Elly Tierney’s OpEd in today’s Capital (or here if you hit the paywall) I think was right on. Local issues are always messy; there is always some compromise. If they were simple, they wouldn’t be issues. For me with a Strong Towns lens – this is how I always view issues in Annapolis – we want to set conditions for local businesses to thrive. Sometimes that is the city government just getting out of the way (ie not micromanaging everything with byzantine regulation, an Annapolis trademark) and sometimes it’s helping (some might say subsidizing) with assets it possess. In this case, the rent may be below “market rate”, but I would assert that is not because the city is artificially lowering it (as the OpEd refutes), rather that the typical “market rates” downtown are artificially high due to a near monopoly on a lot of the commercial space by a few long time land owners who have little incentive to do otherwise.

In the five years since I last opined on the Market House in a Facebook post (January 29, 2018, repeated below) I think it has been a real success. I have enjoyed patronizing it in a number of “third place” contexts from morning coffee after bike rides, happy hours at the bar, semi-organized dinners during a Snipe regatta (instead of staying at SSA), and as a meeting place. Yeah, yeah, yeah, I know it’s not the old Market House of the Rookies era, but the world moves on and by any measure it is a successful third place. It’s these third places that make people oriented places so desirable. This is exactly the kind of thing people say they love about visiting cities and towns in Europe and is virtually non-existent in placeless suburban America.

Ultimately, I think what has allowed Market House to thrive is the ability for the proprietors to iterate quickly as conditions change and they receive market feedback; this was especially true through the pandemic. Every time I go there it’s a little different and they have adjusted with very low friction based on how people actually use the place, not based on some grand master plan that is never quite right and could never be quite right (if I hear someone say “we have to get it right” again, I’m going to scream). As I quoted in my comments five years ago, “Plans are nothing; planning is everything.” a great saying that to me represents being adaptable and resilient and that’s what makes places strong. Annapolis needs to do more of this.

Original Facebook Post:

I was glad to see the Blonder proposal no longer receiving consideration. But I was disappointed the council split over the Danek proposal.

The TL;DR version is:

“Analysis paralysis”. The operative phrase is “we have to get it right” which we hear all the time (and rarely happens). To quote Eisenhower “Plans are nothing; planning is everything.” What we need to consider is not all the locked In details, but almost the opposite: what flexibility exists to deal with mistakes in programming and changes in economic and market conditions over the length of the lease?

The long version is:

The fundamental difference in the proposals is the business model: property management v. owner/operator. I think the details of the proposals (aside from the financial aspects which we – the public – are not yet privy to) are largely irrelevant because no one really knows what is going to work. This history of the place since 2003 bears that out. No one has done any rigorous market analysis and both proposers are using anecdotal evidence, often using apples/oranges comparisons to other markets of different sizes and business models, to support their proposals. So we should not get too focused on colors, layout, stalls, programming etc. and think about what happens over time. I think it is unrealistic to think that the assumptions made by either party are going to “get it right”. To quote Eisenhower “Plans are nothing; planning is everything.” To get at this, I think we need to ask two questions:

1, How resilient is each of the business models to mistakes in programming and changes in economic and market conditions over the length of the lease?

2. What are the incentives that drive the changes based on the issues raised in the first question?

Both proposers are playing to their strengths: Blonder’s forte is property management, which he has done well in the city (regardless of what you think of his tenants) and Danek’s forte is holistic owner/operator (which has been successful on West Street).

The issue I see with the Blonder strategy is that it is too rigid. While he is planning on using market forces to determine what programming should go in each stall, the fact that each stall is a stand alone sub lease that is either “on” or “off” with a contractual arrangement makes it difficult to adjust to the issues in the first question. For example, what if one vendor does well on weekends but not weekdays or vice versa? It probably won’t succeed. But due to the structure, as a property manager, there is really nothing Blonder can do about it. They either succeed or fail.

With the Danek approach, the single owner/operator has very fine grained authority to alter the programming based on market forces and is thus much more flexible. Using the example about the cheese stand idea, if that works only during the week for locals, they can do it then, but serve tourist stuff instead on a summer weekend. Because they are the single authority, they can switch things around without the rigidity of sub leases etc.

As to the incentives, if things are not going well, what is likely to happen how would each respond? Blonder would find stall tenants that would succeed “on the whole”; Danek would just keep trying things at a holistic/smaller scale until the best mix could be found. I can see Blonder easily throw up his hands and say “nothing I could do, the place sells tourist stuff the best” because that’s what works best in his model. The same thing might happen with Danek, but the incentive for him is to continue to experiment and iterate to find something that is not just a tourist trap, his reputation depends on this succeeding.

It is always possible that neither will succeed. While we all might want what was there 30 years ago (ie a grocery-ish store), the world is not the same place. The nature of retail has been turned on its head, people are price/convenience sensitive and it’s just too easy go to somewhere else (including online). There are not enough people in walking distance to make that work beyond a novelty. Annapolis is not a dense inner ring suburb where many people don’t own cars or if they do, it’s too much trouble to drive. Small format grocery stores (like tiny Trader Joes) and specialty meat/seafood/bakery shops do very well in those environments.

In summary, I think we need to pick the proposal that fits the Eisenhower quote the best. What can adjust the easiest? I think Danek has shown they can work in this way with their other businesses. And the current property manager model since 2003 has shown not to work well regardless of who that manager is. I believe from what I have seen, the Danek proposal will have the best chance at a successful outcome.

In summary, I think we need to pick the proposal that fits the Eisenhower quote the best. What can adjust the easiest? I think Danek has shown they can work in this way with their other businesses. And the current property manager model since 2003 has shown not to work well regardless of who that manager is. I believe from what I have seen, the Danek proposal will have the best chance at a successful outcome.