Innovative developers in the Northeast are exploring a variety of nontraditional approaches to building retail projects. Aging shopping centers, older downtown areas, and even smaller emerging markets are getting a second look.

In this climate, where lack of available land is a major concern, developers often tout the benefits of renovating and expanding existing centers. “It's getting more and more difficult to get approvals and develop new projects,” notes Richard Baker, president of National Realty & Development Corp. in Purchase, N.Y.

As a result, one of the company's strategies is to bring the principles of urban development to the suburbs. “We're becoming more creative and designing projects that have parking garages, rooftop parking and multi-level retail in order to satisfy the requirements of our tenants,” Baker says. “And we're spending more money and time in order create new projects out of old failed projects.”

In Middletown, N.Y., for example, National Realty & Development has demolished a portion of an existing 1 million-sq.-ft. vacant mall and is rebuilding a 900,000-sq.-ft., two-level power center with deck parking. The $80 million Orange Plaza project is slated to open in Orange County in March 2002.

In fact, Orange, Westchester, and Fairfield Counties are under-retailed for traditional community shopping centers, according to Baker. “Target and Wal-Mart are dying to get into those markets and they can't because there is no land and you can't get approvals.” While residential construction has been steady in these areas, retail growth has lagged behind.

Garden Commercial Properties, based in Short Hills, N.J., has also watched its development approach evolve over the years. “If you enhance a community then you will be successful,” says Mario Dudzinski, Garden Commercial's vice president of real estate. In Boonton, N.J., for example, the company cleaned up a 30-acre contaminated site and is redeveloping it into a community shopping center, expected to get underway next year.

And in Basking Ridge, N.J., Dewey Meadow Village would not have been possible if Garden Commercial hadn't worked with the town to develop a common vision for the project. The mixed-use center, expected to be completed by June 2002, is situated on 25 acres and includes an athletic field, daycare center, clock tower, parking and office space, as well as upscale retail and restaurants.

Uncertainty about New York

The terrorist attacks Sept. 11 changed the entire country and sent shock waves through the U.S. economy. Although the long-term effects of these events on New York retail markets have yet to be determined, the city is working hard to rebuild itself and get back to business. (See sidebar, p. N10.) As Lehman Bros. notes in a recent report, however, “the combined attack on the WTC and the Pentagon has the impact of imposing a terrorism tax on the economy that has turned the 2001 slowdown into an outright recession.”

Immediately before the attacks, many retail markets in New York City were healthy and active, with no shortage of creative deals. Some of this growth was spurred by strong residential activity, as in the northern part of Manhattan, notes Benjamin Fox, executive vice president of Manhattan-based NewMark New Spectrum Retail LLC.

Manhattan neighborhoods that have been evolving into active retail zones of late include Harlem, NoLIta (North of Little Italy), West Chelsea, and the Lower East Side, says Robert K. Futterman, CEO of Manhattan-based Robert K. Futterman & Associates, LLC. “These aren't average run-of-the-mill locations,” Futterman notes.

Vacancies in these areas have been few and far between, and, as a result, retail opportunities have arisen in nearby peripheral areas such as the West Side. Another trendy area is Ninth Ave. between 42nd St. and 57th St., which has been transformed as a direct result of the revitalization of the Midtown/Times Square area stretching from Eighth Ave and 42nd St. to 57th St.

Still another area poised for growth, according to Fox, is 34th St. and 7th Ave. near Penn Station. There, Vornado has put together many parcels for future development. In addition, Fox says, the AOL Time Warner project at Columbus Circle is expected to transform the entire neighborhood. (See sidebar, p. N8.)

While Fifth and Madison Avenue and SoHo have traditionally been the primary retail zones in Manhattan, a shortage of space has caused prices to escalate, explains Jim Linsley, vice president of both The Palladium Co. and Columbus Center LLC, developers of AOL Time Warner Center. “There is an entire consumer base which is not being catered to at the moment,” Linsley says. “This project could fill that void and act as an important catalyst to invigorate that whole Broadway retail corridor.”

Stephen Stephanou, executive vice president of Manhattan-based HGCD, says Madison Avenue has been seen as a vibrant market. In recent months, several new stores have opened in the area between 57th St. on up to 72nd St., including some international retail stores.

In urban communities outside of New York City, retail opportunities abound. In Newark, for example, the New Newark Foundation is spearheading a $180 million mixed-use project to revive a stretch of the city's downtown. The two-phased project calls for the development of luxury apartments, 200,000 sq. ft. of retail, and street-level entertainment. The plan involves the renovation of the aging Hahnes department store, and the adjacent Griffith Piano Co. building. Kravco Co., Philadelphia-based Dranoff Properties and Universal Cos. are developing the Newark plan. Phase I is expected to begin in Spring 2002.

