Wednesday, July 2, 2014
Retail's Role In Mixed-Use Development
It is an exciting time for commercial real estate development. Live/work/play communities are in high demand. Retail plays a crucial role in this type of development. Dense population supports sales and, as such, retail perfectly complements a strong multifamily development. Add daytime office workers and the need is increased. When we began planning the CityPlace development in Overland Park, we knew that retail would be needed to help support this new in-fill community. Here are some of the insights we gleaned when incorporating retail into the CityPlace development:
Know when you need retail
Creating population around green fields begets the need for retail. The 90 acre CityPlace development is ideally situated in an area already surrounded by dense residential and daytime populations (corporate office parks and a community college are a short distance away). It's highway accessibility adds to the desirability of this location. Money magazine, in its list of the 100 Best Cities in the United States, ranked Overland Park 7th (ranked 6th in 2006 and 9th in 2008). Not only that, but the median household income in Johnson County (where CityPlace is located) as of June 2012 was $73,052 with sound school systems continuing to drive more and more wealthy to the area. We recognized the opportunity for retail in the thick of an already existing, vibrant community.
Know your audience
From there, we dove deeper into the area's demographic data and added to that the number of office workers and residents that would be added by way of the development. According to the "Work shopping" article in Shopping Centers Today June 2012 which was supported by an 84 page report produced by ICSC Senior Research Analyst John Connolly, the office-worker typically spends approximately $102 per week within close proximity of the workplace. Expenditures at restaurants, fast-food establishments, delicatessens and other eateries (without regard to breakfast, lunch, dinner or snacks) collectively account for 14% of the typical weekly expenditure and among the expenditures on goods and services, grocery stores capture the largest spend (19.3%). When analyzing the marketplace forecast demand, supply of existing retail, and spending habits of the neighborhood, we identified the retail categories that were in highest demand. This research helped guide our focus when considering how much, and what types of retail would be best for this mixed-use development, like full service and quick casual dining, lawn and garden stores, shoe stores, coffee shops, and specialty grocery stores.
Know how retail complements your community
Adding the right retail that creates a sense of community is also known to attract buyers. As this Urban Land Institute Article says, "what attracts people—and what they are willing to pay for—is the opportunity to buy into a development that creates a sense of community or promotes physical health." Therefore, it's important to choose retail for a mixed-use development that aligns with the population's needs while creating a sense of community.
Multifamily development is on top of this current cycle and retail is riding the wave in mixed-use developments. Want to see how you can get in on the retail scene? I can help.
Vice President of Retail Leasing
Block Real Estate Services