can someday be broken down by business types: grocery vs large products vs small products, services of various kinds, etc. That might give us a better idea of who really stands to gain the most from these changes, and also might give property owners an idea of who to market their leasable space to.

  • Reader

    Ideally, yes, but as we’ve seen time and time again, just using safety arguments aren’t enough to overcome local opposition. Ultimately people tend to care about their bottom line more than other people’s safety. And I don’t think DOT is arguing that retail profits are the only metric here. I think it’s just one part of a holistic approach to making the case for better streets.

  • Eric5434

    The data in this report doesn’t support the conclusions. First of all, only 3 data points are examined (improved, comparison, borough), making any statistical conclusions impossible. Second, the “improved” area had LESS growth post-construction than the borough as a whole, and barely more than the “comparison” area. Not exactly a ringing endorsement.

  • G

    I’m interested in your take. Can you explain for a layperson (me) why the statistical conclusions are impossible?

  • Kenny Easwaran

    I think the problem is that individual businesses often have such noisy sales patterns that the owners may not even realize that, on average, sales are up 71%. They remember one week as a particularly good week, and one week as a particularly bad week, and they come up with their own theories for why each week was good or bad. People are good at noticing individual data points that support their prejudices, and bad at noticing long-term statistical trends unless the data is graphed in a very easy-to-read way.

  • Eric5434

    http://en.wikipedia.org/wiki/Sample_size_determination#Estimating_proportions_and_means

    “So, for B = 10% one requires n = 100” – and similarly, here n=3 so the margin of error is 1/sqrt(3)=58%. The difference between improved and unimproved areas is much less than this margin of error.

  • spike

    Your statistical argument makes no sense. They aren’t averaging three things to get an answer, rather the data are a sum of presumably a large number of measurements. We have no information on the standard deviation (std) for any of these measurements, however the observed quarter to quarter variation shows a clear seasonal cycle so clearly the std is small compared to that. The observed differences are real and not a statistical artifact (unlike what you imply).

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