COVER STORY, NOVEMBER 2007

AN AMENITY FOR MIXED-USE PROJECTS
Retail serves as the heart of mixed-use projects, but it can also be an amenity for residents and visitors.
Robert Champion

Champion

It’s been approximately 10 years since the concept of retail/residential mixed-use development truly caught on in California. Driven in large part by the confluence of California’s housing shortage, in particular entry-level housing, with deteriorating downtowns and the planner’s mantra of “pedestrian orientation,” the past decade has proven it to be a successful product type.

But the success of mixed-use in the West did not come without its fair share of bumps along the road. Financing a mixed-use project in the late 1990s was extremely difficult, and there were many questions as to whether homebuyers and retailers would buy into these projects. Today, while financing a mixed-use development is not simple, it is much easier. In fact, there is so much capital chasing product, that it has created a new problem. Cities, anxious to incorporate mixed-use into their general plan and armed with financial incentives, are granting approvals to developers with knowledge in only one product type, usually multifamily housing. The result is that developers are focusing primarily on the residential component and treating the retail as an afterthought.

Mixed-use is an extremely complicated development. Working on as many as three projects at the same time, each of the land uses is interdependent upon one another. It is more than combining two or more land uses in a single development. The components need to be carefully orchestrated so that the result is greater than the sum of the individual parts. Mixed-use projects are really synergetic developments and should be treated that way.

So what makes retail an amenity in a mixed-use development? First, it is important to note that mixed-use works best when there is no other alternative for retail. Many mixed-use developments fail to attract the best possible anchors and subs because the projects are located where there is an opportunity for conventional retail. While many residential buyers or renters may pay a premium to be in a mixed-use development, many retailers would prefer to locate in a stand-alone environment if possible.

While retail usually comprises no more than 20 percent of any mixed-use development, it is still one of the most critical components, not only to the success of a project, but to the impact the overall development has on a community. In a mixed-use development, the residential piece can be viewed as a race car and the retail is the tires. Putting on the wrong set of tires at best will ruin performance and at worst can spell disaster.

Selecting the right retail mix is more than what is just good for the project and its residents. The proper retail mix has to satisfy two tests. Not only does it have to be compatible with the lifestyle that is being created for the project, it has to meet the needs of the trade area as well. The retail component must create a feeling of a district, where residents and non-residents alike can experience a real “shopping ambiance.”

In Culver City, 15 miles west of downtown Los Angeles, a developer is working with the city’s redevelopment agency on a specific plan for a half-mile stretch along Sepulveda Boulevard, a major thoroughfare traveled by more than 60,000 cars a day. The new plan would address the redevelopment of a nearly 60-year-old commercial strip that features approximately 30 different properties, 100 different retail businesses designed in mid-century style, 30 different curb cuts, nearly as many parking fields and absolutely no pedestrian activation.

The developer has proposed within this planning area a mixed-use development with pedestrian-oriented retail and restaurants at the street level and multifamily residential above. In order for this project to succeed, there needs to be a cohesive plan that will create a sense of district. As part of the specific plan, the developer has proposed to reduce the curb cuts to four, move surface, street front parking off the street to both structures and below grade, to create a street front environment with more than 2,000 linear feet of frontage. The tenant mix would include a gourmet market, bookstores, restaurants with outdoor seating, and hard and soft goods that would be both tenant and community-serving. Complementing the ground-level retail will be public plazas and open space served by wide sidewalks, landscaped strips and outdoor dining. In this project, the retail is an amenity because it creates a sense of district or village that the residents can identify with.

Selecting the appropriate retail for a mixed-use project also needs to be grounded in the fundamental principle that what is best for the project is best for the community. If the project’s retail component satisfies the tenant’s needs but does not meet the demands of the trade area, then the retail is doomed to fail and with it the success of the project. The tenant mix must not just appeal to people who live there, but to those who work and shop in the area as well. As stated before, a successful project is not so much a mix of uses, but a mix of uses that creates synergy.

Take for example, the Burbank Collection, currently under construction in Burbank, California. The Burbank Collection is located in the center of a vibrant entertainment hub with a strong daytime and evening population. As anticipated from research, the buyers of the condos and lofts are young professionals working in Burbank, who were looking for a cosmopolitan housing option and were buying more for lifestyle than convenience. As a result the emphasis for the retail component is focused on a mixture of women’s apparel, men’s accessories, and boutique food and beverage. This tenant mix is in keeping with the image and lifestyle the residents wanted when they purchased their units. It is more of an amenity than any drugstore or dry cleaner would have been.

Since residents of a mixed-use development see the whole environment as their own, it is important that the retail reflects positively on the overall image of a project. This is especially true in large markets like Los Angeles, San Diego and San Francisco where one can be defined by where they live. Therefore much attention needs to be paid to make sure a “billboard retailer” — one that can identify an entire project — portrays the correct image. For example, while large electronics stores or women’s discount clothing retailers may have strong brand names and offer goods that might be suitable to the residents, very few people spending $500,000 or more on a condo or loft want to be located in the “Dress for Less” building. Consequently, smaller, boutique-feel retailers and incidental food and beverage merchants are often better suited for a mixed-use project.

Retail is certainly not an amenity if it goes out of business. While a community center or regional mall may be able to feature an untried retailer or debut a new store, the kiss of death to any mixed-use project is a revolving door of retailers. It is imperative that stores be open and doing sales. With rare exception, the tenant mix of a mixed-use project should comprise exclusively experienced retailers with a proven track record.

