Market Opportunity

We are in the middle of a major shift in American demographics.  In the coming years, baby boomers are retiring and looking for smaller in-town homes close to amenities, at the same time that their children, the echo-boom, are entering the workforce and desiring apartments and homes close to the same urban amenities.  This is a multi-generational population that wants local places to shop and eat, in walkable neighborhoods with parks and multiple modes of transit.  There is a national shortage of places that offer such amenities, and as a result the established cities that offer world-class quality of life have seen real estate appreciation that makes housing unaffordable to many people who would prefer to live there.  Before the housing market crash, prospective buyers were told to “drive till you qualify”, seeking housing as close to their city as they could, but finding they could only afford to live in the outlying suburbs.

There are lots of potentially great cities in the country that are benefiting from this shift.  As the major metropolitan areas become unaffordable, life in smaller cities is increasingly attractive to prospective buyers.  Even places with lasting negative reputations like downtown Pittsburgh, Cleveland, and Baltimore are becoming attractive places to live and work and are seeing an influx of young professionals and empty-nesters.  Meanwhile, Rochester is on the Forbes list of best places to live and has weathered the national recession well, with a growing regional economy of small businesses.  But downtown is still vacant and there are few places that are walkable neighborhoods offering the services and amenities desired by the majority of Americans.  Rochester Local Capital intends to provide those neighborhood services in walkable environments.

Rochester has everything to gain from the trend back to urban centers and already has the demographic base to support local services.  Rochester is home to several universities and colleges including Rochester Institute of Technology, University of Rochester and the Eastman School of Music.  Both students and faculty are found living in downtown neighborhoods and frequenting Rochester establishments.  Together with staff from Strong Hospital (associated with Univ. of Rochester) the demographics of southeast Rochester and downtown show an educated population that typically prefers the urban amenities of traditional mainstreets like Park Avenue.  In this neighborhood, 48% of households have at least a college degree compared to a 28% national average.  The average income of this area is around $53,000 which is lower than the national average of around $70,000, but comparably higher than the $30,000 for the City as a whole.  The low neighborhood average income may also be explained by the fact that 12.7% of the population are enrolled in college or graduate school, compared to 6.5% nationally.  As a friend’s mother told him when he was an impoverished student “it’s not that you are poor, you are just impecunious.”  Even without documented income, students have the curious ability to spend money at coffee shops, restaurants, and bars.

Conventional wisdom assumes that Rochesterians do not have much money to spend and always prefer “value” options, and that all the wealthy people moved to Pittsford.  This narrative explains the tendency for mediocre services, catering to incomes at the median income level.  Using restaurants as an example, there are very few differentiated by quality and even fewer that cater to a sophisticated palette.  The few that focus on quality are able to charge higher prices and still appear to do well, suggesting there might be holes in the dominant narrative.  This might be because upper income (over $75,000) households probably account for about 50% of support for “Food Away from Home” (the statistical category for restaurants) in the area.

In many retail categories there is room in this market for new services that focus on quality and are located in walkable environments.  Rochester Local Capital has the opportunity to organize and launch several businesses in the same neighborhood, revitalizing walkable streets and building neighborhood destinations.

Most importantly this location? has the elements that support the vision for Rochester Local Capital.  There is an existing, underserved market, available and modestly priced real estate, access to young talent through universities, and stable neighborhoods with incomes to support local investment. The opportunity is here for creatively assembling these pieces to generate successful local businesses.

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