Downtown Honesdale Market Study & Strategic Work Plan

Greater Honesdale Partnership Market Study by Shepstone Management Company for Honesdale Borough, Wayne County, Pennsylvania

1.0 Background Brief, Summary and Recommendations

It is imperative, as Honesdale once again embarks upon a downtown revitalization program, that it establish measures of success that can be used to shape and evaluate programs. It is suggested these include the following:

A reduction in the number of vacant downtown storefronts to no more than 5% at any one time.
An increase in the number of shoppers and other visitors to downtown Honesdale.
An increase in spending by visitors.
An increase in the profitability of downtown businesses.
An increase in the desirability of downtown Honesdale as a business location.
An increase in private investment in downtown Honesdale.
Enhancing of the image of downtown Honesdale as a centerpiece attraction for economic development of Greater Honesdale and the County as a whole.
Improvement of downtown Honesdale as a shopping area and service center for the benefit of residents as well as visitors.

The markets available to Downtown Honesdale businesses consist of a combination of locals and visitors from within a 15 mile radius of Main Street. The former provide a year round business base and cash flow for financing. The latter provide opportunities for higher margins and the profits to attract investment. These various Downtown Honesdale markets may be defined as follows:

Honesdale businesses have opportunities to; (1) make better use of their own natural secondary and fringe markets, (2) pull off a small portion of that regional market drawn to the area by their competition and (3) appeal to a special higher income market of second home visitors.

The last of these is a distinct regional market not possessed by most communities. It consists of the part-time residents of Wayne, Pike and Sullivan Counties who own second homes here. There are an estimated 15,311 second homes located within 15 miles of Downtown Honesdale. These represent an additional peak seasonal population of as many as 46,600 persons and an average of approximately 18,400 added visitors. These are prime customers for some Main Street Businesses who get as much as 60% of their trade from these households.

The visitor market offers:

Wealthier households with substantially greater home equity, disposable income and propensity to spend.
Large numbers of professionals and blue-collar managers with resources to buy into country living when they perceive a value opportunity.
A population that eats out more and spends more on recreation and entertainment.
A population eager to experience country living in the context of doing business with family enterprises, taking in the outdoors and operating at a somewhat slower pace.

Goods and services that Downtown Honesdale businesses can sell to this market include:

Food, recreation and entertainment packaged as local, home-grown family enterprises.
Basic necessities needed while away from home.
Construction, home and garden items for 2nd homes.
Lodging.
Other upscale (but not too upscale) experiences including antique shops and similar enterprises selling goods and services to be purchased with discretionary income.

The key to marketing these goods and services is focusing of efforts on the marketable competitive advantages offered by Downtown Honesdale, including the following:

Market Growth

Second Home Market

Traffic and Visibility

Traffic along Main Street ranges from 9,000 to 18,000 vehicles per day and has grown by over 13% since 1990. The highest traffic location in all of Wayne County is, in fact, found in Downtown Honesdale. It is the intersection of Main and Fourth Street. No other spot in Wayne or Pike Counties enjoys this level of visibility.

Business Variety

Downtown Honesdale includes over 150 storefronts and 200 individual businesses. There are 10 restaurants, 9 retailers of food, clothing and furniture and 38 specialty retail shops. There are also over 50 professional offices, 24 service businesses, 10 personal service shops, 9 churches, numerous public offices and buildings, 2 lodging places and more than 50 other businesses found in Downtown Honesdale, ranging from meats to music and skis to shotguns.

Reasonable Rents

Rents for downtown businesses are very competitive. A Main Street storefront can be rented for $5-7 per square foot and quality office space can be secured for $4-6 per square foot. This is an extraordinary bargain compared to the $10-12 per square foot typical of regional mall locations where store-owners are captive to escalating extra charges for maintenance and services.

Parking Availability

Downtown Honesdale offers over 1,000 public parking spaces within easy reach of all its offices and shops. This includes approximately 75 off-street spaces found in the centrally located Park ‘N Shop lot. There are also over 80 spaces of publicly-provided employee parking accessible from most downtown and store locations at modest rates of as little as $180 per year per space.

Strategic Location

U.S. Route 6 and Route 191 serve as the main east-west and north-south arteries, respectively, through Wayne County. The two routes converge on Main Street. Downtown Honesdale must also, as County Seat, provide for the needs of more than 350 County employees. It is, too, the site of the Wayne Memorial Health System, with over 550 employees. County government and health services alone generate a minimum of 2,000 visitor trips for downtown Honesdale every business day.

Business Organization

The 70 member “Honesdale Business Association” sponsors a succession of very popular events that attract thousands of visitors to the downtown. These include the “Winter Carnival,” “Street Fair and Sale,” “Heritage and Arts Festival” and “Home for the Holidays” promotions. The County Chamber of Commerce has also established a Farmers Market in the parking lot of its Visitors Center to complement train excursion trips it has been conducting since 1979.

