Once solely a big-city phenomenon, the vertical concept has been especially popular in cities like New York, Miami, Los Angeles, and San Francisco, where high land and construction costs tend to prohibit new development. However, as city centers across America gained popularity as hip places to live, vertical centers gained popularity in cities like Atlanta, Chicago, and Dallas.
By increasing the square footage of a given project and incorporating different elements—such as retail, office, or residential space or entertainment venues—developers are able to maximize their investments and offer projects that are more attractive, more profitable, and less risky for lenders.
Cost, leasing, and return on investment (ROI) are primary objectives for developers. With more than three decades of experience working with the development community, our firm understands the vital need to keep those issues at the forefront of every project. Often developers and tenants have different objectives, so balancing the demands of both parties can require constant negotiation. Architects act as mediators of sorts, making design recommendations that satisfy the needs of all interests and maximize investor ROI while taking into account possible site-related constraints associated with site configurations, building codes, landmarking, zoning, and other factors.
The Rewards and Challenges of Retail/Residential Developments
In Rego Park, Queens, GreenbergFarrow is designing a new mixed-use project that incorporates residential towers soaring above a retail base that will house national big-box retailers. Initiatives like this are common in high-density areas like New York City, where smart developers are frequently using mixed-use vertical as a cost-effective design solution.
From a lender’s standpoint, when millions of dollars are being invested in a project, it pays to spread the risk around. The investment community’s favorable attitude toward risk sharing is helping to accelerate the trend toward mixed-use development.
In the case of a mixed-use project, the property’s steady, stable income is typically generated by the residential component. A 500-unit condominium project along with a 75,000-square-foot retail base will clearly be more attractive to lenders than a stand-alone, 500-unit condominium tower.
This type of development requires developers to be flexible with their plans and make certain allowances to accommodate retailers’ needs in their designs, even if it means altering an already successful model.
Critical to attracting future tenants, the space must be designed so that it is flexible. An often-recited industry statistic is that nearly one in five retailers will disappear within a decade or so. Therefore, the retail portion of the project will need to be redeveloped roughly every 15 years to stay viable. In contrast, the residential portion will typically be strong and remain stable for decades.
It is thus easy to see why stacked projects are enticing for developers. And while it may be tempting to squeeze in some “throwaway” retail space just to reap the extra benefits, a project that lacks proper planning and quality assurance is sure to fail in the long term. A successful residential developer that wants to build a mixed-use building must exercise the discipline to think about the project’s retail component with the same level of subtlety and sophistication as its residential portion.
Parking Pitfalls
Parking is one area where mixed-use designers frequently make mistakes. Shoppers will not return to a mixed-use center if they need to struggle to remember where they parked, if they feel unsafe waiting for an elevator in a dark garage, or if they have trouble navigating a parking lot. Retail customers seek a parking lot that is bright, safe, and easy to enter and exit.
In the case of residential, segregated parking is a must. Also, residents understandably will not want to encounter shopping carts in their lot on a daily basis. For residential parking, it is acceptable to use columns, ramps, or turns to designate certain areas because, over time, residents will become familiar with the layout and may even have reserved spaces.
Designers must also possess a thorough understanding of local building and zoning laws when dealing with parking issues. Ultimately, parking challenges can be overcome through a thoughtful combination of creativity and design acrobatics.
In the borough of the Bronx in New York City, GreenbergFarrow designed River Plaza, a 235,000-square-foot retail center anchored with a Target department store. With a tight, irregularly shaped site bordered by major highways and a train line, parking posed a significant challenge. The solution was found with rooftop parking and a partially submerged building. This not only conserved space and met zoning requirements but also contributed to the project’s having one of the city’s most successful Target stores.
Planning and Design Are Critical
Although mixed-use vertical centers were previously only seen in major cities, the trend has spread across the Northeast and around the country. More and more, developers are ready to go vertical as a way to maximize their investments.
The creation of a top-quality, stimulating mixed-use project, however, requires flexibility on the part of the developer. By paying attention to such key factors as accessibility, parking, and long-term flexibility of space, developers can control costs while maximizing leasing and ROI. A successful mixed-use developer is prepared to undertake a carefully planned and well-executed design that fulfills the particular needs of each of the property’s separate components.
