Bill and Fred Streuver and their friend, Cobber Eccles, began their development business in 1974 by renovating a Baltimore row house bought at a foreclosure sale. But when they put up a For Sale sign, nobody called. That's when they realized they had to revive the other dilapidated houses on the block and the parks and, eventually, nearby retail.
This was their introduction to the mixed-use approach — the concept that any single component of real estate sells better when it's in an attractive neighborhood. Now partners in Streuver Bros. Eccles and Rouse Inc., the brothers and Eccles have expanded that concept to cover Baltimore's waterfront with developments that include retail as part of much broader live, work and play projects.
“We don't look at one building,” said Larry White, senior development director, in an interview at the ICSC Spring Convention in Las Vegas. “We look at how we can transform a large area.”
And, judging by the enormous number of mixed-use projects unveiled at other developers' booths this year, the Streuver brothers are not alone. Renderings of grand projects featuring retail, apartments, office space, entertainment, hotels (see story starting on page 28), spas, cultural centers and, in some cases, even medical centers and police substations, lined the walls.
Taubman Centers, for one, jumped into mixed use this year when the Mormon Church hired it to revive a site across from its headquarters in downtown Salt Lake City. The redevelopment, which is close to the city's convention center, is intended as a catalyst for even more revitalization, according to Steven Kieras, Taubman senior vice president of development. The project will feature office, multi-family housing, hotel and retail. “It's probably the most complicated construction project we've ever done,” Kieras said at ICSC.
Longtime-Southern developer The Sembler Co. is also thinking bigger. “This is new for us,” said Sembler president Craig Sher. “But, frankly, this is new for everybody.” With such a large number and variety of mixed-use projects under way, and it is just beginning, “I think the 2010s are going to be the heydays of retail development.”
Bubble ahead?
Not everyone would agree with that optimistic projection. Many at the show said they felt a bubble hovering overhead, possibly ready to burst. But the most enthusiasm came from those with projects that will be open 24 hours, because people live, shop, go to the movies and work in a mixed-use Town Center, or whatever name is being used this month for what is in essence the creation of an entirely new city.
Sembler has five projects in the works in Atlanta that all have mixed-use components along with two in Florida. In some it has sold off the residential portions, but going forward it is thinking of doing more of that work itself. Streuver Brothers, for example, develops all aspects of a community. It's even been fixing up some schools and firehouses to enhance the neighborhoods it's in.
That's important. Because, especially in the crowded East, when you propose to redevelop acres of land that once served some other purpose — old factories or well-worn houses, for example — you have to get community approval, and that's not always easy.
Not all oppose the concept. Mixed-use is especially popular in the Southwest, where Westcor and Related Urban Development are building new cities on land that was once barren desert. Since no downtowns exist, the developments themselves become the community's gathering places.
It's not just mall and lifestyle center developers getting into the act. Even strip center owners see the potential, because for office, residential and hotels, you can always build up — not usually the case for retail.
“The demand for residential in close proximity to retail, part of the whole live-work-play thing, is dramatically changing the industry, and we are changing to reflect that,” said Edens & Avant CEO Terry Jones. Kimco is also entering the mixed-use arena.
Will they work? backers say early demand for residences from Gen Y and Xers as well as Empty Nesters has been enormous. Federal Realty's Santana Row in San Jose, Calif., was initially panned because of its $455 million price tag (a fire didn't help either). But now the project's 255 apartments are 98 percent leased and its 101 tenants are pulling in an average $600 per square foot, according to the company.
The Streuver brothers and partner Eccles learned well. The company now has a portfolio of 500 million square feet in mixed-use projects.
| Selling Total | Buying Total | Ratio | |
|---|---|---|---|
| Q4/2004 | $17,587,627.28 | $658,259.00 | 26.71840002 |
| Q1/2005 | $18,488,893.18 | $444,665 | 41.57937589 |
| Source: Lehman Brothers | |||