I
have copied in below a post from the popular Greater Greater Washington blog.
Why?
The
topic of what kind of retail – as in national credit tenants vs. local/independent
businesses – is a topic under discussion regarding the development of
Bloomingdale’s McMillan Sand Filtration site.
(I
acknowledge that there are people who want the site not to be developed at all
or would prefer all/mostly park space. This
post is * not * intended to be dismissive of the people who are pursuing that
goal.)
I
direct you to the last two paragraphs of this GGW post:
Lenders
still love "national credit tenants" (the big chains), the panelists
agreed, but the younger and more affluent are not interested in such stores.
Those are the shoppers and residents that developers want to attract, but they
have little interest in living near the stores that lenders prefer.
Conversely,
the independent retailers and restaurants that most appeal to target markets
for new apartments often struggle to secure financing. For developments such as
the 6 Walmarts planned for the District, the panelists concluded that this
tension will be quite acute.
Will
the retail that is implemented at the sand filtration site be national credit
tenants or independent retailers? Or can it be a mix?
by
David Versel • April 25, 2012 1:13 pm
According
to industry experts, retail is rapidly evolving into little more than an
amenity to enhance the value of housing and office spaces above.
The
old retail model of traveling to a place simply to acquire goods is dying,
thanks in large part to the Internet, they said at a panel on retail during
ULI's April 17 Real Estate Trends Conference. Today's successful retail
destinations are much more about entertainment experiences than shopping.
Developers
want to attract younger and more affluent residents to mixed-use developments,
but the kind of retail that these residents crave is very different from the
retail that makes lenders want to finance a new building.
On
the panel, moderated by Janis Schiff of Holland & Knight, mixed-use
developer Grant Ehat of JBG/Rosenfeld talked at length about the decline of
enclosed malls. The only mall to open in the US since 2006 is City Creek in
Salt Lake City, which is adjacent to the Mormon Tabernacle and is heavily
subsidized by the LDS church.
Tysons
Corner is the only "super fortress" mall in the DC area that is
viable for the long term, Ehat argued. In his view, even Montgomery Mall may
not survive for another generation.
50%
of the space at top-end retail destinations like Miami's Lincoln Road Mall is
food oriented, said Ehat. Architect David Schwarz added that consumers are
basically lazy, and that the most successful developments are the ones that
contain the greatest number of attractive uses in the most convenient and concentrated
places.
The
economics of retail is shifting. According to Placemaker Michael Ewing, of
Williams Jackson Ewing, retailers now rely on the "clicks and bricks"
model, with their physical stores serving as venues for customers to see and
learn about products that they later purchase online. Ewing said that people
want to feel younger and more affluent than they really are, calling this
"the psychology of aspiration."
From
the developer's perspective, Ehat reported that he no longer even considers retail
as part of the bottom line. Instead, in the context of mixed-use developments,
the retail, dining, and entertainment offerings on the ground floor drive the
image of the overall project and, hopefully, improves the financial performance
of the apartments, condos, or office suites on the upper levels.
A
final obstacle to retail developments is the balance between financiers and
customers. Lenders still love "national credit tenants" (the big
chains), the panelists agreed, but the younger and more affluent are not
interested in such stores. Those are the shoppers and residents that developers
want to attract, but they have little interest in living near the stores that
lenders prefer.
Conversely,
the independent retailers and restaurants that most appeal to target markets
for new apartments often struggle to secure financing. For developments such as
the 6 Walmarts planned for the District, the panelists concluded that this
tension will be quite acute.