Streetscape

Downtown Honesdale has undergone almost continuous revitalization since the 1960’s. Its streetscape underwent a major overhaul in the mid-1990’s in conjunction with a Main Street reconstruction. New sidewalks were installed with brick borders and handicapped ramping. New trees have been planted regularly to maintain Honesdale’s image as “the Maple City.” Several facade restorations, expansions and other store improvements have been financed. The result is a streetscape admired in articles in the Philadelphia Inquirer, The New York Times, and the The Middletown Times-Herald Record.

Workforce

Honesdale and Wayne County as a whole, are the source of a quality labor force available at reasonable wage rates. Northeastern Pennsylvania wage rates for clerks run 2% to 10% below the U.S. average as compared to rates of 13% to 15% above the average for Long Island and 5% to 20% above average for New York City and metropolitan New Jersey.

Banking Community

Honesdale hosts 5 major financial institutions. Collectively, these enterprises represent deposits of $378,936,000 and account for 48% of all deposits in Wayne County financial institutions. There is, in fact, more money deposited in Downtown Honesdale than all of Pike County. Wayne County deposits per capita ($17,619) exceed those of every surrounding county in both states by more than $2,500.

Volunteerism

Downtown Honesdale has a history of getting it done with volunteers and minimal governmental help. This self-reliant attitude produced the following downtown development projects over the last several years: 1) the Park N’ Shop Lot, 2) the Torrey Building and Stourbridge Lion Exhibition Buildings, 3) the Honesdale Pool, 4) the Fred Miller Pavilion and 5) the Wayne Memorial Hospital’s Propst Pavilion Addition. Most recently the Chamber of Commerce raised $225,000 in local contributions to help build the Wayne County Visitors Center.

Actions Recommended:

There are several actions that can be taken by the Greater Honesdale Partnership to build on these strengths. These include:

1) Developing a package of financial and tax incentives that can be used in a business recruitment program.

Establishing a LERTA program to offer tax abatements on downtown business investments. See Appendix 4.3 hereof.
Creating a low-interest loan pool to finance both exterior and interior property improvements.
Establishing a publicly funded Downtown Revolving Loan Program to provide start-up funding for small businesses and other micro-loans.
Securing public funding to establish a business incubator program downtown (perhaps in the Warehouse Furniture building).
Using the business incubator program to provide free marketing and promotional assistance for one year to any new downtown business and, thereafter, on a fee basis.
Providing new businesses with architectural help and other design assistance by retaining the services of a technical advisor to made available during construction/renovations.

2) Developing a business recruitment program based on marketing to targeted businesses with the greatest potential to locate and do well in downtown Honesdale, being careful to include existing businesses with expansion potential.

Preparing a professional brochure documenting downtown Honesdale’s marketable advantages and describing the package of financial and tax incentives.
Conducting targeted mailings with a four-step follow-up program.
Making follow-up contact and and offering technical assistance.

3) Implementing a year-round general marketing program promoting downtown Honesdale as the place to shop and do business.

Employing an over-arching theme with appeal to both residents and visitors and enough distinction to achieve recognition in the marketplace(s).
Linking individual store advertising to the campaign.
Targeting promotions to second-home communities and other visitor populations, going aggressively after this portion of the market.
Developing more package promotions with businesses and attractions outside of Honesdale (e.g. Erhardt’s Restaurant joint promotion of the train excursions with the Chamber), making this a prime responsibility of the Downtown Manager.

4) Identifying opportunities for selected businesses and secure the funds to acquire key sites for those businesses so as to reestablish anchor businesses for the downtown.

Identifying key sites (e.g. entrance way locations such as the Texaco station at the corner of Fourth and Main Streets) and key businesses with potential for these sites.
Identifying funding sources for acquisition.
Creating financial, tax and zoning incentive programs for developer participation in such projects.
Soliciting competitive bids from developers, making the properties available through sale or lease (the latter offering some tax incentive possibilities).

5) Conducting a review and update of Honesdale’s zoning ordinance with respect to eliminating any and all disincentives for business development such as prohibitions of sidewalk marketing and advertising. This review also needs to identify any disincentives for residential development and correct these to ensure continued downtown activity at all hours of the day.

2.0 Description of Markets

2.1 Definition of Trade Areas

The Urban Land Institute states that “a shopping center cannot generate new business or create new buying power; it can only attract customers from existing businesses…or capture the increase in purchasing power that arrives with population growth. It can cause a redistribution of business outlets and consumer patronage, but it cannot create new consumers…” Measuring the types and amounts of business available and the competition for that business within the trade area of Downtown Honesdale is, consequently, pivotal to a successful revitalization program.

Trade area can be defined as the geographic area from which is obtained most of the continuing patronage of those businesses that presently comprise the downtown shopping area or might be attracted to it. The downtown will have the most “drawing power” on those individuals in the immediate area with less drawing power as distance increases. Although there is significant growth within the region, the focus must be on competition; that is, capturing patronage from existing stores in the trade area or providing goods and services not already provided by other establishments.

