June/July 2004: Sustaining Pike Place Market
By Trevor Griffey and Heather MacIntosh

Pike Place Market is one of the most famous, successful, and unique historic districts in the nation. But for all the heroic work that went into saving Pike Place Market in the early 1970s, the job is still unfinished.

The Market's revitalization arguably helped downtown Seattle recover from the economic doldrums it suffered in the 1960 and 70s. In spite of its local popularity and its tourist appeal, the Market has survived through federal money, private donations, a city initiative, and public-private partnerships.

The Market is now looking toward another overhaul that will, in the words of Carol Binder, the Market's Interim Executive Director, "preserve their historic structure, yet upgrade their infrastructure." These upgrades may cost as much as $45 million. How will the Market raise this much capital in the current economy?

Can the historic district achieve financial sustainability while at the same time preserving the character of the businesses and culture that make the district distinct?

Pike Place Market is one of only a few sanitary markets with historic district designation. It's also one of only a handful of historic districts that preserves historic use, not just the building fabric.

This unusual combination has been the key to the Market's popularity and success. However, finding the money to pay for historic building upkeep while keeping rents low enough to preserve historic businesses has been an ongoing and sometimes contentious struggle.

Set in this context, the Market's current capital needs aren't new, nor do they necessarily constitute a crisis. What's remarkable is that this time, after decades of fundraising campaigns for short term fixes, the Pike Place Market's PDA is looking into ways to set the Market on the road to permanent financial sustainability.

Recently, the Market conducted an assessment of its economic value to the community to plan for this monumental effort. The study proves what many already understand intuitively. The Market generates and attracts quite a bit of revenue. This evaluation will be part of the Market's public case for its significance. Economic studies like the Market's are becoming an increasingly common tool used by historic districts when arguing their worth in the community, and to elected officials and others holding the purse strings.

The Debate Over Development

Sometimes the history of Pike Place Market's preservation is told as if the two rival forces merely had competing aesthetic tastes. Business elites preferred vacant lot parking and giant modernist towers, while neighborhood activists and preservationists saw something more humane in the architecture of old that should be improved instead of torn down.

That's true, but that's not the whole story. At the heart of the battle to save the Market in the 1960s and 1970s were competing notions of what constitutes healthy economic development.

The postwar impact of suburban development dramatically hurt the residential, retail, and commercial sectors of downtowns around the country. Seattle's Skid Row -- from Pioneer Square up First Avenue all the way to Belltown -- seemed to worsen during these years, with little sign that it could revive without outside help.

For downtown's boosters at the time, the city's historic built environment was an obstacle to progress: it provided too little parking, too little density, too little open space, and too much traffic congestion. Pike Place Market, they thought, could only compete with auto-friendly suburban supermarkets by becoming one.

A Bold Alternative

When Victor Steinbrueck famously led the populist battle to save the Market from downtown developers, he wasn't calling for mummification or stasis. He put forward an alternative vision for the future. As early as 1965, the Friends of Pike Place Market called for "a different kind of urban renewal." The revolutionary idea was that economic revitalization and historic preservation weren't mutually exclusive: they were mutually dependent.

The vision that Steinbrueck helped craft in the citizen's initiative that preserved the Market was a bold one. It created a nine-acre district of largely dilapidated buildings, 80 percent of which would eventually be publicly owned, to be restored with urban renewal federal funds that traditionally went to slum clearance, not preservation. It created a Public Development Authority to manage the district's finances without government subsidy, an independent review board to ensure its architectural integrity, and a charter that committed them to a very different kind of economic revitalization.

The charter not only required the preservation of the buildings. It required the preservation of the cultural character of the district. The vision behind the charter was for redevelopment that could preserve the very things downtown developers thought would have to be displaced for the market to succeed: its affordable housing, low-income social services, small farmers, and independent merchants.

In most ways, Pike Place Market has proved its skeptics wrong. The Market has become a national success story for historic preservation advocates. Its preservation helped shift Seattle politics away from downtown businesses interests and intrusive public works and more toward neighborhood groups and small community projects.

Even economically, with over 9 million visitors a year, the Market has done better than most could have imagined. It's one of the city's prime tourist destinations. It helps draw suburbanites downtown to shop. It's an entertainment destination. It's a restaurant draw for downtown's lunch-time rush. With the growing residential density of Belltown and downtown of the past decade, the Market is even being rediscovered as a place to regularly buy groceries. Carol Binder notes, "The current expanding downtown residential base and the public's growing concern about eating fresh and healthy foods bodes well for the Market as a downtown food center and farmer's market."

The Market's Challenges

In the 1930s, during the heyday of the Market's life as a farmer's market, the Market averaged over 600 stall vendors per day. But Japanese internment hit the Market hard: roughly 80 percent of the market's vendors in 1940 were Japanese, and few returned to the Market after the war. By 1949, during a time of general overcrowding in Seattle that preceded the region's suburban explosion, the Market averaged just 59 vendors per day. Two decades later, in the 1960s, the Market still averaged fewer than 100 vendors a day.

Supermarkets challenged the Market's economic viability.

