Mixed-Use Development Newsbriefs

National News and Trends
Mixed-Use Facilities: Then Vs. Now
On the Waterfront (Mixed-Use Thrives)
Mixing It Up
Breaking the Mold (Is What J.H. Snyder Hopes to Do by Focusing on Mixed-Use)
Luring Business Developers Into Low-Income Areas

Regional News
Quaglino Project Is Unique to SLO (Bringing Mixed-Use to a California Industrial Zone) (CA)
Local Developer Plans $750M Mixed-Use TOD (CO)
Restoring Village to Reveal 'Gem' (in Tampa) (FL)
St. Lucie Land to Be Auctioned by Grubb & Ellis (Features a Mixed-Use Zoning Designation) (FL)
Urban Center Approved for Downtown Bethesda (in Maryland) (MD)
Downtown Mixed-Use Development Setback: $77M Deal Falls Through (MI)
Blueprint/Minneapolis: Big Projects Boost Commercial Sector (and Add Mixed-Use Space) (MN)
Gentrification Arrives at a Crossroads in Yorkville (and Mixed-Use Will Be Playing a Role) (NY)
AFL-CIO Trusts Launch $500M Housing Effort (That Includes Mixed-Use) (NY)
Forest City, Partner Unveil Pittsburgh Casino Plan (as Part of a Larger Mixed-Use Development) (OH)
Developer Offers Big Plan for Mart Site (and Will Include a Mix of Uses) (PA)
New High-End Retail Tenants Evaluate Market, Decide to Move Into Austin (as Part of The Domain Mixed-Use Project) (TX)
Houston Project Invests in Downtown Retailing (and Mixed-Use) (TX)
From the Ground Up: Billion-Dollar Project (to Add Everything From Offices to Stores to Condos) (VA)

National News and Trends

Mixed-Use Facilities: Then Vs. Now
Buildings (02/06) Vol. 100, No. 2, P. 40; Garris, Leah B.

Mixed-use facilities are gaining in popularity in many U.S. downtown corridors and elsewhere. A growing movement in the mixed-use development arena is residential units over retail space. In the past, people were reluctant to buy or rent living space over retail stores out of concern over the noise and the frequent automobile traffic. However, more and more of today's mixed-use projects are being designed in such a way that retail and residential can co-exist peacefully and that many of the potential disturbances are minimized in the planning stage of a project's development. Factors in mixed-use range from security--i.e. the separation of such elements as parking areas, elevators and lobbies to make sure residents feel safe--to building systems such as HVAC that have to be designed to accommodate a variety uses and demands. Now, other building types are embracing the format, as well. Office buildings, for instance, are offering more than just workspace. Many also are adding everything from restaurants and dry cleaners to hair salons and fitness facilities in the design stage to offer tenants and their employees more services under one roof.
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On the Waterfront (Mixed-Use Thrives)
Commercial Investment Real Estate (02/06) Vol. 25, No. 1, P. 28; Bilsky, Carolyn

Mixed-use projects are coming to define many of the nation's shore-side commercial real estate markets. Over the years, such cities as Chicago, San Antonio, and San Francisco have rehabilitated their riverfronts in an attempt to breathe new life into less-than-robust central business districts. Those projects have proven so successful that shore-side properties in both small towns and big cities across the country are evolving to include a mix of uses. A prime example is the River Center, which has been built on a property along the Catawba River seven miles from downtown Charlotte. Not only does the site now house the Charlotte Merchandise Mart (CMM), it also boasts 120 condominiums, a 200-room hotel, a county park, and approximately 150,000 square feet of retail stores. Project developer Edna Chirico, owner of Chirico-Huber Properties, states, "About half the local portion of the sales tax generated by the [CMM] exhibition center will be used to pay off revenue bonds--for infrastructure and the 250,000-sf exhibition hall. The hotel, condos, and retail will all be private sector secured by [co-developer Lockard Reed Development Group]." Another example is Branson Landing in Missouri, a 445,000-sq.-ft. project that will include stores, eateries, hotels, condos, a convention center, and town square when completed and attract as many as 4 million visitors a year. HCW Development Co. has been hired to develop the project, with a substantial share of the financing to come from state and local funds.
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Mixing It Up
Commercial Property News (01/06) Vol. 20, No. 1, P. 17; Rosta, Paul

