Under standard definitions of shopping centers, Los Jardines, at 78,000 square feet (7,250 square meters) with a 30,000-square-foot (2,790-square-meter) anchor tenant, would be classified as a neighborhood center. But this newest invention of Beverly Hills-based Primestor Development is proving to be the exception. Despite its relatively modest size and its location, Los Jardines in many ways functions more like a community center in the sense that it has become a focal point for community life in Bell Gardens or even a regional center in that it routinely draws patrons from well beyond the immediate community. This larger-than-typical trade area (for a center of its size) is attributable to at least four factors: 1) the developer’s commitment to create a sense of place through the architectural and physical configuration, the tenant mix, which combines national retail chains with local and regional businesses, and an extensive community outreach program; 2) an anchor tenant (Famsa, a Mexico-based electronics and home furnishings chain) with tremendous name recognition in the Latino community (the trade area’s population is 87 percent Hispanic); 3) immediate proximity to other retail development and to a major casino, effectively creating a critical mass comparable to that of a large community shopping center; and 4) location in a densely populated trade area (more than 900,000 people within a five-mile (8-kilometer) radius that for years has been severely underserved with high-quality retail development.
The project is located on a seven-acre (2.8-hectare) site in an urban, blue-collar, largely Hispanic neighborhood. The city of Bell Gardens, about six miles (10 kilometers) southeast of downtown Los Angeles, encompasses 2.4 square miles (6 square kilometers) and has a resident population of about 46,000.
The site was assembled from 19 separate parcels that previously contained apartment buildings, abandoned commercial buildings, an operating but outdated Taco Bell restaurant, an adult bookstore, vacant land, and a public alley. The city, operating as the Bell Gardens Redevelopment Agency, assembled the land and relocated the tenants. The Taco Bell franchisee was recruited to be a tenant of Los Jardines and has no regrets about the change: the Taco Bell Corporation has praised the new building for the architectural detail, and it is now one of the most successful restaurants in the chain.
The site is at the intersection of Florence and Eastern avenues, which the developer describes as “Main and Main.” At the northeast corner are Los Jardines and an older 70,000-square-foot (6,505-square-meter) shopping center; at the northwest corner a 160,000-square-foot (14,900-square-meter) neighborhood shopping center anchored by a supermarket and a pharmacy; at the southwest corner one of California’s largest card casinos and a major southern California entertainment destination; and at the southeast corner another seven-acre (2.8-hectare) vacant site owned by the Bell Gardens Redevelopment Agency. The agency recently selected Primestor to develop this site as well, based largely on Primestor’s success with Los Jardines. The site’s tenants will include a Ross Dress For Less, a Marshalls, and a nationally recognized sit-down restaurant. Whereas Florence and Eastern are both major commercial corridors, the other two sides of the Los Jardines site are bordered by older residential development, mostly smaller single-family units.
As part of Primestor’s community outreach during preconstruction, local children painted ceramic tiles that were then incorporated into the streetscape.
The older shopping center on the northeast corner adjacent to Los Jardines is owned and anchored by Toys “R” Us. Although owned and operated separately (and currently much less attractive than Los Jardines), this neighboring center effectively functions as part of Los Jardines; were it not for the stark contrast in architectural quality, a shopper would never know that the two centers are separate entities. Primestor characterizes Toys “R” Us as a “shadow anchor” for its project. The relationship between the two centers is formalized in a reciprocal easement agreement, which enables Los Jardines to share the other center’s “surplus” parking and, in return, enables the prominent listing of Toys “R” Us on Los Jardines’s two marquee signs (one of which is actually located on the other center’s property). In the absence of the agreement, it would have been necessary to physically separate the two centers, which clearly would have defeated the goal of creating synergy between the two. Moreover, the shared parking arrangement brought Los Jardines’s parking ratio in line with the expectations of the retail tenant community (Los Jardines’s own parking amounts to 3.9 spaces per 1,000 square feet [93 square meters] of GLA, just shy of the “four per 1,000” requirement of major national retail tenants; with the other center included, the ratio is 4.26 spaces per 1,000 square feet). Plans are now afoot to substantially renovate the Toys “R” Us center, consistent with the high architectural standards set by Los Jardines. To facilitate the process, the Primestor management team is donating its time to coordinate the neighboring center’s site improvements, and the redevelopment agency is paying the architectural fees.
