Filling the urban and suburban gaps

The following pages highlight a handful of such infill developments around the country. Many are mixed-use and are often near transit stops as developers seek the highest and best use for the real estate while building in a 24-hour population. Developers are tackling them in dense locations like Brooklyn and Dallas, in burgeoning fringe markets such as East Austin, and near student populations like the University of Southern California campus, to name a few.

Of course, infill locations are not immune to the effects of e-commerce, changing shopping preferences or other disruptions that are affecting department stores and other traditional retailers. In fact, in more than one case, the shifting market forces have sparked changes amid a project’s progress. In Miami, for example, the developer of the huge MiamiCentral mixed-use and transit hub project has adjusted merchandising and leasing on the fly.

“As the project has evolved, quite honestly it has been shocking to see how retail is changing,” said John Guitar, senior vice president with MiamiCentral developer Brightline, a division of Florida East Coast Industries. “We’ve definitely got our focus more on the type of retailers that are modern and millennial-based.”

Nevertheless, expanding conventional retailers are also exploring ways to fit into infill locations. Most notably, Target Corp. has launched a small store concept of around 50,000 square feet primarily for dense urban areas and college towns. 

“All of the downtown residential projects being built are opening opportunities to develop projects within cities,” said John Bucksbaum, founder and CEO of Bucksbaum Retail Properties, which is developing the mixed-use Addison & Clark project in Chicago. “I think the good retailers that have had success in the suburbs are now experimenting with new formats in urban environments to get in front of that customer base.” 

The profiles herein in no way capture every infill retail effort underway. But they offer a snapshot of projects that investors believe will survive a turbulent retail environment.

Housing boom fuels Brooklyn's CityPoint

The recession in combination with demographics shifts and retailing trends might have been a blessing in disguise for Acadia Realty Trust’s sizable City Point project, in downtown Brooklyn, N.Y. The retail landlord led the 2007 acquisition of a mall between Gold Street and Flatbush Avenue and razed the old center right away to eliminate any association with the area’s decline up to that time, according to Christopher Conlon, COO of the Rye, N.Y.–based REIT. 

The slowdown of the economy kept the firm from moving ahead with plans to build a big-box shopping center there. Fortunately, that also afforded time to reconsider the blueprint. What emerged was a plan placing more emphasis on street-front shops and food-and-beverage offerings, including a Trader Joe’s and the DeKalb Market food hall, both of which are scheduled to open before this summer.

“We basically threw away the old plan, thinking that Brooklyn presented a different opportunity because of rezoning that really started to ignite residential submarkets and density,” Conlon said. “We realized that we needed to provide a really unique experience that doesn’t exist anywhere else in downtown Brooklyn to draw people from communities that are a few stops from the City Point subway stop.”

When completed, City Point will encompass some 600,000 square feet of retail, restaurant and entertainment space across six levels, plus roughly 20,000 square feet of offices. A 125,000-square-foot Target, a 140,000-square-foot Century 21 department store and a seven-screen, 796-seat Alamo Drafthouse Cinema have already opened. Arcadia sold air rights to residential developers adding a mix of 1,100 apartments and condominiums within three towers. 

Food-related tenants will occupy 70,000 square feet on the lowest level. Among the stand-alone restaurants are the Han Dynasty Chinese restaurant and Fortina, a sit-down Italian concept founded by Food Network’s Christian Petroni. The first Katz’s Delicatessen outside Manhattan will anchor the food hall. “You’re going to see a very eclectic mix of all types of food,” said Arcadia’s Luciana Francese, City Point leasing head. 

The post-recession plan makeover also spawned Prince Street Passage, an interior roadway opening that runs southwest, linking Flatbush to Fulton Street, and which will feature small street-front shops. “Flatbush is a major highway that connects to the Brooklyn Bridge and Manhattan, while Fulton has been the retail spine of downtown Brooklyn for 100 years,” said Conlon. “So it was important to create a connection between the two, and Prince Street is where we’re putting our focus to find the right collection of unique brands.”

Kirkland Urban turns a mall inside out

Real estate investors and city officials in Kirkland, Wash., are hoping that the largest downtown development in the city’s history will not only revitalize the nearly 12 acres upon which it sits, but also provide a live-work-play alternative to the nearby cities of Seattle and Bellevue.

Development partners PGIM Real Estate, Talon Private Capital and Ryan Cos. broke ground last fall on Kirkland Urban, as the project is called, and they anticipate full occupancy by early 2019. The first phase, at Central Avenue and Sixth Street, will comprise about 140,000 square feet of retail, 390,000 square feet of offices and 185 apartments, all atop a 1,700-car parking garage. 

