Some developers are building more stores, despite the recent glut in retail space. Instead of building them in malls, they are developing smaller clusters of retail space in new housing developments, called mixed-use developments. Many young people as well as retirees are looking for cheaper housing in the suburbs, but with an urban vibe and access to restaurants, shopping and offices.
These projects are usually joint ventures between a residential developer and a commercial developer who specializes in retail. The developments must have walkability, and provide residents with a short walk to grocery stores, shops or the gym. “The single biggest change is walkability,” said Steve Patterson, chief executive of Miami -based developer Related Development, LLC. He told the Wall Street journal that “proximity to schools, transportation and shops is important even for suburban projects.” Related Development recently completed a mixed-use project in Doral, Florida with 250 square feet of retail space, and 700 residences.
Some retail property owners are constructing residential developments or offices next to malls or open-air shopping centers, and on top of street front retail stores to create a built-in shopper base to help support local stores and restaurants. Federal Realty Investment Trust, a shopping center REIT with expertise in building mixed-use projects said it takes years to understand how to develop such projects. The decision on where to have parking and office space in close proximity to retail space, to make it easy for residents to walk from their homes is not a mundane decision, as are operational decisions such as where to have trash pickup. “It’s not something you decide on a Friday, and execute on a Monday,” Said Jeff Berkes, head of the West Coast operations for Federal Realty. He told the Walls Street Journal “It’s not always easy and it’s not always perfect.”
The real estate investment trust (REIT) is developing a 1.7 million square foot project in San Jose, California, which it acquired in 1997. The REIT is investing in a new office building with ground floor retail that should be completed in 2019. This will expand its existing development of rental homes, condos, office space, shops and a boutique hotel.
SOURCE: Wall Street Journal, “Stores are Getting Built, Just Not in Malls,” by Esther Fung, December 27, 2017
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