On race days at Forest City Enterprises' Village at Gulfstream Park mixed-use center in Hallandale Beach, Fla., shoppers will be able to take a break from the 750,000 square feet of retail space to watch as racehorses parade through the property. And they will be able to catch glimpses of the finish line from seats at outdoor cafes when the retail component is finished in October 2008.
Elsewhere, a 60,000-square-foot medical office campus is set to be built next to a planned hospital at the $500-million, 10-million-square-foot Prairie Center mixed-use project in Brighton, Colo.
And at the Expo Xplore project in Durban, South Africa, visitors can not only buy a Nissan at a 6,500-square-foot showroom, they can take it for a drive on a ten-minute off-road track through water traps and sand pits and around a roll-over corner.
A couple of years ago, mixing office, retail, residential and hotel was considered cutting edge. But as mixed-use moves from the avant garde to the mainstream, developers — and, increasingly, their public and private partners — are seeking more unconventional components for their projects, including performing arts centers, YMCAs, libraries, city halls, schools, aquariums, zoos, senior centers, comedy clubs, auto racetracks, water-park resorts, a drive-in movie theater and sports stadiums.
Placement of retail and other services, such as the medical facilities planned at THF Realty's Prairie Center, in a city center isn't new. After all, downtowns have long been built around combining civic facilities and other services. “We're going back to the future,” says Rick Caruso, president and CEO of Los Angeles-based developer Caruso Affiliated. The new mixed-use center is, he says, “the old downtown, where you went to do a variety of things in an outdoor environment that you can't do at indoor malls.”
Neither is inclusion of entertainment features in retail settings. The Mall of America has always had family fun components including the Dinosaur Walk Museum, an aquarium and a LEGO sculpture park. “It's been done as part of superregional shopping centers,” says Roy Higgs, chief executive of Baltimore-based Design Development Group, which has worked with international developers to create unique mixed-use centers, including Old Mutual Properties' Expo Xplore and Menlyn Park.
What is new is the integration of these elements into — or adjacent to — mixed-use projects. “These new developments go beyond the envelope,” says Higgs.
There's a good reason to push the envelope. Developers want to pack as much punch per square foot as they can in a development. Just building a retail center, without other uses, has limited potential for profits and limited sales per square foot at a time when property prices are sky-high.
But when you add medical facilities, or entertainment features or auto showrooms, which THF Realty is considering for Prairie Center, and horse racetracks, you expand the money-making possibilities and keep shoppers in your development longer and allow residents to get more of what they need near home.
“We could have scaled our 2,000 acres down to a few hundred acres and just built a shopping center, but there is so much pent-up demand for other opportunities,” says Jim Lewis, project manager for THF Realty.
For example, says Higgs, experience has shown that car shows in conventional shopping malls are the biggest draw. So, he says, “It makes sense showrooms would want to be close by and part of a mall.”
What's more, developers are becoming more comfortable expanding beyond the traditional limits of retail centers. This is especially true outside the U.S., says Higgs, where more investments are made by private companies that aren't as conservative as U.S. REITs tend to be. But even that's changing.
“A town center ought to have some serendipity,” argues David Zoba, COO of Columbus, Ohio-based Steiner + Associates, which helped pioneer the town center concept with its influential hometown project, Easton Town Center. “The visitor should come across something unexpected.”
Take, for example, the serendipity of finding a theater/bowling/bar/restaurant complex, which is on the drawing boards at both Steiner's 1.2-million-square-foot Bayshore Town Center in Milwaukee, Wis., and the developer's planned 1.5-million-square-foot Glory Park in Arlington, Tex. And at Old Mutual Properties' Merlyn Park Complex in Pretoria, South Africa, you'll find a rooftop drive-in movie theater.
In Calabasas, Calif., the city hall, performing arts center and library are being rebuilt next to Caruso Affiliated's Commons at Calabasas. And Caruso located The Lakes at Thousand Oaks, Calif., adjacent to that city's performing arts center and city hall.
In suburban Atlanta, Hedgewood Properties' Vickery Village was built next to an elementary school and middle school and near the site of a planned high school. The Forsyth County YMCA is located there as is a performing arts center where music classes are held, attracting mothers who ferry their children to and from the facilities to spend time shopping at the boutiques.
“The best foot traffic is between 1 p.m. and 4 p.m. on weekdays, when mothers combine errands with picking their children up at school or delivering them to a music lesson or YMCA activity,” says Cheri Morris, chief executive of Atlanta-based developer Hedgewood Properties. The YMCA alone attracts 1,000 visitors a day.
And in downtown Los Angeles, New York-based Related Urban Development plans its $2 billion, 3.6-million-square-foot Frank Gehry-designed Grand Avenue mixed-use property across from Gehry's acclaimed Disney Hall performing arts center as the connecting tissue to revitalize what has been a depressed area.
