For the Long Haul
Mixed-use isn’t news, but it continues to make headlines anyway. After a several-year period when ground-up building has ranged from sluggish to practically non-existent, a number of mixed-use projects are beginning to stir with renewed life as leasing gains traction once again.
Part of the reason for the rekindling of the format is the amenities it offers and the convenience-oriented tenant mix. Chain Store Age talked with four mixed-use developers about the leasing and design strategies they employ that assure their projects not only get built, but have staying power.
Leveraging the neighborhood: “Mixed-use today entails not only the amenities on-site, but also those in close proximity to the center,” said Howard Paster, president of St. Paul, Minn.-based Paster Enterprises, developer of the mixed-use project Mendota Plaza, in Mendota, Minn.
In fact, Paster added, those nearby uses and amenities can be leveraged to expand a retail project into a mixed-use development. “Many of the mixed-use opportunities that you see today are regular development sites in which component layers are added,” he said.
For example, a savvy shopping center owner might have a retail shopping center site and change some elements of that center to integrate it into the adjacent uses, linking them physically or making them more accessible. “Or you might examine the nearby uses and allow them to influence the center’s direction,” Paster said. For instance, if office buildings surround a shopping center, an owner might pay more attention to those office uses and consider what the worker population might need.
“Focusing on what those consumers need, such as restaurants and pedestrian accessibility, will allow a developer to make a property more relevant,” he said.
Go big or go home: Then there are the projects that are so massive that they, in essence, create a city within a city. Take The Wharf, for example, Washington, D.C.-based Madison Marquette’s planned neighborhood-style development with a mix of uses designed to make the D.C. waterfront a near 24-hour destination.
For The Wharf, “We are developing a mile stretch of waterfront just footsteps from the National Mall and one of the most transit-accessible locations in the city,” said Kurt Ivey, senior VP corporate marketing and communications, Madison Marquette. The project is already connected to the city’s underground subway system and bus line network, and Ivey said that Madison Marquette plans to enhance that accessibility by connecting the project to the city’s existing bike lane network, building better pedestrian access to/from the National Mall and welcoming the arrival of the city’s new trolley car system.
Groundbreaking is anticipated for 2012, and Madison Marquette is prepping the area for the project’s arrival. “We have already begun a robust programming schedule to reintroduce the waterfront to the city,” Ivey said. “Our activities include a weekly farmers market, live music nights, local food truck round-ups, seasonal festivals and free outdoor fitness classes.”
The Wharf’s offerings of best-in-class local and regional retail and dining concepts are designed to reflect the Washington, D.C., culture. But more important is that the project connects to the surrounding community; provides transit and accessibility; adds amenities and programming that keep visitors engaged; and layers in a mix of local, regional and national concepts. “Established operators are important for > getting a project out of the ground, while unique and unproven concepts are equally important for creating that compelling sense of place that resonates with the local community,” Ivey said.
Creating a sense of place: The expression “place-making” may be overused, but the concept will never grow old. In fact, the 10-year-old, 1.7 million-sq.-ft. Easton Town Center, in Columbus, Ohio, built its decade-long reputation on place-making — and the results are self-evident.
“For all of its brick-and-mortar appeal, Easton’s success has been more about ideas than blueprints,” said Yaromir Steiner, CEO of Steiner + Associates, which co-developed the project with The Georgetown Co. “The truly innovative foundational concept is that a ‘town center’ is not just an architectural design concept, but part of a defining social contract.”
That “sense of place” is no accident; the developers actually used storyboards to help plan Easton, and design themes from a range of eras create variety and a sense of a town that has evolved naturally over time. But behind the brickwork and period signage that give the project its signature Americana feel lies a very contemporary perspective and sophisticated strategic vision.
“If you want a true community destination, you have to make room for the community,” Steiner said.
“There is no question that Easton is a fully realized mixed-use town center environment, but that doesn’t mean that it isn’t still a work in progress,” he added. “It is that restless sense of ‘Can it be better?’ that has helped us maintain that feeling of dynamism and energy.”
