Wednesday, February 21, 2007

Life Style Center will Continue to be Hot

"The traditional lifestyle center as defined by ICSC (International Council of Shopping Centers) is between 150,000 sf and 500,000 square feet. They are open-air, usually in upscale locations and have many of the same fashion and restaurant tenants. But the definition and parameters are becoming more fluid as developers build more of these centers and shoppers get to know them.
When putting them together, developers also need to keep in mind what tenants go where. The biggest flaws we see are in the site plans.
You can't put a Cheesecake Factory in the middle of a street. As much parking as we can provide them, they'll eat it all up.
Some of the more innovative, earlier lifestyle centers introduced larger sidewalks than a typical strip center, allowing more people to congregate. However, that can also be overdone. A sea of concrete is really not very friendly.
Panelists agree that adding other real estate components to lifestyle centers and making them mixed-use is the wave of the future for these developments, but that might not always be a good thing. As land becomes more expensive and in shorter supply, mixed-use properties are rapidly becoming the project of choice for most developers. And while having the right mix of uses is vital to a project's success, it's just as imperative to have the right mix of retailers.
Retail is an important part of mixed-use from an economic point of view. It also gives a project character, so the types of retailers that occupy a project can have a significant impact on its overall image. This kind of format is conducive to a blend of retailers that would not normally come together under one roof.
Mixed-use enables mall mainstays to coexist with typical open-air or lifestyle tenants, offering a wide range of merchandise. A key component to a successful development is food and entertainment.
Restaurants are critical to a mixed-use project. Most of them are the anchor tenants and drive the sales volume that we need to make projects work. They also help to make it a daytime/nighttime destination.
Mixed-use clearly has its benefits. Chief among them are that municipalities and zoning entities are likely to look more favorably on mixed-use as a smart-growth-type initiative than they would a straight-forward retail project. A successful mixed-use complex is more sustainable, less susceptible to competition. Mixed-use projects tend to be costly and need higher rents in order to make fiscal sense.
CAMs (Common Area Maintenance) tend to be much more for a mixed-use asset, because of things like parking and security. CAMs for mixed- use can be between 30% and 35% more than suburban centers.
The discussion also touched on issues such as parking and the competition for prominent positioning among the various components of a project. All the uses — hotel, retail, office, residential - want that prime corner. Therefore, it is important for the developer to to create a place where they each have visibility and identity."