By the late 1980s, there was a nearly 7-1 ratio of craft vendors to farmer vendors in the Market. Throughout the 1990s, the PDA acknowledged that farm vendors were underrepresented at the Market, and pursued a series of programs to address the issue: it capped flower stall vendors, sought out new produce vendors, provided more space to farmers, created special programs, and better advertised itself as a place to by produce.

The Market's overall economy is also strong. Sales have gone up considerably in the Market. Overall, they've never dropped off.

Daniel Lieberman, the Market's ED in 2003 noted, "as the economy has been much softer, the Market as a whole has grown rather than lost. It hasn't been significant growth, but if you compare it to everyone else's losses, it's significant. Although we've had more vacancy in stores than we've had in the last three decades, we also have a much lower vacancy rate than the rest of downtown, the rest of Seattle, the rest of Puget Sound."

Toward a Sustainable Future

In the 1970s, the federal government provided nearly $60 million for badly needed renovations to the Market's buildings. Private donations and investments brought in another $75 million to the district.

But the challenge of having a charter that required the preservation of historic buildings through affordable residential and commercial rents provided an incentive for some unusual financial juggling.

In the early 1980s, unable to refinance its own buildings to get access to their growing equity as private real estate owners might, the Market's PDA partnered with a group of New York City-based venture capitalists called the Urban Group. The PDA hoped that a public-private partnership might allow the Market greater access to the capital it needed to fulfill its complicated mission.

The plan backfired in the late 1980s when the Urban Group began to demand that the PDA raise rents to give investors a greater rate of return on their investment. Instead of raising rents, Victor Steinbrueck's son Peter organized a second grassroots campaign to save the Market, and the state helped support the Market in a settlement that costing millions.

About the same time that the PDA got involved with the Urban Group, in 1982, the Market Foundation was founded to seek private funds for the support of its low-income community and for the ongoing capital needs of the district. Since then, the Foundation has conducted a number of private donation campaigns, including a tile campaign in the 80s, the Care for the Market Campaign in the 90s, and a more recent "Pigs on Parade" campaign.

During the 1990s, the Market got on relatively firm financial footing. As part of its settlement with the Urban Group, the PDA was required to place money in a capital reserve fund. It also began to implement five-year capital improvement plans.

True Market Value?

The January 2004 analysis of the Market's economics quantified the district's net benefits to Seattle and the region. The study proved that Market properties produced gross revenues of nearly $86.8 million in 2002 (up 6.1% from 2000). The same year, sales at the Market generated nearly $3.9 million in tax revenue including $3.3 million in sales tax, $500,000 in business and operations taxes and more than $100,000 in utility taxes.

The study also pointed to the Market's role as an employment center, supporting approximately 1,500 jobs in winter and up to 2,400 jobs in the summer. The Market serves 20,000 residents living within walking distance, and countless more residents around Seattle.

The Market has also served as the backdrop for films looking to establish their Seattle setting. Sleepless in Seattle and the Fabulous Baker Boys are two of many films shot on location in the Market.

Its economic value for the region far exceeds all the public subsidies that the Market has so far received.

But what does this report, and the Market's benefits to the City mean in relation to the district's sustainability, its economic future, and its true value? Like all PDAs chartered by the City of Seattle, the Market was conceived to provide a public good -- in this case, social services, affordable housing, preservation of a central venue for "start-up" businesses (Starbucks, Dilettante Chocolates, and Sur La Table got their starts there), historic preservation, among many other public benefits. It's impossible to put an exact dollar value on the value (and values) of the Market.

Is historic Pike Place Market a public investment? Can the Market's business and income really be compared with other historic districts with private property ownership without such rigorous use restrictions?

The structure of the Market's governing policy represents the ethics and intentions of Seattle at its best. The Market represents a public assertion that progress (in Seattle) must be thoughtful, humane, socially conscious, and maintain a cultural and social vibrancy that simply can't be replicated even by the most thoughtful new development. Financial sustainability for the Market has to maintain not just the buildings, but the social ethics the district represents.

The solution to the Market's longterm financial success will provide a model for reconciling these ethics with real estate development and management. This challenge represents one of the most common challenges for a new generation of preservationists who, more and more often, are touting the economic benefits of preservation as they advocate in the community -- a community that includes real estate developers and others greatly concerned about the bottom line.

The Fight, the glorious efforts associated with the roots of the preservation movement in Seattle and elsewhere, has in many ways taken a back seat, or become synonomous with, "The Case." Lobbyists use "The Case" to argue for continued and expanded support for preservation -- in the form of outright funding and friendly policies, many associated with tax credits. The January 2004 analysis of the Market represents one such case, now necessary as a means of asserting importance in common fiscal language.

Other causes associated with real estate and property, like museum facilities, affordable housing and parks, are generally funded by subsidy, grants, endowments, or combinations of these. It's understood that parks cannot generate enough income for their upkeep without becoming somewhat or wholly privatized. The Market, even with its cause-based mission, has steadily increased revenue over time and attacts visitors who spend money on hotel stays, local restaurants and shopping downtown.

Whatever plan of action the Market's governance takes, the solution will no doubt involve some community support. But as Seattle plans for its own sustainability in the future, defined by the many elements that make up a high quality of life for all citizens, it stands to gain from recognizing the values represented by the Market, and protecting these values in perpetuity.

View last month's Neighborhoods article

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