This study specifically concentrates on the Main Street and immediately adjoining sections of Honesdale Borough. This, for purposes of the study, constitutes the downtown. The “Downtown Honesdale Shopping Area Map” following illustrates this area Business districts of this sort typically function as both regional and neighborhood centers. They pull 60-70% of their local market activity from customers living within a 5-10 minute drive or approximately a 0-5 mile radius. This is the “primary market.” There are also, in Honesdale’s case, “secondary,” “fringe” and second home markets of a more regional nature.

Enterprises competitively unique to Downtown Honesdale extend the market area for those particular businesses and draw potential customers for other stores in the vicinity. Honesdale’s medical and legal offices, outgrowths of its function as County Seat and headquarters of the Wayne Memorial Health System, undoubtedly have this effect. The Wal-Mart and K-Mart complexes, although competitors, also draw new customers to the greater Honesdale area. They create opportunities for some downtown businesses even while taking away from others.

Again, the market is most appropriately defined in terms of driving time. The Shopping Center Development Handbook suggests a driving time of 15-20 minutes as a “rule of thumb” for the identification of a regional market area. The secondary (10-15 minutes) and fringe markets (15-20 minutes) of a rural downtown shopping area represent more or less the same area although a regional center such as the Route 6 Plaza will pull much heavier from the outskirts and will have its own secondary and fringe markets that extend well beyond these points.

Honesdale also has a distinct regional market not possessed by most communities. It consists of the part-time residents of Wayne, Pike and Sullivan Counties who own second homes here. There are an estimated 15,311 second homes located within 15 miles of Downtown Honesdale. These represent an additional peak seasonal population of as many as 46,600 persons and an average of approximately 18,400 added visitors of higher than average incomes with greater propensities to spend. These are prime customers for some Main Street Businesses who get as much as 60% of their trade from these households.

Honesdale businesses have opportunities, therefore, to; (1) make better use of their own natural secondary and fringe markets, (2) pull off a small portion of that regional market drawn to the area by their competition and (3) appeal to a special higher income market of second home visitors.

Summarizing based on observed trends nationally and locally, Downtown Honesdale’s markets may be defined as follows:

Downtown Honesdale Market Areas

Analyses have been made of each of these markets in terms of demographic characteristics and spending patterns. The source of the primary data is the U. S. Census. Estimates and projections have been supplied by Claritas Inc.. Their full “Marketview Comparison Reports” may be found in Appendix 4.4 hereof. Section 2.2 below summarizes and interprets this data.

2.2 Demographic Analysis

Claritas Inc. is a major industry supplier of market-based data used to evaluate business locations. Their Marketview Comparison Report provides a comprehensive analysis of demographic data along with estimates and projections for future years, including spending patterns. This information may be obtained for any specified geography and reports were requested for the primary, secondary and fringe markets as defined above. The data is, in fact, compared side by side for the three areas in the first of the Marketview Comparison Reports found in Appendix 4.4.

Second home owner data is more difficult to obtain because the primary measure of these households’ demographic characteristics is the Census data for their respective primary residences. The numbers of second homes as well as the seasonal residents of these dwellings can be closely approximated by using a combination of local Census counts on vacant housing units and second home survey data, but beyond that the characteristics of the households themselves is largely a function of where they come from.

Second homes are identified as vacant in the Census and, with adjustments for normal vacancies attributable to units for sale or rent, one can determine what portion of a community’s housing stock consists of second homes. This was done using the numbers of vacant units identified for each local market area in the Marketview Comparison Report. The results indicate there are approximately 864 second homes located within 5 miles of Downtown Honesdale, another 4,267 such units within 5-10 miles and 10,180 more seasonally occupied dwelling units in the 10-15 mile range, the last category including much of Lake Wallenpaupack.

Second home studies conducted by the County for the 1994 Wayne County Comprehensive Plan indicated the typical such home was occupied by 3.34 persons during peak periods. The average occupancy was 1.32 persons. These numbers were applied to yield estimated second home populations found in Table 2.2.1 following. They are consistent with similar studies done at about the same time in neighboring Pike County. The Census counts of second homes also generally match real estate tax assessment data available for these areas on a municipality by municipality basis.

The surveys conducted by the County (with assistance from this consulting firm) also provide information regarding the primary residences of second home owners within the region. Questionnaires sent to 950 such households and returned by 269 (over 28%) indicated that these seasonal residents primarily came from Northern New Jersey, Long Island and New York City (except for the Bronx). Philadelphia was a secondary source. Similar results were obtained when local realtors were consulted as to more recent home buying habits, although Philadelphia was reported to be gaining somewhat.