Easton Town Center is anchored by Nordstrom, Macy’s and AMC Theatres — featuring 180 stores and restaurants in all — along with significant office space and three hotels.
Incorporating community and sustainability: Successful mixed-use projects create not only a community that strategically blends various types of users, but they introduce a level of sustainability not found in other formats.
“By their very nature, mixed-use plans place homes, offices, shops and restaurants all in close proximity, fostering a ‘walk-ability’ that is not possible in settings that keep the various uses separated by streets and by distance,” explained Rob Wetherald, VP development for Peoria, Ill.-based Cullinan Properties Ltd., developers of the 1.4 million-sq.-ft. Streets of St. Charles, near St. Louis. “As people choose a greener and more sustainable lifestyle, mixed-use developments offer a way to live those goals by eliminating the need to drive to work or to run errands.”
The benefits of mixed-use, Wetherald said, transcend even the sustainability pluses. “Unlike other developments that segregate residential areas from business areas, mixed-use developments promote and encourage a neighborhood atmosphere. This is reinforced by the inclusion of common areas, amenities, signage and other elements that make for a cohesive design — referred to by urban planners as the ‘city within a city.’ ”
Cullinan’s Streets of St. Charles, currently under construction with Phase I opening in 2012, embodies all of the components of a successful mixed-use project — with some 250,000 sq. ft. of restaurants and retail, and 250,000 sq. ft. of office above and around the retail, as well as hospitality, a health club facility and a theater complex. “Streets of St. Charles will provide a 360-degree experience to retailers, offering a captive residential and office component with a highly sought-after daytime population,” Wetherald said.
Focus on: Inventory Management
With more than 6,800 stores nationwide, Family Dollar is a leader when it comes to operating a tight ship. Most recently, with threats of rising operating costs, the Matthews, N.C.-based discounter put a renewed focus on inventory management. An important priority: automating inventory auditing operations in an effort to speed up the recording process and improve reporting accuracy.
Two years ago, Family Dollar embarked on a chain-wide “Store of the Future” initiative to revamp its IT infrastructure, which included the addition of new merchandising and assortment planning solutions. With those systems now well-established chain-wide, the retailer focused on its internal, store-level processes.
First, the chain worked to automate its fulfillment process, with an automated replenishment system that enables it to automatically order items as they are recorded as purchased at point-of-sale. The process supports Family Dollar’s just-in-time inventory strategy.
“To be successful at this strategy, we need to have visibility into inventory levels, so data integration between inventory and automatic replenishment systems is important,” said Stan Johnson, director of inventory control, Family Dollar.
While the company was making strides to automate its fulfillment processes, it was also managing an informal, manual inventory auditing process whereby it conducted nearly 7,000 inventory counts a year, hitting each store at least once a year. Managers physically counted each piece of merchandise on store shelves and recorded data on paper-based spreadsheets.
An inventory count could take an average of six hours, and the auditing review could last another few hours. Further, the chain was working with two industry counting services partners to complete this task, which made the process even more cumbersome.
“Since we were making strides in inventory control, it was important to get a formal, standardized program in place,” Johnson explained.
The first step toward a more efficient process was to migrate from two-service providers to a single partner. The company chose to move forward with one of its existing partners, WIS International, San Diego, which worked with Family Dollar to develop an electronic inventory audit process.
Within 24 months, store managers traded in pencils and spreadsheets for wireless handheld auditing terminals where they can input inventory information. Data are instantly transmitted to WIS’ inventory database, and audits are now a part of its inventory files and records.
“There is no longer concerns about mailing paper audits or tracking down lost paperwork from a store,” Johnson explained. “By having a single [electronic] report at the store instead of 25 to 30 [physical] pages, we have fewer chances of store personnel sending us incorrect audit results. This has greatly helped us improve our auditing reconciliation efforts.”
