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December 11, 2003

Retail chic: Shopping centers with meeting places

Town centers, lifestyle centers, revamped shopping centers are hot

By MARIA ROYER
Blatteis Realty Co.

Kent Station
Rendering by Tiscareno Associates

is a public/private partnership by Tarragon Development and the city of Kent to redevelop downtown into a destination.

The Seattle area is seeing a multitude of redevelopment of older shopping centers and the development of infill mixed-use use, town center projects being planned and executed.

The main streets of yesterday that lost retailers to malls and power centers have seen a renaissance in their communities as density moves back into smaller second tier cities. Furthermore, many of the shopping centers that were built in the 1970s and ‘80s have seen tremendous growth in population and incomes in their trade areas.

This population growth has created a pent up demand for better quality lifestyle retailers. Consequently, we have seen many developers add lifestyle tenants such as Crate & Barrel, Restoration Hardware, Pottery Barn and Williams-Sonoma to their tenant mix with very positive results.

Lifestyle centers capture the feel of an urban town square with sidewalks, plazas and landscaping with the convenience of suburban parking fields. Town centers combine the tenant mix of a lifestyle center with existing main street infrastructure. Both formats are evolving as land prices and costs continue to increase. Residential components are increasingly necessary to make these projects pencil.

Mall developers are adding open-air formats to their existing malls, and community centers are adding lifestyle tenants to their mixes.

The number of lifestyle/town center projects has more than doubled since 1997, and there are now nearly 60 nationwide, with another 20 scheduled to open over the next two years, according to the International Council of Shopping Centers' Research Department. The resurgence of such branded specialty retailers as Chico's, Pottery Barn, Talbot's and Williams-Sonoma — which are now among the mainstays of such centers — have in large part fueled this expansion.

Lifestyle/town centers

Rendering by Callison and Anita Lehman, AIA

University Place Town Center is a lifestyle/town center development proposed by a partnership between the city and Robert B. Aikens & Associates.

With fewer than five new regional malls set to open around the United States over the next two years, specialty tenants are looking to the lifestyle format to feed their own growth objectives. The Puget Sound area is no exception to this growth, with lifestyle/town center/mixed-use projects planned or under way at Lynnwood's Alderwood Mall, Issaquah, Bellevue, Kent and Tacoma.

Stuart Sloan's redevelopment and remerchandising in 1995 of University Village, one of the most successful lifestyle centers in the country, gives both the retailer and the consumer what they want in a shopping environment.

From retailers' point of view, lifestyle centers offer huge advantages. For example, while sales per square foot at Talbot's are nearly the same at both its mall and non-mall units, occupancy costs are lower, due to lower rents and CAM (common area maintenance) charges. Talbot's is one of the new retailers that will be opening at University Village's continued redevelopment and expansion in 2004.

Consumers love lifestyle/town centers, too, for their convenience and their attractiveness.

One of the lifestyle format's main advantages is the ability to park close to the stores while at the same time having pedestrian-friendly walkways that are safe and comfortable. University Village accomplishes both objectives.

Communities, too, have grown to appreciate the format, which blends in with their surroundings far better than fortress-like malls.

Gathering places

Lifestyle centers offer a place to gather, greet and meet — unlike regional malls, with their traffic problems, and neighborhood centers with their often generic architecture that seems to add little to their communities. They are increasingly becoming the town square for the community and are breathing life into older neglected town squares.

This is the format Alderwood Mall is following with its 270,000-square-foot expansion, which will tack on two open-air wings of shops and restaurants called the “Village” and the “Terraces,” as well as a 16-screen movie theater. The project is scheduled to be finished by fall 2004 and will blend a variety of lifestyle, entertainment and traditional mall anchored tenants.

Issaquah also has plans and the demographics to support such a lifestyle center. Port Blakely has plans to build a 450,000-square-foot mixed-use lifestyle center at the Interstate 90 and Sunset interchange, adjacent to a planned Microsoft satellite campus. Due to the extremely strong demographic of the trade area, several developers are also scouring the area for sites to develop a small village format lifestyle center. The attention that the trade area is getting from developers and tenants alike is forcing current shopping center landlords to re-evaluate their tenant mix to compete for the inevitable waive of lifestyle tenants looking at Issaquah as a possible expansion area.

Another twist on the lifestyle center is a vertical village. Kemper Freeman's planned completion of the unfinished Lincoln Square project in downtown Bellevue is an example of a hybrid, vertical, mixed-use lifestyle center. The $360 million project — which will include a 300-room hotel, 148 luxury condominiums, 330,000 square feet of retail space and eventually 530,000 square feet of office space — combines lifestyle, entertainment, health club and restaurant tenants with residential and hotel components. Freeman's strong development and retailing experience, coupled with his attention to detail and design, will create a vertical village where people will gather, live, work and play.

Public/private projects

The Puget Sound area is also experiencing growth in urban in-fill mixed-use projects that are public/private partnerships. The city of Kent and the city of University Place have plans for such developments.

Kent Station, a public/private partnership by Tarragon Development and the city of Kent, is the city's vision to create a mixed-use destination downtown, alongside its mass transit station, that will become the community's focal point and identity. In the heart of southeast King County, the fastest growing corridor in the county, Kent Station will ultimately consist of 530,000 square feet of mixed-use development, offering a lifestyle shopping experience where people will dine, shop, live, work and be entertained.

The surprisingly exceptional demographics of southeast King County, consisting of a trade area population of over 160,000 residents with an average household income of over $91,000, is one of the strongest trade areas in the region.

The demographics support a line up of retail entertainment and lifestyle merchants that are the best in their category. For example, AMC Theatres, one of the world's largest theater chains with more than 3,500 screens, has recently committed to open 2,400 seats in 14 screens at the project.

Kent Station will break ground in 2004 with a spring 2005 opening.

The city of University Place in Tacoma is also planning a lifestyle/town center development. The town center project is a public/private partnership between the city and Robert B. Aikens & Associates of Rochester Hills, Mich.

Aikens was one of three national developers who submitted a response to the city's request for qualifications. Aikens' strong retail background, the company's financial strength and its history of maintaining ownership of its projects were some of the reasons Aikens was selected as the preferred developer.

The University Place City Council was also impressed with the large number of community events Aikens sponsors at its developments, reflecting the company's desire to seamlessly blend its developments into the social and architectural fabric of the community. Some of Aikens' projects include: Village of Rochester Hills in Rochester Hills; Shops at Bay City in Bay City, Mich.; Acadiana Mall in Lafayette, La.

Aikens has already leveraged his tenant relationships sighting strong interest from national retailers such as Talbot's, Ann Taylor and Williams-Sonoma. University Place will include over 300 high-quality residential units, located above about 300,000 square feet of specialty shops, restaurants and a parking garage. The project will include a new public plaza and will be anchored by the University Place Library, City Hall, Public Services Building and Homestead Park.

Maria Royer is senior vice president and managing partner at Blatteis Realty Co., a Seattle-based boutique real estate firm representing retailers and landlords with offices across the country.

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