So as to evaluate the characteristics of areas from which second home owners come, three distinct markets were identified. These included; 1) Nassau and Suffolk Counties, New York (colored blue below), 2) New York City outside of the Bronx (green) and 3) the 8 counties constituting northern New Jersey, including Bergen, Essex, Passaic, Suffolk, Morris, Somerset, Union and Middlesex (red). A Marketview Comparison Report was then requested for these three areas as well. A review of the data (which may be found in Appendix 4.4) indicates, however, that New York City includes so many single-family households that the averages are distorted. They are not reflective of the typical second home buyer coming to the Honesdale area although many such buyers do come from that area.

The market data summarized in Table 2.2.1 indicates several important factors regarding these various local and second home markets available to Downtown Honesdale businesses. These include the following:

The permanent population base of each of the local markets is growing, in contrast to most of the Northeast. The secondary market, in fact, grew by 15.6% between 1980 and 1990 and has gained another 19.7% since then. The urban areas from which are drawn the area’s second home owners, are not growing significantly.

While the area has often been perceived as having an older population, the median age is not substantially different than the more urban areas adjoining the region. This is because immigrating households in recent years have included large numbers of family households.

Average household wealth within the local area is only 55% to 65% of the markets from which second home buyers come. Therefore, the latter are usually able, if not willing, to pay much more for goods, services and property than local buyers. This has already produced some gentrification within the area but this negative is also accompanied by the positive impacts of additional spending. There are clearly opportunities to raise business incomes by targeting second home markets.

Income gaps between local and second-home households are also widening, indicating that increasingly wealthier households will be looking to buy into Wayne County. This will generate some conflicts but also holds the possibility of raising local wealth if business owners direct more goods and services toward those with the ability to pay. As the County attracts more of these households some will also bring their businesses with them creating the opportunity to produce broad-based economic development not built upon any one sector.

Second home markets are characterized by high levels of education. This is an indicator of greater disposable incomes. These households have different tastes and wants. They appreciate art, music, antiques, fine foods, quality merchandise and certain other facets of a better standard of living. However, these are not the extreme wealthy or the upper class type households who characterize the Hamptons, Westchester County or the Upper East Side of Manhattan. Rather, they tend to be first generation college-educated individuals who have “made it” but “remember where they come from.” They have money to spend but want value for that money. Their spending is above average but they remain price conscious and don’t make extravagant expenditures. They appreciate country living but want to balance it with some of the finer things in life. Many have well paid blue collar or middle-management white collar positions. There also include a number of professionals and small to medium sized business owners.

During peak periods second home visitors to the primary and secondary market areas adds as many as 15,428 persons or 55% to the resident population. Within the fringe market they represent another 31,213 people, for an 86% gain. Overall, the average population of the local markets is increased by an estimated 28%. This is very significant because second home visitors by definition tend to eat out more, spend more on recreational activities and generally exhibit a greater propensity to spend because they are on vacation when visiting their second home.

Households within second home market areas generally have more than twice as much value represented in their primary home as local market households. This means not only that local housing is a bargain for them but also that they use the equity in their first home to finance the second and, over the long term, to sell the first and covert the second home to a permanent residence. This, again, has both a positive and negative side. It exacerbates the gentrification problem and takes more of the local area’s younger households out of the housing market. It also raises the prospect of large tax increases for school support as conversions take place. Monroe and Pike County are facing this problem now. Nonetheless, it also supports strong real estate and construction industries with associated opportunities for local residents, merchants and service providers. This is evidenced by the wide differences in the rates of new housing construction locally (66.6% of units under 10 years old) as compared to generally mature metropolitan markets (9-12%).

Detailed spending data on the local and second home markets is quite revealing as to future opportunities for Downtown Honesdale businesses. The Marketview Comparison Reports provide information indicating by index number the degree to which spending in given categories fall below or exceed national averages. An index of 100 means the market matches the national average. An index of 85 indicates 85% of the national average and so on. The numbers indicate that second market households spend much more heavily in every category other than nonprescription drugs. The greatest differences are in the categories of food and beverages away from home, personal care services, men’s and women’s apparel and floor coverings.

Interestingly, there are also significant variations within the market area in some categories even though per capita incomes are little different. Generally, expenditures increase as one moves away from town into areas with higher numbers of second homes and new households. The greatest deviations take place in the same categories as noted above and this is probably explained by the large numbers of new households in the mix within these areas who are accustomed to eating out more and spending more on these goods and services. Their incomes may not be much higher because they have taken local jobs but they bring with them greater wealth (see Table 2.2.1) and have stuck with certain aspects of their somewhat higher standard of living.

This suggests there are opportunities for more upscale (but not too upscale) eating and drinking establishments and, perhaps, personal care services, but in other categories there is substantial competition from major low price competitors and, therefore, the possibilities are somewhat circumscribed. Opportunities in men’s apparel, for example, would generally be at the high end of the scale and, even here, there is already at least one existing such business serving Downtown Honesdale.

