Prepare Now for the "Pybus Effect"

The Pybus Public Market is a phenomenal gift to the community that will not only create opportunities for its vendors, but will also spur development and new market opportunities for the area and businesses surrounding the Pybus Market itself.

In commercial real estate development and investment, there is a concept known as “shadow-anchored centers.” A shadow-anchored center is a center that does not itself have an anchor, but feeds off a nearby large retailer’s traffic. A typical example of this concept is a small open-air retail center that is located near a large big-box retailer. The traffic created by the large retailer benefits the nearby center and acts as its “anchor,” even though the small center and the anchor are not part of the same development.

In the past decade, shadow-anchored centers have seen strong growth across the nation. Investors have begun to pursue shadow-anchored centers more and more aggressively, thus increasing their value and marketability. Lenders have grown increasingly competitive in financing these types of projects as they have recognized that the adjacent large retailer helps lower the risk profile of the shadow-anchored center.

In the context of the Pybus Market, the area surrounding the Pybus Market stands to benefit from the Pybus Market in much the same way as shadow-anchored centers have done. The Pybus Market will generate substantial traffic (foot, bicycle, and vehicular) and increase visibility for previous undeveloped or under-developed properties near the Pybus Market core. This increased traffic will create opportunities that did not exist before the Pybus Market. Call it the “Pybus Effect.”

Sophisticated developers, entrepreneurs, and lenders should start anticipating this trend and identify existing properties and emerging opportunities that will benefit from the Pybus Effect. From the perspective of existing land or building owners in the area, now is the time to start thinking about what adaptive re-use or development opportunities the Pybus Effect will create. Warehouse space may be better suited for small incubator office space that markets itself to creative-class oriented businesses. Existing spaces above main level shops may be converted to residential condominiums or apartments. Undeveloped land can be put to a higher and better use by thoughtful planning and permitting to facilitate construction of commercial improvements and residential projects that leverage upon the walkability the Pybus Market, loop trail, and downtown area.

Entrepreneurs can contribute the vision and planning necessary to position new businesses such that they directly benefit from and create synergy with the Pybus Market. These efforts should look at what services and goods the Pybus Market provides, and what services and goods shadow-centers could provide that would facilitate, but not duplicate, these types of goods and services.

Lenders should recognize the opportunity and lower risk profile that the Pybus Effect creates and prioritize lending to businesses and developments that seek to capitalize upon the shadow-center concept. These lenders should not be limited to just formal banking institutions, but also to private money lenders and existing property owners that are often the best source of funding for smaller, local businesses. The lenders and entrepreneurs that come together and recognize the Pybus Effect will be able to use the Pybus Market anchor as a lever to increase their success and returns.

The timing of the Pybus Effect is less science and more art. No one has the ability to predict, precisely, when the benefits of the Pybus Effect will start to be realized. That said, the developers, entrepreneurs, and lenders that begin their planning in the near term will be in the best position to capitalize on the Pybus Effect.

Planning, obtaining the necessary entitlements, arranging financing, and construction all require significant lead times. Navigating these steps requires putting together a team of professionals that have the experience and expertise necessary to efficiently manage the process. Engaging these professionals early on results in a better project for the owner, and a better project for the community.

Perhaps the best example of this fact is the Pybus Market itself. From its inception to its pending completion, the Pybus Market has sought out dedicated professionals with the vision and experience necessary to take a project from concept to reality in an astoundingly short period of time.

The vision and expertise that went into the creation of the Pybus Market is the same vision and expertise that will be needed to carry the Pybus Effect forward. The developers, entrepreneurs, and lenders that recognize and participate in this momentum will create new and exciting opportunities for themselves, for the Pybus Market, and for the community as a whole.

Michelle Green and Clay Gatens are attorneys with Jeffers, Danielson, Sonn & Aylward.