How Local Shopping Streets Change Cities

It is not surprising that local shopping streets change cities. Commerce is what cities are all about, and when commerce flourishes or flounders, cities flourish and flounder, too. Government policies, investment in infrastructure, and real estate regulations do not have much of an impact on a city if households, private firms, and retail outlets do not respond to them.

The growth of a city is primarily influenced by the growth of commerce. For example, even if the local urban authorities raise the floor area ratios (FAR is the ratio of the constructed area on a plot to the size of the plot. For example, if the FAR is 5, this means that at most a building of 5,000 square feet is permissible on a 1,000 square feet plot) in a village in Assam to 25, developers are not likely to build tall buildings there. This is because the shopping streets in a tiny village are not likely to be well developed. There is not much demand for various goods and services, and the demand for more complex services is almost non-existent. So, there is not much of an incentive to greater real estate development. When there are not many commercial enterprises in an area, there is not much demand for housing either. So, developers are not likely to build tall residential projects in such a neighbourhood either. But, if authorities raise the FAR in Connaught Place to 25, developers almost certainly will build very tall buildings, because commerce flourishes in central business districts. So, a city's growth is primarily influenced by the strength of shopping streets and the private economy.

Shoppers are also likely to nudge city authorities into building better infrastructure and handling parking woes. They are also likely to demand enhancements to streets, like lowering traffic congestion. For example, it is not surprising that the odd-even rule, though misguided, was put into practice in Delhi and not in a city with low commercial activity. People are also likely to demand wider streets and more space for pedestrians. This is why larger cities generally tend to have wider streets and more space for pedestrians than smaller cities. This does not mean that large cities are necessary better than small cities in such aspects. There seems to be a general tendency for larger cities to improve better than smaller cities, partly because shoppers and retail owners tend to pressurise authorities for better amenities.

This also does not mean that it is an unmitigated benefit for everybody concerned. Store owners, for example, are less supportive of policies that give more space for cyclists and pedestrians because this may make shopping inconvenient for people who travel in cars. But, usually when such policies are implemented, store owners benefit from it. When revenues rise, they begin to support such policies, too.

Flourishing shopping streets also lead to what economists call “spill-over effects”. Households, for example, are willing to locate where stores are shopping malls are nearby. Similarly, private firms are more likely to build offices where there are well-developed shopping streets, because when cities grow, most trips within a city are not likely to be from residences to offices. People are more likely to commute to shopping centres, malls, theatres and other avenues of entertainment. So, in developed cities, it is not easy to attract skilled employees by being far away from major shopping streets.

When shopping streets perform better, real estate prices rise. There also seems to be a cascading effect because of economic growth and private investment influences by well-performing shopping streets.

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