Those business categories with only limited competition from major discount chains or existing businesses include only food and beverages away from home and other entertainment (which includes both equipment and services). These categories were, therefore, investigated in more detail. Per capita expenditures for each are provided in Table 2.2.1. The numbers are approximately 50% higher within the second home markets as compared to Honesdale.

Overall, the local markets represent $51,625,000 of expenditures on food away from home (not including alcoholic beverages accounting for another $2,673,000 of expenditures). The average second home population, however, accounts for another $22,335,000 of sales, an increase of 43% in the size of the total market available within 15 miles to downtown businesses. It is accounted for not only by the large numbers of these visitors but also their higher rates of spending in this category (an average of $1,230 per year compared to $803/year locally.

Likewise, the total non-electronic entertainment expenditures within the primary, secondary and fringe markets accounted for $14,466,000 of local expenditures and, at average per capita expenditures of $387 versus $225 locally, the second home market contributed another $7,027,000.

The importance of these two categories of expenditures relates less to the actual expenditures than to their discretionary spending nature. Dining away from home and entertainment are items that households spend their extra money in obtaining. When times are good the expenditures in these areas tend to rise. During recessions, they fade in importance. Larger stores and chains depending on large volume low margin sales tend to avoid them for this reason, thereby limiting competition. Gross margins, therefore, are greater. They must be higher to offset the risks and volatility of these lines of business.

Such lines include not only restaurants and entertainment enterprises but also related activities such as craft and gift shops, specialty stores offering non-basic items (e.g. candies and confections), antique shops, art galleries, book stores, card shops and the like. These are where the greatest opportunities lie. Downtowns capitalizing on them have done well. An example is the small industrial City of Hudson, New York, which is now becoming an antique mecca, causing a major revival of that small town’s economy. Honesdale could easily do the same with some promotion and incentives.

Nevertheless, building a future on such businesses alone would be highly risky. The County’s economic development strategy calls for a balance among tourism, agriculture and industry to provide greater economic stability. Downtown Honesdale’s proper role in serving up this balance demands that it be receptive to industry by accommodating the needs of DSFI and other industrial enterprises located downtown.

It also requires that the downtown function as a service center where persons from throughout the region can come for legal, medical and other professional services as well as related goods (e.g. office equipment and supplies). These two responsibilities need to be incorporated in any vision for Downtown Honesdale. They not only reflect the real world, but also provide the essential counterbalance needed to support a burgeoning tourist industry.

Summarizing, Downtown Honesdale serves combined local and second-home markets with substantial potential for sales of goods and services purchased with discretionary spending money. It also enjoys a particular role as County Seat that provides opportunities to provide sell certain basic as well as non-basic goods to visitors utilizing the numerous professional services found downtown. The downtown, too, includes a substantial industrial enterprise fronting on Main Street that needs to be supported.

Given these factors, it would be a serious mistake for Downtown Honesdale to attempt to simply transform itself into a trendy tourist town. That might well work for Hawley, but it would miss the mark in terms of opportunities and probably not be successful in Honesdale. Non-tourist activities would inevitably invade the downtown anyway, creating conflicts with those promoting the tourist objective.

An example of this is the recent addition of three new convenience stores downtown and nearby. All three replaced aging out-of-date facilities with arguably better quality stores targeted to taking advantage of Honesdale’s high traffic. They also offer the “lights on downtown” image so essential to creating interest and visibility. Attempts to keep them out would have been in vain and counterproductive. Yet, it is also true that the convenience store image, by itself, is not what will attract other businesses to downtown and for some it seriously detracts from the other qualities that form a basis for attracting tourism. What then will work?

The answer for Downtown Honesdale, as it is for the County as a whole, is to studiously work at maintaining a balance of enterprises. This may not be as exciting as trying to sell Honesdale as a tourist town alone, an antique town, a book town or some other specialty image, but it does reflect reality and opportunity. The Greater Honesdale Partnership needs to forge a program that reflects this balance. It should clearly work harder at attracting specialty stores such as now missing antique shops, but it cannot ignore the service center role and the need to provide for those goods and services.

What it must do, however, is to ensure that those goods and services are provided in a quality manner that will not detract from tourism possibilities. This doesn’t mean stopping convenience stores, but it should mean that such enterprises are done tastefully in keeping with downtown architecture with plenty of landscaping and carefully planned lighting.

An excellent model is Lewisburg, Pennsylvania, another County Seat where a new CVS store was blended into the downtown streetscape with great taste. Lewisburg has been designated as one of the “100 Best Small Towns in America” and enjoys a Victorian architecture that it heavily promotes. Not an entirely a tourist town, it nonetheless attracts great amounts of tourism and that is the proper approach for Downtown Honesdale to take advantage of its market opportunities.

