Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/827208
scheduled to open in about a year. Plans call for about 400 apartments, which should attract residents who want an ur- ban experience without dealing with downtown Philadelphia congestion, says Michael Markman, president of BET Invest- ments. (Bruce Toll, a co-founder of Horsham-based home- building giant Toll Bros., is the principal of BET Investments.) In addition, the Children's Hospital of Philadelphia ended up leasing some 7,000 square feet for pediatric offices. "The hospital was looking for a high-profile location frequented by their audience: mothers and children," he said. "So if more women are coming to the project and making it their routine, they're more likely to stay and shop. It's a harmonious use." Westfield Corp., which has targeted a handful of Califor- nia malls for makeovers that will add residences, offices and hotels. These range from the near-wholesale demolition and redevelopment of Westfield Promenade, in Woodland Hills, Calif., to the expansion of Westfield UTC, in San Diego. In Orem, Utah, Salt Lake City–based Woodbury Corp. re- cently completed the first phase of a $500 million renovation of the 1970s-era University Mall, which is being expanded into a mixed-use development spanning some 130 acres. Woodbury has renamed the project University Place and has so far added a 150,000-square-foot office building, nearly 500 apartments and some green space to about 1 million square feet of existing retail space. Similarly, Santa Monica, Calif.–based mall REIT Macerich is embarking on a luxury-wing upgrade at its 1.8 million square foot Scottsdale (Ariz.) Fashion Square, where sales per square foot were off last year by some $18 from the previous year, to $727 per square foot. Following the redo will be the addition of offices, residences and a hotel. During the com- pany's fourth-quarter 2016 earnings call in February, COO Robert Perlmutter told analysts that the project provided the opportunity to expand luxury retailers and entertainment and restaurant offerings, and to bring a captive audience to the property. "This is a site that can justify densification," he declared. In particular, he added, the company owns some offices in Phoenix that have experienced "some fairly signifi- cant rental rate growth over the last couple of years and [that] have been a good contributor to the shopping centers." North American Properties joined Stormont Hospitality Group and the city of Alpharetta, Ga., to develop a $112 million, 325-room hotel with a 47,000-square-foot con- ference center, scheduled to open early next year. The con- ference center represents a further push to bring bodies to the shops and restaurants at the 86-acre Avalon mixed-use neighborhood, says Mark Toro, an Atlanta-based partner at North American Properties. "Every one of these uses brings energy at various times of the day — we call it the 'energy curve,'" he said. "If you're a homeowner, you're walking the dog at 6 a.m. If you're an of- fice worker, you're there at lunchtime. If you're a hotel visitor or resident, you're there to shop and dine in the evening." n Developers undertaking mixed-use projects face ob- stacles they never encounter when building traditional retail centers. These challenges may lie inside or outside the projects themselves — whether balancing vastly different uses, say, or allaying the concerns of municipal officials. Or consider the need to address the potential disturbance of late-night noise from bars and movie theaters (which arguably comprise the most critical elements of these developments): This requires significant design and legal expertise. Residential contracts must inform renters that they are living in an urban environment that has the potential to be noisy. The failure to foresee some challenges can cause problems midway through construction, says David Glover, a principal at architec- ture and design firm Gensler. He is currently working to find a noise- and vibration-damp- ening solution at a project under way where a devel- oper had wanted to install a music venue between the offices directly above and the retail directly below. The developer wrongly assumed that the tenant would pay for soundproofing, Glover says. "The landlord kicked it down the road so long that now we're having to deal with it," he said. "Mitigating sound pollution and vibration is very expensive to do." Projects often require cool- ing systems around trash areas to prevent restaurant refuse odors from wafting through the property, particularly as food-and-beverage operators take up growing amounts of space, says Glover. From a more fundamen- tal perspective, while the potential of increased traffic appeals to shopping cen- ter owners thinking to add apartments, offices and other nonretail property types to their shopping centers, these various uses must be able to stand on their own, says Lisa Stoddard, a CBRE executive president based in Washing- ton, D.C. "A developer might say, 'I'm going to have 500 people living on top of retail,'" she said. "But that does not a trade area make — you have to take into account what is surrounding the project in the trade area itself." What is more, many municipalities are pushing for mixed-use projects but often lack the expertise to recognize where they would succeed. In the San Francisco Bay Area, for example, jurisdictions want apartment developments to include ground-floor retail, says John Cumbelich, founder and CEO of the Walnut Creek, Calif.–based John Cumbelich & Associates retail brokerage. But much of the retail space is vacant, while the housing market is so strong that devel- opers and lenders hardly wor- ry about empty storefronts. "The litmus test is, who is campaigning for mixed-use? Is it government bureaucrats that don't have any skin in the game?" said Cumbelich. Further, he argues, with some exceptions, mixed-use works best in urban environments that already enjoy density. Proponents do point out, however, that if done right, mixed-use properties act as main-street destinations for the surrounding neighbor- hoods. "Most projects we see to- day are mixed-use and being developed in what are still premier locations," said John Lambert, retail market lead for JLL in Florida, who is working with Boca Raton, Fla.–based Encore Capital Management on the Plantation [Fla.] Walk mixed-use project. "It's a mixed-use world." — JG IT AIN'T EASY