Commitments to the Marketplace at Kirkland Urban retail component include a 50,000-square-foot QFC and a seven-screen, 450-seat iPic movie theater. Seattle-based Real Retail is handling the leasing. Kirkland Urban replaces Kirkland Park Place, an old shopping center with a small, outdated movie theater and some obsolete office space. The dated property contributed to tenant leakage southward out to Bellevue, and to Seattle, westward across Lake Washington. 

“The mall was limping along since before the last recession, and the office floor plates were too small for large tenants,” said William Leedom, director of investments at Seattle-based Talon. “But this is a very dense area, and it’s becoming more dense all the time. We met with more than 15 different neighborhood groups over time, and they became very supportive of the project.”

Initially, Prudential Financial affiliate PGIM Real Estate and another developer had envisioned putting up a 1.8 million-square-foot mixed-use development on the site that would have included a hotel. But in 2013 PGIM brought Talon in as a consultant, which resulted in a scaled-down project, the addition of apartments and Talon’s own eventual partnership. 

Seattle architecture firm CollinsWoerman’s master plan includes open-air public space, plazas and water elements. The developers are also connecting to Peter Kirk Park, which slopes about 20 feet below Kirkland Urban’s western boundary. The Marketplace’s lower level will feature the QFC and some other retailers, while roughly a dozen restaurants are to occupy a good portion of the upper level. Heavy Restaurant Group, a local restaurateur and catering company, has agreed to lease about 4,000 square feet.

A touchdown at Crenshaw Imperial Plaza

NewMark Merrill Cos. put a wager on the old Crenshaw Imperial Plaza shopping center in Inglewood, Calif., two years ago, and the move is proving prescient ahead of the anticipated 2019 arrival of the NFL’s Rams and Chargers football teams at the $2.6 billion stadium being built nearby. 

This will not necessarily translate into a stampede of football fans into the 1960s-era shopping center on game days, but it does indicate that Inglewood is moving in the right direction, says Sandy Sigal, CEO and president of Woodland Hills, Calif.–based NewMark Merrill, which acquired an interest in the shopping center when it was about 40 percent vacant.

“It’s the kind of thing that’s going to spark more interest in Inglewood,” Sigal said. “I don’t think real estate people knew where Inglewood was, but now the association with two football teams has put it on the map. It’s a lot easier for me to take deals to people and know that they’ll look at them.” 

NewMark Merrill is nearing completion of its $18 million renovation of the 304,755-square-foot property, at Crenshaw Boulevard and Imperial Highway. The work includes infrastructure and facade upgrades, the construction of a Planet Fitness spa and an additional retail building, and the demolition of a two-story retail-office building. The company also converted the bottom floor of a half-empty, six-story office building into retail space. 

The Crenshaw Imperial Plaza office and retail space is now virtually full, Sigal says. In addition to Planet Fitness, among the new tenants are Chipotle Mexican Grill, Five Guys Burgers and Fries and Save-A-Lot. CBRE is handling the leasing and has helped secure some 75,550 square feet of tenant space. Sigal also credits the city of Inglewood for its help.

“The trick with these shopping centers is that people redo them but then they become unaffordable and lose a lot of their local customers,” Sigal said. “So I don’t want to go super high-end, but I also don’t want to race to the bottom.” Though the shopping center had a long history within the community, it failed to keep up as the market changed, and NewMark Merrill came along and saw the opportunity, says Sigal. “Of the shopping centers I’ve done, this has been one of the most exciting and rewarding experiences,” he said. “It’s in my favorite five.”

Mixed-use drives MiamiCentral

Some 40 years after the downtown Miami train station built by rail and real estate pioneer Henry Flagler closed and was relegated to surface parking, Flagler corporate successor Florida East Coast Industries is reviving the 11-acre site with a $900 million mixed-used project and transportation hub. MiamiCentral, as the project is called, will comprise about 180,000 square feet of retail, restaurant and entertainment space, most of it beneath an elevated rail platform that will offer four operators serving South Florida. About 800 apartments and some 280,000 square feet of offices will be spread across four towers in the project. 

Developer Brightline, a newly launched private rail service and a division of Florida East Coast Industries, anticipates that the transportation hub and some of the retail will begin operating this summer, and the rest will roll out progressively over the next 12 to 18 months. CBRE is overseeing the retail leasing. 

“When the federal highway plan took hold, people stopped using trains, and the Henry Flagler station in Miami was eventually torn down,” said John Guitar, senior vice president of business development at Brightline. “But now our highways are clogged, and that spurred the launch of the Brightline passenger rail service as well as the opportunity to develop this real estate that we’ve owned for more than 100 years.”

