COVER STORY, SEPTEMBER 2009

MIXED-USE BONANZA
Developers promote value-oriented projects.
Jon Ross

Developers in the Southeast know recession-era consumers are focused on value, so officials have responded with mixed-use projects that highlight bargain-shopping trends. The three developments highlighted below bring retail, office and residential space into underserved areas while paying attention to consumers’ pocketbooks. 

Constellation
Huntsville, Alabama

The Shops of Grand River in Huntsville, Alabama.

D. Scott McLain, managing broker of Coldwell Banker Commercial McLain Real Estate, envisions an alternative downtown for Huntsville. Constellation, the mixed-use project he’s developing at the intersection of Memorial Parkway and Clinton Avenue, will bring needed amenities to the area, drawing downtown residents to a new shopping destination, he says. The $150 million project consists of two hotels totaling 314 rooms, 63,320 square feet of retail space, 187,000 square feet of office space, three restaurant outparcels and 97 residential units. Construction of the first hotel, a 157-room Springhill Suites by Marriott, is about to get underway; a Residence Inn by Marriott will be built when Springhill Suites is complete.

“Constellation will put downtown Huntsville on Memorial Parkway in the mind of the public,” McLain says. “We will be creating essentially a new downtown to compliment our historic downtown.”

Huntsville’s citizenry has gotten behind McLain’s idea. While the city supports the project and has undertaken site work for Constellation, the real seal of approval comes from around town. “The public is focused on the further redevelopment of downtown Huntsville and fully supports this project,” he says. “I get calls from John Q. Public every week.”

After the hotels deliver, office space will likely be the next piece out of the ground, with retail space to follow. McLain is focusing on reserving 21,000 square feet of retail space for a green grocer. Retail options exist in the area — the Parkway Place and Valley Blend shopping centers can be found southeast of Constellation, and the Bridge Street Town Centre is on University Drive, south of the development —  but McLain says Constellation is generating excitement among potential tenants, who are longingly eyeing the remaining retail space. The outparcels are also gaining interest. “We’ve had a good response from a number of restaurants who see this as an unusual market where they can actually do deals and be successful,” McLain says.

Though construction of the initial buildings is just starting, the project began 2 years ago with the demolition of the Heart of Huntsville Mall. McLain’s family had purchased the property, which was built in the 1960s, with the intention of transforming the site. Delays due to entitlement issues slowed Constellation’s initial progress, but McLain is finally ready to push forward. The economy in Huntsville, he says, is relatively strong, so Constellation should progress without any more roadblocks. Adding to the project’s tenant draw is the fact that development throughout the rest of the country has slowed, so there is a smaller number of  properties being constructed.

“There are so few development projects in the country right now that one of this scale in a town like Huntsville seems to be notable,” he says. “If you are going to work on a project like this, Huntsville is where you would want to do it.”

Grand River
Leeds, Alabama

Another large project can be found 116 miles due south from Huntsville in Leeds, a small suburb of Birmingham, Alabama. On Barber Motorsports Parkway, near a Bass Pro Shops Outdoor World store and the Barber Vintage Motorsports Museum, sits a wide band of land waiting to be developed by Birmingham-based Daniel Corporation into its Grand River project. Hoar Construction of Birmingham will soon break ground on the 330,000-square-foot first phase of the mixed-use development, The Shops of Grand River. CMH Architects designed the 100-acre, open-air outlet center. The remainder of Grand River’s first phase will consist of residences. Development of office and hotel space is also planned.

When building a massive mixed-use project on pristine wilderness, it’s important to proceed in the most sustainable way possible. Daniel has taken this into account by working with Selkirk, New York-based Audubon International on an environmental master plan. The companies will work to protect wildlife habitats, conserve natural resources and avoid decimating native plants.

The Shops of Grand River, which is set to deliver in Fall 2010, will bring upscale retail to an area historically overlooked by national tenants. “In this part of town, there’s really not a lot of retail close to this proximity,” says Stacey Berthon of Hoar Construction. The Bass Pro store and the museum have been big tourist draws and have boosted area traffic counts, but until now, there’s been no place to shop. “Leeds is a little bit off the beaten path, but it’s a new destination place. [Daniel Corporation] just thought it was a good time to bring in an upscale outlet center,” he says. “This is really going to transform Leeds and have a major positive impact on the city.”

In this down economy, value-oriented retailers are fairing better than their more upper-scale counterparts, so an outlet mall seemed like the perfect development to get started mid-recession. Daniel Corporation, Berthon says, is seeing this gamble paying off in robust pre-leasing activity. “They’ve already signed a lot of leases,” he says. “They’ve had a lot of interest from a lot of national retailers.”

Village at Gulfstream Park
Hallandale, Florida

Cleveland-based Forest City Commercial Development is working to enhance existing entertainment in Hallandale with The Village at Gulfstream Park, a 1 million-square-foot project adjacent to Magna Entertainment Corporation’s Gulfstream Park horse racing track. Construction started on the project during the summer of 2007, and the development’s grand opening is booked for next February. When complete, The Village at Gulfstream Park will include 750,000 square feet of retail space, 140,000 square feet of office space and 1,500 residential units. The $244.7 million project will complement the 1930s racetrack, which was redeveloped 3 years ago.

“The area that we were in was missing a truly unique and vibrant outdoor lifestyle-type retail and entertainment development,” says Will Voegele, vice president of development at Forest City. “If we could take that opportunity in the market and couple it with the entertainment power of racing and gaming, we thought we had an opportunity that couldn’t be beat.”

When Forest City broke ground on Gulfstream Park, it seemed like the perfect time to start a project of this magnitude. Shopping centers peppered the area, and retailers in the vicinity were experiencing healthy sales numbers. The residential market was solid, so adding 1,500 units to the market seemed like a good idea. With the onset of nationwide financial troubles and the collapse of residential real estate, Forest City changed its plans. While not scaling back the project, the developer chose to defer residential construction and focus on above-retail office space.

“The retail entertainment and dining piece has continued to be very strong, but clearly the residential market changed significantly. That caused us to shift our thinking about some of the residential that we intended to develop with the first phase,” Voegele says.

Leasing for the retail and office space is moving well. In February, Forest City announced the first wave of 30 tenants, which includes Crate & Barrel, Vogue Couture and the restaurant III Forks. Paradis Latin Miami, the restaurant Ta-Zin and Claudio Shoes, along with 10 additional tenants, were announced last month. Voegele attributes this activity to the quality of The Village’s space and the demographic attracted to the race track. Additionally, he says, national tenants have expressed interest in leaving stores in the surrounding area to build flagship locations in the project. 

Forest City’s dedication to sustainable building also helped attract tenants. The Village will be up for Florida Green Building certification, but only because The U.S. Green Building Council’s Leadership in Environmental Education and Design program isn’t applicable to the kind of project Forest City is building. Even in the current recession, Voegele says it’s important to stick to sustainable practices, even though it may cost a little more.

“In the present economy, they’re trying to balance those things with the challenges that are out there in the world today,” he says. “At the end of the day, our commitment remains, and we design and build the most sustainable projects we can.”

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