Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
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36 S C T / J U N E 2 0 1 7 Mixed-use projects have become increasingly popular among business corporations, which view them as a recruiting tool as they compete for young workers in search of an urban environment to live in — or at least, an environment that offers restaurants and other amenities. One of the most recent demonstrations of this current corporate mind-set was evident at Federal Realty Investment Trust's signature Santana Row development, in San Jose, Calif. Late last year big-data analytics firm Splunk occupied an entire 234,500-square-foot speculative office building at the 1.7 million square foot project, which includes retail, residences and a hotel. Also last year Federal Realty began building a larger office structure at Santana Row, also on a speculative basis. "We did a ton of research and talked to every top office broker in the market to understand the supply-and-demand factors in Silicon Valley," said Chris Weilminster, a Federal Realty executive vice president and also president of the firm's mixed-use division. "We understood how important having an amenity-rich environment right at the doorstep is to office users today." In Plantation, Fla., several corporations have expressed interest in occupying a vacant, 160,000-square-foot office building as part of the $350 million future Plantation Walk mixed-use development, says John Dowd, vice president of retail development for Encore Capital Management, a Boca Raton, Fla.–based real estate investment firm. Encore Capital is developing this project on the site of the 660,000-square-foot Fashion Mall, which closed 11 years ago and became the target of a failed redevelopment effort. Encore Capital bought the property in a bankruptcy auction, along with the office building, in 2015 for $37.7 million. The firm completed razing the mall this year and is building 200,000 square feet of lifestyle retail oriented toward entertainment and restaurants, including a probable 30,000-square-foot food hall, plus 700 luxury apartments. A 260-room Sheraton hotel under separate ownership operates at the site. "We've had a lot of office tenants come to us and say, 'Wow, a full-service hotel, restaurants and apartments — we'd like to be part of that kind of environment,'" said Dowd. "It's great for their employees and for business people coming to visit the company." In Alpharetta, Ga., North American Properties has all but wrapped up the 1.2 million-square-foot second phase of its 86-acre Avalon neighborhood, in effect doubling the size of the $1 billion project, which contains single-family homes, condos, apartments, offices, retail space, and public parks and event space. A 227,000-square-foot office building jointly in Avalon developed by Hines and Cousins Properties was 95 percent occupied before it opened, according to Mark Toro, an Atlanta-based partner with North American Properties. "Competition for talent between office users is fierce today," Toro observed. "If I'm going to recruit and retain the best and brightest workers, I can no longer be in a suburban office park." — JG Demand for mixed-use continues to grow some 20 years after New Urbanism practitioners began trumpeting the concept as smart development. "Mixed-use is desired by almost all constituents," said Drew Alexander, president and CEO of Houston-based We- ingarten Realty Investors, which is pursuing mixed-use af- ter having begun to pare back its portfolio of suburban retail centers in 2011. "It's what the market wants, it's what the cities want, and tenants like it and consumers like it. There are only a few examples where stacked retail works, so if you want to add density, you're typically mixing uses." In West Seattle, Weingarten formed a joint venture with Miami-based homebuilder Lennar to develop 389 apartments on five stories at The Whittaker, above a nearly $31 million, 65,000-square-foot shopping center now under construction. In Houston the firm teamed up with Hanover Co. and Ziegler Cooper Architects to construct a $150 million, 300-unit luxury rental tower atop 10,000 square feet of restaurant space next to its venerable River Oaks Shopping Center. Weingarten is also investing some $316 million on two planned, Harris Teeter–anchored retail centers in subur- ban Washington, D.C., that will be topped with apartments. Further, Weingarten is exploring adding apartment, of- fice, town home, senior housing and hospitality uses at its 170,000-square-foot Cambrian Park Plaza shopping center, in San Jose, Calif. But some uses are trickier than others, Alex- ander cautions. "Residential helps draw people to shopping centers and is a little bit more predictable and stable business than offices or hotels," he said. "If you miss pricing apart- ment rents in the first round, you can reprice them the next year. If you miss it on office, you've missed it for a few years." Butler Enterprises is adding residential space to its Butler Town Center property, in Gainesville, Fla. Anchoring the proj- ect will be a Whole Foods store, a Regal cinema and a food hall. In April Butler announced that two luxury apartment developments totaling some 200 units will open in the fall of 2018 along with the retail district. Also in April, Jackson- ville, Fla.–based Regency Centers said it had begun develop- ing Mellody Farm, in Vernon Hills, Ill., a 270,000-square-foot shopping center anchored by Whole Foods, Nordstrom Rack and REI. Focus Development and Atlantic Realty Partners are developing 260 luxury apartments at the project. Meanwhile, Horsham, Pa.–based BET Investments con- sidered the beleaguered 1.1 million-square-foot Granite Run Mall, in suburban Philadelphia, a good mixed-use opportu- nity when the company acquired it from the lender in 2013 for $24 million. The developer demolished some 800,000 square feet to make way for an 820,000-square-foot outdoor retail project oriented toward restaurants and entertainment. The Promenade at Granite Run, as the project is called, is GREAT PLACES TO WORK THE PERFECT MIX