Mixed use is all about community

By Chris Lewis

Published in The Crittenden Report Magazine, Fall 2022

The world has changed, and real estate developers and property owners are quickly pivoting to keep pace.

COVID-19 brought work-from-home opportunities to the forefront, and many employers are sticking with these arrange-ments in an effort to retain talent and save money. That has led to a shift in real estate needs. Most experts predict office develop-ment and leasing will remain sluggish as a result.

To stay relevant, many developers are focusing even more on amenities and retail convenience, and shifting more projects to mixed use. But some markets are headed in very different directions.

“The trick is figuring out which asset or mixed-use is best for each market,” said Oliver Robinson, executive vice president of development and construction for Centennial Real Estate Co.

 While some markets have demand for office space, others are oversaturated and have more need for coworking, creative space, retail or residential.

“People are looking at office use in different ways now,” Robinson said. “And in turn, the way we utilize office space is dif-ferent. We have to be able to offer different office space to different types of users.”

He said Centennial Real Estate has even considered converting a third-story mall retail area into office space.

Tim Perry is a managing partner of North American Properties, a privately held, mul-tiregional real estate operating company. He said the right mix for mixed-use devel-opment can vary considerably from place to place.

His company has one project with roughly 600,000 square feet of office space and 600,000 square feet of retail space. Another project has 200,000 square feet of retail space and 1.1 million square feet of office space.

“The amount of office space should be dictated by the market dynamics of supply and demand, along with return on cost,” he said. “A high daytime population is essen-tial for retailers and restaurants in order to support their business.”

 If space above ground is provided, office space will not only be demand driven but also exceed market occupancy and rents by upward of 10% and 40%, respectively, per square foot, he added.

Perry said residential can support retail and restaurants, as people head home in the evening and seek out shops and eateries along the way.

It’s all about human interaction, Robinson said, and mixed-use projects are uniquely positioned to foster that.

 Human interaction, after all, can’t be commoditized nor sold online. Robinson said his company is focused on creating environments where people want to dwell longer — and more often. The company is offering customers opportunities to step outside their offices and enjoy elements that resonate with their minds and souls.

Centennial’s MainPlace Mall in Santa Ana, Calif., is being transformed from a traditional mall into a mixed-use destination with a variety of offerings. A five-story, 309-unit luxury apartment complex called Paloma is being built in the park-ing lot with an expected completion date of mid-2024. And Centennial is building a 75,000-square-foot, 4,000-person-capacity indoor entertainment venue next to Paloma.

The site will also include green space; five sit-down, full-service food and beverage venues; children’s play areas; and a 410-unit multifamily project. A 150,000-square-foot office building planned for the heart of the project will enable employees to bike or walk to work, lunch, dinner and concerts, all while socializing, enjoying the outdoors and taking in the development’s unique architecture.

“We  want  to  take  advantage  of  the Southern California climate and provide new and meaningful experiences that don’t exist here today,” Robinson said. “People need to interact with each other and experience  various  aspects of life together. Through these projects, we’ll be achieving those goals, while also proving that mixed- use is here to stay.”

North American Properties has created an office concept known as Flip the Switch. One  such  project  was  completed  last November at a retail/entertainment center in Newport, Kentucky, just across the river from Cincinnati. Previously the upstairs of a Barnes & Noble, the Flip the Switch office  suites,  which range from 4,000 to 20,000 square feet, are ready for move-in.

Surrounded by retail, the office space is available with short lease terms that vary from six to 18 months, along with amenities such as flexible furnishings, ultraviolet air purification and Wi-Fi.

Using  this  concept,  North  American Properties’ clients can fulfill a variety of their needs, whether they’re interested in living near entertainment and retail, unable to commit to long-term leases or simply preparing to move to another location in the not-so-distant future.

“Through Flip the Switch, we’re not nec-essarily focused on walking distance to cli-ents’ homes and offices but what is within walking distance from the office suite spaces instead,” Perry said. “Regardless of the ‘use’ in mixed-use, there must be con-sistency regarding what clients can walk to, from events centers and theaters to coffee shops and restaurants.”

From dying mall to vibrant center

Without question, mixed-use developments are highly desirable, especially for institutional owners.

“Retail, specifically, in a mixed-use environment is expected to surpass every sector with firm tailwinds from tenant expansion into proven assets and continued consumer demand driving sales,” Perry said. “Where that exists, the office, residential and hotel components all outperform their respective sectors.”

 Russell Glen is a full-service real estate development and investment firm. It has adapted office space and dying retail foot-age into space for coworking, education and health care, all with a community-first approach.

 It has redeveloped the former RedBird Mall in Dallas into Shops at RedBird. It has creative spaces for community gatherings as well as space for entertainment, health care, a grocery and other retail.

 Known as a neighborhood center, the development now has office space on the second floor, with tenants such as The Dallas Entrepreneur Center, Chime Solutions and Dallas College.

 “And since the . . . area has been under-served for health care, our redevelopment strategy focused on medical,” said Terrence Maiden, CEO of Russell Glen. “As a result, the University of Texas Southwestern Medical leased the mall’s entire former Sears department store, consisting of 150,000 square feet. The medical center will provide specialty health care for the community, including cardiology and oncology.”

 UT Southwestern Medical subleased 75,000 square feet to Children’s Health for pediatric care, while Parkland Hospital Systems has leased 42,000 square feet for a regional medical center.

 “Shops at RedBird is a great example of how Russell Glen is highly committed to developing impactful projects in tradition-ally underinvested communities,” Maiden said. “As a place that will embody the com-munity’s culture, the $200 million mixed-use development project will ultimately create thousands of jobs too.”

Urban Land Development, a full-service real estate development firm, is incorporating a variety of features into its upcoming mixed-use developments.

The San Francisco company is building a ground-up development project known as 531 Bryant. It will have office space with what the firm describes as the hospitable feel of a four-star hotel, along with outdoor terraces, retail, dining and to-go options.

 “We’re also redefining mixed-use devel-opments as a whole by utilizing businesses and services that engage local communities and artists,” said Jon Mayeda, CEO of Urban Land Development. “By integrating their works and the messages they convey through their creations into our develop-ments, we can help our tenants and the sur-rounding community become healthier.”

 With a primary focus on enhancing peo-ple’s well-being, 531 Bryant will be the first ground-up boutique office development in San Francisco’s Central SoMa neighbor-hood south of Market Street.

Set to open in 2023, the energy efficient development will use outdoor air with state-of-the-art filtration monitoring. It will include space for dining, meditation, socializing and yoga, along with bike park-ing, lockers and showers. The project will feature a mural and sculpture garden cre-ated by local artists.

“Mixed-use developments are argu-ably more important today than they’ve ever been,” Mayeda said. “To accommo-date evolving work environments and work styles, while also ensuring employees maintain high wellness, ULD will con-tinue to provide more mixed-use office developments to communities around San Francisco and the greater Bay Area.”