Demand Analysis and Forecast
Forecasting retail or leisure spending growth potential is a difficult challenge, especially with the active Rte. 22 shopping corridor nearby. That said, the effort for the City of Plainfield going forward should be one of proactive rather than reactive outlook, and closing the gap in retail and leisure spending should be the goal. It has become very difficult to measure the retail gap/leakage due to the impacts of e-commerce on store sales, but the focus should be the narrowing of the market gap between the City and the 30-minute, 45-minute, and the State of NJ average spending patterns. Accordingly, the median value of the three competing categories will be utilized as the benchmark and target increase of 50% in Plainfield’s performance metrics toward that benchmark will represent the economic development objective.
In 2023, the 16,775 households within the City of Plainfield had an average discretionary spending pattern of $28,041 per household in the following 8 major retail categories. For the 30-minute Retail Trading Area (RTA) and the 45-minute RTA, these areas had an average discretionary spending pattern of $40,821 and $38,776 per household, respectively. The State of New Jersey's average was $37,953:
Graphic analysis illustrates areas of retail spending shortfalls relative to the 30-minute and 45-minute RTAs, as well as the State of NJ:
In the table below, the targeted shortfalls are addressed. Using the per household spending figures for the 30-minute & 45-minute RTAs and the State of New Jersey, a median value is compared to the City of Plainfield in each retail category. The gap in spending is identified and a 50% targeted increase is applied. The goal figure is then computed and a percentage increase over Plainfield’s current spending is generated. The median value for the 27 retail categories is 19%. The shaded green entries represent those retail candidates whose target is above the median.
To summarize, the 10 retail categories that emerge from this analysis are as follows:
While the 10 retail categories from above are identifiable, their descriptions require more exploration. Given the urban nature of Plainfield, 2 categories can be immediately eliminated as non-applicable to a central business district location:
The remaining 7 categories can be further re-branded as follows (Note: Home furnishings and Furniture stores are combined):
Added to this list are 2 more categories that emerged from the Entertainment & Leisure Demand analysis (below):
These 9 retail groups will be further evaluated in the Competitve Supply and Capture Analysis in Tasks 5 and 6.
From discussions with the Review Committee, the subject of Lodging is one of particular value to Plainfield. Although there are hotel and motels on the Rte. 22 corridor, there are two pathways for Plainfield to establish a lodging presence:
Short term Rentals (STR)
A short–term rental (STR) is typically defined as a rental of any residential home unit or accessory building for a short period of time. This generally includes stays of less than a month (30 days), but the maximum length can vary depending on the state and jurisdiction in which the rental is located.
Such rentals are also sometimes referred to as transient rentals, vacation rentals, short-term vacation rentals, and resort dwelling units, Companies such as AirBnB and VRBO specialize in vacation areas, but due to Plainfield’s high volume of new apartments, a short-term rental market is evolving for commuters to New York City in much the same way that extended stay hotels have catered to a similar market. The City is currently evaluating it’s zoning ordinances to permit more short-term rental of apartments.
Viability success lies in the length of stay, or, occupancy rate of these units. In the following graphic, 11 AirBnB offerings in the Plainfield area are examined. The labels indicate the expected annual revenue expectations arising from the rentals. The table below the graphic summarizes the daily rates, the projected annual revenue, the estimated number of daily rentals, and the occupancy rates. The median values for the 11 properties are 59 days per year rented and an occupancy rate of 16.2 percent.
A key driver for STR demand will be the FIFA World Cup in 2026. According to the New York New Jersey Host Committee, the games are expected to support over 14,000 jobs, generate over $2 billion in economic impact and draw more than one million visitors to the region, roughly half of whom will be non-ticket holders. It can be expected that many apartments will vacate during this period to create the opportunity for STR revenue creation. It must be noted, however, that this is a one-time event and does not suggest sustainability of the STR market for Plainfield.
The question is the number of furnished units that could enter the STR market. The 16.2% occupancy rate is only applicable to units already in use as STRs and does not suggest that thus is the percentage of new units that could become available. Our conservative estimate is that perhaps 5% of existing units could be considered as STRS. With perhaps an additional 1,500 new units coming to Plainfield as well as the 909 units contained in the 10 study property buildings, the STR inventory could grow to as many as 120 units. The criteria for this market’s success would remain the ability to walk to the commuter rail stations.
Boutique Hotel
A boutique hotel is typically a small, stylish hotel, often situated in a fashionable urban location. It’s characterized by its distinct character, intentional design and decor, and personalized service. Boutique hotels are known for their intimate atmosphere and individualized attention to guests, often featuring unique themes and high-quality amenities. Boutique hotels usually have fewer than 100 rooms, which allows for a more personalized and intimate guest experience.
One of the advantages of that boutique hotels can have over major branded facilities is the opportunity to develop a theme. With the City of Plainfield developing a new entertainment district, the addition of a small hotel with musical or other entertainment thematic elements is a distinct possibility. Although the need to house talent or troupes of performers is more likely to occur in New York City or other established lodging locations, the chance to entice visitor to spend the night and explore the area’s rich history may be a sufficient driver.
For example, here are ten themed-boutique hotels in NJ that have received critical acclaim:
Another pertinent example is the Watt Hotel Rahway. Our firm conducted the market study for this site, reaching the conclusion that a boutique hotel of up about 50 rooms would be viable. The project ultimately built out to 100 rooms and became a Hilton property. Marketing language for hotel the denotes the proximity to the Rahway NJ Transit Station, offering direct rail services to NYC., with restaurants and the Union County Performing Arts Center within walking distance. Plainfield’s message could be a similar one if a hotel were well-sited.
A major component of a boutique hotel should be outstanding dining. It would be important to establish a fine-dining restaurant within the facility, especially if culinary talent can be recruited form NYC via the rail line. A series of visiting chefs tables could be a feature of the restaurant, perhaps as even enough to establish a new culinary school in Plainfield. The “foodie” experience is one that is creating its own tourism industry in many communities, and the City is primed to take advantage of this opportunity. Given that the lodging market in Plainfield is quite underserved, we would recommend that a 70-room project be considered as a potential candidate.
Analysis of market potential for Entertainment & Leisure activites reveal areas of dominance in the local market (green shaded) shown in the table below:
In a similar analysis to retail, Entertainment & Leisure spending increase can be targeted. In the table below, the median value in 14 entertainment & leisure categories is 24%. The 8 groups that meet or exceed the median (shade in green) are:
Entertainment & Leisure Demand Conclusions
Like the Retail Demand section, some of the Entertainment & Leisure categories can be excluded from an urban environment or are more oriented toward retail spending:
The remaining 5 categories can be re-stated as follows: