APA Webinar, Economic Development Division July 20, 2012 TOWN CENTERS Matthew Wetli, AICP DEVELOPMENT STRATEGIES 10 S. Broadway, Suite 1500 St. Louis, MO 63102-1743 Phone: (314) 421-2800 Fax: (314) 421-3401 www.development-strategies.com
Town Centers: Introduction Retail and Public Space Las Ramblas Image Source: Matthew Wetli DEVELOPMENT STRATEGIES 2
Town Centers: Introduction Retail and Public Space The Promenade Image Source: Matthew Wetli DEVELOPMENT STRATEGIES 3
Town Centers: Outline Outline Introduction (Brief) History of Retail in Three Slides Town Centers Defined Central Concepts Case Studies: Evidence of Success Conditions of Success Implementation Conclusions Discussion The Promenade Image Source: Matthew Wetli DEVELOPMENT STRATEGIES 4
Town Centers: A Brief History Streetcar Era Woodward Avenue, Detroit (circa 1930) DEVELOPMENT STRATEGIES 5
Town Centers: A Brief History Mall Era DEVELOPMENT STRATEGIES 6
Town Centers: Introduction Placemaking Era: the pendulum swings back Phillip s Place Phillip s Place, Charlotte DEVELOPMENT STRATEGIES 7
Town Centers: Introduction Country Club Plaza put the pedestrian first, but accommodated the automobile The Grove Image Source: Matthew Wetli Country Club Plaza DEVELOPMENT STRATEGIES 8
Town Centers Defined Town Centers: Introduction A walkable, open air, multi-use development that is organized around a clearly identifiable public realm. Anchored by retail, dining, and leisure uses, as well as by residential uses. At least on other type of development is included: office, hospitality, civic, etc. Urban Land Institute Crocker Park Image Source: MSI Design DEVELOPMENT STRATEGIES 9
Town Centers: Introduction Town Center versus Lifestyle Center Summit Fair, Lee s Summit Lifestyle Center Town Center The Greene, Dayton Ohio DEVELOPMENT STRATEGIES 1 0
Town Centers: Concepts Market Premiums what they tell us about ourselves DEVELOPMENT STRATEGIES 11
Town Centers: Concepts European versus American Approach Central Control Limited Competition Restricted Hours Central Amsterdam Image Source: Matthew Wetli DEVELOPMENT STRATEGIES 12
Town Centers: Concepts European and American Lease Rates Retail Lease Rates Annual Rent (psf) in $USD Central Shopping District Prime Shopping Center Paris $872 $184 London $968 $739 Amsterdam $295 $85 New York $2,150 - Chicago $250 - Miami - $135 Columbus - $35 Cincinnati - $37 St. Louis - $35 Kansas City - $40 Atlanta - $70 Houston - $50 Source: Colliers International 2011 Magnificent Mile, Chicago DEVELOPMENT STRATEGIES 13
Town Centers: Concepts European and American Lease Rates Retail Lease Rates Annual Rent (psf) in $USD Central Shopping District Prime Shopping Center Stuttgart $503 $157 Glasgow $344 $244 Leeds $272 $265 Warsaw $135 $126 Bratislava (Slovakia) $63 $60 Columbus - $35 St. Louis - $35 Kansas City - $40 Source: Colliers International 2011 Konigstrasse, Stuttgart DEVELOPMENT STRATEGIES 14
Town Centers: Concepts 50 Retail Growth Per Capita: United States (In square feet) 40 30 20 10 0 1970-1979 1980-1989 1990-1999 2000-2008 Shopping Centers Other Retail Sources: ICSC Research, U.S. Census, McGraw Hill Construction DEVELOPMENT STRATEGIES 15