In the fourth quarter of last year, Atlanta played host to the Mixed-Use East Development Conference. Attendees agreed that mixed-use has evolved into a fairly far-reaching category. Bank of America Commercial Real Estate Banking regional executive Jeffrey Warrick remarked, "There is such a myriad of combinations that can be put together. You really can't necessarily say, 'Mixed-use is in this box.'" The approaching end of zoning-based development is one of the big reasons that mixed-use projects have been increasing in number nationwide. On the downside, financiers are not always willing to lend as aggressively for mixed-use developments as they would for separate properties. But their comfort zone is improving, according to Hillwood Capital President Jonas Woods, who noted that a condominium component can often make financing upscale hotels easier. For those looking to launch mixed-use projects, attendees stressed that a thorough understanding of the targeted market's demographic mix is critical. Additionally, they said the most attention should be placed on retail, as a failed retail portion of a mixed-use development can stigmatize the larger project.
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Breaking the Mold (Is What J.H. Snyder Hopes to Do by Focusing on Mixed-Use)
Real Estate Southern California (01/06) Vol. 7, No. 1, P. 52; Williams, Daniel D.

J.H. Snyder Co. currently has more than $1 billion in its development and redevelopment pipeline. The California-based firm is now looking to focus on what it calls "creative, mixed-use" projects as it moves ahead into 2006 and beyond. The company has become known for its high-impact revitalization projects, including one of the largest such efforts in the San Fernando Valley. J.H. Snyder principal Cliff Goldstein remarks, "We have been working on it for four years and still haven't broken ground. It will be over two million square feet of office, residential and retail." In recent years, the firm has sold quite a few of its properties due to positive market conditions. However, Goldstein assures that J.H. Snyder will never be known as a "merchant builder." He adds, "The focus is to always hold a piece of property for as long as possible and not to be forced to sell it upon completion. Some projects we have held for 25 years, some we sell after five or six years."
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Luring Business Developers Into Low-Income Areas
New York Times (01/25/06) P. C8; Chamberlain, Lisa

Supporters of a little-known development tool known as new-market tax credits believe it can work the same wonders that the low-income housing tax credit has, but in the commercial real estate market. The program is the only federal tax credit available for commercial developments in low-income areas. Enacted in 2000, the program today is helping to revitalize streets, neighborhoods and entire downtowns in some instances. Developments both big and small that most financial specialists report would never see the light of day are going up because of these tax credits ranging from $500,000 to more than $150 million. The program has been key in the development of Martineau Division-Oakes, an arts-oriented, mixed-use project in Grand Rapids, Mich. Once the commercial-residential project got underway, city officials pledged $2 million for everything from landscaping and repaving to new lighting and sidewalk improvements in the project's vicinity. Dennis Sturtevant, president of the nonprofit group that spearheaded the Martineau Division-Oakes development, remarks, "When you're talking about tough neighborhoods and all the costs associated with renovating dilapidated, obsolete buildings with lead and everything else, you need to combine all these resources to make it work." Elsewhere, the city of Bridgeport, Conn., is on the verge of a major redevelopment of its downtown corridor, which will be partly financed with funds from new-market tax credits.
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Regional News

Quaglino Project Is Unique to SLO (Bringing Mixed-Use to a California Industrial Zone) (CA)
San Luis Obispo Tribune (02/01/06) Cleveland, Melanie

Quaglino Properties has been given the green light to build a mixed-use project with residences in a San Luis Obispo, Calif., industrial zone--the first such project in the city's history. The development will include rental apartments in addition to approximately 15,000 square feet of commercial space in an area designated as a services and manufacturing zone. City officials decided that such a project was appropriate for the zone because other mixed-use developments are going up nearby. Indeed, Hamish Marshall and the locally based Westpac development group currently are building a mixed-use project across the street from the Quaglino site. It will feature more than 31,200 sq. ft. of commercial space along with 82 residential units.
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Local Developer Plans $750M Mixed-Use TOD (CO)
GlobeSt.com (01/26/06) Rebchook, John

