Street Tactics

As developers take retail to the streets, tenants seem only too happy to be there. Town-center-type projects featuring a Main Street retail district are “the current trend,” said Craig Sher, CEO of St. Petersburg, Fla.-based The Sembler Co. “The live-work-play concept has become very popular. People want to live near where they work and they want to play proximate to where they live. The format is here to stay.”

However, there are certain conditions required to make town centers viable, said Sher. “Not only do you need population density and income, but more importantly you need a reason for consumers to walk or drive down your street.”

Thus, strategically merchandising and planning the site is very important.

“You need something potent at both ends of the Main Street,” said Sher. He also prefers sites with wide Main Streets. “Four rows of parking are better than two. You also need to have other parking very close.”

Sembler likes to populate the actual Main Street with high-end retail and restaurants. The site plan for its new Winter Garden Village at Fowler Groves in Winter Garden, Fla., a 1,150,000-sq.-ft., open-air shopping center that will debut in November, will include powerhouse chains Target and Lowe’s home-improvement warehouse. “We are trying to ‘densify’ projects more and more, so people don’t have to drive so far,” explained Sher, whose company has about a dozen such retail projects in the works, including Brookhaven Village and Perimeter Place, both in Atlanta.

Smart districts: Jeff Axtell, project director for Vestar Development Co. of Phoenix, said that, in Vestar’s town-center-type projects, his firm tends to create “hybrid” centers that typically contain three distinct merchandising areas. One area will address women’s daily needs, with brands such as T.J. Maxx, HomeGoods, Michaels, Ulta and Whole Foods Market, along with boutiques. Then there is a typical “lifestyle” section with bookstores, restaurants and soft-goods retailers such as Ann Taylor, Talbots, Forever 21 and H&M. The third area will “have Target and Costco and those types of retailers grouped together,” said Axtell.

That is the approach Vestar took with its just-opened The District at Tustin Legacy in Tustin, Calif. Along with residential and office components, it features 1 million sq. ft. of retail space. Anchors include Target, an AMC theater, Borders, Whole Foods Market, Costco, Lowe’s, Best Buy, T.J. Maxx, HomeGoods, DSW and Strike Bowling.

Vestar has several more similar projects on the drawing board including the mega Desert Star at North Las Vegas in Nevada, opening in October 2009. It will bring 1.2 million sq. ft. of retail to the area and will be the largest shopping center of its kind in this rapidly expanding, but understored, region, said Axtell. “North Las Vegas is growing at the rate of 1,800 people a month and retail has not kept pace.”

But if there’s any one element to avoid in North Las Vegas it’s “residential on top of retail.” Issues such as controlling street noise for residents and figuring out utility usage make it difficult, said Axtell.

Building community: Tampa, Fla.-based South Capital Construction has also been inspired to venture into Main Street retail development. The result of its inspiration is the Trinity Town Center that will open Phase I at the end of this month, with the entire 200,000-sq.-ft. complex completed by August 2008.

Located in Trinity, Fla., “It is destined to become the Main Street” for the residents of Pasco, Pinellas and Hillsborough counties, said Paul Aiello, senior VP of real estate development. The area, explained Aiello, has drawn populations to its swelling golf course-centered communities, but there is no real community district to pull it all together.

The Trinity site has been laid out with painstaking detail. Space has been slotted for high-end retail, specialty restaurants featuring cuisine of local chefs, a spa/salon and a health club. Amenities inc lude a waterfront park and band shell. There will also be professional office space for financial, legal and medical services. Nothing is random. Going beyond just grouping areas, some suites, such as the spa/salon locale, are dedicated for that specific use. If one tenant moves out, another similar operation will move in.

“It has been set up very uniquely,” said Aiello. “Each tenant has a unique purpose.”

Trinity Town Center leasing agent C. William Calary of CB Richard Ellis noted that tenants in outdoor centers such as Trinity pay about $7 per square foot to cover taxes, common fees and insurance, compared to $15 to $20 per square foot at enclosed Florida malls.

Abalancing act: Tommy Spinosa, president and CEO of JTS, Baton Rouge, La., is preparing to unveil the first open-air town-center project of its kind to the state’s capital city.

“What was important is that we develop a real community. It is not just a retail play that throws in bits and pieces for the sake of calling it mixed-use,” said Spinosa, who was born and raised in Baton Rouge.

JTS labored to get the right balance. “We spent a lot of time on that.” The company even forewent some financial opportunities—such as putting a major restaurant in the community area. “It was better to reserve it for primary green space,” said Spinosa.

The total site is 2 million sq. ft. with retail, restaurants, office, residential, medical, a hotel, theater and grocery. Spinosa describes the style as eclectic. “I chose not to have a look that I’ve seen in others as if it was manufactured overnight. It looks like it evolved over time.”

There is a diversification of food types, with restaurants mostly grouped in one area. Retail tenants include Fresh Market, Barnes & Noble and Urban Outfitters. Most tenants have signed on for 10 years, with a few holding five-year leases, noted Spinosa.

A standout feature at Perkins Rowe will be a multimedia entertainment element, Spinosa pointed out, but he remains a little secretive. “We’ve added a new dimension—one that is being done for the first time in retail.” The “reveal” is in the works.

Toast of the town: Joel DeSpain, VP of real estate development, Dallas office of Minneapolis-based Opus Group, said the company has more than 3.5 million sq. ft. totaling four mixed-use/lifestyle centers under development across the country.

Its 1.3 million-sq.-ft. Hill Country Galleria project in Bee Cave, Texas, will be secured by the likes of Dillard’s department store, a Cinemark theater, a Barnes & Noble and a Dick’s Sporting Goods store. Also important to the success of lifestyle centers is a representation of other national retailers. Chains with previous experience with Opus have committed to Hill Country Galleria, including Banana Republic, Chico’s, Cold-water Creek, Ann Taylor, Eddie Bauer and Victoria’s Secret.

DeSpain pointed out that not only is it important to Opus, but it is important to the retailers themselves. In many cases, the retailers require co-tenancy clauses in their lease agreements. DeSpain said about 90% of his national tenants do.

Hill Country Galleria will have a Texas flavor with about one-third of the retail space occupied by local businesses, including a home-theater store, restaurants and some apparel merchants.

The right mix of tenants is crucial, but the layout also has to be right. So retailers are grouped by categories, such as housewares or apparel. A movie theater has been placed at center court and circled with restaurants and small shops.

And, when it comes to tying in with the community, Hill Country Galleria delivers. Main Street will also be home to city hall and the public library with office space, townhomes and apartments incorporated throughout the development.

“Many projects will bill themselves as town centers,” said DeSpain. “But this really is the center of town.”