With so much more data available, Family Dollar now takes advantage of more types of exception-based and customized reports to further improve its auditing efforts. For example, new out-of-stock reports provide store managers with a list of items that are out of stock on the sales floor, so post-inventory the managers can focus replenishment efforts on the merchandise that will provide the most return on increasing sales and customer satisfaction, according to Johnson.
Meanwhile, the details revealed in exception reports allows Family Dollar greater insight into building and maintaining inventory count accuracy, as well as identifying old and discontinued merchandise.
“WIS partnered with us to develop procedures to help us identify and remove stale and recalled items,” Johnson reported. “This effort has also greatly reduced our exposure to legal and regulatory concerns caused by lead, phthalates and other restricted merchandise.”
Besides cutting the auditing process to half the time, the electronic process has also helped Family Dollar eliminate 200,000 to 250,000 pages per year.
“It just makes good sense from an environmental standpoint to eliminate those reams of paper printed during an inventory,” Johnson added.
Harnessing Solar Power
When it comes to managing energy use, more and more retailers are looking to the sun — and are generating electricity on-site through solar roof panel installations designed to increase efficiencies and utilize a proven green power option. Chain Store Age talked with Michael Walker, director, commercial product management and marketing for Lennox Industries, about the growing retail movement toward solar power and how Lennox is leveraging the interest.
Solar installations of varying types are making the news more and more frequently. How prevalent do you see solar becoming in the retail environment?
As sustainable solutions continue to make headlines, retailers are showing a strong interest in solar technology. And that makes sense — more and more customers are interested in sustainable technologies, and they want to do everything within reason to increase efficiency and eliminate grid-based energy usage. As energy prices rise and solar technology becomes more commonplace, expect to see even more retailers taking advantage of it.
What types of locations or sizes of stores are best suited to solar technology?
Solar solutions can be a good match for any location. At Lennox, we can scale our system starting with one panel on up; which means even locations with small rooftop space can benefit. Obviously, new construction is a great application, because systems can be designed to include solar from the beginning. However, because it is not necessary to tie our system directly to the main electrical system, solar can be a great solution for existing buildings that want to replace their HVAC systems and add solar.
What retailers do you see as having really maximized solar solutions?
It is not one type of retailer (for example, restaurant, big-box store, supermarket) that has maximized the use of solar, but rather a mind-set. Companies that proactively seek to try new technologies, reduce energy usage, or capitalize on their own customers’ move toward green and sustainable lifestyles are the ones that have expressed the most interest in and are integrating solar products.
What should retailers understand about solar energy, in terms of investment and benefits?
Solar provides retailers with a way to reduce their grid-based energy usage. This will help them lower total energy usage throughout the year, as well as the peak amount used at a single time. Lowering peak energy usage is something that not everyone thinks about. But it can dramatically lower energy bills, because oftentimes, a commercial user’s electric rate is partly tied to the maximum amount of energy they need at any one time. Many retailers also talk about the positive side of being seen as green or using sustainable technologies — their customers identify with and like this idea. In turn, they reward these retailers with their business.
How involved has Lennox become in solar solutions?
Lennox is the first and only commercial HVAC system that integrates directly with solar power. Lennox recognized the potential power of sustainable solutions before anyone else, and we have given our customers exactly what they have requested. Now, we sell and support a completely integrated solar solution that’s ideal for new construction or retrofit applications.
Describe your SunSource Commercial Energy System — and how it can impact retail.
Lennox offers a simple, safe, efficient and scalable solution compared with a traditional solar product. With the SunSource system, each solar panel features a microprocessor that allows it to tie directly to the commercial HVAC unit. This unique configuration eliminates the need to integrate SunSource into the building’s main electrical system — which can be prohibitively expensive, especially for smaller jobs.
Since the efficiency level of the individual solar panels is not tied to the system, energy-draining degradation problems of traditional systems are eliminated. Users can also add or remove panels as needed, based on changing demand or budget. The overall investment and expected returns vary greatly, depending on the number of panels purchased, location and government/municipal rebates.