Westfield Development has announced plans to begin building the first phase of the mixed-use Lincoln Station development in Denver later this fall. The project will be located near a T-Rex light-rail station. The first phase will include a Class A office building, containing approximately 150,000 square feet; a smaller office complex; a 30,000-sq.-ft. retail village and 80 for-sale residential units. Westfield describes the development as a "Goburb," or one that combines the vitality and choices of an urban environment with the more laid-back styles of the suburbs. Thanks to Lincoln Station's close proximity to public transportation, residents and those who work in the development's office component will have little need for automobiles. Westfield President Rich McClintock commented, "Right now, if you want to buy a sandwich and get a beer, you have to get into your car. That is all changing, and I think CEOs in the future will be more socially responsible."
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Restoring Village to Reveal 'Gem' (in Tampa) (FL)
St. Petersburg Times (FL) (01/31/06) P. 1D; Albright, Mark

Developer David Wasserman of Wasserman Vornado Realty Trust hopes to undertake a $100 million renovation of Old Hyde Park Village in Tampa, with plans to expand the mixed-use village to 320,000 square feet from 270,000 sq. ft. now and add 150 parking spaces plus a pair of mid-rise condominium towers. There are plans to include 270 condos or luxury apartments in the five- and 11-story towers. Wasserman says the residential component is needed to make the project profitable, but he will need a rezoning to boost the number of permitted condos or apartments. Wasserman says the village will retain a mix of chain stores and local retailers, adding that storefronts will be revamped to entice window shoppers. The mixed-use project also calls for the conversion of a portion of a parking garage into retail space and either the relocation or removal of the popular Victorian fountain to create a space for open-air dining.
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St. Lucie Land to Be Auctioned by Grubb & Ellis (Features a Mixed-Use Zoning Designation) (FL)
Tampa Bay Business Journal (01/25/06)

Grubb & Ellis is auctioning off a 200-acre parcel of South Florida land with a suggested value of $80 million. The property is situated in St. Lucie County and is designated for mixed-use development. The vacant lot boasts projected entitlements of about 2 million square feet of commercial space and 700 residential units, along with a 350-room lodging and conference center. The Web-based auction is expected to attracted a large number of prospective bidders, who will have access to documents relating to the site and will be able to place bids and monitor the process from anywhere in the world. The action is being conducted by the LFC Online site, a strategic partner of Grubb & Ellis.
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Urban Center Approved for Downtown Bethesda (in Maryland) (MD)
Washington Post (02/01/06) P. B2; Trejos, Nancy

In Maryland, the Montgomery County Council has approved a plan that would make the Woodmont Triangle area of downtown Bethesda a more dense urban center with a mix of retail, restaurants and residential units in addition to the plethora of office and other commercial and residential space already there. Council members approved a zoning change that would permit developers to add more than 1,600 residences--most of which will be for-sale condos and rental apartments--to the area not far from the Washington, D.C., border. The project is part of the county's "smart growth" movement, which continues to encourage developers to build more near bus stations and Metro subway stops. In early January, the Montgomery County Council gave the green light to a project that would surround the Shady Grove Metro stop with up to 6,340 residences. Council member Steven A. Silverman (D-At Large) remarked, "With Shady Grove and the Woodmont Triangle, we have sent a clear message that Montgomery County is prepared to implement smart growth and not just talk about it." The latest plan encourages a mixture of new housing, small-scale retail stores on the ground floors of the various buildings, art galleries and pedestrian-friendly streets. These developments will be added over the next 20 years. Developers will be allowed to build taller buildings under newer, less strict height limits as long as they pledge to reserve up to 15 percent of their units for low-income residents.
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Downtown Mixed-Use Development Setback: $77M Deal Falls Through (MI)
Kalamazoo Gazette (MI) (02/02/06) Jessup, Kathy