Town Centers: Concepts Demographic Transition Americans Turning 65 Each Year Decline in Households with Kids Household 1960 2000 2025 Source: Census for 1960 and 2000, 2025 adapted from Martha Farnsworth Riche, How Changes in the Nation s Age and Household Structure Will Reshape Housing Demand in the 21 st Century, HUD (2003). With Children 48% 33% 28% Without Children 52% 67% 72% Single 13% 26% 28% Source: Census for 1960 and 2000; adapted from M artha Farnsworth Riche DEVELOPMENT STRATEGIES 16
Town Centers: Concepts National Association of Realtors: The 2011 Community Preference Survey, 2011 DEVELOPMENT STRATEGIES 17
Demographic Transition Town Centers: Concepts DEVELOPMENT STRATEGIES 18
Town Centers: Concepts DEVELOPMENT STRATEGIES 19
Town Centers: Evidence of Success Case Study: Easton Town Center Image Source: Steiner and Associates DEVELOPMENT STRATEGIES 20
Town Centers: Evidence of Success Case Study: Easton Town Center Image Source: Steiner and Associates 7/24/2012 DEVELOPMENT STRATEGIES 21
Town Centers: Evidence of Success Case Study: Easton Town Center The Mall at Tuttle Crossing Polaris Fashion Place Tuttle Crossing Polaris Fashion Place DEVELOPMENT STRATEGIES 22
Case Study: Easton Town Center Town Centers: Evidence of Success Median Household Income (Columbus, Ohio) DEVELOPMENT STRATEGIES 23
Case Study: Easton Town Center Income Density (Columbus, Ohio) Town Centers: Evidence of Success DEVELOPMENT STRATEGIES 24
Town Centers: Evidence of Success Case Study: Easton Town Center Easton Town Center (1999) Sales per Square Foot: $545* The Mall at Tuttle Crossing (1997) Sales Per Square foot: $425** Polaris Fashion Place (2001) Sales Per Square Foot: $366* Survey: 7 in 10 prefer Easton over Polaris* *Sheban, Jeffery. Slugging it out, Columbus Dispatch, August 20, 2006. ** Mills to Pay $1.3 Billion, Retail Traffic Magazine, August 11, 2004. DEVELOPMENT STRATEGIES 25
Town Centers: Evidence of Success National Study Open air centers with an emphasis on design, public space, and landscaping 36 regional centers 20 lifestyle centers Alexander Babbage, 2009 DEVELOPMENT STRATEGIES 26
Leisure Expenditures Town Centers: Evidence of Success Food and Drink: 5 times greater than malls Source: Yaromir Steiner, Steiner and Associates DEVELOPMENT STRATEGIES 27
Leisure Time Town Centers: Evidence of Success Saturday expenditures much greater than malls Source: Yaromir Steiner, Steiner and Associates DEVELOPMENT STRATEGIES 28
Cross Shopping Town Centers: Evidence of Success # leisure visits comparable to shopping visits Source: Yaromir Steiner, Steiner and Associates DEVELOPMENT STRATEGIES 29
Catalyst: Office Town Centers: Evidence of Success Country Club Plaza Key Office Market Indicators, Class A Space Select Submarkets, 2006 and 2010 2006 2012 Rate* Vacancy Rate* Vacancy Kansas City Country Club Plaza $29 6% $24 14% College Boulevard $22 9% $21 13% Downtown $16 17% $17 17% Overall $20 14% $20 15% DEVELOPMENT STRATEGIES 30
Catalyst: Residential Town Centers: Evidence of Success Town Center Apartments Selected Cities 2 BR Rent 2 BR Avg. Metro % Higher Town Center Market psf Rent Rent Rent Occupancy SouthSide Works Pittsburgh $1.60 $1,744 $841 107% 96% Easton Town Center Columbus $1.04 $1,170 $665 76% 99% The Greene Dayton $1.22 $1,353 $710 90% 100% Sources: Marcus & Millichap, MPF Research, DEVELOPMENT STRATEGIES, 2011-2012 DEVELOPMENT STRATEGIES 31
Town Centers: Conditions to Success Retail Spheres of Influence Income Economy Credit Land Economics Jobs Retail Density Connect ivity Households Family Type Demographics Parking & Infrastructure Marketability Safe Clean Location Visibility Adj. Uses Access Image Branding Tenant Mix Anchors DEVELOPMENT STRATEGIES Matthew Wetli 2011 Inline Space Planning Design Interior Public Space Competition DEVELOPMENT STRATEGIES 32
