The 'new urbanism' in the wake of Katrina

Today marks the first anniversary of the date on which Hurricane Katrina made landfall on the Gulf Coast in 2005. To commemorate that sad and troubling event, I thought I'd put up a relatively optimistic post with interesting thoughts about the future of that area. It's based on a USA Today article by reporter Larry Copeland, dated Aug. 27, 2006.

Copeland's article, entitled "Gulf Coast taking a look at 'new urbanism,' " focuses on the possibility that the new urbanism -- in which mixed-use development is a central concept -- can hold a key to the rebuilding of some of the towns on the Mississippi shoreline. The article focuses on Ocean Springs, Miss., a city of some 17,300 people that Copeland writes "seems the most likely to emerge as the kind of welcoming, village-style community envisioned by Gov. Haley Barbour and the 'new urbanists' who designed Mississippi's blueprint for rebuilding."

The article continues, "New urbanism uses zoning to try to recreate the best of the USA's pre-sprawl, small-town past. It promotes communities where people can walk from home to shops and offices. Houses have front porches to encourage neighborliness. Condominiums and apartments are built above shops.

"Ocean Springs Mayor Connie Moran says she was quick to embrace new urbanism because her city already cherishes its principles. 'It's the old urbanism to which we aspire,' she says. 'The new urbanism is recreating the old urbanism, and Ocean Springs is a prime example of that.' "

However, the article points out, the new urbanism is by no means easy to bring about in the hard-hit area. Copeland writes:

"The process has been slowed by a lack of funding, a shortage of staff planners and the cumbersome legal process of making zoning changes, says Ann Daigle, Gulf Coast new urbanism expert for the Mississippi Development Authority, which is supervising much of the rebuilding.

"New urbanism isn't an easy sell to some local politicians and state transportation officials, Daigle says. 'The people in general . . . are really listening and learning about this alternative for rebuilding,' she says. 'What I am discouraged about is that . . . in general, I think the elected officials are not interested.'

"Neither are some residents. In a part of the state where tens of thousands of people still live in government trailers and thousands are fighting their insurers over storm damage to their homes, esoteric concepts such as new urbanism are often very low on the priority list.

" 'It's something different,' says Marty Wagoner, 45, a financial planner and 40-year resident. 'A lot of people don't accept something they've never seen before.'

"As residents get long-awaited checks from the federal government to rebuild their homes, they're doing so in traditional subdivisions.

" 'I'm disappointed because the developers coming in are not as open to developing around these principles,' Daigle says.

"New urbanism emphasizes development in 'pods,' communities with a discernible center, often a square or a green. The center has a transit stop because public transportation is valued over the automobile. Homes are built in a variety of styles for young and old, families and singles, and people of various incomes. Neighborhoods are designed within a five-minute walk of the town center. Shops and offices are located at the edge of the neighborhood, and the streets are relatively narrow and tree-lined.

"Coastal Mississippi, pre-Katrina, had developed in a far different fashion. It was a land of strip malls and distant suburbs, a place defined by the car culture. It has no regional transportation system."

It will be fascinating to see if the new urbanism catches on in this challenging geographic and historical environment.

Permalink: http://womblemultifamilyandmixeduse.blogspot.com/2006/08/new-urbanism-in-wake-of-katrina.html

How to find mixed-use tenants

On Aug. 8, 2006, Multi-Housing News ran an interesting interview with Clay Likover of Hillwood Capital about how to find mixed-use tenants. Hillwood is developing the W Dallas Victory Hotel & Residences in Dallas, which will feature a 33-story building with 20,000 square feet of street-front retail space, a 252-room W hotel, 63 tower condo units above the hotel, an additional 83 mid-rise condo units above the parking garage just to the south of the hotel, a nightlife venue on the 33rd floor, a spa/pool/fitness center on the 16th and 17th floors, and a helicopter deck. Although the project is not located in the Southeast United States, the interview raises fascinating questions and is worth reprinting in full.

Multi-Housing News: When planning a mixed-use project, what's the best ratio of multi-family to commercial spaces?

Likover: We don't believe there's a set formula in terms of a hard ratio. It's more about having "critical mass" and a truly authentic mixed-use environment that creates a place where people want to live/work/shop/play, and return to time and again. This is what makes great cities—or certain areas of great cities—enjoyable places to be and why people tend to gravitate to these mixed-use areas. This is what we're creating with Victory Park, a vibrant mixed-use neighborhood that incorporates the best of the world's great cities. Getting the right mix of multi-family and commercial is more art than science. You've got to have enough multi-family that you create a permanent population and a neighborhood that has staying power—not just an office/retail district that's vacant at certain times of the day or night—but then, on the flip side, there has got to be a critical mass of commercial (office/retail) so that the project can not only be self sustaining, but so that you have enough amenities to serve the multi-family population.In the type of high density/urban mixed-use development that we execute, our biggest challenge tends to be finding the space to build enough retail at the ground floor. This is especially problematic when trying to execute retail with office/hotel density on top, because there tends to not be as much space left for the ground floor retail as you would like. So, we design our buildings with an intent to preserve and maximize as much useful ground floor retail area as we can. A big piece of achieving success in this is using architects who understand how to execute high density/mixed use and are familiar with the issues of retail. There are plenty of great residential architects—but you've got to have one who can execute the retail/mixed-use component as well.

