Mixed-Use Development Newsbriefs

National News and Trends
Q&A--Larry Gellerstedt: Population Growth Makes Mixed-Use Fixture of the Future
Mixed-Use Upgrade (Sees Lifestyle Hotels Boosting Mixed-Use)
Mixed-Use: Roundtable

Regional News
Plots & Ploys: Forget Freeways (When Mixed-Use Can Put L.A. Residents Closer to Work) (CA)
San Francisco Mixed-Use Project Nabs $55.5M Financing (CA)
Vail Council Approves $400M Mixed-Use Redevelopment (CO)
German Firm Nears Stake in Block 37 Project (Featuring a Mix of Uses in Chicago) (IL)
Kendall Square Sells for $211M (in Massachusetts) (MA)
National Harbor to Get More Hotels (as the Maryland Mixed-Use Expands) (MD)
Mixed-Use Due Along U.S. 1 (as Part of a Long-Delayed Revitalization in Maryland) (MD)
Mixed-Use Project Takes Kanawha Name (in North Carolina) (NC)
Developer Plans $2 Billion Race Car Resort in Beatty (as a Mixed-Use Alternative to Vegas) (NV)
Blueprint/Nassau County, NY: Mixed-Use Project Aims to Revitalize (NY)
Tall Building Isn't Suitable for Historic Area, Residents Say (as Mixed-Use Project is Put Under the Microscope) (OR)
Timetable Set for Lehman Mega-Development (Bringing Mixed-Use to This Pennsylvania Township) (PA)
Borough Tables Plans for Housing Complex (With Elements of Mixed-Use in Pennsylvania) (PA)
178-Acre S.C. Mixed-Use Development Gets Summer Start Date (SC)
Partnership to Create 112-Acre Mixed-Use Project in Sugar Land (TX)
Building Big on the Future of Metro (Means More Mixed-Use Development for Northern Virginia) (VA)
MetroWest Development Is Approved in Fairfax (Adding More Mixed-Use to Virginia) (VA)
Huge Bristol Residential and Commercial Project Moving Forward (in Milwaukee Suburb) (WI)

National News and Trends

Q&A--Larry Gellerstedt: Population Growth Makes Mixed-Use Fixture of the Future
National Real Estate Investor (04/06) Vol. 48, No. 4, P. 11; Schenke, Jarred

Larry Gellerstedt was appointed president of Cousins Properties' office/multifamily division early last summer. His hiring came as a bit of a surprise, considering his professional background was mostly in the condominium market. In hindsight, the move was a shrewd one, especially with so many of the projects in Cousins' development pipeline now being mixed-use in nature. Gellerstedt commented, "The key component of a well-executed mixed-use project is that you don't see any of the aspects of the project compromised by other components of the project. We're still in what I consider the really fun part of the mixed-use phenomenon in that it's still very entrepreneurial--there's not a formula you can just take project to project." One of Cousins' success stories has been Terminus, a $500 million mixed-use development in Atlanta's Buckhead financial district. Gellerstedt listed California, Florida, Georgia, North Carolina and Texas as prime markets for mixed-use growth, adding that Cousins has been active in all five of those states. He concluded, "Generally, the market is still somewhat traditional in terms of the buyers. You tend to have buyers who like office product, or retail product or multifamily product, [but] I think that will change over time."
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Mixed-Use Upgrade (Sees Lifestyle Hotels Boosting Mixed-Use)
Commercial Property News (04/01/06) Vol. 20, No. 7, P. 38; Edmundson, William