Town Centers: Conditions to Success Demographics: Rightsizing Easton: 1.5M s.f. 20 Min Drive Pop: 1 million Zona Rosa: 925K s.f. 20 Min Drive Pop: 530,000 Crocker Park: 800K s.f. 20 Min Drive Pop: 680,000 DEVELOPMENT STRATEGIES 33
Town Centers: Conditions to Success Demographics: Population Growth? DEVELOPMENT STRATEGIES 34
Town Centers: Design and Marketability Retail Spheres of Influence Income Economy Credit Land Economics Jobs Retail Density Connect ivity Households Family Type Demographics Parking & Infrastructure Marketability Safe Clean Visibility Location Access Image Branding Adj. Uses Public Space Tenant Mix Anchors DEVELOPMENT STRATEGIES Matthew Wetli 2011 Inline Space Planning Design Interior Public Space Competition DEVELOPMENT STRATEGIES 35
Town Centers: Conditions to Success Competitive Position and Tenant Mix Zona Rosa Marshalls DSW Old Navy CC Plaza Tiffany & Co. Michael Kors Burberry Zona Rosa Image Source: Steiner and Associates DEVELOPMENT STRATEGIES 36
Anchors Conventional Public Space Leisure Town Centers: Conditions to Success DEVELOPMENT STRATEGIES 37
Town Centers: Design and Marketability Retail Spheres of Influence Income Economy Credit Land Economics Jobs Retail Density Connect ivity Households Family Type Demographics Parking & Infrastructure Marketability Safe Clean Visibility Location Access Image Branding Adj. Uses Public Space Tenant Mix Anchors DEVELOPMENT STRATEGIES Matthew Wetli 2011 Inline Space Planning Design Interior Public Space Competition DEVELOPMENT STRATEGIES 38
Town Centers: Conditions to Success Placemaking: Urban Design Fundamentals Human Scale Address the Street Hide the Parking Sidewalk Widths Landscaping Crocker Park Image Source: MSI Design DEVELOPMENT STRATEGIES 39
Town Centers: Conditions to Success Placemaking: Urban Design Fundamentals Height to Width Ratios Sense of Enclosure DEVELOPMENT STRATEGIES 40
Town Centers: Conditions to Success Placemaking: Sense of Enclosure Street Widths: 60-120 Feet Crocker Park, Westlake OH Birkdale Village, Huntersville NC Street Widths: 60-160 Feet DEVELOPMENT STRATEGIES 41
Town Centers: Conditions to Success Placemaking: Sense of Enclosure (or lack thereof) Width: 300 Feet Village at Sandhill, Columbia SC DEVELOPMENT STRATEGIES 42
Town Centers: Introduction Country Club Plaza The Grove Image Source: Matthew Wetli DEVELOPMENT STRATEGIES 4 3
Town Centers: Conditions to Success Placemaking: Sense of Enclosure (or lack thereof) DEVELOPMENT STRATEGIES 44
Town Centers: Conditions to Success Sidewalks and Mature Street Trees Main Street, Ann Arbor DEVELOPMENT STRATEGIES 45
Sidewalks: 12 to 16 Town Centers: Conditions to Success DEVELOPMENT STRATEGIES 46
Town Centers: Design and Marketability Retail Spheres of Influence Income Economy Credit Land Economics Jobs Retail Density Connect ivity Households Family Type Demographics Parking & Infrastructure Marketability Safe Clean Visibility Location Access Image Branding Adj. Uses Public Space Tenant Mix Anchors DEVELOPMENT STRATEGIES Matthew Wetli 2011 Inline Space Planning Design Interior Public Space Competition DEVELOPMENT STRATEGIES 47
Integration of Uses Town Centers: Conditions to Success DEVELOPMENT STRATEGIES 48
