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RETAIL GIVES NEW START TO LONG-BLIGHTED CITIES

BY CURT HAZLETT

John Stainback helps cities redevelop their downtowns, and he’s a busy man these days. “I’ve been in this business since 1985, and I can’t believe the exponential growth in the last 18 months,” said Stainback, whose Houston firm, Stainback Public/Private Real Estate, guides public-private partnerships through the planning and construction of mixed-use projects.

The redevelopment boom can be seen in cities across the country — from small ones like Chapel Hill, N.C., where Stainback is shepherding a project, to such metropolises as Buffalo, N.Y.; Cincinnati; and Louisville, Ky. Five decades after suburban flight began stripping cities of their vitality, Americans are moving back to the cities. And retail is following right behind — encouraged at every turn by the cities themselves.

“We’re seeing a huge bump in residential construction in most downtowns, and retailers are responding to this growth and want to be part of it,” says urban planner Michael D. Beyard, a senior resident fellow at the Urban Land Institute and its ULI/Martin Bucksbaum chair for retail and entertainment. “That makes for a major shift.”

The re-retailing of somnolent downtowns has been under way for a while now, but its form has shifted. Some early examples — Taubman Centers’ 1.1 million-square-foot MacArthur Center, Norfolk, Va., for instance, which opened in 1999 — were essentially enclosed regional malls adapted for an urban setting, but Beyard notes that the movement is now taking “a more holistic approach.”

“There is less cataclysmic money and a more thoughtful step-by-step process,” Beyard said. “Not huge, but smaller and more specialized projects with clusters of cultural and civic uses along with incentives for residential.”

Chapel Hill is but one example. The city brought in Stainback Public/Private to help transform three downtown parking lots into an $82 million project consisting of 109 residential units and between 60,000 and 80,000 square feet of retail. Among other services, the firm has provided market analysis, planning and assistance with the selection of developers.

Downtown redevelopment “is one of the hottest markets in the country right now,” said Stainback. “Governments own a tremendous amount of property downtown, and typically it’s underutilized.” Chapel Hill “is a classic example of a city owning strategically situated properties that are being used as parking lots, and they realized they could use them to redevelop downtown.”

As the trend gains momentum, public-private partnerships are becoming increasingly popular, especially in cities where private developers are not yet ready to take the full risk of a project. That is often the case in cities whose downtowns are most in need of revitalization.

In Louisville a collaboration between the city, the state and Baltimore-based Cordish Co. produced Fourth Street Live, a $75 million redevelopment of the failed Galleria mall downtown. In the year since its first tenants opened their doors, Fourth Street Live has drawn 4.2 million visitors, making it the most visited site in the state. “The partnership has been terrific,” said Blake L. Cordish, a Cordish Co. vice president. “Every facet of it has met or exceeded our goals and those of our partners.”

When the Galleria opened in 1982, it was a bit of suburbia transplanted downtown — an enclosed mall with an anchor and suburban-style tenants. Twenty years later it was largely dark. Louisville officials contacted Cordish Co., whose Power Plant Live project had helped revitalize Baltimore’s Inner Harbor. “The city recognized it had a tremendous problem in the Galleria, and it was having negative effects in terms of perception,” Cordish said. “It didn’t give energy to the core.”

The company de-malled the property and reopened Fourth Street, which had been covered over by the structure. Portions of the mall’s glass roof were left in place, allowing protection from the elements for outdoor events. The resulting center covers two square blocks and includes 350,000 square feet of retail and entertainment, as well as 200,000 square feet of office space.

No one can say that downtown Louisville lacks energy now. The new center’s tenants — which include six restaurants, a food court, a Lucky Strike bowling alley, a Felt pool hall and a variety of specialty retailers — have filled the area with foot traffic. The city allows Cordish Co. to close Fourth Street to vehicles on Wednesday through Saturday nights so it can be used as a venue for events, of which there will be 150 this year.

Successful urban revitalization requires a critical mass of complementary attractions, says Cordish. “There’s more than one right answer, but we think the best path is one where there’s a catalytic development that occurs in a concentrated way and the public focuses its energies on a core master plan,” he said. “That model, which we call the laser beam model, we feel is the most powerful and will have the deepest effect in the quickest time frame.”

Perception is everything, Cordish says. “A success can flip the switch almost overnight,” he said. “It can have that catalytic effect.”

Among Cordish Co.’s ongoing projects is an even bigger turnaround attempt in Kansas City, Mo.’s long-suffering downtown. There, design work has begun on the Power and Light District, a mixed-use development on nine blighted city blocks that will include retail on every street, five residential towers, a hotel and an arena. “That’s how you dramatically change and enliven a market,” said Cordish. “What’s exciting about Kansas City is that what’s happening is an organic movement back to the city in terms of residential.”

Of course, redevelopment can occur on a more gradual scale. In Cincinnati, a new nonprofit called the Cincinnati Center City Development Corp. (3CDC) has assembled a group of private-sector leaders, with Procter & Gamble CEO A.G. Lafley serving as chairman, to help revitalize three downtown areas. One is the Fountain Square District, nine blocks in the heart of the city.

The working group for that project, headed by retired Federated Department Stores Chairman Jim Zimmerman, has spent months lining up public support for a plan that would add retail and dining to storefronts around and near the 130-year-old fountain.

The plan takes the holistic approach described by the Urban Land Institute’s Beyard. Working with urban retailing specialist firm Williams Jackson Ewing, 3CDC plans to attract about 20 retailers, mostly restaurants, to sites throughout the district, says Mary Lynn Bourne, 3CDC’s vice president of development. The sites will range from 2,000 to 5,000 square feet.

The idea is to “fill in the missing pieces,” Bourne said. “Retail and entertainment provide the authenticity of the experience.”

Though the Fountain Square plan calls for extensive physical changes, “without having retail around, it doesn’t give anybody a changed experience,” Bourne added.

The downtown redevelopment stakes are especially high for rust-belt cities that have suffered the greatest loss of downtown vigor.

Buffalo’s central business district “has seen a lot of flight, just like a lot of cities,” said Timothy Wanamaker, president of the Buffalo Economic Renaissance Corp. and head of the city’s Office of Strategic Planning. But the city is coming back. A recent study concluded that the downtown housing market could sustain growth of about 1,700 units a year, driven by an influx of young professionals and empty nesters.

That growth is creating a new market for retail, Wanamaker says. Late last year Bass Pro Shops announced that it would open a 250,000-square-foot store in Buffalo’s vacant Memorial Auditorium, part of a downtown project that will eventually include a museum and additional retail development on the Lake Erie waterfront.

The city hopes that drawing the retailer to the auditorium (the former home of the Buffalo Sabres and now “a true white elephant,” says Wanamaker) will help seed the business district for more retail, which will in turn encourage more people to live in and visit the downtown. Wanamaker says he has fielded plenty of calls in recent months from national retailers, including Target, that are drawn to a market that is not only underserved but lies only a short drive from under-retailed shoppers in Canada.

Bass Pro Shops did not come cheap. It is getting $80 million in incentives, including tax increment financing, tax credits from both the city and the state, and bond issues to help with infrastructure improvements.

Wanamaker says a growing number of financing tools are available to help public-private partnerships pull off such ambitious deals. “But it’s still a very arduous process to put all the financing together,” he said. “This deal has been two years in the making. Anchor retailers can stand that, but smaller retailers can’t.”

But to cities like Buffalo, it is worth the trouble. “Retail is extremely important if you want to create livable communities,” said Wanamaker. “You need to have entertainment opportunities and residential, and you need retail. It’s the only way you’re going to compete with the suburbs.”