William Edmundson, vice president of brand management and strategy for Choice Hotels International Inc.'s new Cambria Suites chain, observes that a new trend is emerging in mixed-use development nationwide. He notes that the inclusion of so-called lifestyle hotels "is helping progressive developers reap ever greater returns on their mixed-use projects." Unlike luxury lodgings, which can be an awkward fit for mixed-use projects, Edmundson says that lifestyle hotels offer upscale amenities at a price point that fits within most corporate expense accounts. Lifestyle hotels typically offer spacious rooms and modern amenities ranging from plasma TVs to organic food. The concept is one of the fastest-growing segments of the hotel industry and has proven to be particularly popular with Generation X-age consumers. Edmundson states that the inclusion of lifestyle hotels in mixed-use projects can "help attract highly desirable lessees to a project and increase the price of leased space. Upscale restaurateurs and shop owners can benefit from having 150 to 300 affluent consumers staying within a short walk of their stores." In addition, planning commissions and city councils have traditionally been accepting of lifestyle hotels as part of mixed-use developments, due to the fact that they bring in 30 percent to 40 percent more hotel tax per room than competing mid-scale hotels.
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Mixed-Use: Roundtable
Retail Traffic (03/06) Vol. 35, No. 3, P. 42

A number of top retail property professionals were queried by Retail Traffic magazine to get their views on the evolving market for mixed-use developments. One of the biggest challenges with the growing mixed-use trend is that companies are having to collaborate on projects with more partners. Victor MacFarlane, founder of MacFarlane Partners, commented, "Mixed-use design is much more complicated because the buildings are more complex, with the varied uses needing certain types of spaces. Both the design process and the partnership need a project leader who understands the overall process." In recent years, retail developers have been among the biggest pioneers of mixed-use development. While most mixed-use projects incorporate retail and residential, office and other uses are becoming more and more common. Forest City California CEO Brian Jones noted that the Victoria Gardens development in California is a prime example, as it boasts a Performing Arts Center with a library and community meeting space along with the usual mixed-use elements. In terms of retail developers attempting to take on more or even all aspects of mixed-use projects, Marcus & Millichap President and CEO Harvey Green concluded, "The need for specialized expertise and spreading the financial risk almost dictates the joint venture structure. There are some large players who are likely to take on overall development risks, but even then the development of various components will most often require partners."
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Regional News

Plots & Ploys: Forget Freeways (When Mixed-Use Can Put L.A. Residents Closer to Work) (CA)
Wall Street Journal (03/29/06) P. B6; Herrick, Thaddeus; Forsyth, Jennifer S.; Haughney, Christine

Los Angeles is following the leads of such other major cities as New York and Chicago in using mixed-use development to ease the commuting burdens of its local population. As a case in point, CIM Group Inc. has partnered with Lee Homes to launch the $170 million Sky development. Unique to downtown L.A., the project will feature more than 130 condominiums priced between $660,000 and $1.35 million when it opens next month, in addition to 10 floors of office space and ground-level retail. The Sky project is located in the city's South Park neighborhood and underscores a growing trend toward upscale living in the city's downtown corridor. This comes as developers continue to pursue conversion projects in downtown L.A.'s older, grittier areas. Since city leaders relaxed requirements for office-to-residential conversions in the late 1990s, nearly 6,500 residential units have been built downtown with another 6,000 or so units in various stages of planning and development.
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San Francisco Mixed-Use Project Nabs $55.5M Financing (CA)
Commercial Property News (03/22/06) Auer, Tonie

Union Property Capital recently financed an 18-month deal for $55.5 million for a mixed-use development in San Francisco's Union Square district. The project will boast a total of 78,112 square feet of retail stores and condominiums. The centerpiece is a 43,800-sq.-ft. retail site that has been leased by H&M, a leading off-price apparel retailer. In addition, the project will include 29 one- and three-bedroom condos ranging from 966 to 2,180 sq. ft. Wrightwood Capital is providing the financing. Senior director Anthony Papadakis states, "Rarely do we work with a tenant with great sponsorship in all areas from location to great retail and condos. This deal has the best of all elements playing a role." The project is part of a historic property that is being fully renovated.
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Vail Council Approves $400M Mixed-Use Redevelopment (CO)
GlobeSt.com (03/30/06) Rebchook, John

