COVER STORY, MAY 2008

MIXED METAPHORS
Mixed-use projects represent the needs of communities.
Jia Gayles

Mixed-use is still in style. Developers across the Southeast are responding to community calls for projects that infuse underserved areas with retail, multifamily, office and entertainment spaces in an attractive environment that also increases quality of life through walkability, sustainability and convenience. “The benefit of a mixed-use project is that it creates synergy,” says Gary Moyer, president of Sarasota, Florida-based Lions Gate Development. “It’s really the microcosm of a very tiny city.” Also, as gas prices grow steeper daily, the suburban population is drawn to mixed-use projects that meet every desire of its residents, most often within a walkable distance.

Lions Gate Development is building The Proscenium in downtown Sarasota, Fla.

Lions Gate Development is building a pedestrian-friendly mixed-use project in downtown Sarasota, Florida. The Proscenium will span two city blocks reaching from the historic Tamiami Trail/Highway 41 to Coconut Avenue on its east/west boundary and from Boulevard of the Arts to Fourth Street on its north/south border. “It’s a convenient way of living that allows you to walk to the office, shop, meet friends or business associates for dinner and see a show without having a reason to get into your automobile,” Moyer says. The project features a 225-room Waldorf-Astoria, 300,000 square feet of Class A office space, 130,000 square feet of restaurants and high-end retail, an 800-seat performing arts center operated by New York-based Nederlander, a four-screen theater, jazz club and 111 condominiums, of which approximately 50 percent will be branded as Waldorf-Astoria private residences. Additionally, the Hilton Hotels Corporation will build a 59-room Waldorf-Astoria on Lido Beach, an 8-minute drive away, to provide guests with beach access and amenities. “We didn’t want to list a lot of markets,” Moyer says. “We don’t have very much residential, but the office market is very broad and the quality we’re putting up hasn’t been built in Sarasota. We also wanted to add an interesting entertainment aspect to the project.” The Sarasota theater is part of Nederlander’s expansion plan to develop a circuit of off-Broadway productions. The city of Sarasota boasts the title of Florida’s Cultural Coast and has a professional symphony, ballet and opera as well as more than ten theaters and 30 art galleries. Moyer expects to start demolition on the project in late summer or early fall and complete construction by year-end 2010. The project architect is New York-based Perkins Eastman, along with Sarasota-based Lawson Group. “This is the perfect time to commence projects of this nature,” Moyer says, “There are cycles in every market, and what you don’t want to do is end up finishing a project when the cycle is in the trough, because, obviously you don’t have a lot of buyers at that point.”

Tony Collins, president of Axis Development, purchased land along the city/county line of Petersburg and Prince George County, Virginia, for Independence Village after discovering that the new Southeast Regional Hospital was under development across the street and also hearing about the expansion of nearby Fort Lee due to BRAC (base realignment and closure act). “The demand for housing and shopping is imminent in this [corridor],” Collins says, “regardless of the day-to-day economic conditions in the country.” Independence Village is comprised of 139 acres, roughly of which 64 are located in Prince George County and 75 are located in the city of Petersburg, near the intersection of South Crater and Rives roads. The $200 million project required a dual approval, of which the two municipalities readily gave. “It was unanimous,” Collins says, “They heard my case simultaneously and approved it at the same meeting. It was a historic rezoning.” The project will be developed in four phases over 5 to 7 years, beginning early next year, and will feature 350,000 square feet of commercial space, which includes office space, and 125 residential units in its Main Street district, 500,000 square feet of regional retail, 336 additional mixed residential units and 145 age-restricted units. Independence Village will adhere to the principles of new urbanism by promoting walkability, connectivity, mixed uses, urban design, traditional neighborhood structure and sustainability. The design of the community will emulate downtown Petersburg, with a mix of multi-story retail and multifamily components. “It’s part of the concept of a town center idea,” says Collins. “We want to put emphasis on creating a community, and we are gearing it toward military personnel.” According to the Economic Services Division of the Virginia Employment Commission, compensation to Fort Lee employees will increase from $930 million in 2007 to $1.2 billion in 2008, bringing higher demographics to the area. “Tenant interest has been aggressive,” Collins says, “We have had a wonderful amount of activity and multiple interests in different uses.” Adding to the corridor’s growth, London-based Rolls Royce will build a state-of-the-art aeroengine facility in Prince George, which will bring 500 new jobs to the area.

Also reponding to population growth, Town Creek Center is under development along Route 321 in Lenoir City, Tennessee, which is known as the “Gateway to the Smokies.” Town Creek Center will be a $150 million, 267-acre mixed-use development, located 26 miles southwest of Knoxville. The Tetra Companies is spearheading the development, which will begin construction this month and complete in four phases in 2013. “All the growth is happening in [this corridor] and to the west of us, and there is nothing to service that,” says John Dinsmore, director of marketing at The Tetra Companies. “Turkey Creek, the nearest retail center, is 12 miles way. The [demographics] have the incomes to spend on luxury items, and there is a huge scientific community.” Town Center will be built across the street from Fort Loudoun Medical Center and Oak Ridge, the Department of Energy’s largest science and energy laboratory, is nearby. The development will include big box, neighborhood and lifestyle retail, as well as medical office, multifamily and assisted and independent senior living communities. “New retirees are moving to Tennessee because of the improved cost of living, and also they want to get away from hurricane-prone Florida,” Dinsmore says. An as yet undecided senior living developer will design the age-restricted portion, which will comprise 1/3 of the overall project. Also, Tetra is working with a consortium of doctors to develop the medical office park, which will be located across the street from the hospital. “The senior population is growing. They have more medical needs, and we [decided] to answer that call from the market.”

Little Rock, Arkansas’ midtown district will soon welcome an infill mixed-use development on the old University Mall site. Dallas-based The Strode Company is building Park Avenue, a $90 million, 711,000-square-foot project near the intersection of Markham Street and University Avenue. The development will have an urban feel and site work is expected to begin in September, with initial tenant occupancy scheduled for next fall. The project architect is Good Fulton Farrell, and the general contractor is Spring Valley Construction, both of Dallas. “There’s enough interest out there, and we feel somewhat insulated from what’s going on in other areas simply because it’s an infill,” says Jim Strode, owner of The Strode Company. “It’s a site [people] are not willing to lose. We’re getting run over with restaurant demand, and that’s what we really wanted – a place for entertainment.” The project is situated on 27 acres and will feature 350 residential units, 350,000 square feet of office space, including a 138,000-square-foot Target, a bookstore and a regional movie theater. “We’re absolutely location driven,” Strode says. “The best pocket of demographics is around this center, and the mall site was the biggest piece of land available in [midtown].” Plans for an office tower are still under consideration. “We are near a good-sized hospital, which is adjacent to our property,” Strode says. “There is really a need for office.” Across from the development sits another one of Strode’s projects, Midtowne Little Rock, a 130,000-square-foot lifestyle center that features The Container Store, Pottery Barn and Williams-Sonoma, among others. Another notable development in west Little Rock is Red Development’s The Promenade at Chenal, a 333,000-square-foot open-air lifestyle center which will open in August. “Better retail [projects] have been built in the [Little Rock] market in the last 3 or 4 years. The market seems great,” Strode says. “I think this city’s been overlooked for many years.”

Communities are still hungry for mixed-use developments where there is a increase in population or underserved market, and developers are keen to build where there is a ready-made customer base.  Though developers and retailers alike are watching the market cautiously, projects are still on target where the demographic is primed for new product. “I wouldn’t say that we were worried [about the economy],” Strode says, “but the market has definitely changed, no question.”

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