Published on November 13th, 2017 |0
Flexibility, exciting environments challenges to mixed-use projects success
Flexibility and creating an exciting environment are just two of the many challenges facing real estate professionals looking for success in the mixed-use marketplace which were addressed in two panel discussions presented by Bisnow and keynote speaker Thad Sheely COO of the Atlanta Hawks.
Sheely set the scene by describing the $200 million renovation of Phillips Arena that will transform it into a “catalyst for the entire downtown core. We want to capture the energy connected with the CBD and the Hawks to create memorial experiences,” he says. “We are breaking through walls – literally and figuratively – and creating brands and experiences that demand attention and excitement.”
Suite walls were knocked down allowing more traffic flow on the concourse with premium seating spread out through the arena. “People are spending so much time with their technology that their real life is getting squeezed. We want to create social experiences where people will socialize together, not just in their walled in suites. They will socialize, become a community and create experiences.”
Among the “experiences” will be the Zac Brown Social Club, named after the country singer and foodie. Killer Mike will open his SWAG (shave, wash, and groom) barbershop as well as Top Golf, with two golf simulators in the suites. There will also be a bar 10 feet behind the basket. “How cool is that?” he asked.
In the first panel, “What Tenants Want,” moderated by Christina L. Moore of the law firm Taylor English, Rich Dippolito, EVP of Concordia Properties, said the customer’s mentality has changed. Customers no longer have a “grab and go” mentality when it comes to shopping. Instead they want “an experience and we have to integrate experiences into the design so they will respond to things in the common areas, for instance. Or course, the challenge is finding the right experience for the customer.”
Because customers want an experience, it is harder for developers because “there’s no longer one prototype that will work for each development,” says Leo Wiener, president of retail for Ackerman & Co., an Atlanta-based real estate firm with an investment portfolio valued at $1 billion.
“The continuing challenges are to build centers that support the suburban market and the intown markets. You have to have something for everyone,” Wiener added
In addition to creating the right environment, attracting appropriate anchor tenants that come on board on time is vital to a development’s success. “It used to be easier because you could just tell potential tenants who you thought may be coming in, that doesn’t work anymore,” says Weiner.
Dippolito, whose company specializes in neighborhood retail and mixed-use projects, says that co-tenants are becoming more important. “The trend is who and when are they coming in,” he says. “The timeline is vital because as retail operations are opening fewer stores, they need to know that the anchors will open in the stated time frame.”
“The smaller retailers depend on an anchor and if an anchor doesn’t open on time, it can affect the smaller retailers’ sales,” agrees Pratt Farmer, senior partner in Pratt & Co., a Rosemary Beach, FL.., firm that focuses on the entire spectrum of development and property management and advisory work.
Security doesn’t seem as much of a concern in suburban projects as it is with intown structured parking garages where lighting and paths of access are important. “It used to be that if customers saw security people at a mall they thought something was wrong; now they’re happy to see security,” says Weiner.
Weiner also said that in denser markets, such as Chicago, it is easier to limit the ratio of parking spaces to tenants but Atlanta is not quite that progressive. “Eventually it will evolve here where it can be a 3-1 ratio rather than the 4-1 ratio that is usual for Atlanta.”
Dippolito agrees that Atlanta is “evolving. There is concern for parking, particularly with restaurants and entertainment uses, especially in neighborhoods. But you can find ways to share parking and reduce the number.”
The second panel, Retail & Mixed-Use Developments on the Rise,” delved further into the importance of providing experiences as a competitive edge. Moderated by Bob Sizemore, CEO of the Sizemore Group, the panel agreed that it was all about engaging customers and understanding the market.
“You have to create different types of experiences for those who are there in the daytime, workers and shoppers, and also those who will come in the evening and weekends, residents as well as shoppers or those wanting entertainment,” says Vaughn Irons, CEO of APD Solutions, a community & economic development firm providing services and strategies that impact distressed and underserved areas across the United States.
APD Solutions is developing Atlanta Sports City at Stonecrest, a $200 million sports and entertainment complex that will have 29 playing fields, 5 full-sized basketball courts, an outdoor covered stadium, two sports training facilities, a sports medicine pavilion, a 15,000-seat sports stadium and a culture and entertainment district.
In addition to the athletic fields, Atlanta Sports City will have a multitude of dining, beverage and retail options as well as Sea Quest, an aquarium where children can swim with fish, and feed birds, reptiles and turtles and a MMA bar. The newly renovated Colony Square, which according to North American Properties’ Partner John Kelley had “700,000 square feet of dead office space at night”, will have a multi-screen movie theater and food hall. Avalon, also developed by North American Properties, features a skating rink and more than 200 events a year, says Kelley. “We have a valet and concierge service, which is unique. It’s more of a hospitality model than retail.”
All were quick to point out that it’s more than just add “fun” amenities to a project; it is not only the right one but it has to fit into the overall design and ambiance.
Chad DuBeau, senior managing partner with Mill Creek Residential, says a key to success is hiring consultants. “You need consultants who speak to the different sets of disciplines. We have retail consultants who deal with the first 20 feet — street level — and then others on residential. We need them both to create a 24-hour environment. We used consultants who are compassionate and I listen to them.”
He conceded that such amenities and activities do add to increases in the rent but “we’ve been able to show that these things drive up sales.”
Also affecting projects is Atlanta’s biggest bottleneck – literally and figuratively – traffic. Wesley DeFoor, vice president of Cornerstone Development Co., says that sometimes other developments affect the mix and planning. “The BeltLine has changed the dynamic in a number of places and it’s redefining what we’re doing. It’s creating a lot of opportunities and experiences, which enhances the value to tenants.”
At Colony Square, a mobility concierge was hired to help customers with different transportation solutions, including renting bikes, walking or MARTA.
Adds DuBeau, “We’re doing the same — helping people not to drive. We feel it’s almost a social responsibility not to drive and we’re promoting that environment.”
Du Beau warns there is a different risk model with mixed-use than other projects. “It’s more expensive than a stand-alone project and more of an investment on the ground floor,” he says. “Sometimes it’s harder to raise capital because you may be dealing with two difference financing groups – retail and residential.”
Adds Sizemore “Mixed-use is not for every developer because there are more challenges than with a single-use project.”
Which prompted Irons to note that “If this was easy, everyone would be doing it.”