Time was when mixed-use developments were experimental, even controversial. Did people really want to live above the store? The answer, increasingly, is ‘yes’ as retail developers continue to add residences, offices, even hotels to their mixed-use complexes with the goal of squeezing as much profit out of the projects as possible.
"Our projects going forward will all include residences," says Barry Rosenberg, president, Steiner and Associates. General Growth Properties and Pennsylvania Realty EstateTrust reportedly are also joining the mixed-use ranks and considering additional uses at some properties, as is Developers Diversified Realty Corp. And Crosland Inc. is about to announce a joint venture with Biltmore Farms LLC to develop a 42-acre mixed-use downtown complex on land that was once part of Vanderbilt's original estate.
"As fewer and fewer greenfieldsites are available and infill projects in urban areas become more popular, it's important to make the most of the properties," says a DDR spokesman. DDR is building the 600,000-square-foot Shops at Midtown Miami, which will include about 3,000 residential units-rental apartments and condos-built through a partnership with Biscayne Development LLC. It is considering other projects.
Mixed use is not new. Steiner, for example, tried the concept out two years ago by adding 25 residential units to its Zona Rosa project, and then upped it to 130 units on top of retail at Bayshore, a mixed-use expansion and conversion of an enclosed mall in Milwaukee. And now it's constructing The Greene, an 800,00-square-foot project with about 500,000 square feet of retail, near Dayton, Ohio, with another 130 homes.
What is new is the speed with which mixed-use is catching on and the fact that some developers are taking on the entire projects themselves, such as Steiner with Bayshore, rather than partnering with residential developers. "We're building ourselves," says Rosenberg. That doesn't preclude future partnerships with condo builders.
And General Growth may add condos at its Natick Mall, pursuing the investment on its own and selling off the condo units through a taxable REIT subsidiary.
There have been a handful of companies that have done it all. Baltimore-based Struever Brothers Eccles & Rouse has been developing all aspects of its mixed-use projects for years now, but it entered the arena through residential. Atlanta-based Cousins Properties Inc. also is multi-disciplined and Federal Realty Trust in the past has developed entire mixed-use projects itself. But the amount of retail developers taking on all the responsibilities is growing.