Town Centers: Conditions to Success Street Network: SouthSide Works DEVELOPMENT STRATEGIES 49
Town Centers: Conditions to Success Street Network: SouthSide Works DEVELOPMENT STRATEGIES 50
Town Centers: Conditions to Success Street Network: Belmar 7/24/2012 DEVELOPMENT STRATEGIES 51
Town Centers: Conditions to Success Street Network: Belmar Belmar Image Source: Retrofitting Suburbia DEVELOPMENT STRATEGIES 52
Town Centers: Conditions to Success Street Network: Easton Town Center Image Source: Great Master Planned Communities DEVELOPMENT STRATEGIES 53
Town Centers: Conditions to Success Street Network: Easton Town Center DEVELOPMENT STRATEGIES 54
Town Centers: Design and Marketability Retail Spheres of Influence Income Economy Credit Land Economics Jobs Retail Density Connect ivity Households Family Type Demographics Parking & Infrastructure Marketability Safe Clean Visibility Location Access Image Branding Adj. Uses Public Space Tenant Mix Anchors DEVELOPMENT STRATEGIES Matthew Wetli 2011 Inline Space Planning Design Interior Public Space Competition DEVELOPMENT STRATEGIES 55
Town Centers: Conditions to Success Economics and Parking: More viable for retail Retail (1 M s.f.) Office (1 M s.f.) Peak Rents: $35 psf Peak Rents: $28 psf Expenses: $4 psf Expenses: $10 psf NOI: $31 psf = $390 M NOI: $18 psf = $225 M DEVELOPMENT STRATEGIES 56
Town Centers: Conditions to Success Land Economics: Acquisition cost higher for infill Per Acre Acq. Cost Commercial and Multifamily Main Street Mixed Use Institutional Medical Office Center Infill: $1.1 M Greenfield: $300K DEVELOPMENT STRATEGIES 57
Town Centers: Conditions to Success Residential: A parking financing strategy Garage Cost: $32M Parking Revenue: $17M Condo PILOTS: $6M Gap: $9M DEVELOPMENT STRATEGIES 58
Town Centers: Conditions to Success Economics and Parking: Location Matters SouthSide Works Parking Public Investment: $40M (2,400 spaces) Projected Return (from parking revenue alone): $19M Gap: $21M DEVELOPMENT STRATEGIES 59
Town Centers: Conditions to Success Retail: A lot of reasons why projects succeed or fail Retail Spheres of Influence Income Economy Credit Land Economics Jobs Retail Density Connect ivity Households Family Type Demographics Parking & Infrastructure Marketability Safe Clean Visibility Location Access Image Branding Adj. Uses Public Space Tenant Mix Anchors DEVELOPMENT STRATEGIES Matthew Wetli 2011 Inline Space Planning Design Interior Public Space Competition DEVELOPMENT STRATEGIES 60
Town Centers: Implementation Great Projects Unlikely to Happen on their Own (Especially where they should happen) Redevelopment Costs Overretailed = low lease rates DEVELOPMENT STRATEGIES 61
SouthSide Works LTV Steel Closed in 1990 URA Purchased in 1993 Phase I opened 2004 $103M Public leveraged $250M Private investment Town Centers: Implementation DEVELOPMENT STRATEGIES 62
SouthSide Works Town Centers: Implementation DEVELOPMENT STRATEGIES 63
Town Centers: Implementation Easton Town Center, Phase I City created TIF district (1996) $26M for parking and infra. Developer Assumes All Risk Letter of Credit Until revenues = 1.5 x debt service Easton Image Source: Steiner and Associates DEVELOPMENT STRATEGIES 64
CityCenter, Englewood, CO City as Developer $25M for parking and infra. (2000) Certificates of Participation Library and Municipal Offices Return on Investment $160M private investment Nets $2M-$2.5M in annual sales tax Town Centers: Implementation DEVELOPMENT STRATEGIES 65