Plans for a $77 million, mixed-use project for downtown Kalamazoo, Mich., have been pulled off the table. Downtown Kalamazoo Inc. reports that the financial prognosis for the retail-residential-office development went from break-even to a money-losing proposition. Rumors persist that the development partners, of which Greenleaf Cos. was one, were unable to sign a flagship tenant. The law firm of Miller, Canfield, Paddock and Stone reportedly had been among the top candidates, but it recently announced that it would be staying at its current location in downtown Kalamazoo. Mayor Hannah McKinney lamented, "Besides adding money to the tax district, this would have brought workers and people downtown and increased the foot traffic. It's a sad day." Other city officials hope that the collapse of the project will not diminish what they perceive as renewed vitality in Kalamazoo's central city district.
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Blueprint/Minneapolis: Big Projects Boost Commercial Sector (and Add Mixed-Use Space) (MN)
Wall Street Journal (01/25/06) P. B6; Sadovi, Maura Webber

The Twin Cities region is slated to see several super-sized development projects in the months ahead, further proof that the area's commercial property market continues to improve. Property & Portfolio Research reports that the region, which is anchored by Minneapolis and Saint Paul, already is home to more than 15 Fortune 500 companies and a mix of industries. Target Corp. has tentative plans to develop a pedestrian-friendly, mixed-use community in suburban Brooklyn Park at a cost of $2 billion. The project could contain up to 8 million square feet of offices, along with approximately 3,000 residential units and a couple of lodgings. In suburban Bloomington, meanwhile, plans are in the works to more than double the size of the landmark Mall of America to include a mix of uses--from 1,500 hotel rooms to a performance venue. Analysts add that the Twin Cities' improving warehouse sector is especially promising.
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Gentrification Arrives at a Crossroads in Yorkville (and Mixed-Use Will Be Playing a Role) (NY)
New York Times (02/01/06) P. C8; Pristin, Terry

The Upper East Side of Manhattan is due to welcome mixed-use development, with the intersection of Lexington Avenue and 86th Street finally opening up to gentrification. On Lexington Ave., Extell Development Co. recently announced plans to demolish a string of tenements and replace them with an L-shaped building that will boast 150 condominiums, 20 rental apartments and approximately 100,000 square feet of retail space. Extell President Gary Barnett currently is negotiating lease agreements for large spaces of store space with an apparel retailer and a major bookstore chain, but he has declined to provide specifics. Despite rising rents in that part of the city, local brokers report that the street is not expected to compete with Madison Avenue for upscale retailers. Instead, it will cater to a broad range of customers. Newmark Knight Frank executive vice president Benjamin Fox states, "Prior to Harlem's renaissance, people from northern Manhattan shopped on 86th Street because it was convenient. To some extent, this is still the case." Meanwhile, along Third Avenue and 86th Street, the Related Cos. and its partners recently have emptied out several tenement buildings and now plan to build a major condo development that also will include an estimated 25,000 sq. ft. of stores.
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AFL-CIO Trusts Launch $500M Housing Effort (That Includes Mixed-Use) (NY)
GlobeSt.com (02/03/06) Jarvie, Barbara

The AFL-CIO Housing Investment Trust has teamed up with the AFL-CIO Building Investment Trust to launch Phase II of the post-9/11 New York City Community Investment Initiative, an affordable housing/economic development plan for the Big Apple. This $500 million second phase will focus on financing the development and rehabilitation of residential and commercial real estate throughout the city's five boroughs. Elements of the second phase include $250 million in financing for the development and renovation of multifamily housing, with the other $250 million going toward commercial development with a focus on mixed-use developments. AFL-CIO President John Sweeney reports that the goal will be an estimated $1 billion of total development over the next five years.
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Forest City, Partner Unveil Pittsburgh Casino Plan (as Part of a Larger Mixed-Use Development) (OH)
Cleveland Plain Dealer (OH) (01/24/06) Montgomery, Christopher