As of late March, the tenants for roughly 50 percent of the space had committed themselves by lease or letter of intent, Guitar says. The food-and-beverage operators occupying the roughly 50,000-square-foot Central Fare food hall in the main building are scheduled to open in September. Voltaggio brothers Bryan and Michael, veteran chefs and stars of cable television food, cooking and travel shows, will co-anchor the component with Monger, a 10,000-square-foot, full-service restaurant that will feature three kitchens. 

Meanwhile, among the local eateries are Miami Smokers and Doggi’s Arepa Bar — heavy on the Cuban and Venezuelan influences, respectively — and Asian fusion purveyor Blackbrick. The food hall is to accommodate roughly 20 vendors in all. Additionally, a yet-to-be named grocery store is scheduled to open in an adjacent building early next year. 

Brightline estimates that some 35,000 train riders alone will frequent MiamiCentral daily. “Retailers want to be in this location because of all the people moving in and around the center for transportation purposes,” Guitar said. “You add all of the office tenants and residents within walking distance of the station, and it really creates a big retail opportunity.”

Plaza Saltillo entertains Austin

A few years ago bar owners in Austin, Texas, began expanding the downtown Sixth Street entertainment district into the hardscrabble neighborhood of East Austin, which had over time witnessed bouts of short-lived development efforts. But as University of Texas students, Millennials and home-rehabbers began moving into the area, investors took notice and set about building offices and apartments, typically with a small retail component included.

Now local developer Endeavor Real Estate Group is leading an effort to build a transit-oriented development on 11 acres at the Plaza Saltillo commuter rail station, at East Fifth and Comal streets. The project is the most ambitious to date on the lower end of East Austin, calling for 110,000 square feet of restaurants and entertainment and retail space, 800 apartments and as much as 120,000 square feet of offices. Dallas-based apartment developer Columbus Realty Partners is a partner with Endeavor, and the venture has agreed to lease the site from Capital Metro, Austin’s regional transportation provider, for about $200 million over 99 years. 

“The surrounding retail market is very entertainment-heavy and scattered,” said Jason Thumlert, an Endeavor principal. “We want to help provide an anchor by creating an emerging ‘cool street’ in an urban fringe market that speaks to Millennials and other locals.”

The Austin City Council approved the Plaza Saltillo plan in March, and Thumlert anticipates breaking ground by the third quarter of this year. The tenant mix will be aimed at gratifying the growing consumer preference for entertainment and shopping experiences at trendsetting and unconventional retailers and restaurants, he says. He envisions a public market anchored by food-and-beverage vendors, sidewalk cafés, specialty fitness concepts and similar users. Plaza Saltillo sits along a roughly 5-mile commuter bikeway, and the project will include a streetscape oriented toward pedestrians and cyclists, a central park and other outdoor public spaces.

The project also fulfills Capital Metro’s broad goal of encouraging mixed-used development at its commuter rail stations. The agency launched the commuter rail service in 2010 and four years later selected Endeavor to lead the Plaza Saltillo effort, after the recession had delayed earlier building plans.

“We have the opportunity to create a more inviting environment,” said Thumlert, “with critical mass that hasn’t existed in this market before.” 

New philosophy transforms USC village 

In 1999 the University of Southern California became one of the biggest retail landlords in South Los Angeles when it acquired University Village, a 1960s-era mall that occupied some 15 acres adjacent to the campus. After years of planning, USC razed the mall in 2014 and began developing USC Village, a $700 million, mixed-use endeavor considered to be one of the most ambitious developments in the history of both South Los Angeles and the school itself. 

Scheduled to open this August, the 1.2 million-square-foot redevelopment will feature several five-story residential halls for 2,700 students, plus 135,000 square feet of retail on a public plaza at the northwest corner of Jefferson Boulevard and Hoover Street. USC will operate the housing and a 30,000-square-foot fitness center, and as of mid-March, the university had received commitments or letters of intent for about 80 percent of the remaining retail space. A 14,000-square-foot Trader Joe’s and 23,000-square-foot Target Express are anchoring the project. 

“University Village was just an old shopping center,” said Brian Wilson, the university’s executive director for real estate development and leasing. “It had a grocery store and movie theaters, but it didn’t really reflect the quality of environment that USC wanted to offer the community.”

The USC Village commercial component will emphasize food and destination tenants in particular, as well as services, Wilson says. In addition to bringing Starbucks, formerly a tenant at University Village, back to the site, USC is signing on national, regional and local restaurateurs that will help give the project a healthy, organic and international flare. Among those are Asian Box, Cava Grill, Greenleaf Gourmet Chopshop, SunLife Organics and an Irish rock pub called Rock & Reilly’s. 