2.3 Inventory of Existing Goods and Services

What is Downtown Honesdale? How well is it responding to the opportunities before it? An inventory was made, in October, 1999, to help answer these questions. It encompassed first floor businesses located on Main Street from DSFI to Day’s Bakery, including side street businesses, but not including Commercial, Church or Court Streets. The results of that inventory follow:

Table 2.3.1 – Inventory of Downtown Honesdale
Businesses (Main & Side Streets – 1st Floors)

38 Specialty retailers (gifts, meats, jewelry, etc.)
24 Service businesses (insurance, travel, etc.)
11 Professional offices (law, dentistry, etc.)
10 Beauty/barber and other personal shops
10 Public/semi-public activities
10 Restaurants:

6 Family and casual dining
3 Sandwich shops or seasonal eating places
1 Upscale casual dining (also seasonal)

9 General retailers (food, clothing, furniture, etc.)
4 Banks
4 Taverns
3 Automotive service stations
3 Convenience stores
3 Storage/other
2 Automotive/equipment dealers
2 Churches
2 Funeral homes
2 Industrial sites
1 Hotel

138 TOTAL FIRST FLOOR BUSINESSES

15 Vacant storefronts (11% vacancy rate)

153 FIRST FLOOR BUSINESS LOCATIONS

Since this inventory was conducted, some businesses have already relocated and others are planning to so. A long-standing craft and gift shop located on a side street is expected to move onto Main Street and a sandwich shop has already done so. Another sandwich shop has closed and still another is moving to a side street location. The new Turkey Hill store has opened and the former location will become the AAA office. Another storefront has been purchased and will be converted to offices.

The patterns of activity experienced in recent months and years exhibit the beginnings of a transformation of Downtown Honesdale into more of a specialty shopping area. Stores offering basic goods have gradually disappeared and been replaced by others specializing in everything from meat to music and skis to sneakers. The mix of uses has taken on a much more eclectic tone, a healthy overall trend though painful insofar as the loss of landmark businesses. New landmarks are certainly needed but the amalgamation as a whole is fairly complete. Decidedly few Yellow Page listings are not represented in Downtown Honesdale.

There are, nonetheless, a few obvious deficiencies in the current offerings. There is, for example, no upscale tavern and fine dining facility on the order of Milford’s “Tom Quick Inn” and “Dimmock Inn” or Stroudsburg’s “Bailey’s.” Downtown Honesdale also lacks major antique stores, a small hardware store and a toy and hobby shop. All of these hold possibilities and many categories of business are represented by only one merchant, suggesting the door is open for some competition.

Competing enterprises in the same vicinity often bring each other business (e.g. Wal-Mart and K-Mart, fast food restaurants and Baer’s, Tri-State and Palmers). The movement of Country Dawn onto Main Street should, likewise, benefit the Wallflower, and Morning Glory Gifts. All of these enterprises serve the same customers but each offers slightly different wares. Together they will offer a combined selection of wide appeal within walking distance of each other.

This effect needs to be ingeminated throughout Downtown Honesdale. Much of the effort of the Greater Honesdale Partnership needs to be directed toward this end, marketing Downtown Honesdale as the place to shop for selected categories of merchandise. The professional staff of the Partnership must, for this reason, exhibit demonstrated marketing skills.

A person of this sort will have much more to work with than might first appear. The loss of landmark locations such as the Katz, Murray and Weniger stores and a relatively large number of first floor storefront vacancies has created a superficial and incorrect impression that business is exiting Downtown Honesdale. The facts are, however, that while these individual businesses and others have left town under competition from large discount retailers, virtually all of the products they sold are still available downtown. Those goods are now found at specialty retail locations such as the Wallflower, Art’s Apparel, Northeast Sports and Weniger’s Express where the owners have been able to target customers. These enterprises have attracted business by offering superior quality goods and services in unique environments at reasonable prices.

Moreover, the number of businesses in Downtown Honesdale appears to have actually grown in recent years. Certainly the variety is greater today. Vail’s Health Club, Bagel Gourmet and Party Perfection are all examples of businesses inconceivable for Downtown Honesdale 20 years ago. Many second and third story businesses have also been attracted to the downtown (e.g. those occupying the upper levels of the Murray and Katz buildings). Others have located on Commercial, Church, Park and Court Streets and miscellaneous locations such as Pet Central’s and Universal Hair Design’s. The Visitors Center is also a tremendous new asset for attracting tourism to the downtown.

When one considers these various other activities, the number of businesses found in Downtown Honesdale easily surpasses 200. There are, for instance, an additional 20 law firms to be found downtown but sited off Main and side streets or in upper story locations. There are also a number of medical, accounting and other offices along with a medley of assorted businesses including a laundromat, ceramic shop and kitchen utensils store.

There is, indeed, a very wide variety of business offerings pulling customers and visitors into Downtown Honesdale – much more than can be found at any other location within Wayne County. There are, to be sure, many challenges but the level of downtown activity is considerable and the pattern is evolving in a manner that offers a foundation for long-term success.