Forest City Enterprises Inc. has partnered with Harrah's Entertainment Inc. to develop a $512 million casino in Pittsburgh as part of Station Square, a $1 billion mixed-use retail, residential and entertainment project. Forest City is now poised for a showdown with three other groups jockeying for the city's lone slots parlor license. No matter which proposal emerges as the winner, Pittsburgh's new casino will look to draw Ohio gambling enthusiasts who have few options in their home state. The plan for Forest City's 52-acre Station Square complex is to have a 400,000-square-foot casino along with 1,250 condominiums and an expanded Sheraton hotel. A 1,200-seat event center is also planned, as are new parks, streets and a riverside walking path.
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Developer Offers Big Plan for Mart Site (and Will Include a Mix of Uses) (PA)
Philadelphia Inquirer (02/09/06) Colimore, Edward

In Pennsylvania, the Camden County Improvement Authority is negotiating with Beazer Homes to make the Atlanta-based company the master developer of the 35-acre, mixed-use Pennsauken Mart. Beazer has proposed a plan that would include 700 townhomes and condominiums and 150,000 square feet of commercial space. Pennsauken Park would feature a conference center, a hotel, a lake, a boat house, an amphitheater, retail and restaurants. The homes would be priced from $250,000 to more than $350,000, with the priciest units located near the park area. The mixed-use project would be built over a three- to five-year period, with authority liaison Louis Cappelli Jr. envisioning "a beautiful, useful neighborhood and gateway in Camden County."
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New High-End Retail Tenants Evaluate Market, Decide to Move Into Austin (as Part of The Domain Mixed-Use Project) (TX)
Austin Business Journal (02/06/06) Tereshchuk, Julie

Next spring, department-store retailers Macy's and Neiman Marcus will open as anchor tenants at The Domain in Northwest Austin. The master-planned project is a joint venture of Simon Property Group Inc. and locally based Endeavor Real Estate Group LLC. In addition to retail stores, the mixed-use project will feature offices, top-quality eateries and between 350 and 650 units of housing. For Neiman Marcus, this will be the chain's first full-line store in the Austin market. The new store will be designed to mesh with the "urban village" style of The Domain. The mixed-use project also plans to have an array of outdoor entertainment and events to attract customers. Wayne Hussey, Neiman Marcus' senior vice president of properties, remarks, "This is such a growth city. We think that the Northwest sector of Austin is going to be a real destination environment for anybody who wants to shop or dine out."
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Houston Project Invests in Downtown Retailing (and Mixed-Use) (TX)
Wall Street Journal (01/25/06) P. B8; Herrick, Thaddeus

Houston's downtown revival has proceeded with much success, but retail development has largely been a no-show. Now, a $200 million project spearheaded by Houston Pavilions LP is aiming to transform three city blocks into an open-air retail and entertainment destination that will also feature offices and residential condominiums built along a light-rail line. House of Blues Entertainment has been named the first major tenant of the approximately 700,000-square-foot development, almost 50 percent of which will be retail space. The mixed-use complex is further proof of a growing push by developers into heartland downtown areas, many of which are undergoing extensive revitalizations. Houston's downtown had been in decline ever since the oil crash of the 1980s. In addition to the retail space, Houston Pavilions will feature some 200,000 sq. ft. of loft-style offices and a condo tower. The risk for the venture's partners, veteran developers Geoffrey Jones and William Denton, is whether or not locals will opt for an outdoor urban experience over an indoor suburban alternative. City officials see development of this sort as a way to potentially boost the number of people who live downtown from its current total of around 3,700 to 10,000.
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From the Ground Up: Billion-Dollar Project (to Add Everything From Offices to Stores to Condos) (VA)
Washington Post (01/23/06) P. D3; Hedgpeth, Dana

Meridian Group Inc. is in the process of building a mixed-use project in Ashburn, Va., that will include approximately 3 million square feet of office space, another 600,000 sq. ft. of stores, a hotel and a residential component that will include both multifamily and single-family housing. The office complex will include a World Trade Center building aimed at attracting a wide range of international tenants. Construction of the $1 billion development is on track for a fall 2007 start date. The project's first phase should be up and running by the following autumn.
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