COVER STORY, SEPTEMBER 2004

THE SOUTHEAST EMBRACES MIXED-USE DEVELOPMENT
Many residents in the Southeast are trading in their long commutes for a chance to walk to work.
Dawn Pick Benson

Yates

Mixed-use development is beginning to come into its own in the Southeast, according to Todd Yates, senior vice president of national development at The Alter Group. Although mixed-use development has historically been situated in large metropolitan areas such as New York, Chicago and Boston, it recently has made its way south to cities like Atlanta and Fort Lauderdale, Florida.

A Growing Trend

One reason for this trend is the growing population base in the South. “I think mixed-use is a reaction to the excesses of urban sprawl and an expanding population base in the South, which has fragmented our communities and strained our infrastructure,” says Yates. He says that true mixed-use projects ease the movement and congregation of people as they travel between work, school and other activities. They offer ideal live, work and play environments.

“Atlanta residents have been historically tied to their cars,” says Yates, “but the city has grown to a size in which people are commuting an hour to work each day. Many are now thinking, ‘Why not move into the city and walk to work, or at least be fairly close to work?’ This is what I think has driven mixed-use development in Atlanta.”

Fort Lauderdale is another city that is experiencing this shift toward mixed-use development, says Yates. “In the past 2 years, there have been at least a half-dozen high-rise residential projects going up downtown near the CBD office area.”

Recent economic conditions are also a reason for this growing interest in mixed-use development. Because of the recent economic slump and its negative impact on the office market over the past 3 to 4 years, Yates says many developers have shifted to residential development in order to utilize land they already have or serve as a reason to begin new developments. “A lot of developers who have never done high-rise residential are now getting into it,” says Yates. “Our company is a good example. We have several projects now that we’re considering for mixed-use development.”

Challenges

When it comes to mixed-use development, there are several hills that must be climbed before a project is finished. For example, the timing of each phase is often a challenge. “It’s hard to align the stars so that all product types within a mixed-use development can come on line concurrently,” Yates says. “A perfect analogy is the discordance between the residential and commercial sectors. The residential has been buoyed by low interest rates and a shortage in the supply of single-family homes, and the commercial is still feeling the effects of the recession. The mixed-use formula is further complicated by the often contradictory objectives of the different components: residential users may seek out retail amenities for all of their needs — supermarkets, big box retail, boutique stores — but don’t want the commensurate rise in congestion; retail tenants may seek out a solid residential component but find they don’t have the parking or outside traffic to meet their sales goals. It is a complex mix that requires foresight and the right timing to overcome the challenges.”

Financing can also be an issue. “The financing structure is a lot more complicated,” says Yates. “And because it is more complicated and you are crossing product-type lines, the lenders in the financial community that either have the understanding or desire to go through such a complex transaction are limited.”

There are also new building codes that must be taken into consideration in designing each project. “You have to consider the functionality as well as new building code issues,” says Yates.

Finally, analyzing the market can often be difficult. “You have to decide on the level of housing that you want to offer,” says Yates. “Do you want to build $250,000 homes or $1 million homes?” He says retail is also an important support amenity for a project, so a developer must be sure to choose the appropriate types of restaurants or support services. This will help the sale of the residential as well as the leasing of office space. “The worst thing you can do is have vacant first-floor retail,” he says.

Current Projects

The Alter Group is lead developer for the 145-acre office and industrial section of International Park at World Golf Village in Jacksonville, Florida.

International Park at World Golf Village is located immediately adjacent to the World Golf Village master-planned mixed-use community on Interstate 95 near Jacksonville, Florida. The Alter Group is lead developer for the 145.75-acre office and industrial section. Yates says the company began working on the development in the summer of 2001, but the events of September 11, 2001, caused the project to be delayed until the market made a turnaround.

“Activity this year has definitely picked up,” says Yates. But, he says, the question remains: Is Corporate America confident enough that the economy is going in the right direction that companies will start expanding again and creating new jobs? Yates believes that most companies are waiting until the presidential election is over and they have several quarters of solid earnings and growth behind them before they justify more jobs and a need for more office.

The Alter Group also has developed Brookside Concourse, an urban/suburban environment located just off Old Milton Parkway in the Atlanta suburb of Alpharetta. Yates says residential neighborhoods were already in place, so the company developed office and retail space and then connected everything through a series of sidewalks. “We’ve tried to create an urban environment in the suburbs,” says Yates. The development also has jogging and running trails, and a daycare facility and Georgia State University’s North Atlanta campus are within walking distance. Seven buildings totaling 800,000 square feet have already been completed, and The Alter Group has one site left to develop. The development will consist of 72 acres of office development and about 30 acres of retail.

