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EXPERT ANALYSIS: Closer to home

The days of consumers spending their free time exclusively at a suburban mall is becoming a novelty of the past. However, consumers demand more from businesses including instant accessibility for optimal productivity and convenience. Retailers and property owners must respond by creating stylish, functional mixed-use destinations to meet these needs.

Lengthy and inefficient commutes propel housing sales in many urban areas. And, people who live and work in urban and suburban downtowns are less willing to battle traffic to outlying areas to shop.

Downtown Los Angeles' CBD will realize a 55% increase in housing stock within the next three years, primarily adding mid-level and executive housing. This creates the need for mixed-use urban infill projects offering retail, restaurants and entertainment closer to home.

Because land is scarce, developers, planners and architects are faced with the challenge of finding developable urban and suburban downtown sites and utilizing them to their maximum potential. Developers and architects challenge themselves to create such projects. They strive to take advantage of the built-in demographics of well-established, existing urban sites.

Chicago-based Urban Retail Properties Co. has a strong track record for urban infill development. Water Tower Place, on North Michigan Avenue in Chicago, opened in the mid-1970s with seven stores of stacked retail and hotel, office and residential components. Later, Urban developed Copley Place over the Massachusetts Turnpike in Boston's Back Bay, and 900 North Michigan in Chicago. These projects provide some of the highest investment returns of any mixed-use property in the nation.

The necessary base

“Critical mass — of office, residential and visitor markets — is the key to successful urban infill projects,” says Ross Glickman, president of leasing, Urban Retail Properties Co. “Developers cannot pioneer the concept of retail and office uses. In order to support the mixed-use office and residential components, there must be an existing base of people who live and work in the area. A strong visitor market of tourists and convention attendees is necessary to support the hotel component and make the whole project work.”

Assembling potential infill parcels can be prohibitively expensive. Few projects can absorb the high land cost. When sufficient parking or transportation intercepts are added, local tenants may be willing to pay above market rents without city participation.

A city's financial participation helps ease this burden at times when cities have the fiscal incentives to assist developers through public/private partnerships, tax increment financing districts or other creative financing methods.

The financial success of these projects is convincing city leaders to invest in well-designed infill developments that offer the potential of new, long-term revenue streams to their general funds.

Other options

But what happens when cities can't or won't provide financial assistance for off-site improvements? Should the project simply be dismissed? The answer is no.

Creative thinking by developers, cities and planning professionals have structured several very successful infill projects around the country and many others are in the pipeline.

One popular solution is to enhance a project's allowable density, encouraging vertical and stacked projects. Stacked development encourages more on-site parking and street front retail if the city allows an increase to the existing floor to area ratio. For example, in Tempe, Arizona, HTH Group currently is working on a proposed five-story infill project consisting of a two-level ground floor department store and two stories of office space separated by three levels of parking.

The retailer in this project has a strong streetfront presence; office tenants pay more rent for the higher views. The parking structure is two levels above the street, convenient for both the retailer and the office tenants.

Palm Springs

Esplanade at Palm Springs in Palm Springs, Calif., poses a very different challenge. The existing site was an outdated downtown regional mall that had turned its back to pedestrian and vehicular traffic along Palm Springs' main shopping district. Over time, customers turned their backs to the mall, eroding the project to nothing more than vacant shops.

The current solution calls for demolishing 80% of the site and replacing it with a mixed-use project that will be open to the sky and will reconnect with the city's streetscape.

The proposed venture between the Agua Caliente band of Cahuilla Indians and Washington, D.C.-based Combined Properties calls for new storefront retail that will share panoramic view rotundas and outdoor living rooms and courtyards and may also include a new hotel and housing. In exchange for an increase in density, height, and urban use elements, downtown Palm Springs will be revitalized with a richer streetscape and a truly European environment.

Infill development

Many infill projects succeed by reinventing a city's premier attraction. Across the Red River from Shreveport, La., Bossier City, La., has positioned itself as the preferred destination for riverboat gaming and entertainment. It is the nation's third largest gaming destination.

An exciting new infill development, Riverwalk, is shaping up as a critical piece of the reinvented Bossier City.

Project developer John Good of locally based Riverwalk Entertainment LLC worked diligently to assemble 40 acres along the riverbank connecting the city center with the riverboat casinos.

The project offers new ways for guests to enjoy the Red River's shoreline beauty including retail, cinemas, live performing arts theaters and jazz clubs, restaurants, a bowling alley, hotel, sporting lodge and an aquarium.

When completed, the plan is for this project to be the piston driving the engine of a revitalized Bossier City.

Moving forward

Minnetonka, Minn.-based Madison Marquette is currently redeveloping a former department store in Cincinnati. The downtown infill project includes two levels of retail and 110,000 sq. ft. of office space in the heart of the CBD.

The renovated and reconfigured Fourth & Race will connect via skywalk to Tower Place Mall and the upscale Fountain Place shopping center.

The company is revitalizing another large department store site in Westwood Village, Calif., reconfiguring the space into a neighborhood gourmet grocer and home design center.

Unlimited opportunities

Urban infill opportunities are not limited to thriving metropolitan areas and can take many forms and shapes. For example, HTH Group is working with several developers and cruise ship operators to create a touch of urbanism in island resorts, building infrastructures and retail towns that support cruise ship passages and local town residents.

In many cases, these sites are the last viable lands to develop in established port of call towns — towns already surrounded by housing, offices and hotels. The missing link is that magical component most of our major cities are built around — retail and entertainment.

The measure of successful, high profile projects is suburban retailers meeting urban challenges. Innovative infill projects responding to consumers' new lifestyles hold the greatest promise for the continued evolution and reshaping of the urban landscape.


Richard E. Huelsman is CEO and founding partner of H T H Group, LLP.

His 30-year career spans every arena of retail design, from large malls and power centers to specialty retailers.

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