The story of Los Jardines is really the story of Primestor Development, its development philosophy, and its successful partnership with the Bell Gardens Redevelopment Agency. Primestor was started more than 20 years ago, initially focusing on property management. The firm’s principals, Arturo Sneider and Leandro Tyberg, are both immigrants from Latin America (Sneider from Mexico and Tyberg from Argentina). Through their experience in property management, Sneider and Tyberg were keenly aware of the tremendous gap in retail goods and services in Latino communities and, in 1997, decided to do something about it. They shifted Primestor’s focus from property management to development and decided to concentrate strictly on urban infill projects. At that point they brought Gene Detchemendy on board as a partner, based on his strong background in directing real estate projects for urban-oriented tenants.
Los Jardines has a long-term ground lease with the Bell Gardens Redevelopment Agency, structured to allow for economic feasibility while still providing an income stream to the agency. The ground lease facilitated a project that otherwise would have faced large land assembly and relocation costs.
Los Jardines is Primestor’s tenth shopping center (all are in Latino communities in the greater Los Angeles area). The firm’s successful formula includes considerable attention to architectural details and site amenities, an ability to attract top-drawer tenants to neighborhoods that they have historically avoided, an understanding of the importance of public/private partnerships for urban redevelopment projects, and full engagement of a project’s residential and business neighbors during planning.
Primestor’s hands-on approach to community outreach is perhaps the feature that most sets it apart from its competition. Tyberg, who spends a large portion of his time on outreach, is emphatic about the need to build an ongoing relationship with local stakeholders: “In these areas, a project simply won’t happen unless it has community support,” he says. This message resonated with the city of Bell Gardens. The city’s redevelopment agency selected Primestor after three previous project proposals for the site (over ten years) had failed to come to fruition. Primestor’s competitors for the site included firms that were much larger and better known but lacked grassroots experience in Hispanic neighborhoods.
Overall development, from Primestor’s selection by the agency through the project’s grand opening, took three years. Primestor began marketing the project immediately upon being selected by the agency. Primestor and the agency took approximately six months to negotiate the terms and development agreement. Essentially, the deal involves a long-term ground lease, structured to allow for the project’s economic feasibility while still providing an income stream for the agency. The ground lease arrangement is consistent with Primestor’s intent of creating a long-term partnership in which the developer and the community both have a vested interest in the project’s success.
The entitlement process took about four months and was largely a formality because of the strong city/ community support that already existed for the project. Primestor needed to obtain a conditional use permit because the project would include a drive-through restaurant and to get tentative tract approval to consolidate the original 19 parcels making up the site. Both the planning commission and the city council voted unanimously to approve the project.
Site planning and design took approximately six months, construction about eight months. The community was involved throughout the process, from town hall-type meetings to job fairs to encourage the hiring of locals (more than 11,000 applications were received and distributed to all the center’s tenants) to inspections during construction to a grand opening fiesta. During preconstruction, local children were invited to come to a neighborhood youth center to paint customized ceramic tiles that ultimately became part of the streetscape. Involving the center’s younger neighbors not only served to build a customer support base among their parents but also affected the community’s sense of ownership of the project. According to Tyberg, “The children who worked on those tiles still bring their families to the center to see the work they did. It is a common sight to see a seven- or eight-year-old at the center with a parent, looking for the tile he painted.”
The project is on city-owned land. The ground lease with the city is for 55 years plus 30 years of options. Ground lease payments are $65,000 per year. Development costs (including $100,000 in capitalized ground lease payments) totaled $12.2 million. Primestor used a conventional construction loan of $9.75 million from KeyBank, which was repaid with the company’s own equity at the completion of the project (there is currently no mortgage on the property). According to Tyberg, “It was our commitment to this project to put in our own equity, in part as a measure of how much we believe in what we are doing.”
