The ‘New’ Lifestyle

June 7, 2004
Retail-starved Markets Put Lifestyle Centers in the Spotlight

In most instances, the famous line from the film Field of Dreams, "If you build it, they will come," has reached well beyond the point of overuse.

But when it comes to putting lifestyle centers into retail-starved markets, it's the most apt description out there.

Case in point: On Oct. 24, 2003, the first lifestyle center in Northeast Ohio opened for business on the vacated campus of TRW Corp. in Lyndhurst, OH, about 10 miles east of downtown Cleveland. Developers First Interstate Properties of Beachwood, OH, courted upscale retailers and restaurateurs, which include Crate & Barrel, The Cheesecake Factory, Norwalk Furniture, Expo Design Center, and California Pizza Kitchen, to name just a few, into leasing space to more than 70 stores and restaurants in the 67-acre, $160 million complex. The project consists of approximately 610,000 square feet of space, including 25,000 square feet of third-story office space.

The center opened at 10:00 a.m. The Apple Computer store handed out t-shirts to the first 1,000 customers. By 12:30 p.m., according to reports from The Plain Dealer, Cleveland's daily newspaper, the shirts were long gone, as were parking spaces. Local police had to turn prospective shoppers away on grand opening day. The center's 3,330-space parking lot filled to capacity by 11:00 a.m.

"People are starved for either plain raw value or they're starved for something unique and exciting when they finally walk away from their computers," says Jacques Verlinden, senior creative director and director of architecture for Crate & Barrel in Northbrook, IL, which opened its final new store of 2003 in the Legacy Village complex. "Today's customer likes the quality of the shopping experience."

Lifestyle centers are today what enclosed regional malls were in the late 1980s and early 1990s. And it's all about open-air environments, no matter the climate. Think of it as bringing a slice of that Michigan Avenue shopping excitement home to Anytown USA, whether it is in the north, south, east, or west - or squarely centered in the heartland.

And while the concept isn't new, this retail model has seen tremendous growth in the past five years, says Patrice Duker, manager of media relations at the International Council of Shopping Centers (ICSC), New York City. For 2003/2004, ICSC projects 25 to 30 lifestyle center openings, Duker says.

"It's where we're seeing the growth," she notes. But lifestyle centers aren't completely replacing regional malls, yet. According to figures from the ICSC, there are 58 lifestyle centers in the United States, compared with the country's 1,182 regional malls.

The typical lifestyle center has between 150,000 and 500,000 square feet of retail space. Tenant mix tends to be upscale, as is overall center design. As a result, these centers are built in areas where demographics and income are higher. Enhanced by fountains, sidewalks, walking trails, vintage-style street lamps, and other aesthetic accoutrements, these centers reflect a sort of "Main Street" shopping experience that has become en vogue. They are seeking a gentrified, small-street environment in which to shop, dine, and perhaps even spend a good portion of the day, says Dallas architect Jeff Gunning, vice president and director of retail and entertainment at RTKL Associates Inc.

"There's something nostalgic about them," Gunning says. "They have a feeling of a downtown. There's a sense of community in these environments that you don't typically find in a regional mall."

While some lifestyle centers, such as Legacy Village, offer retail or a mix of retail and office space, other centers have seized completely upon the "lifestyle" concept and offer a true mixed-use format of retail, office, and residential.

"You can live, work, and play within a couple of blocks," says Michael T. Greeby, vice president of The Greeby Cos., a commercial facilities development and construction firm in Lake Bluff, IL. "If developers can have their shoppers living above, near, or next to where they are shopping, they are building their own customer base."

Notable mixed-use, lifestyle center projects have opened up across the country in the past five years. Some that have created substantial buzz are Santana Row in San Jose, CA; Paseo Colorado in Pasadena, CA; Pentagon Row in Arlington, VA; and Bowie Town Center in Bowie, MD, to name only a few standout projects.

Mixed-use has its advantages and disadvantages from a development perspective, experts say.

"The fact that residential is becoming a player in these projects adds a positive dimension," Gunning says. "Because there's a blend of uses, these projects are sustainable in terms of financial success. They're more like a community than a project."

Simply put, single-use endeavors are all about retail. And, as retail developers know, a retail-only center's fortunes are dependent on the fortunes of the retailers and the retail climate. "Mixed-use does provide an opportunity to grow a community in more ways than a single-use apartment complex, office park, or retail center would do," Gunning adds.

These projects, however, are "significantly more complicated" than traditional retail-only, from a design, construction, and maintenance/management perspective.

"It's not like you're dealing specifically with retail leasing and management," Greeby says. "It's more challenging. The needs are so different between retail and residential, but they all must be satisfied efficiently."

Bear in mind that not all lifestyle centers are created equal, and prospective tenants are well aware of this. It all comes down to a good retail mix, interesting design, and even good maintenance. There's a fine balance that must be met.

"You'll soon have every developer getting into lifestyle centers, and not all will be successful," Crate & Barrel's Verlinden says. "It will depend on the scale in which they are built. You need to have a good mix of retail. You also have to allow for a unique feeling that is reflected in the quality of materials used. Some developers just don't get that. They think painting drywall is enough. It's not."

Robin Suttell ([email protected]), based in Cleveland, is contributing editor at Buildings magazine.

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