On the waterfront…

On the Philadelphia waterfront, the $240 million Penn's Landing project is being planned by Simon Property Group. The Delaware River Port Authority is a major participant in the project, which will combine entertainment, retail and a museum center.

In downtown Pittsburgh, a $140 million mixed-use development, SouthSide Works, is currently being constructed on a 34-acre riverfront site by the Soffer Organization. Approximately 50,000 sq. ft. of retail broke ground this summer. When complete, the project will offer a retail, restaurant, office, and entertainment venue.

And a once-desolate industrial site along the riverfront in Wilmington, Del., is now a thriving destination as a result of the efforts of the Riverfront Development Corp. Today the riverfront area offers numerous attractions including outlet shopping, dining, and various cultural events.

A major addition to the Wilmington riverfront's revitalization was the addition of the upscale Shipyard Shops project. As a result of the project's success, Pettinaro Co. is currently developing the second 100,000-sq.-ft. phase on speculation and is nearing completion. The third phase is expected to begin in spring 2002. When complete, the four-phase project will total 400,000 sq. ft. of outlets, restaurants, and other retail shops.

Dora Johnson is a Tinton Falls, N.J.-based writer.

SIDEBAR: A media giant's giant HQ

In the midst of Manhattan's bustling traffic and crowds, construction cranes perched at the southwest corner of Central Park are working on a colossal project which will become AOL Time Warner Center, the headquarters for the world's largest media company. The $2 billion mixed-use project, slated for completion in August 2003, will eventually be distinguished by a pair of glass towers stretching 80 stories high.

Touted as a development feat, the 2.8 million-sq.-ft. Columbus Circle project will combine seven different elements.

Along with AOL Time Warner, which will occupy 900,000 sq. ft. of office, production, and broadcasting facilities, the towers will offer another 200,000 sq. ft. of office space, 198 luxury condominiums overlooking the park, a Mandarin Oriental hotel, Jazz at Lincoln Center, a 340,000-sq.-ft. retail complex called The Palladium, and a parking facility.

“It's a very pivotal location in New York,” says Jim Linsley, vice president of The Palladium Co. and vice president of Columbus Center LLC, developers of the complex. The project links Times Square to the south with the cultural activities of Lincoln Center a few blocks to the north. “It fits in the middle of those two zones and links them for the first time.”

As a result, the project will establish some of the highest retail rents on the West Side, exceeding $300 per sq. ft. for ground floor space.

“We're out there leasing space now at the rents we said we would,” said Linsley. “So we're hitting some pretty high marks.” Leases have been signed with Hugo Boss, Thomas Keller, J Crew, Armani AX, Joseph Aboud, and Cole Haan. Linsley added, “There won't be another project of this magnitude, combining these different real estate uses in quite some time.”

SIDEBAR: A pleasure in Pittsburgh

The Mall at Robinson opened in Pittsburgh on Oct. 26, 2001, as a pleasure to behold. The mall is part of a total retail park and commercial real estate development called Robinson Town Centre.

The 1.2-million sq.-ft., two-level regional center is located at Parkway West and Highway 60 in Robinson Township, five minutes east of the Pittsburgh International Airport. Centered in the fastest growing employment corridor in the region, The Mall at Robinson also serves 463,000 people living in the trade area.

The retail portion of Robinson Town Centre, in development since the 1990s, welcomed more than 100 retailers, including some newcomers to the area.

These include Hollister Co., Yankee Candle, The Buckle, EB Kids, Rice & Co., and Rampage. In addition, the $130 million center is anchored by a 199,000-sq.-ft. Kaufmann's that opened in 1998 as a freestanding store; a 141,000-sq.-ft. Sears; a 147,000-sq.-ft. JCPenney; and a 65,000-sq.-ft. Dick's Sporting Goods, opening in spring 2002.

A delightful design

The design is traditional yet contemporary, with a prevalence of wood paneling; warm textures; soft furniture and carpet; and subtle colors of cobalt blue, burgundy, tan, sand and green, creating a relaxing atmosphere.

Intersecting flat planes, neutral tones and layered ceiling treatments lend intimacy to the space. Perhaps the most spectacular feature is the two, two-level round rotundas at the anchor junctions, with spacious ceiling domes made of glass and steel.

The partners in the project include Cleveland-based Forest City Enterprises Inc., Michael Zamagias Interests and JC Penney Corp. The Law Co., based in Wichita, Kan., was the contractor for the center, and Farmington Hills, Mich.-based JPRA was the architect.