As part of its ongoing marketing program, Primestor imported fresh snow, a new experience for many of the children.
The walkway is part of the overall objective of creating a community gathering place as well as a place to shop.
Architecture is an integral part of the value that Primestor creates for its tenants and neighborhoods. The common threads running through all the firm’s projects are highly attractive architecture and landscaping, a pedestrian orientation, and public amenities that express the heart of the community. The firm strives to design its shopping centers from a neighbor’s instead of a customer’s perspective, creating places where people come to spend time even if they do not always spend money. According to Tyberg, “Hispanic buyers are very loyal. Even if they don’t spend money on every visit to the center, they will return if the experience is positive.”
Creating a community gathering place was the main objective of the architectural firm Perkowitz + Ruth retained to design Los Jardines (and now working for the redevelopment agency on the renovation of the adjacent center). To that end, the site incorporates a community fountain/plaza area, thematic landscaping (northern Mexico/Sonora Desert), and a botanical walkway. Key species in the landscaping palette include palm trees, non-fruit-bearing olive trees, agave, dragon trees, and ocotillo.
The building architecture is inspired by traditional northern Mexican design—light colored, hand-troweled smooth stucco walls accented by darker colors on the roof tiles, stone columns, and ornamental iron light fixtures. Five hundred azulejos—the traditional ceramic tiles painted by neighborhood children—provide a personal touch to the center’s architecture. Portions of the main building have faux second floors, with bougainvillea plants hanging from the balconies. Other features include trellises and an overhanging canopy archway where music is always playing. The project has two 38-foot (11.5-meter) pylon signs with ledger stone bases that match the overall building style. Based on tenants’ expectations, the fascia signage is conventional and probably the one concession to the homogeneity of American retailing.
Each storefront is recognizable as a separate business, achieved by using different accent treatments throughout the project and varying building depths. The number of outparcels was intentionally limited, and they were carefully placed so as not to block visibility of the main building from Eastern Avenue, the site’s main commercial frontage. Parking is ample.
Unlike other Los Angeles-area projects in urban settings, Primestor’s centers are never fenced. In the firm’s experience, the downside of limiting community access (and thereby undermining the primary goal of creating an inviting environment) far outweighs the perceived security benefits of fencing. Indeed, Primestor maintains that its shopping centers are much less frequently targeted by graffiti and other vandalism than other properties in their neighborhoods. The firm’s principals attribute this fact to the tremendous effort they make to build goodwill before they build buildings.
The Los Jardines tenant list includes Starbucks, Red Brick Pizza, Panda Express, Quiznos, Cingular Wireless, Bank of the West, Cold Stone Creamery, and Hollywood Video—the names usually found in newer retail centers in affluent suburbs. This seeming anomaly is perhaps what is most noteworthy about Los Jardines and Primestor’s other projects. Primestor’s principals credit their success at recruiting tenants to their track record and their resulting personal relationships with tenants. Whereas five or ten years earlier it would have been virtually unheard of to attract such tenants to Bell Gardens, with each project Primestor has gained momentum in breaking down the barriers to urban retail development. And the success of Los Jardines has further enhanced the firm’s credibility among major retail chains. Ross Dress For Less and Marshalls, which Primestor recently signed for its new project across the street, both passed on Los Jardines when it was first marketed.
The other interesting aspect of the Los Jardines tenant mix is that it combines U.S.-based national chains with regional tenants and includes Famsa, a major retailer in Mexico (more than 200 stores) with an emerging presence in the United States (about ten in southern California and Texas). Overall, 70 percent of the center’s GLA is occupied by national chains, with the other 30 percent occupied by smaller regional chains based in the Los Angeles area. Famsa, the center’s 30,000-square-foot (2,790-square-meter) anchor tenant sells furniture, appliances, and electronics. Its U.S. stores have a hybrid merchandise mix, combining Famsa’s own products with major brand names. Famsa products are familiar and popular among recent immigrants from Mexico, whereas name brands tend to appeal more to American Latinos. One of the keys to Famsa’s initial success in this country is that its stores offer a convenient service that enables customers to purchase products at its U.S. locations and have them delivered to family and friends south of the border directly from its Mexican stores.