Town Centers: Concluding Thoughts Public-Private Partnerships Necessary Up-front costs higher Public Sector: Due Diligence: Make sure market forecasts are realistic Design: Get it right The Grove Image Source: Matthew Wetli DEVELOPMENT STRATEGIES 66
Lessons For Main Street Invest in Public Space Town Centers: Concluding Thoughts Tenanting: know your market (and limitations) Image: Keep it clean and safe Anchors DEVELOPMENT STRATEGIES 67
Town Centers: Concluding Thoughts Not the End of Big Boxes But a vastly superior model to shopping malls and commercial strips Mix of Uses Public Space Street Grid DEVELOPMENT STRATEGIES 68
Town Centers: Concluding Thoughts Adapted from City of Eugene, Oregon, 1996 and PAS Report 515 Town Center connectivity is only as good as its surrounding road network. DEVELOPMENT STRATEGIES 69
Infrastructure Priorities Town Centers: Concluding Thoughts Between 1950 and 2000, metro Buffalo tripled its area served by infrastructure, but added no population. Sources, U.S. Census; Streetsblog Network, April 21 2011 DEVELOPMENT STRATEGIES 70
Town Centers: Concluding Thoughts Town Center locations some are better than others. DEVELOPMENT STRATEGIES 71
Town Centers: Concluding Thoughts Missed opportunities/future opportunities abound. DEVELOPMENT STRATEGIES 72
Town Centers: Concluding Thoughts We can continue to subsidize places like this DEVELOPMENT STRATEGIES 73
Town Centers: Concluding Thoughts or we can only subsidize places like these. DEVELOPMENT STRATEGIES 74
Town Centers: Concepts Education and Economic Growth Top 10 Metros: 1.8% annual income growth* Bottom 10 Metros: 0.8% annual income growth* Central Amsterdam *Sources: CEOs for Cities 2005; Gottlieb and Fogarty 2003. Study spanned 1990 to 2000 DEVELOPMENT STRATEGIES 75
Town Centers: Concepts Source: CEOs for Cities 2005 Young people particularly educated people are more mobile DEVELOPMENT STRATEGIES 76
Town Centers: Concepts Young people start more companies Sources: Global Entrepreneurship Monitor; CEOs for Cities 2005 DEVELOPMENT STRATEGIES 77
Town Centers: Concepts Young, educated people are moving to close-in neighborhoods areas with a strong sense of place. Precentage Growth in 25-34 Year Old Population with a Four-Year Degree 2000-2009 MSA Close-in Rest of MSA Atlanta 61% 7% Boston 40% -2% Buffalo 27% 7% Charlotte 34% 20% Cincinnati 28% 10% Columbus 45% 23% Cleveland 49% -10% Houston 62% 18% Indianapolis 83% 14% Las Vegas 19% 59% Louisville 10% 19% Nashville 41% 21% Pittsburgh 40% 9% Raleigh 28% 25% Phoenix 14% 32% St. Louis 87% 16% Washington DC 31% 9% Total, 51 Largest MSAs 26% 13% Source: CEOs for Cities, American Community Survey DEVELOPMENT STRATEGIES 78
Town Centers: Concepts DEVELOPMENT STRATEGIES 79
Town Centers: Concluding Thoughts The Power of 10 Projects for Public Spaces Melbourne DEVELOPMENT STRATEGIES 80
Public Space Creates Value Validation of Planning and Urban Design Principles Culture and Policy Town Centers: Concluding Thoughts The Promenade Image Source: Matthew Wetli DEVELOPMENT STRATEGIES 81
APA Webinar, Economic Development Division July 20, 2012 TOWN CENTERS Matthew Wetli, AICP mwetli@development-strategies.com 10 S. Broadway, Suite 1500 St. Louis, MO 63102-1743 Phone: (314) 421-2800 Fax: (314) 421-3401 www.development-strategies.com