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MIXED-USE DEVELOPMENT MORE COMPLICATED THAN EVER

BY STEVE MCLINDEN

Despite a greater acceptance of mixed-use “live-work-shop” destinations, the risks, politics and planning layers surrounding such projects are not getting any simpler, said developers during a panel discussion at the Spring Convention in Las Vegas.

On the contrary, the complexity and the aesthetic demands of mixed-use projects continue to grow, said Thomas J. D’Alesandro, vice president and Eastern region manager at The Woodlands Development Co., Spring, Texas.

“To really make a mixed-use project work, it’s almost akin to calling a meeting of the United Nations, with all the retail people, office people, architects and multifamily or even hospitality people starting off on different pages,” he said. “But from the very beginning, it’s very important to give everyone the [project] vision. Each party needs to know how to describe the program.”

D’Alesandro learned such lessons on the job, as he leased the 250,000-square-foot Reston Town Center, in Reston, Va., a highly regarded mixed-use property completed in 1990.

Reston Town Center confirms that an attractive, street-friendly, “sense of place” design really does lure more people, D’Alesandro said. “We found that the space between the buildings is very important,” he said. “You have to program constant activity into these, with events and festivals. At Reston 15 percent of the project is open space. It helps give it that human scale.”

D’Alesandro suggested that such projects as Reston are best developed in phases. “Projects that were started all at once have run into problems because they are less flexible,” he said. “You overreach that way, and it’s too late to go back and [alter] your plan.” While the retail components are usually pegged to go into specific strategic locations, the residential and office portions can be moved around as a project progresses, he said.

Developers are also finding that residential density seems “to drive the program” as the most lucrative profit center in most mixed-use projects, said Brian Myers, president of NuQuest Ventures, a Laguna Beach, Calif.-based development firm. “In California, residential land values [in mixed-use developments] are three to four times that of the commercial properties.”

The public sector does not always smooth the way for mixed-use centers, Myers noted. Many cities and governments often make the mistake of doing their preliminary planning and entitlements for newly zoned mixed-use property without first consulting the private sector. “I always encourage government agencies to partner with private companies first to get off on the right foot,” he said.

Government can help in other ways, too. Mixed-use projects near mass-transit stops are generally eligible for state transportation funds or other incentives if they demonstrate potential to reduce motor vehicle traffic in a region, said John Waldron, associate partner of McLarand Vasquez Emsiek & Partners, a California-based design firm. “That is a big factor these days,” he said.

Arbor Lakes, a mixed-use town center in the Minneapolis suburb of Maple Grove, got more than it bargained for when city officials decided to move the town hall and the police and fire departments into the development, said Timothy W. Murnane, senior vice president and general manager of real estate at Minneapolis-based Opus Northwest, the project’s developer. (Opus Northwest is an arm of Opus Group.) Consequently, the facilities draw people for city services who then stay to shop at the complex.

Government facilities are an ideal component for mixed-use projects because they bring another facet to the mix, panelists said. In fact, it is imperative that such projects, particularly town-square-style developments, “have the right blend of New Urbanism, symbolism and local flavor,” said Steven C. Mulhern, director of development at Aliso Viejo, Calif.-based Shea Properties, which is putting the finishing touches on Arvada (Colo.) Ridge. The 68-acre, transit-oriented site will have a SuperTarget anchor, other national and niche retailers, some offices and as many as 600 residential units.

Finding the right architect is crucial, Mulhern said. “Ideally, you want someone who has done these before, but who is local and knows the culture well enough to make the plan unique and locally identifiable.”

Multilevel downtown retail, once ubiquitous in the form of the department store, is making a comeback, said Craig H. Sher, president and CEO of The Sembler Co., St. Petersburg, Fla. Sembler’s nearly completed Edgewood Retail District, in Atlanta next to a transit station, has a brick-faced Main Street of shops and cafés plus a two-story Target and some other national two-story anchors.

“That’s known as a densifying of big-box stores,” said Sher. “They are coming up with adaptive formats and finally saying, ‘Why not go vertical.’ ” New-generation escalators and elevators are designed to transport shopping carts and larger purchases from floor to floor with ease in such layered buildings, he said.

Most quality urban mixed-use projects will not become obsolete as the many cookie-cutter suburban centers have, said Sher. “They are built to withstand the test of time,” he said. “For a long time, developers fought planners. Now developers are saying planners were right all along.”

The modern-day mixed-use development, once a puzzle to city planners, real estate practitioners and financiers, has been elevated to preferred-project status in municipalities around the country. More than ever, cities are recognizing that a creative balance of uses will help keep their shopping and entertainment offerings vibrant and relevant plus provide new urban tourist destinations that promote less use of the automobile, panelists said.

“We are quickly rediscovering our urban cores, and as people move back to the central city, the need for supportive retail services has come back as well,” said Alan Beaudette, senior vice president of Lowe Enterprises Real Estate Group, Irvine, Calif.

Demographic changes hint that more urban mixed-use projects will continue to spring up, and their residential components will continue to play a big role. The average U.S. household has declined in size from 3.1 people 30 years ago to about 2.6 currently, according to the Census Bureau. The data indicate that there are more singles and empty nesters to seek urban housing.

The sentiment is growing that mixed-use projects built on transit lines and that have strong residential components address both environmental and traffic concerns and strengthen the tax base, sources say.

“Mixed-use isn’t a fad,” said Myers. “It is a reality — it is how you get plans approved these days. And it is how you maximize value.”