Retail Gets a New Lease on Life
Posted: February 27, 2014
The retail landscape is literally changing before our eyes. Chains are now anchoring residential and commercial complexes, uniting them in one community called mixed-use developments. This concept has been around for a quite some time in various forms, but now we’re seeing a real trend that may mark the wave of the future.
Government (FHA mortgage insurance programs) and commercial lending are viewing these developments in a much more favorable light than in years past, due to a combination of market demand from affluent workers and residents who seek the convenience and communal spirit of close-knit communities, and growing government awareness about the economic and environmental benefits of transit-based development.
Locating work, shopping and housing together near mass transit cuts down on car traffic while creating areas that are used 24/7, thus creating revenue through multiple channels. It facilitates efficient access to where people live, work, play and shop. Mixed-use complexes encourage pedestrian-oriented activities at various scales. This variety of uses enables people to live, work, play and shop in one place, which then becomes a destination for people from other neighborhoods.
These developments also serve to revitalize downtown areas, which have seen mass exits in the last 20 years. Developers say these are win-win opportunities, giving the retailer ready-made access to potentially thousand of shoppers living above the store, and giving the developer a tangible sales advantage over similarly-priced condominiums in the same market. It also is bringing the supermarket back to the inner cities, one of the more underserved real-estate sectors in the country.
Harris Teeter will be anchoring an apartment complex in Bethesda, MD.
Wilmington, NC, is working on a project that will incorporate 20,000 square feet of retail space mixed with residential units and multi-level parking facilities. In Nashville, downtown development is expected to focus on retailers anchoring high-rise office, condo or apartment buildings.
Austin Benedict, a Colliers International Broker specializing in retail, notes, “Because the land prices are so high, no one could afford to buy the land for just retail use. The highest and best use is for office, hospitality or residential developments with the retail at the bottom.”
Today, Panasonic is moving more than 800 employees from Secaucus — and Newark is using the deal as a way to market the city to new investors.
Meanwhile, the $120 million renovation of the landmark Hahne & Co. department store in Newark is on track for success. Built in 1901, the 400,000-square-foot building is being converted into a mixed-use complex. Whole Foods will anchor the site, which includes another 80,000 square feet of office and community space and 180 (market-rate and affordable) loft-style rental apartments.
Whole Foods seems to be leading the pack in using mixed-use development. Miami, Minneapolis, Portland, Seattle, Manhattan, and San Francisco are among the cities seeing Whole Foods laying the groundwork and prompting other retailers to join in mixed-use complexes.
Real estate developer Don Miliken referred to the Marketplace Tower project in Minneapolis when noting, "We are absolutely convinced that we've found the perfect nexus between neighborhood and development.”
Ron Shuffield, Miami condo developer, said the addition of Whole Foods "is a huge draw for people to buy in these buildings.”
Ron Bond, president of real-estate developer Bond Cos., which built a 160-unit apartment complex in San Francisco with Whole Foods on the bottom floor, said that the supermarket helped push occupancy higher than the rest of the market, also citing “that it was the smartest move the company made when designing the project.”
This means more jobs in the retail sector and with the ease of mass transit to these new centers of the community, the idea of mixed-use developments seems to be the boon that retail needs.TAGS: retail, retail trends, retailers,