“The development will further validate Grand Avenue in downtown L.A., where the Los Angeles Museum of Modern Art and Dorothy Chandler Pavilion are already located,” says R. Webber Hudson, Related Urban executive vice president.
Pairing with partners
What retail developers lack is the money and experience to build and operate such disparate properties. As a result, the serendipity often must come from partners. “Part of the dilemma is how this gets paid for,” says Higgs. “You must shop around for partners that have those specific experiences and funding opportunities.”
The partnerships vary. Some are public/private partnerships where the developer provides space for, say, an entertainment space in return for building rights. Others are joint ventures with specialty operators.
The companies or public institutions that can add to the diversification of a shopping experience measure success differently than retailers, where results are computed simply as sales per square foot. They might count ticket sales, for example. The ultimate goal of all this variety is to increase retail sales by encouraging shoppers to stay longer and to provide shopping and entertainment for residents. Even turning parking structures into revenue-generating components ups the ante.
So just who is forging relationships with retail developers? Aurora, Ont.-based Magna Entertainment Corp., for one. North America's leading owner and operator of horse racetracks, based on revenue, is working with Forest City Enterprises Inc. to build retail developments around Gulfstream Park in Florida and Caruso Affiliated at Santa Anita racetrack in California.
At Gulfstream, the walking ring usually located in front of the track's clubhouse will become the town square where horses will be paraded, says Will Voegele, Forest City vice president of development.
“Once we were involved, the design had a lot to do with our concurrence with Magna's vision and some of the unique creative ways we wanted to see the retail and racetrack be integrated,” says Voegele.
Another partner in mixed-use centers is Seattle-based Era Living. It is working with Lorig Associates and Stellar Holdings, both also in Seattle, to build an Era Care Community for seniors outside the city, on land adjacent to the planned revitalization of Northgate Mall, which the developers purchased from Simon Property Group for $11.2 million. The project is expected to be completed by the summer of 2009.
And IPic, based in Fort Lauderdale, Fla., is planning bar/restaurant/theater/bowling alley complexes for projects being developed by Steiner. One is set for Bayshore and another for Glory Park located between the Texas Rangers baseball and Dallas Cowboys football stadiums. The state-of-the-art theater will include a 120-seat bar, 200-seat restaurant, six-screen cinema and 12 bowling lanes, according to IPic.
“The theater business is changing,” says Zoba. “You must have event theaters — for late-night date events, not just a multiplex.” IPic is working with other developers to provide similar experiences at other mixed-use centers, though the company wouldn't name the projects, but said six locations will open over the next two years in Wisconsin, Texas, California, Illinois and New York.
Other firms teaming up with developers to expand the draw of mixed-use development include hotel and resort companies. Great Wolf Resorts, for example, plans some of its water-park complexes at such projects and Starwood Hotels & Resorts Worldwide plans three hotels as part of the 2-million-square-foot Memorial City project, a mixed-use community in West Houston, Tex. One of the hotels, Sheraton, will be built adjacent to Baseball USA, an 11-field baseball complex, which draws over 500,000 visitors a year.
Many of those visitors, like the 25,000 expected on major race days at Gulfstream, will shop and eat at the retail establishments and restaurants, boosting revenue generation. Meanwhile, residents can partake of the entertainment opportunities, while shopping and eating in a sustainable village.
Grocery stores are increasingly an element of mixed-use developments. “The best of these developments seamlessly blend the various building structures into livable communities that truly serve the residents and surrounding areas,” says Morris.
The much-desired serendipity at mixed-use developments unfortunately doesn't happen serendipitously. It is carefully planned and the space is merchandised to find just the right ingredients to make one center more interesting than another.
“It is important to us that our projects be unduplicated,” says Morris. “There is not to be a shopping center the likes of which you can visit down the road.” So Morris and her people go after specific shops, rather than taking on any business willing to sign a lease. That's why there's a Giggles for Kids toy store to serve mothers of school children and an orthodontist. Other shops include Peckenpaugh's Fine Foods, Lanier Family Healthcare and e. k. taylor, an upscale clothing boutique that advertises itself as being “kind to curves.”
Retailer e.k. taylor moved to Vickery from a shopping center — North Point Village — down the street. “Having the residences enhances the community and value of us as retailers,” says Shelley Freeman, the store's owner. “We have more potential here.”
Forest City shopped long and hard before it chose IPic as a partner, to provide a novel experience. And Caruso jumped at the chance to be located by a racetrack.
“With Santa Anita, we're trying to extend the stay of our guests,” says Caruso. “It's one more reason to come to that property.”
But diversity isn't for everyone. Many developers of mixed-use projects are more conservative than, say, Old Mutual Properties, which planned the rooftop theater in Pretoria and a themed test track, with different simulated conditions, to complement the Nissan showroom in Durban.
“We're not seeing a revolution across the board,” says Higgs of Development Design Group. “Many of these developers are REITs that have severe limitations on how they can spend their money.”
However, Higgs adds: “I'm sure that's going to change.”