3.0 Market Analysis

3.1 Marketable Competitive Advantages

The key to marketing anything is the focusing of efforts on marketable competitive advantages. Honesdale’s list of these is quite impressive. Included are the following:

3.1.1 Market Growth

The Honesdale market includes over 27,000 persons living within 10 miles of Main Street and over 11,000 within 5 miles. It is also a growing market, having gained over 26% since 1980. The area within 5-10 miles of Downtown Honesdale has grown by 20% since the 1990 Census. Even the already developed downtown and environs within 5 miles added 8% during that period. Another 36,000 persons reside within 10-15 miles of Downtown Honesdale and this base, too, has expanded by 7% since 1990.

3.1.2 Second Home Market

There are over 13,000 second homes within 15 miles of Downtown Honesdale, including over 4,000 within 10 miles of Main Street. The visitation to these second homes adds over 46,000 persons to the market during the vacation season. These households, primarily from New York and New Jersey, spend at up to twice the rate of local residents on food away from home, entertainment and other discretionary goods and services.

3.1.3 Traffic and Visibility

Traffic along Main Street ranges from 9,000 to 18,000 vehicles per day and has grown by over 13% since 1990. The highest traffic location in all of Wayne County is, in fact, found in Downtown Honesdale. It is the intersection of Main and Fourth Street. Traffic at this site exceeds that found at the Route 6 Plaza, on I-84, Route 590 in Hamlin and Route 209 in Pike County. No other spot in Wayne or Pike Counties enjoys this level of visibility.

3.1.4 Business Variety

3.1.5 Reasonable Rents

3.1.6 Parking Availability

Downtown Honesdale offers over 1,000 public parking spaces within easy reach of all its offices and shops. This includes approximately 75 off-street spaces found in the centrally located Park ‘N Shop lot. Users of this lot are able to obtain free parking by merchant validation of their receipt. There are also over 80 spaces of publicly-provided employee parking accessible from most downtown and store locations at modest rates of as little as $180 per year per space. Metered parking is very inexpensive and helps to ensure continual availability of space on Main and side streets.

3.1.7 Strategic Location

U.S. Route 6 and Route 191 serve as the main east-west and north-south arteries, respectively, through Wayne County. The two routes converge on Main Street making it a County centerpiece attraction. Downtown Honesdale must also, as County Seat, provide for the needs of more than 350 County employees headquartered at the Courthouse and other downtown locations. Honesdale is, too, the site of the Wayne Memorial Health System, with over 550 employees at, not only the hospital, but also several clinics, offices and out-patient service locations. County government and health services alone generate a minimum of 2,000 visitor trips for downtown Honesdale every business day. The Wayne County Visitor Center attracts another 20,000 visitors per year for train excursions and downtown events.

3.1.8 Business Organization

Downtown Honesdale merchants have been served by the very active “Honesdale Business Association” for 35 years. Over 70 members of this organization have come together to sponsor a succession of very popular events that attract thousands of visitors to the downtown. These include the “Winter Carnival,” “Street Fair and Sale,” “Heritage and Arts Festival” and “Home for the Holidays” promotions. The County Creative Arts Council sponsors numerous additional events in Central Park. The County Chamber of Commerce has also established a Farmers Market in the parking lot of its Visitors Center to complement the train excursion trips it has been conducting since 1979. These various events help to provide Downtown Honesdale with a continuous “lights on – open for business” image.

3.1.9 Streetscape

Downtown Honesdale has undergone almost continuous revitalization since the 1960’s when local banks sponsored low-cost financing for storefront renovations. Its streetscape underwent a major overhaul in 1996 and 1997 in conjunction with a Main Street reconstruction. New sidewalks were installed with brick borders and handicapped ramping. New trees have been planted regularly to maintain Honesdale’s image as “the Maple City.” Several facade restorations, expansions and other store improvements were financed under a Downtown Revitalization program in the mid-1990’s. The result is a streetscape of great appeal to visitors. It has been admired in articles in the Philadelphia Inquirer, The New York Times, and the The Middletown Times-Herald Record.

3.1.10 Workforce

Honesdale and Wayne County as a whole, are the source of a quality labor force available at reasonable wage rates. There were 3,375 persons employed in retail trade in Wayne County in 1996 with average payrolls of $13,040 each. Northeastern Pennsylvania wage rates for clerks run 2% to 10% below the U.S. average as compared to rates of 13% to 15% above the average for Long Island and 5% to 20% above average for New York City and metropolitan New Jersey.

