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In recent years, vertical mixed-use developments with supermarket components have surged in popularity in many urban U.S. markets. The primary driver is the lack of land and the high prices of property in fashionable urban areas.

Young professionals who work downtown, couples without children and empty nesters are the main types of people who enjoy urban living. Many individuals who work downtown want to live within walking distance of their offices and enjoy the vibrancy of city life. When Baby Boomers become empty nesters, they often prefer low-maintenance apartments to single-family homes. Together they constitute the largest spending group in the country, which makes them especially attractive to retailers.

Mixed-use development has been popular in the dominant cities in the world for many years. Meanwhile, some U.S. residents became accustomed to infinity — large structures with huge parking lots. Now we're seeing the revitalization of urban neighborhoods and industrial areas. Developers are replacing older, inefficient structures with mixed-use developments that combine retail, residential and office space to provide “one-stop” living.

Savvy grocers follow urban neighborhoods that are experiencing mixed-use redevelopment. They understand that in a vertical neighborhood, they will provide apartment residents with the convenience they desire and gain market share.

A good example is the Time Warner Center at the southwestern corner of Central Park in New York City. Last year, Whole Foods Market opened a 59,000-square-foot store on the ground floor of the 2.8-million-square-foot complex.

Boston's Newbury Street is another example of mixed-use development done well. This historic area features designer shops, restaurants and art galleries in multilevel buildings that are architecturally significant. The popular Boylston area also features multilevel shops with retail and grocery components.

Southward Bound

Miami Beach is experiencing the mixed-use trend, and, in the Northeast, the driving force is the lack of land. The development of sprawling one-story retail centers that proved popular in Miami several decades ago is quickly diminishing. Throughout South Florida, construction cranes punctuate the skyline as developers break ground on mixed-use projects. Some of the most high-profile activity is in downtown Miami and the Brickell area, where trendy lofts and ultra-luxe condominiums top off upscale retail shops. South Florida's high population density, diversity and urban revitalization together create a powerful magnet for shops with an international flair.

A mixed-use development can become the center of a neighborhood, having guaranteed traffic from the residential component. An example is Mary Brickell Village, a 192,000-square-foot development in the heart of Miami's historic Brickell area. Anchored by Bally's Total Fitness and a Publix grocery store, the project will include Skyline at Mary Brickell Village, a 369-unit condominium tower.

Municipalities encourage urban development, and as a result, coexistence with nature will improve. Going vertical is a solution to the lack of land and an answer to the sensitive environmental conditions that densely populated states such as Florida and California are experiencing. People can coexist with nature, and every city must find ways to balance development and protect the environment.

Redevelopment is also occurring today in industrial areas. Developers are transforming landfills into usable sites with technology that can remediate the contaminated area. An example is the Biscayne Commons shopping center on Biscayne Boulevard in North Miami Beach, Fla. Another popular mixed-use development is the Alamo Quarry Market in San Antonio, Texas, which includes a Whole Foods grocery store.

Mixed-use developments are also growing in sprawling Texas metropolitan areas such as Dallas-Fort Worth. An in-town mixed-use project that has gained momentum in Dallas is the Victory development. Located in the central business corridor along Interstate 35 just north of downtown, Victory currently consists of the American Airlines Center. Phase II, scheduled to open in 2006, will consist of two buildings housing 90,000 square feet of space with offices and high-end retailers.

A Profitable Mix

In the Atlanta metropolitan area, urban revitalization is on the rise, and growth in the northern suburbs continues. In Midtown, for example, urban in-fill is finally occurring in the area between Interstates 85 and 75 and Peachtree Street to create much needed revitalization in a core part of the city. Plaza Midtown is a three-acre development that will include two 20-story towers with 70,000 square feet of retail, dining and entertainment space. The towers also will house more than 400 high-rise residential condominiums.

Undoubtedly, the trend toward mixed-use developments will continue in fast-growing urban areas. Rising land prices will shape the future of residential, commercial and retail real estate in urban markets over the next several decades. As land becomes scarcer and more expensive, we will see fewer sprawling shopping centers and malls with huge parking lots, fewer new single-family homes and fewer freestanding office buildings. Combined, this provides developers, retailers and residents with a wealth of new options.

Vertical mixed-use centers will become more popular along the East and West Coasts and in some urban markets. In the future, expect growing popularity of grocery-anchored vertical developments and the fact that there will be very valuable types of mixed-use properties anchored by supermarkets.

President and chief operating officer of Equity One Inc., a North Miami Beach, Fla.-based real estate investment trust that owns and manages shopping centers across the South and in the Boston metropolitan area

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