In Colorado, the Vail Town Council late last month voted 4 to 3 in favor of developer Peter Knobel's plan for the mixed-use redevelopment of the 30-year-old Crossroads. The new project, which will have a completed value of around $400 million, will indeed feature a mix of property types. Included in the design plans are 69 lodging/residential units, an ice skating rink, a bowling alley, a three-screen cinema, retail stores, eateries and a public plaza. But compromises had to be made in order to receive majority approval from the council. The number of lodging/residential units have been reduced by six since the initial proposal a year ago. In addition, Knobel has bowed to community opposition and reduced the buildings' height on the east and west wings. The plan also calls for local road and other infrastructure improvements. Knobel's company, Crossroads East One LLC, also plans to provide Vail with deed-restricted employee housing for up to 12 individuals--double the requirement.
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German Firm Nears Stake in Block 37 Project (Featuring a Mix of Uses in Chicago) (IL)
Chicago Tribune (03/23/06) P. 3-1; Corfman, Thomas A.

DIFA Deutsche Immobilien Fonds AG is poised to become a key investor in the first stage of the mixed-use Block 37 project in Chicago. The development has been delayed by the mounting financial troubles of its master developer, Virginia-based Mills Corp. While the DIFA deal is a significant step in the right direction for the troubled project, now dubbed 108 N. State, challenges remain. Among them is leasing up the retail component of the development. The project is to be a 16-story office building anchored by WBBM-Channel 2 and Morningstar Inc., with an undisclosed amount of space for new stores. Mills has been considering a sale of the office component since late last year. The deal with DIFA calls for the German property investment firm to acquire the 400,000-square-foot building after it has been completed. Mills has chosen Golub & Co. to build the office tower for DIFA. Locally based Golub would likely earn fees serving as manager rather than take an ownership interest in the completed structure. A later stage of the development will be a condominium tower, which Golub also has agreed to develop. DIFA, which manages open-ended funds, maintains an international portfolio of properties valued at more than $16.5 billion.
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Kendall Square Sells for $211M (in Massachusetts) (MA)
GlobeSt.com (04/12/06) Ford, Beverly

The Beal Cos. has formed a joint venture with Rockwood Capital Corp. to purchase the nine-building Kendall Square mixed-use project in Cambridge, Mass. The total acquisition price was $210.5 million. JE Robert Cos. and Lincoln Property Co. were the sellers. Kendall Square was originally erected in the late 1890s as a manufacturing facility for Boston Woven Hose & Rubber Co. It was later redeveloped as a mixed-use center containing offices, retail stores, lab space and storage. Among its tenants today are Amgen, Charles Draper Labs, Harvard University, and Genzyme Corp. Spaulding & Slye's Boston office marketed the property for the sellers. Broker Michael Smith said that the complex "generated broad investor interest on a global scale. The new ownership will benefit from its strong underlying fundamentals and unrealized potential."
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National Harbor to Get More Hotels (as the Maryland Mixed-Use Expands) (MD)
Washington Post (04/17/06) P. D1; Hedgpeth, Dana

After 11 years of planning and design, the first phase of the National Harbor mixed-use project is finally under construction in Prince George's County, Md. When completed, the massive development will boast 4 million square feet of hotels, stores, eating places and condominiums. Developer Milton Peterson now reports that a total of five major hotel operators have agreed to build lodgings at National Harbor, in addition to the 2,000-room hotel and convention center that is now being erected by Gaylord Hotels. These additional hotels will range from a 195-room Westin to a 246-unit Fairfield Resorts timeshare property. Peterson states, "We want to draw the tourist, the conventioneer and the business traveler. We want to give each of those kinds of travelers something more than a bed, a bureau and a bathroom." Meanwhile, convention-industry officials in the nearby nation's capital have been citing the imminent rise of National Harbor as adding urgency to their calls for the development of a $550 million hotel adjacent to the Washington Convention Center.
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Mixed-Use Due Along U.S. 1 (as Part of a Long-Delayed Revitalization in Maryland) (MD)
Baltimore Sun (03/17/06)

