Retail Traffic

Study Abroad

Mixed-use development has been a hot topic in the U.S. for the past few years. But in the race to get projects done quickly, developers may have lost touch with what makes such environments thrive. The result is that very similar projects across the country are missing one of the key ingredients that make mixed-use work: a connection to what's already there. So as the pace of development slows, it might be a good time to stop and take stock of what's working and what's not. And it also might be an opportunity to study overseas — particularly Asia — where many architects say mixed-use is being done better than anywhere else.

For example, consider Xintiandi, or New Heaven and Earth, a 645,800-square-foot mixed-use complex completed seven years ago in Shanghai. The development, which in 2003 received an Award for Excellence from the Urban Land Institute, is cited by architects as one of the best examples of mixed-use anywhere in the world.

“It's one of the nicest places to just meander through,” says Dawn Clark, principal in the Seattle office of architecture firm NBBJ. “There are all sorts of little buildings, restaurants and shops. You have a sense of an older connection to that place.”

Architects say Xintiandi skillfully combines retail, entertainment, residential and hospitality uses and blends together old and new architecture, making the project feel like a natural part of its urban environment. That's in stark contrast to many clearly manufactured mixed-use complexes in the U.S. that appear as if they've been dropped from the sky out of nowhere, according to Ming Zhang, a principal with MulvannyG2, a Bellevue, Wash.-based architecture firm.

Xintiandi sits in the center of Shanghai, one block away from a major subway station and is in the middle of a steady flow of traffic. The South Block of the project, which houses shopping, entertainment and residential uses, is designed in a modern style. Meanwhile, the North Block uses restored Shikumen houses, a kind of tenement building unique to Shanghai, to provide an array of high-end boutiques and restaurants. In addition, Xintiandi is connected to a 473,600-square-foot public park, complete with trees, shrubbery and a man-made lake. Project developer Shui on Land, a Chinese firm, “took traditional Shanghai row houses and made [the area] into a pedestrian, people-friendly retail experience,” says Zhang. “It's blended into the fabric of the city.”

Ideally, that's what developers of mixed-use centers in the U.S. strive for. Yet oftentimes, they go about the task the wrong way, says Karl Kalcher, managing director with MindFolio Ltd., a London-based consulting firm. Aside from hewing too closely to existing models, another mistake, in Kalcher's view, is when developers place uses next to each other horizontally, rather than stacking them vertically. “When you set the uses side by side, you are not creating a true mixed-use [environment], which is really what a city fabric is. It's sort of organic and messy,” says Clark.

Perhaps one of the biggest challenges U.S. developers face comes down to the old mantra of “location, location, location,” according to Marios Savopoulos, principal and director of design with Perkowitz + Ruth Architects, a Long Beach, Calif.-based architecture firm. A successful mixed-use development needs existing traffic and a public transportation network to function properly, he notes. Mixed-use won't work in a suburban location that lacks an existing draw for people. Because developers overseas often have to deal with land constraints unknown to U.S. builders, they have been more successful incorporating these lessons into their projects, which is why U.S. companies would do well to follow their lead, says Roy H. Higgs, CEO and senior partner with Development Design Group, a Baltimore-based architecture firm.

Higgs also thinks the way U.S. companies are structured may play a role in the conservatism in how mixed-use is being applied. “In my view, the proliferation of REITs has, to a significant degree, led to the death of innovative real estate development,” he notes. “It's been copycat, copycat, copycat. But over a number of years we have made the point quite forcefully that some of the more innovative developments have been occurring outside of the U.S.”

Within city limits

Placing a mixed-use project in the middle of an existing urban center provides several major advantages. In best-case scenarios, projects can be part of larger redevelopment schemes where developers have control over multiple plots of land or are working in concert (rather than competing) with developers of nearby sites. Indeed, a lot of overseas mixed-use complexes tend to be created as part of larger redevelopment efforts, Clark says.

For example, several years ago, the Spanish firm Riofisa won a public competition to redevelop the Principe Pio transit station in Madrid. The firm added 410,000 square feet of retail and entertainment space to the 129-year-old structure. But, because it had to remain respectful of the original architecture, Riofisa managed to make its contemporary spin on the design of the retail and entertainment components fit within Madrid's existing aesthetic, according to Savopoulos.