The university also saw USC Village as a chance to improve infrastructure and living conditions in South Los Angeles, a large swath of the metro that has fought to reduce levels of poverty and crime. Among other efforts, USC spent roughly $40 million on community projects split between road and sidewalk upgrades and support for affordable area housing funds. 

“USC Village is incorporated into our campus, and our primary objective is to elevate the student experience,” Wilson said. “But we’re in South L.A., so we’re also trying to enhance business and employment opportunities for the neighboring community.”

Victory Park is authentically Dallas 

When Trademark Property Co. began a $100 million expansion of the 75-acre Victory Park mixed-use development in Dallas in 2012, CEO Terry Montesi quickly deduced why the retail component was falling short. The tenant mix had created a street that spoke to a trendy international customer likely to stay at the project’s W Dallas Victory Hotel and not to the residents and office users in Victory Park and the nearby downtown and uptown neighborhoods.

“My analogy was that they were going after the guy in a black silk shirt driving a Ferrari, and his girlfriend — and that’s not authentic Dallas,” said Montesi, whose firm is overseeing the overhaul for Estein & Associates USA, Victory Park’s landlord. “It was a very narrow merchandising focus, and we heard from everybody that it didn’t work. The customers of Victory Park are very diverse: You’ve got high-end office tenants, creative-class office tenants, high-end condo owners and apartment dwellers.”

Victory Park surrounds the American Airlines Center arena, and Trademark Property is focused on doubling the retail component to about 160,000 square feet and creating a more-pedestrian-oriented main street befitting Dallas, Montesi says. That effort includes an emphasis on more local and artisan chef-driven food-and-beverage concepts, versus the predominantly out-of-town restaurateurs that were in Victory Park originally. 

In March Victory Park announced that Dallas–Fort Worth operators would open new bar, restaurant and entertainment venues later this year that will occupy some 35,000 square feet in the aggregate. And late this year Dallas entrepreneur Tristan Simon will open Rebees, which will encompass a Texas saloon, a retail outlet selling local artists and some creative workspace with a café.   

An eight-screen, 750-seat Cinépolis movie theater is scheduled to open in a new, 23-story apartment building that will include an additional 20,000 square feet of retail space. The developers are planning to create a pop-up retail zone to accommodate 400-to-600-square-foot users, Montesi says, and public art will play a prominent role in the project too. 

“Our redevelopment is changing everything,” he said. “This place is going to have heart, art and soul.” 

Addison & Clark developers swing for fences in Wrigleyville

Hoping to capitalize on a diverse set of demand drivers in a storied neighborhood, a joint venture between Bucksbaum Retail Properties and M&R Development is redeveloping 2.3 acres into a mixed-use project across the street from Wrigley Field, the home of the 2016 World Series Champion Chicago Cubs. Dubbed Addison & Clark, the development is replacing several low-slung commercial buildings and is part of a broader overhaul of the Lakeview neighborhood, an area known for its nightclubs and restaurant district that is often referred to as “Wrigleyville.” 

“The neighborhood has been centered on Wrigley Field for a long time,” said John Bucksbaum, founder and CEO of Chicago-based Bucksbaum Retail. “We’re going to just continue to complement what’s there.”

Scheduled for a 2018 opening, Addison & Clark will feature 150,000 square feet of retail space, 148 luxury apartments, and a 405-car garage that will serve the public and residents. The project also is near a Chicago Transit Authority Red Line “L” station. Tenants announced so far include a 10-screen CMX movie theater and a 3,500-square-foot Shake Shack. Additionally, Lucky Strike Entertainment will open its second Chicago location, taking 30,000 square feet at Addison & Clark. Unlike it other Chicago location, Lucky Strike at Addison & Clark will feature live music, Bucksbaum says. 

Bucksbaum identified three audiences that in one way or another are part of the neighborhood: some 3.5 million event-goers who attend Cubs games and roughly 10 concerts at Wrigley Field each year; a broad cross section of Chicagoans who frequent the area’s restaurants and nightclubs from Thursday through Sunday each week; and the roughly 230,000 people who live within a couple of miles of the project.

“When we’re making our merchandising and leasing decisions, we want to be able to appeal to all three constituencies,” said Bucksbaum, who says he expects to make more tenant announcements in the coming weeks. 

Addison & Clark also stands to benefit from a major Wrigley Field renovation that includes redevelopment outside of the ballpark’s walls. Hickory Street Capital, a real estate firm controlled the by the Ricketts family, which owns the Cubs, is developing a six-story office building that will house the team’s front office and retail space overlooking a triangle-shaped community plaza. It also is developing a 180-room Hotel Zachary that will feature a handful of upscale restaurants.