Maryland has long deemed the U.S. Route 1 corridor as one of the last, premium stretches in need of revitalization and new development. Those plans will receive a big boost later this year with a multimillion-dollar, mixed-use development in the Baltimore-Washington, D.C. suburb of Laurel. Orchard Development is teaming up with Howard County to build an L-shaped retail-residential project that will include ground-floor stores and at least 80 apartments on the above levels. To kick-start the building effort, county officials are expected to issue up to $6.5 million in tax-exempt development bonds. Because Howard is committed to invigorating the economy along U.S. 1--which has long been mired in empty lots, roadside motels and general blight--legislation that would authorize the bonds is expected to pass by a wide margin. The development site was acquired by the Howard County Housing Commission for $2.15 million. Under terms of the deal, Orchard will build and operate the project. After 20 years, the county will have the option to purchase the residential units; after a term of 65 years, the entire project will revert to the county. The mixed-use project is the first to take advantage of new zoning approved to help revitalize the Rt. 1 corridor, and it is important to note that the Housing Commission has never before combined residential units with retail.
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Mixed-Use Project Takes Kanawha Name (in North Carolina) (NC)
Charlotte Business Journal (03/20/06)

In North Carolina, the Culture and Heritage Foundation of Rock Hill has announced plans to build a 350-acre mixed-use development at the planned Museum of Life and the Environment site. The York County project will be erected as a "living laboratory on sustainable design," reported Foundation President Frank Barnes III. He added, "It allows us to influence the character of this special property as it is being developed and will provide sustainable economic benefit to the new museum." Cherokee Investment Partners of Raleigh has agreed to serve as project developer. The firm is also the master developer for a mixed-use project that aims to link downtown Rock Hill, N.C., and Winthrop University via a parcel of former industrial property.
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Developer Plans $2 Billion Race Car Resort in Beatty (as a Mixed-Use Alternative to Vegas) (NV)
Las Vegas Business Press (03/20/06) Illia, Tony

Developer Mark Fleming has taken the wraps off plans for a $2 billion race car-themed hotel-casino-condominium resort in Beatty, Nev., which is located about 120 miles north of Las Vegas. Dubbed the Xtreme Cars and Stars Hotel Casino, the mixed-use complex would boast four 27-story towers containing nearly 2,600 condos, hotel rooms and timeshare units. In addition, plans call for approximately 75,000 square feet of retail stores and a 120,000-sq.-ft. casino, along with a 480,700-sq.-ft. hotel. Also on the drawing board is a 2.1-mile NASCAR racetrack that would encircle the entire property and a go-cart course. Other features planned range from an 18-hole golf course to an RV park. Fleming reports, "There are no car-themed hotel-casinos anywhere in the world. This is a totally unique facility that is expected to attract millions of visitors and car enthusiasts." Groundbreaking could take place by the end of the year, with construction expected to last between 36 and 48 months.
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Blueprint/Nassau County, NY: Mixed-Use Project Aims to Revitalize (NY)
Wall Street Journal (03/29/06) P. B6; Sadovi, Maura Webber

Nassau County, N.Y., currently is planning a mixed-use development in an effort to create a central core in one of the nation's oldest and wealthiest suburban markets. The centerpiece of the $1.6 billion project will be a $200 million renovation of the Nassau Veterans Memorial Coliseum. Also part of the mix is a new hotel, up to 1 million square feet of new offices, a minor league baseball stadium, retail stores and an estimated 1,700 residential units. Of that total, 340 of the housing units will be affordable. Reckson Associates Realty Corp. is financing the pedestrian-friendly project with New York Islanders owner Charles Wang. County Executive Thomas Suozzi, a Democratic candidate for governor of the state, describes the project as part of a broader effort aimed at creating a "new suburbia" in Nassau County. The main goal is to help as much of the local young population as possible escape the congestion and higher taxes that come with living in a middle-aged suburb. Looking at the broader market, an average home in Nassau cost $482,000 as of the end of last year, while office properties fetched average prices of $188 per square foot--in line with the national average of $190, according to Real Capital Analytics Inc.
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Tall Building Isn't Suitable for Historic Area, Residents Say (as Mixed-Use Project is Put Under the Microscope) (OR)
Salem Statesman Journal (OR) (04/16/06) Thompson, Dennis