3.1.11 Banking Community

Honesdale is a principal location or headquarters for 5 different regional financial institutions. These include Wayne Bank, Honesdale National Bank, The Dime Bank, Citizens National Bank and Citizens Savings Association. Collectively, these enterprises represent deposits of $378,936,000 and account for 48% of all deposits in Wayne County financial institutions. Another 22% of County deposits are in branch locations associated with these banks. Small communities with this much investment are highly unusual. There is, in fact, more money deposited in Downtown Honesdale than all of Pike County and more within Wayne County than all of Sullivan County, New York though the latter is 55% larger in population. Wayne County deposits per capita ($17,619), moreover, exceed those of every surrounding county in both states by more than $2,500.

3.1.12 Volunteerism

Downtown Honesdale has a history of getting it done through volunteer efforts and minimal governmental help. This self-reliant attitude produced the following downtown development projects over the last several years: 1) the Park N’ Shop Lot, 2) the Torrey Building and Stourbridge Lion Exhibition Buildings, 3) the Honesdale Pool, 4) the Fred Miller Pavilion and 5) the Wayne Memorial Hospital’s Propst Pavilion Addition. Most recently the Chamber of Commerce raised $225,000 in local contributions to help build the Wayne County Visitors Center. This prominent downtown structure is the site of numerous events including the Farmers Market, the Stourbridge Line Train Excursions and various exhibits. It complements the very professional Main Street museum facilities of the Wayne County Historical Society. These various efforts demonstrate a “can do” attitude supportive of those willing to invest in Downtown Honesdale.

3.2 Markets with Potential

Goods and services that Downtown Honesdale businesses can sell based on these marketable advantages include:

3.2.1 Food, recreation and entertainment packaged as local, home-grown family enterprises.

Second home owners look for unique experiences consistent with their image of the country. They also want to buy into family enterprises in the sense of being their customers. This is, in fact, another less tangible but, nonetheless, marketable advantage of being located in Downtown Honesdale – the opportunity to be personal rather than corporate in attitude. Most second home owners come from urban areas where there is no end to the possibilities of mall shopping. When they come to the country they want something different.

3.2.2 Basic necessities needed while away from home.

While there is heavy competition in these areas from the chains and superstores, there is always room for those who can package the goods and services with superior service or convenience. If price alone were the issue, there wouldn’t be three new convenience stores locating in Honesdale. Basic necessities will always find buyers and Downtown Honesdale remains very convenient by virtue of its location. Additionally, some chains will find downtown a very appealing location for their particular customers. The success of Honesdale’s CVS is a case in point.

3.2.3 Construction, home and garden items for second homes.

The rapid growth of the area surrounding Honesdale ensures that housing construction and related home activity will always be a market for goods and services. Large retailers have consumed many of the opportunities for bulk sales but there remains many possibilities for marketing selected services and for offering convenience items. A traditional hardware store, for example, where one can go to purchase small items without fighting the crowds at lumberyards, is missing from the Downtown Honesdale mix. There are also opportunities for plant shops, home decorator services and similar specialty goods and services.

3.2.4 Lodging.

While Honesdale has both a hotel and motel, there is room for higher quality more modern lodging geared to the needs of business visitors. There is also a need for banquet and conference facilities that might well be connected to such lodging. Presently, many businesses are referring visitors as far away as Twin Rocks for such rooms.

3.2.5 Other upscale (but not too upscale) experiences including antique shops and similar enterprises selling goods and services to be purchased with discretionary income.

The second home market offers much potential to offer more upscale goods and services. This is, however, not a blank check to offer anything at any price. The types of customers attracted to the Downtown Honesdale market are well off but not necessarily wealthy. Even those who are wealthy tend to be first generation successes, inclined to be value-conscious. Therefore, the challenge for those appealing to this market is to balance value with price. They must specialize and offer excellent service while maintaining a reasonable, not necessarily the lowest but certainly not the highest, price for their goods and services. There are legion success stories of small businesses competing with retail giants next door but they all involve a combination of personal service and value.

4.0 Appendices (not included on this website)

4.1 Strategic Plan (University of Scranton)

This Market Study is an outgrowth of a strategic planning effort chaired by representatives of the University of Scranton. Concluded in June, 1999, this program involved numerous interested parties, including representatives of Borough government, merchants and economic development groups. The report summarizing the results of that planning process is attached hereto as Appendix 4.1 and should be considered the foundation of this Market Study and Strategic Work Plan.

4.2 Business Plan

Prior to developing this Market Study, the consultants were engaged to develop a Business Plan for the Greater Honesdale Partnership. It draws upon and complements the Strategic Plan referenced above by expanding upon the recommendations with respect to organizational structure. It also fills in gaps regarding the strategic work plan of the Partnership, building upon the work of the University of Scranton and setting the stage for this Market Study. It, too, should be considered an integral part of it. This document is attached as Appendix 4.2.

4.3 LERTA Guidelines

The LERTA program is an important feature of the recommendations for business recruitment incentives found in Section 1.0 hereof. Guidelines for the program are found as Appendix 4.3.

4.4 Marketview Comparison Reports

Appendix 4.4 provides the full reports from Claritas regarding the Downtown Honesdale markets.