MHN: At what point in the development process do mixed-use tenants need to be secured?

Likover: Once again, it's more art than science. It also highly depends on the type of mixed-use project and what kind of retail or restaurant tenants you're targeting. It's also highly dependent on what type of residential you're executing; for rent or for sale. In a rental project, you can wait much longer into the process, while in a condo situation, you tend to need the retail/restaurant names to add credibility/desirability to the sales pitch for the units (which is many times required prior to construction in a pre-sale requirement situation).

Depending on the balance of all these issues, we tend to find that it's better to wait as long as possible to secure at least a good portion of the mixed-use tenants. The longer you can wait, the more selective you can be. As the project matures and begins to move from vision to reality, you tend to be able to convince the more desirable mixed-use tenants to sign on. In our view, in the end, these are the tenants that make it a really interesting and desirable place for people to visit and live, and are really the fuel for the project. You may have 20,000 square feet of retail and 300,000 square feet of multi-family space in a project. From a cost basis, the retail barely moves "the needle" but what you do with it can make a huge impact. This is a big piece of the vision for Victory Park—creating the ultimate urban neighborhood by offering cutting-edge hotels, world class dining, interesting shopping, sophisticated nightlife and parks and green space.

MHN: How do you decide which prospective tenants you'll court for a particular project? Describe the process that goes into these decisions.

Likover: It's very much both "macro" and "micro." We believe very strongly in understanding the general market area and what is needed in terms of retailers/restaurants and what the customer in the area truly desires—and what will make them excited about the project. You also have to understand how you fit into the competitive environment of all the existing projects in the area and what other retail/restaurant/living options the users will have.

For example, at Victory Park, we knew Dallas did not need any more "typical" retail space. Dallas already has plenty of malls, lifestyle centers, etc. One of our guiding principles was "nobody is going to drive past a Gap to go to a Gap; nobody is going to drive past a Chili's to go to a Chili's"—you've got to understand where your project fits in your market (geographically relative to the potential users, and also regarding what they still need and will be willing to come to this project for). We knew that Dallas did need/desire unique retail and restaurant tenants that were not yet in this region (and many times were not yet anywhere in the U.S. except on the coasts). So, we focused on bringing to Dallas unique retail and restaurant concepts that couldn't be had anywhere else in the region—and mixing this with great, proven local operators doing new concepts that we knew understood the local market and could add the local flavor.

Once we had this macro vision, we could then fine tune the focus of each individual project based on its tone; for example, the retailers and restaurants we're targeting for the W project tend to be a little more cutting-edge, hip and fashion forward then we would target for another project (like the block of Victory Park) that doesn't have the W hotel in it.

MHN: Is a developer typically approached by the tenants or vice versa?

Likover: Given our vision, it is almost always us approaching the tenants. Occasionally we are approached, but many times the tenants that seek out the developer are not the ones you want. I would definitely say that doing high quality mixed-use is not a game of "sit back and wait."

MHN: Are there negative repercussions when all tenants aren't in at the same time?

Likover: It depends on how you manage it. Critical mass is important, but so is making sure you have the right tenants. You also have to be strategic about making the market happy vs. maximizing the value of the project by maximizing rental rates as commercial space gets scarce and late tenants realize how profitable it will be to be a part of the project.

MHN: Are there special incentives offered to retail or restaurant tenants such as Tenant Improvement (TI) Allowances?

Likover: Yes, sometimes we will do unique deals with tenants that you would not see in traditional developments. Sometimes this involves a special TI allowance, sometimes it means structuring a deal where the tenant pays a percentage of rent only for the first year or two to reduce their risk on the front end of coming to a new market/new project.

MHN: In terms of finding mixed-use tenants, how do you measure success?

Likover: Early on, we can measure success based on the excitement in the market for the new and unique retailers or restaurants we're bringing to the market and the level of interest amongst potential condo buyers/office tenants/multifamily renters. Later on, we can measure based on the staying power and popularity of the tenants in the market … and based on their profitability and performance such as sales per square foot.

Permalink: http://womblemultifamilyandmixeduse.blogspot.com/2006/08/how-to-find-mixed-use-tenants_22.html

The following interesting article is from Multi-Housing News. This new development in Fort Myers, Fla., seems to combine two of this century's most interesting housing trends: mixed-use planning and "green" or environmentally friendly buildings.

Do the same kinds of residential tenants who flock to mixed-use developments and shun traditional suburbia also prefer "green" buildings? So do the two ideas naturally go together? That's an interesting marketing and business question. Here is the article.