Residents of a historic district near downtown Salem, Ore., are voicing their concerns regarding a proposed tall, mixed-use project. The city's hearings officer recently granted a developer's request for a zone change that would allow a building to be 150 feet tall and between 12 and 15 stories at the site. The property's neighbors have appealed the decision to the Salem City Council, which has scheduled a special hearing on the issue for early this week. Residents don't like the fact that the mixed-use tower would loom above their historic properties, with some also expressing concerns over possible worsening traffic congestion as a result of the project. South Central Association of Neighbors President Kathrine Reed stated in a letter: "We would welcome redevelopment of the subject property that is compatible with the adjacent neighborhood. Such compatibility needs to integrate the new use into the existing historic area in a way that does not diminish its value as a public resource or diminish private property values."
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Timetable Set for Lehman Mega-Development (Bringing Mixed-Use to This Pennsylvania Township) (PA)
Pocono Record (03/29/06) Sadowski, Michael

In Pennsylvania, the Mountain Laurel Development Group--a partnership of Wolfington Cos. and O'Neill Properties--has requested that Lehman Township supervisors create a mixed-use residential overlay district so that it can build residential and commercial space on more than 2,000 acres at the former Tamiment Resort and Conference Center and the Mountain Laurel Center for the Performing Arts. The developer plans to build 5,800 single-family homes, townhouses and condominiums on the site--40 percent of which would be reserved for "active adults" aged 55 and over. Rich Almquist, vice president of land development at Wolfington Cos., expects commercial development to commence within 18 to 36 months. Almquist says a grocery store chain and several doctors have expressed interest in the development. Supervisors asked for a timetable to ensure that years will not go by before the grocery store and other businesses are brought in. Meanwhile, the partnership's attorney expects the residential component to be finished in approximately 15 years.
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Borough Tables Plans for Housing Complex (With Elements of Mixed-Use in Pennsylvania) (PA)
Public Opinion (Chambersburg, PA) (03/22/06) Panzer, Tracy

The Earl Group's proposal to build a mixed-use development in Shippensburg, Pa., has stalled after the borough council postponed a vote on the project. Plans call for the construction of two dozen townhomes in the first phase and an office compound at a later date. Hopes for approval of a preliminary subdivision plan were dashed, however, because officials wanted to give the developer time to address concerns cited by the borough engineer. Those issues revolve around parking, traffic flow, park landscaping and maintenance. If new plans are submitted and well-received during the council's April 4 meeting, developer Sam Cressler estimates that work crews could break ground on the project as early as September. The homes are expected to sell for about $180,000 and higher.
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178-Acre S.C. Mixed-Use Development Gets Summer Start Date (SC)
Commercial Property News (04/06/06) Leon, Hortense

The Tetra Cos. LLC reports that it will begin building the infrastructure for Hamrick Farms, a 178-acre mixed-use project in North Augusta, S.C., in the mid-summer. The project will boast 284 single-family residences, 384 apartments and approximately 286,000 square feet of commercial space once development is complete. The Tetra Companies has long specialized in developing apartments and mixed-use properties. The Virginia-based firm does not build homes, however. Rather, it serves as the master developer, purchasing raw land and putting in infrastructure. Eric Vannier, a director at the company, reports, "We sell single-family lots to builders and retail pads to outparcel players, such as restaurants and banks, who can either buy the land" or have The Tetra Companies develop their structures for them.
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Partnership to Create 112-Acre Mixed-Use Project in Sugar Land (TX)
Houston Business Journal (03/27/06)

