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December MSCA** 2007 CORPORATE SPONSORS: Adolfson & Peterson Construction American Engineering Testing, Inc. The Avalon Group Barna, Guzy & Steffen, Ltd. Bremer Bank, N.A. Brookfield Properties Corporation CB Richard Ellis CSM Corporation VOLUME 21, NUMBER 12 DECEMBER 2007 Cambridge Commercial Realty Capital Growth Madison Marquette Colliers The Collyard Group L.L.C. 2007 URBAN LAND INSTITUTE FALL MEETING Commercial Partners Title, LLC eature Cuningham Group Architecture, P.A. Cushman & Wakefield by Peter Berrie, Faegre & Benson, LLP F Dalbec Roofing Dougherty Funding LLC he Urban Land Institute (ULI) hosted its Hanley, Chairman/CEO of Vester Development Exeter Realty Company national Fall Meeting October 23-26 in Company. The panelists discussed existing Faegre & Benson LLP Las Vegas. ULI is a highly respected, retail developments on The Strip such as General Growth Properties, Inc. T Gray Plant Mooty global real estate industry group providing Fashion Show Mall, The Shops at the Venetian, Great Clips, Inc. information on urban planning, growth and The Heart of North Las Vegas, as well as soon- Griffin Companies development. This article summarizes three to-be-open/built projects such as Town Square, Grubb & Ellis/ Northco Real Estate Services retail-related programs from the 2007 meeting: Palazzo and CityCenter. H.J. Development, Inc. (1) Learning from Las Vegas: Laboratory for The tremendous retail volume on The Strip, Heitman Financial Services LLC Retail Information; (2) Housing Above Retail: of course, is largely supported by tourism. In Hempel Properties How to Make it Work; and (3) Where Did the Inland Real Estate Corporation 2006, Las Vegas had over 40 million overnight JE Dunn Construction Life in Lifestyle Center Go? visitors. Generally, tourists account for 80-90% J.L. Sullivan Construction, Inc. Vegas Retail. The first program, “Learning of the retail revenue on The Strip. (Fashion Jones Lang LaSalle/Rosedale Center Show Mall is a notable exception with an KKE Architects, Inc. from Las Vegas: Laboratory for Retail Kraus-Anderson Companies Information,” featured panelists Warren estimated 50/50 mix of tourist and local sales.) LandAmerica Wilson, Senior VP, Development for General The 40 million tourists spent on average $141 Landform Growth Properties; Joseph Tagliola, President per person on retail purchases. Larkin Hoffman Daly & Lindgren Ltd. of Retail for Turnberry Associates; and Lee LaSalle Bank Urban Land Institute on page 2 M & I Bank McGough Development Messerli & Kramer P.A. THE VILLAGE AT VADNAIS HEIGHTS Midwest Maintenance & Mechanical, Inc. napshot Minneapolis/St. Paul Business Journal NAI Welsh S NorthMarq Capital, Inc. Location: SWQ of 35E and Co. Olsson Associates Rd. E, Vadnais Heights Oppidan, Inc. Opus Northwest LLC Month/Year Opened: New Park Midwest Commercial Real Estate construction projected to open 2008 Paster Enterprises RJ Marco Construction Inc. Owner/Managing Agent: Manley RLK Incorporated Commercial, Inc. RSM McGladrey, Inc. RSP Architects Center Manager: Carol Johnson Reliance Development Company, LLP Robert Muir Company Leasing Agent: Jim Rock, Ryan Companies US, Inc. Skip Melin, Brad Pfaff, Jennifer Schoell Madson Colianni, Cushman & Wakefield Anchor Tenants: Super Wal-Mart shadow- Shingobee Builders, Inc. of MN, Inc., (952) 465-3300 anchored center Solomon Real Estate Group Inc. Stewart Title Guaranty Company – Architect: Architectural Consortium Market Area Served: Northeast National Title Services TCF Bank Construction Contractor: TBD Construction Style: New construction Target Corporation Towle Financial Services GLA: Approximately 117,000 sf Additional Facts/Narrative: Exciting new U.S. Bank center in an under-retailed trade area. Lifestyle Current Occupancy: 0 United Properties center elements in place to embrace the city’s Venture Mortgage Corporation Number of Stores: TBD vision for Vadnais Heights. Mid-box, inline and Weis Builders, Inc. pad opportunities in what will be the 3rd largest Wells Fargo Bank, N.A. Westwood Professional Services, Inc. retail development in the northeast quadrant. URBAN LAND INSTITUTE continued the street level design of the building, as “caters to the needs and ‘lifestyle’ pursuits well as the surrounding trees, streetscape, of consumers in its trading area.”1 They This large influx of tourist dollars generates sidewalks, and benches. These street-level usually are upscale and located near huge sales. Mr. Wilson stated that retail elements must be done right to create a affluent neighborhoods, and have between productivity for General Growth’s Vegas retail (and living) environment that people 150,000 and 500,000 sf of leasable retail portfolio is 2-3 times higher than its want to experience and visit repeatedly. area. They generally have an