By Diana Mosher, Editor-in-Chief

AUGUST 01, 2006 -- Fort Myers, Fla.—As some modernists continue to oppose the traditional design aesthetic typically associated with new urbanism, more and more of these communities are in the works across the country to bridge the gap between urban and suburban living.

In Lee County, Fla., The Fountains, a mixed-use project being planned by SouthStar Development Partners—with equity sponsor L.M. Sandler & Sons—is touted as a cost-effective alternative to outmoded suburban development patterns, created in the 1960s.

Scheduled to be built in two phases from 2007 to 2016, The Fountains will offer 4,215 residential units in a range of housing choices for residents of various income levels and all ages and stages of life—from single-family homes to urban-style condominiums and apartments. It will also include 900,000 square feet of retail and office space and a 1.5-million-sq.-ft. research and flex-space district, two schools, a library, parks, and a fire and sheriff's department. The now-familiar goal is to create an urban environment that's pedestrian friendly and environmentally sound—a setting that encourages people to live, work and play all in the same area.

A pivotal aspect of the project is SouthStar's zoning proposal to create a new, comprehensive land plan usage designation known as a Town Center District (TCD). Under the proposal, the area would be zoned to integrate residential, commercial, office and civic uses "as a cohesive unit in order to promote visual compatibility, reduce dependence on the automobile and promote pedestrian movement, utilize joint parking and access, avoid negative impacts on surrounding land uses and traffic circulation, protect natural resources, and provide necessary facilities and services to serve the proposed uses of the district." SouthStar is currently awaiting a decision in the zoning amendment for the site.

"Lee County clearly endorses the goal of smart growth and has identified New Urbanist, mixed-use communities as a tool for achieving it," says Kimball Woodbury, managing director of SouthStar, based in Coral Gables, Fla. "The Town Center District designation would be a natural first step toward turning this goal into a reality. The Fountains is a model for the type of place-sensitive development that the Fort Myers area needs at this point in its growth."

The Fountains will encompass 2,769 acres. The TCD designation would allocate a minimum of 40 percent of the gross site acreage as conservation areas and a minimum of 10 percent of the gross acreage for active and passive recreational uses including parks, an 18-hole golf course built to comply with Audubon Sanctuary Program standards, nature trails, lakes and waterways. SouthStar will hire green design and construction specialists to include environmentally friendly elements such as green roofing and low-volume plumbing fixtures.

The average dwelling size of the for-sale and for-rent units is from 2,000 to 2,600 square feet. These high-density lots will feature shared parking areas off the street and behind the units as well as on-street parking for guests. Layouts will incorporate Internet/tech amenities and gourmet kitchens. The buyer profile is singles, couples and young families.

The buyer profile for coach homes, which will range from 1,000 to 2,000 square feet, will be young singles and couples, pre-family singles and couples, young families and older couples. Coach homes will be alley-loaded with on-street parking, minimal front-yard setbacks and occasional low privacy fences.

Courtyard homes will also be available with an average lot size of 2,700 square feet and an average dwelling size of 1,200 to 2,200 square feet. In addition to promoting a strong quality of life for area residents, The Fountains will aim to provide cost-efficient infrastructure services from water delivery to waste removal, while building a strong, sustainable and diversified employment tax base.

Permalink: http://womblemultifamilyandmixeduse.blogspot.com/2006/08/following-interesting-article-is-from.html

Laura Luger, a lawyer in Womble Carlyle's Research Triangle Park office and member of our construction law group, reports that in her experience, mixed-use development is here to stay.

Here are Laura's conclusions:

"There is no doubt that regardless of whether you live in the Rust Belt or the Sun Belt, mixed use development is on the rise and here to stay for the foreseeable future.

"People want to live closer to their workplaces, and to have the conveniences offered in city centers. Economic conditions also favor mixed use development. Property & Portfolio Research Inc. has reported that over 5500 new mixed use developments commenced this year alone. See Danielle Douglas, Real Estate Forum, June 2006, Vol. 61, No. 6, page 58.

"Mixed-use development models present a host of challenging questions to be addressed by legal practitioners. These projects involve complicated ownership structures, and public/private partnerships where costs and revenues can be shared. They should also be tailored to a community's overall economic development and land use plans, adding vibrancy and creativity to the mix. Durham, North Carolina is a case in point. Commencing with a AAA ballpark stadium and class A high-rise office space, the city began to experience a boom in the purchase and renovation of historic sites. Tobacco warehouses have been converted into office, retail, and residential in several key locations, creating the "live, work, play" environments characterized by mixed use. The 30-something demographic is enjoying the plaza and market-like open spaces all within a stone's throw from the new residential lofts and condominiums. This model has been replicated in many other mid-size cities - take a look at Raleigh's North Hills Mall, Greenville, South Carolina's downtown, Washington's Anacostia River project, Virginia's Brambleton Town Center - and will likely continue as long as the economic climate remains favorable. Mixed-use development has something for everyone."

Permalink: http://womblemultifamilyandmixeduse.blogspot.com/2006/08/laura-luger-lawyer-in-womble-carlyles.html