The partnership of Weaver Davis & Jacob Realty Group has acquired the biggest remaining parcel of undeveloped commercial land in Sugar Land, Texas. Their plan is to erect a mixed-use development on the 112-acre tract. The land is situated in the new Telfair master-planned community. Newland Communities was the seller, although no purchase price had been disclosed as of press time. Dubbed The Crossing at Telfair, the mixed-use project will boast more than 700,000 square feet of new office, medical and retail space. Restaurants and a hotel also will be part of the final design. The development is on track for a fourth-quarter 2006 occupancy date.
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Building Big on the Future of Metro (Means More Mixed-Use Development for Northern Virginia) (VA)
Washington Post (04/10/06) P. D3; Hedgpeth, Dana

Crimson Partners has begun development of Dulles Station, a $1 billion mixed-use project near Northern Virginia's Dulles International Airport. The site is adjacent to one of the new Metro subway stops on a proposed train line to serve Washington, D.C.'s farthest-out Virginia suburbs. Dulles Station will boast 1.5 million square feet of new offices, along with 1,000 condominiums and rental apartments and approximately 100,000 sq. ft. of retail stores and restaurants. To date, 89 of the 169 condos now being erected have been sold, with prices ranging from $270,000 to $400,000. Work is expected to start this summer on a 190,000-sq.-ft. office complex for a fourth-quarter 2007 completion. Washington Real Estate Investment Trust, meanwhile, is planning two additional office structures for Dulles Station. The mixed-use project is one of the first large developments to start near where a Metro line is proposed to open in 2015. Crimson Partners managing partner Kevin Dougherty raves, "You'll be able to go to your office, get a meal and live here without having to get in your car."
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MetroWest Development Is Approved in Fairfax (Adding More Mixed-Use to Virginia) (VA)
Washington Post (03/28/06) P. B5; Rein, Lisa

In Northern Virginia, a massive mixed-use development at the Vienna Metro subway station has been approved by Fairfax County supervisors. Dubbed MetroWest, the complex would replace a community of 65 single-family residents with mid-rise towers. Instead of the sprawling cul-de-sacs, MetroWest's plan calls for clustering offices, stores and residential units just south of the Vienna Station and is viewed as the centerpiece in a larger effort to concentrate future development in dense, urban settings throughout the area. The residential portion of the plan calls for 2,250 condominiums, apartments and townhouses. However, the project has not come without its share of criticism. Opponents lament that the "mini-city" would bring too much vehicular traffic to the already congested roads off Interstate 66 and too many riders to a crowded subway line. County leaders, though, counter that MetroWest would concentrate growth in the only remaining space left in all of Fairfax. William Lecos, president of the Fairfax County Chamber of Commerce, remarks, "The inescapable and inevitable fact is that we will continue to grow, but the county must grow differently than it has."
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Huge Bristol Residential and Commercial Project Moving Forward (in Milwaukee Suburb) (WI)
Milwaukee Business Journal (WI) (04/14/06) Millard, Pete

In the Milwaukee suburb of Bristol, construction on the $100 million Bristol Meadows residential and commercial complex will begin in June. Developer Westminster Swanson Land Partners LLC spent almost two years altering development plans and looked to convince town officials that the mixed-use development would be of significant local benefit. The Illinois-based developer received approval from town officials late in the first quarter of this year to proceed with the 480-acre project. Bristol Meadows will offer a 150-acre business park and 319 residential units when completed. Architect Rick Swanson recalls, "The size of the project troubled many people in Bristol." Indeed, when Westminster Swanson first proposed the project in the fourth quarter of 2004, the initial design included approximately 600 residential units. Last spring, the plan was scaled back to 425 units and ultimately down to 319.
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