open-air normal portfolio. Retailers on The Strip configuration and include at least 50,000 sf Of course, vertical mixed-use projects have easily average $1,000 of sales per square of upscale national chain specialty stores their challenges as well. First, the design is foot. The Shops at the Forum achieve (e.g. Gap, Banana Republic, Pottery Barn, critical and must be done by someone with $2,000 of sales per square foot. On the Barnes & Noble, etc.). But lifestyle centers retail expertise—Are the dimensions (e.g. other hand, gross rent ranges from $150- also include other features that make them ceiling height) right for retailers, is proper 300 per square foot. Mr. Tagliola said that attractive for more than shopping—for sound attenuation incorporated, will most retailers’ cost of occupancy ranges example, restaurants (and less frequently, restaurant odors be vented properly? Second, from 15-19% of their sales revenues. Rents movie theaters), and design features such parking can be tricky. Many of these are driven in large part because of the as fountains, benches, and other elements projects have less parking than the multiple extraordinary land costs, which average conducive to casual browsing.2 As Mr. Vice uses would normally require because of the $30-32 million per acre on The Strip. stated, “we want people to spend time at different peak times of parking use. But our centers,” which is why they include The panelists agreed that Las Vegas—at the 40,000 sf of retail space at The Civic, a lakes, trails, brick-lined sidewalks, least The Strip—is relatively unique, but Portland mixed-use project, was not chessboards and other public amenities. at the same time they suggested that all successful primarily because the parking Presenting an alternative perspective, Mr. retailers could learn two things from dedicated to retail was underground. As Oliver defined lifestyle centers as Vegas. First, shopping centers increasingly with all retail projects, parking has to be “dressed-up strip malls.” need to have incredible public amenities to easily visible, accessible and free. attract customers, and especially families. Successful lifestyle centers today are likely Finally, the mix of uses has to be Second, crazy ideas can work—now more to be mixed-use projects (if located in an compatible. The best retailers for mixed- than ever developers and retailers need to urban setting) or town centers in suburban use projects, because they help create the take risks and innovate. areas. Mr. Savopoulus suggested that for right “sense of place,” are coffee shops, town centers to have lasting value they Housing Above Retail. The second bookstores, wine bars, grocery stores and must incorporate local culture and history, program, “Housing Above Retail: How to restaurants. But the mix presents include beautiful buildings (one out of Make it Work”, featured Art Fucillo, challenges as well. In one notorious project every 3-4 buildings should be architecturally Senior VP, Lerner Enterprises; John where the housing was over a grocery interesting, if not inspirational), wrap Tschiderer, VP Development, Federal store, the marketing campaign said “You’ll parking behind buildings, and integrate the Realty Investment Trust; and Thomas be the First to Know When the Produce residential, retail and community spaces Cody, Principal of Gerding Edlen Arrives.” Unfortunately, this was literally into a place that will endure. Mr. Oliver Development Company. Mr. Cody’s true, when the produce arrived in the focused more on “place-making” and development company specializes in middle of the night. This highlights one of creating an experience for people. “placemaking.” Retail used to be a “loss- the many coordination challenges— Successful projects are all about the leader” in his mixed-use projects, i.e. the delivery hours. Other coordination “negative space” i.e. the space other than retail component usually lost money, but challenges relate to signage (especially if the buildings. In addition to the negative allowed him to get the desired housing lit), ventilation, loading dock use (many space, vibrant place-making depends on project done. But now adding retail to retailers do not want to share a loading art, music and food. Cody’s urban projects increases his dock especially with residents), parking, financial return. First, the retail—if done sound, and hours of retail operation. Conclusion. As always, the ULI Fall right—becomes an amenity for the Meeting provided useful information, Lifestyle Centers. The third program, housing. It also can create an identity for highlighted industry concerns, and reminded “Where Did the Life in Lifestyle Center the housing because residents identify with many of us why we love real estate develop- Go?” featured panelists
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