Western Real Estate Business

JUL 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

Issue link: https://westernrealestatebusiness.epubxp.com/i/1001516

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Page 28 of 32

28 • July 2018 • Western Real Estate Business www.REBusinessOnline.com MIXING IT UP WITH MIXED-USE • Facelifts: re-branding to make shop- ping centers more marketable through common area improvements, tenant upgrades and even name changes • New uses: partially or completely converting to other non-retail uses When more retail isn't the solution, shopping centers find a new highest and best use. Some centers have found they simply have more retail space than the community needs. This has led to a search for new uses. For example, call centers are attracted to mall space because of the large floorplans that re- quire little retrofitting to suit the needs of the large number of employees and the ample on-site parking. Amenities are other sought-after factors that contribute to the success of mixed-use properties. Most shop- ping center owners are revamping their centers by creating foodie des- tinations. Owners are continuing to capitalize on America's love of food. Shopping centers are creating new areas dedicated to the community to further activate their space, including children's play areas and open green spaces. This shift emphasizes the im- portance for shopping center owners to create an environment that attracts and entices people, maximizes the shopper experience and keeps them engaged. Another element of mixed-use properties is the right tenant. Shop- ping centers are working hard to dis- card the public perception that they are places solely for occasional shop- ping events like back-to-school or the holidays. They are handpicking tenant mixes that cater to specific shoppers like Millennials, luxury seekers and those who want to shop local brands. Shopping centers are also shedding their roofs, creating open spaces and bringing other uses into the mix to cultivate new communities by cre- ating a Main Street feel. Shopping centers are achieving this by starting the process of making live-work-play environments by adding in non-retail uses, with apartments and condos be- ing the most popular choices. One example is Manhattan Village, a 44-acre, 573,000-square-foot indoor/ outdoor mixed-use dining and re- tail experience located in the affluent South Bay city of Manhattan Beach, Calif. Manhattan Village has completed interior renovations of the existing center, which includes all new floor- ing; skylights with an expanded clere- story that create a bright, airy canvas to showcase retailers; a new concierge in the center court; new touchscreen directories; new luxe seating areas; upgraded technology with work/ charging stations; a new center court fountain; and many more new and enhanced renovations throughout. In addition to these enhancements, there are relocations and new stores for Coffee Bean and Tea Leaf and See's Candies, as well as a new full-service, upscale Macy's that will replace the existing two locations, becoming one consolidated 168,000-square-foot store later this year. The redevelopment of Manhattan Village includes a 53,300-square-foot expansion of curated open-air dining and retail space, adjacent to a fully ren- ovated enclosed shopping center with an already strong tenant mix. When complete, the new Manhattan Village will be a 648,000-square-foot indoor/ outdoor dining and shopping experi- ence introducing modern luxury and coastal chic, while embracing the al- lure and hometown feel of the West Coast lifestyle. New retailers include MAC cosmetics, Holly and Hudson Nail Lounge, Urban Plates and JOEY Manhattan Beach restaurant. There are numerous benefits as- sociated with mixed-use develop- ments. The top improvements needed to transform a mere shopping center renovation into a mixed-use develop- ment have their pros and cons, and owners need to identify their return on investment. However, they must also consider the alternative. Not renovating may cost shopping centers their shoppers as they become bored and move on to other venues. MIXED-USE from page 1 THE RISE OF ALTERNATIVE MIXED-USE By Adam Robinson, Founder and President, RAF Pacifica Group in Encinitas, Calif. Mixed-use is al- ready the next big product type. De- velopers throughout the world have be- gun to understand the value — both monetary and so- cial — of blending product types to cre- ate dynamic hubs of retail, housing and office properties. The resulting properties are "com- munities within communities" — projects where people live, work and play on a daily basis. This creates a re- tention strategy that supports strong NOI while contributing to a more engaged environment for cities and communities. That said, retail has been the core of many of today's mixed-use proj- ects. Defunct shopping malls are be- ing transformed into open-air centers surrounded by urban-style housing and modern creative offices. Small blocks of formerly retail strip product are being converted into cool, modern spaces that blend local retailers with high-end housing and office. But is retail crucial when creating mixed-use product in today's market? Not necessarily. As the mixed-use trend grows in popularity, we will begin to see a rise in "alternative mixed-use" product, namely properties that blend product types exclusive of retail. One example of alternative mixed-use is emerging in the industrial sector. Today's office tenants continue to demand creative and collaborative work environments. Developers are highly aware of the premium pricing creative office can command, and many are now inte- grating these features into industrial properties for a mixed-use feel, sans retail. Creative industrial properties com- bine characteristics of creative office and industrial functionality. The mix of office to industrial in these facili- ties is more blended than in industrial product of old, as the entire property benefits from high-image aesthetics and upgraded communal spaces — both outdoor and indoor. Because this product type encom- passes the sought-after "live, work, play" lifestyle, creative industrial has become increasingly popular with the influx of Millennial and Gen Z em- ployees entering the workforce. RAF Pacifica is developing more than 1 million square feet of creative industrial facilities throughout San Diego County. Our projects combine the design and amenities of a head- quarters location with a state-of-the- art light industrial/distribution/ manufacturing facility. This includes extensive glass, open-plan creative office space, skylights, patios and out- door amenities, as well as best-in-class loading, warehouse design, and clear heights paired with efficient parking and truck traffic flow. By introducing a mixed-use concept into ground-up industrial, we have been able to attract high-quality in- dustrial and flex tenants who under- stand that preserving their workforce and reflecting a strong brand supports their long-term profitability. As the trend of mixed-use continues to grow in popularity, the industry will see other alternative uses emerge and blend. Creative office, for exam- ple, is increasingly introducing on-site storage and non-retail amenities for tenants and employees. Creative em- ployment hubs often offer bike trails, dog parks and on-site entertainment lounges, among other options, fusing office product with new uses that ap- peal to today's young workforce. Multifamily, too, is growing its mixed-use concepts beyond retail. Many apartment owners are offering ground-level office spaces for local employers, or even ground-level art studios for artists. These strategies strengthen the connection between apartment residents and community businesses, deepening the impact of the property within its community. As mixed-use continues to demon- strate its profitability throughout the industry, developers and owners alike will find new ways to blend uses. Moving forward, developers who identify these trends early and make the move to blend product uses strate- gically will reap strong benefits from all that mixed-use assets have to offer. Booth Manhattan Village is located in the affluent South Bay city of Manhattan Beach, Calif. Robinson RAF is blending non-retail uses in projects like Create, a 146,108-square- foot creative industrial property that will integrate elements of creative office in Carlsbad.

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