Robert Champion is president of Los Angeles-based Champion Development Group.

A Village Near Vegas Executive Home Builders to develop The Village at Queensridge mixed-use center. The Village at Queensridge, an $850 million mixed-use development in Summerlin, Nevada, is scheduled for completion in late 2008. Just outside of Las Vegas in the desert suburb of Summerlin, locally based developer Executive Home Builders (EHB) is developing a mixed-use center unheard of in Las Vegas. The project is called The Village at Queensridge, a 30-acre development that serves as one of the crown jewels of the much larger 1,000-acre Queensridge master-planned community. But instead of a typical mixed-use center, EHB wanted to deliver to residents something more closely resembling three city blocks transported to the desert rather than just another shopping center. “Our goal is that we wanted to create this corner to be the mecca of Las Vegas for locals,” says Eli Applebaum, executive vice president of EHB’s commercial division. “Everybody knows Vegas is the Strip — and the Strip is terrific — but the Strip is not a local marketplace.” The $850 million center is located at the intersection of Rampart Boulevard and Alta Drive on a tract carved out by erosion from neighboring culverts, creating the perfect environment for The Village. A 2.5-level, 4,000-space parking structure will serve as the base of the center — an ideal situation for shoppers seeking to avoid parking in the hot Nevada sun. On top of the structure will sit The Village of Queensridge, a combination of 340 luxury condominiums and 700,000 square feet of commercial space spread across 18 buildings. The commercial component of the center will be divided into 380,000 square feet of retail space, 200,000 square feet of office space and 120,000 square feet of restaurant space. Condos in The Village will range in size from 1,400 to more than 3,300 square feet. The center itself will be unique from other mixed-use centers in that it will not have an anchor tenant. “Do Florence and Rome need to have an anchor? No, because the location and the place is the anchor,” says Applebaum. The Village will seek to distinguish itself by being a destination development, not just another strip center where people come in, do their shopping and leave. EHB will use stonework from its quarries all over the world to build the center, giving the architecture a more aesthetically pleasing look. Artwork, ruins, aqueducts and other elements will give the feeling that the property evolved over time much like an Old World city center. But the architecture will not be the only draw. EHB has already signed several restaurants to the development, many of which are sidestepping the Strip and making their first appearance in the market at Queensridge. Already signed are upscale steakhouse and seafood restaurant Mastro’s Ocean Club, chef Roland Passot’s restaurant Left Bank, Mermaid Inn and Prohibition out of New York City, and Sacramento, California-based Mikuni Japanese Restaurant. On the retail side of things, clothing store Tommy Bahama has already signed on for the center, as has Kidville, a kid-friendly center that offers indoor playgrounds, preschool classes, a café, a salon and boutiques for children up to 5 years old. Negotiations are also underway with a grocery store, and The Village at Queensridge will also contain a farmers market. The unique tenants, as well as the design of the development, are keeping with the idea that people will come and stay much longer than they would at a traditional shopping center. “People will want to come here again and again, because there’s so much to do, so much to see and the experience is so great,” says Frank Pankratz, president of EHB. Vertical construction has already begun on the center, with completion expected in fourth quarter 2008. As part of the Queensridge master-planned community, a park and trail system are also being designed that will wind through the community from just north of The Village to the Red Rock recreational area 10 miles away, providing people in the community with a way to walk or cycle to the development. — Coleman Wood

The District in South Jordan, Utah The Boyer Company is adding 91 acres to The District mixed-use development. Salt Lake City-based The Boyer Company recently acquired 91 acres of land in South Jordan for the expansion of its mixed-use development, The District. Situated at the intersection of 114th South and Bangerter Highway, The District currently features a mix of specialty retail, entertainment and restaurant options, including a 5,200-seat Megaplex 20, Target, JC Penney, Office Max, Sports Authority, Ross Dress for Less, Harmons, Hobby Lobby and Petco. “The most unique part of the project is that the original plan was for a 12-acre shopping center, and now the project is a little under 300 acres, as we discovered there was opportunity for bigger development in the area,” says Wade Williams, retail partner/director of retail development with The Boyer Company. With this expansion, the company plans to develop The North District, which will feature an additional mix of uses, including single-family lots, townhouses, condominiums, office space and retail pads. The new project will also include the development of a new road connecting 114th South to 104th South. Williams notes that the project is bringing a wide variety of options to underserved South Jordan – “we consider [The District] an ‘all’ instead of a mall because it’s bringing all components” to the area. The company has also partnered with Garbett Homes to develop River Heights, a townhome and condominium community located just east of The District. River Heights will complement Boyer’s recently completed Jordan Heights, a single-family development located to the west of The District. Looking to bring convenience and entertainment to South Jordan, The Boyer Company combined its multiple-disciplined expertise to develop the mixed-use project. “[The project was] driven by retail, we think retail is the glue that holds a project together,” states Williams. “From there, we added housing and then an office component for the day traffic – retail acts as an amenity to the office and other components.” The overall scope of the project is very unique to the area and the largest of its kind in Utah, the approximately 310-acre project features a main street with retail and lifestyle retailers surrounded by a U-shaped power center offering office and residential components, which combine to create a true mixed-use development. — Amy Bigley

©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.