Retail Isn't Dead. It's Getting A Second Life In Mixed-Use Redevelopment
Bay Area cities and developers are flocking to mixed-use projects as a way to increase value and uses for a particular site. With traffic congestion getting worse each year, the conversation has shifted toward creating more engaging communities where residents can live and work without getting in their cars. Mixed-use redevelopment does not just mean turning an old mall into a live-work-play community, it also means creating new districts and neighborhoods within a city.
SB Architects Vice President Jason Ambrose, who has been working with Seritage, said the biggest challenge is to find a way to redesign the retail environment to reflect a great mix of food and dining and entertainment and organizing retail without having a traditional anchor. These projects are not markers of the death of retail, but finding new ways to incorporate better uses.
“It’s more of a transformation of retail,” Ambrose said.
Mixed-use is about creating new communities as well. Redevelopment of mixed-use around transit to create pedestrian-focused and non-vehicular development is an important concept to the firm, SB Architects Senior Vice President Bruce Wright said.
“It’s not just a sense of lifestyle and dining and entertainment,” Wright said. “It’s housing. It’s community gathering places where you’re really building a sense of like-mindedness.”
SB Architects’ first mixed-use project was Santana Row, and the company has since developed a mixed-use practice with projects acoss the U.S. and in multiple countries. While mixed-use is becoming popular across the Bay Area, it is just getting a start in the Midwest. SB Architects is working on a 2M SF mixed-use project in Nebraska that is taking density into account.
The Rise Of Mixed-Use Neighborhoods
Mixed-use may be gaining popularity now, but it was not always a sought-after asset class.
“We used to pitch [mixed-use] to single-asset class developers who would be quite suspicious,” Ambrose said.
Lenders also used to be suspicious of mixed-use projects, he said. Now capital sources are becoming much more comfortable with this asset class, which is making it easier for developers long term.
SB Architects has done a lot of outreach to local jurisdictions and in many cases planning and zoning overlay is not compatible with true mixed-use, Wright said. Hospitality, for example, often is not included under allowable use.
“We’re defining a specific plan for a specific property that we can work with the local jurisdiction for flexibility for that type of use,” Wright said.
Bay Area cities are creating specific plans that are geared toward encouraging more mixed-use retail development, Ambrose said.
Cities are thinking bigger than in the past, and are becoming more accepting of mixed-use hubs or transit-oriented hubs, according to Wright. The redevelopment around the Transbay Terminal is an example of mixed-use that re-created an entire area that has a mix of new office, residential and retail.
Fremont Warm Springs is another example of a mixed-use community under development, Wright said. The area will have residential housing within walking distance of a transit stop. Millbrae is now considering a mixed-use development near transit. Redwood City redeveloped its downtown area into a mixed-use community with office and housing next to a Caltrain stop.
Creating The Ideal Mixed-Use Community
In addition to its work with Seritage, SB Architects’ next big project in the Bay Area is a redevelopment of a confidential shopping center where one of the anchors will be taken out, increasing food offerings and adding hundreds of multifamily units.
Creating a live-work-play development requires additional considerations compared to a single-asset project.
“We spend a lot of time figuring out ways so that those three user groups or more don’t conflict with one another,” Ambrose said.
The goal is to activate the space morning, afternoon and evening and connect the different uses with an outdoor area such as dining, landscaping and whimsical elements, Wright said.
“What we’re doing is adapting design philosophy for single-family and … multifamily and creating a sense of place and capitalizing on the unique community features of any of our projects,” Wright said.
Typically, SB Architects incorporates an open space element that allows for different uses throughout the year. A project may include a food hall, a farmers market and an amphitheater that could be used for different events throughout the year. Anchor stores are smaller and tend to have an entertainment element such as a bowling alley.
Retail developers have to start thinking differently about this asset class, Ambrose said. Development should not be just retail within a Class-A center. There are opportunities in the Class-B or Class-C world as well, he said.
Redevelopment could eventually include other uses like industrial where a shop will have a smaller footprint, but also have on-site distribution where shoppers can buy products in-store or online and pick items up at a later date, according to Ambrose. He said these would be distribution centers of scale.
“You address two birds with one stone if you're [a retailer like] Nordstrom,” Ambrose said.
Find out more about Bay Area retail and mixed-use at Bisnow's San Francisco Retail & Mixed-Use Showcase Feb. 21.