“They respected and complemented the initial historic building,” he says. “It didn't feel like Disneyland, it was authentic.” (Principe Pio was completed in 2004. RTKL Associates, Inc., a Baltimore-based global design firm, served as the architect on the $130 million project.)

In addition, the scarcity of land in most urban environments places pressure on developers to come up with innovative ways to make the uses coexist in one space. One of the best examples of a successful mixed-use complex with a rather small footprint is another Shanghai property, the Grand Gateway Plaza, according to Greg Carpenter, principal in charge of design focusing on China and the Middle East with MulvannyG2.

The 3.3-million-square-foot Grand Gateway, developed by Hang Lung Properties, combines 1.1 million square feet of retail space, two 52-story office buildings and two 34-story residential towers on a 12-acre site in the commercial hub of Shanghai. A glass-domed atrium serves as the centerpiece of the project, with the taller office and residential towers flanking its sides. Among its other advantages, the Grand Gateway benefits from its location above one of the busiest subway stations in the city, which provides it with a steady flow of traffic. The project, designed by Seattle-based Callison Architecture, was completed in 2005 and cost $605 million to complete.

“In China, the land uses are extremely efficient because the price of land is very high,” says Ahsin Rasheed, senior partner and director of planning with Development Design Group. “But in the U.S., we do a single-story town center, adjacent to that we will do a residential [component] and there will be a parking lot somewhere in between. We are very comfortable to do those things because we have a lot of land, but that is a short-term approach. The more and more we spread out horizontally, the more walkability becomes a difficult phenomenon.”

Mixing and Matching

Providing a sufficiently diverse mix of uses also plays an important role in the success of a final project, according to Clark. For example, Development Design Group is currently working on Akkoza, a mixed-use development in Istanbul. When completed, the project will include not only four million square feet of residential space and more than 753,000 square feet of retail, but a hospital, several private schools, an amusement center, an open-air festival park, tennis and basketball courts and a fitness center, among other components. The project, which is being developed by the Turkish firm Garanti Koza, began construction in 2006.

Often, such diversity of uses springs from sheer necessity, according to Higgs. In many parts of the world developers don't have a large number of national or international retailers to choose from, so they are forced to work with a handful of established chains and populate the remainder with non-retail uses, including fitness centers, movie theaters, music and comedy clubs, libraries and, in some cases, health clinics. This variety often results in more dynamic centers offering residents and workers true convenience, architects say.

“A few residential units on top of a shopping center don't make a mixed-use center and they don't give you relevance,” says Clark.

Weaving entertainment and sports components into mixed-use properties provides a draw for additional traffic. At another of Development Design Group's upcoming projects in Istanbul, the firm will combine a 15,000-seat basketball arena for the popular Fenerbahce sports club with 269,000 square feet of retail and entertainment space, a 215,300-square-foot office tower and a 240-room hotel. The center is being designed in such a way that it will draw people every day of the week not only on game days, Higgs says. The sports arena can accommodate a variety of cultural events. Meanwhile, the retail component of the development will feature movie theaters and an Olympic-size swimming pool, as well as a family entertainment center.

Fenerbahce Ulker City is being developed by the Turkish Ulker Group and will open in 2010.

Reason to Hope

The good news for U.S. developers is that some of them have already begun adopting the trends outlined above. New York City-based Related Co.'s 2.8-million-square-foot Time Warner Center in Manhattan, for example, takes advantage of its location at a busy intersection in the heart of the city to lure both local residents and visitors from abroad, according to Clark. And Rasheed points to Atlantic Station, a 15-million-square-foot redevelopment project in midtown Atlanta, as a mixed-use complex that takes advantage of vertical integration in a city that is best known for its urban sprawl.

The trick going forward, however, will be trying to make such innovative projects the rule, rather than the exception, according to Zhang. “They've [foreign developers] practiced that for a long, long time. A lot of their development is very compact; it's mixed with hotel, residential and office components and it's very closely connected with the public transportation system.”

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