The Road Ahead

Yates believes that mixed-use developments will continue to be good long-term investments. They have typically done very well in large, growing cities where there is a defined need, so he expects them to continue to expand in the Southeast.

For example, when people began moving into the Atlanta area from cities like New York and Chicago, they were looking for downtown residential. “It’s what they’re used to,” says Yates, “and they don’t have the apprehension that someone who’s always lived in the Atlanta suburbs might have.” He says this desire creates demand and then once the product is there, others realize how convenient it would be to walk to work or to the grocery store.

“Once you create the environment, you not only draw from people who come from that type of environment, you also expose it to others,” says Yates. “I think that’s going to be true, for example, in Fort Lauderdale as well. There’s never been residential in the downtown area. But now that there are four or five new 30- to 40-story towers going up, it’s a natural fit for the transient population in South Florida.” He says it will also be appealing to the native who simply never had the opportunity to live downtown.

Even though there will always be a need for suburban development for those who want big yards and all the perks that come with them, Yates believes that mixed-use is a natural fit for empty-nesters or families without children. “I think people will begin to re-evaluate that hour-a-day they spend in the car going to and from work, and many will start looking toward a live, work and play environment,” says Yates.

DANIEL, SELIG DEVELOP IN MIDTOWN ATLANTA Daniel Corporation and Selig Enterprises are developing The Plaza Midtown in Atlanta. Daniel Corporation and Selig Enterprises are developing The Plaza Midtown, a 550,000-square-foot, 20-story development in Atlanta. The project will feature 452 high-rise residential condominiums in two towers and 70,000 square feet of retail, dining and entertainment space. The 3.3-acre site encompasses an entire city block from Eighth Street to Peachtree Place between Spring and West Peachtree streets. Construction is scheduled to begin this month, with first units available first quarter 2006. The Plaza Midtown will feature reflective glass construction and offer views of Midtown, Downtown, Buckhead, Stone Mountain and greater Atlanta. With security and safety in mind, access from the 881-space parking deck utilizes a keyless entry system with secured elevator lobbies. Residential amenities include a large clubroom, fitness center and deck-top plaza, which will feature a swimming pool and gathering space. Prices for the one- and two-bedroom units will begin in the $180s. Publix will anchor the retail space, occupying 33,600 square feet along Spring Street. The store will offer its urban “market” concept, featuring gourmet take-out, an extensive wine selection and fresh sushi along with traditional grocery items. The remaining retail space will offer boutique shopping, restaurants and entertainment, supported by deck parking. — Julie Fritz Hunt

LATITUDE ADDS TO BRICKELL VILLAGE Construction on E.A. Fish Associates’ Latitude on the River in Miami Beach is scheduled to begin in the fourth quarter. Latitude on the River is a new luxury condominium building with waterfront property on the Miami River, located at 615 W. Second Ave. in Miami. The new mixed-use project is in the midst of Brickell Village, next to fine dining, upscale hotels and chic nightlife and situated among landmarks such as The Four Seasons, Mandarin Oriental and the to-be-developed Mary Brickell Village. Spanning 2.3 acres, the property will consist of several components including the 44-story luxury condominium building, a bistro and riverside café, and Latitude One, a commercial and retail building. A 35-foot View Promenade will traverse the entire ground floor of the property, providing direct views of the river. The property will offer residents many other features and amenities, including a two-story lobby, swimming pool, fitness center, billiard room, business center, home theater, yoga room, Tai Chi Meditation lawn, sauna and storage. Latitude on the River will consist of 452 units including riverfront flats, studios, one-, two- and three-bedroom tower units and two levels of penthouses. The residences range in size from 800 to 1,500 square feet while unit prices range from $180,000 to $600,000. The unit amenities include Italian-style kitchens, bathrooms with granite counter tops, wall-to-wall carpeting and tile in the bathrooms and kitchens. Arquitectonica designed the condominium project, which is owned by Boston-based E.A. Fish Associates. Latitude on the River is being developed by Miami Riverfront Partners. Construction is set to begin in the fourth quarter of 2004 with completion scheduled for late 2006. — Allyson Doll

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