Primestor’s focus on creating community gathering places and its emphasis on public outreach are the foundations of its marketing efforts. Although the firm clearly recognizes the crucial role of outreach in gaining the community’s support before a project breaks ground, it also firmly believes that outreach needs to continue as a permanent part of a shopping center’s operations. Primestor’s ongoing marketing program includes free concerts and events throughout the year, some planned in partnership with a tenant, Latin Music Warehouse; holiday cards mailed to all residential and business addresses in the center’s zip code; holiday-themed events (during the 2004 holiday season, for example, Primestor imported fresh snow and placed it on a large section of the parking lot, attracting children—most of whom had never actually seen snow— from miles around); and support and sponsorship of events held by the local chamber of commerce.
True to its belief that successful urban development requires a long-term partnership between the developer and the community, Primestor serves as the ongoing management team for all the shopping centers it builds. As a way of conveying the message that the firm is committed to its projects for the long haul, Primestor prominently posts its phone numbers at its shopping centers and encourages patrons to call with any concerns.
Primestor is not a big believer in market feasibility studies, and for Los Jardines, the firm did not complete any type of formal market analysis. Tyberg describes their approach to evaluating development opportunities as more intuitive: “This is our community and we know what it needs. When we drive down the street and see that people have no place to shop or to dine, we know there are opportunities.” The firm’s performance record vindicates this approach: its ten shopping centers are all financially successful and have an average occupancy rate of 98 percent. Los Jardines is 100 percent leased.
Since the release of the 2000 Census data, developers and retailers have begun to wake up to the tremendous possibilities of the Hispanic market. In places like southern California, the market is too obvious to be ignored, but the trend is also significant nationally. Projections released by the Census Bureau in early 2004 indicate that the nation’s Hispanic and Asian populations will triple over the next 50 years and that minorities will represent fully one-half of the total U.S. population. Thus, projects like Los Jardines are not only useful models for urban redevelopment but also important guideposts for tapping the burgeoning spending power of American Latinos. Primestor, which so far has developed projects only in southern California, is poised to ride the wave of its success into the national marketplace. The firm is actively looking for infill development opportunities throughout the country.
Thanks to pacesetters like Primestor and milestone projects like Los Jardines, the tenant and equity communities are becoming more receptive to urban infill projects. Given the weight of anticipated demographic trends, it is probably not an exaggeration to characterize Latino communities as one of the next major frontiers for shopping center developers.
Nevertheless, the Primestor team is careful to distinguish between developing projects in Latino communities and pursuing Latino-oriented development. Certainly, knowledge of a community’s cultural background is helpful in understanding its residents’ shopping preferences. But in the final analysis, shoppers in these communities are looking for essentially the same thing as suburban shoppers: a high-quality shopping experience defined by the attractiveness of the physical setting and by the mix of tenants. Los Jardines, by virtue of its architecture and its very mainstream tenant roster, is proof that a high-quality shopping center in an urban area is not too different from a high-quality shopping center anywhere.
Successful development or redevelopment in an urban setting is all about leveraging relationships: with the city, with the community, and with tenants and equity partners. Close collaboration (if not a formal partnership) with the public sector is typically an essential ingredient. In this regard, the developer needs to view the city as a partner instead of an obstacle. In turn, city leaders need to appreciate the value the developer is creating and the risks it is assuming to do so. Although some developers shy away from public/private partnerships because of the prevailing wage mandates involved, Primestor sees them as another opportunity to build goodwill in the community.
For developers who understand the demands of urban infill projects, the financial and intangible rewards can be great. At the end of the day, Primestor’s principals like to think that their work is really more about community building than bricks and mortar. Tyberg sums it up: “When a child walks to school and has to pass blighted, drug-infested buildings, it affects how he thinks about his community and about himself. Self-respect is a big part of what we’re trying to achieve. To see the improvement in these neighborhoods is breathtaking and utterly heartwarming.”
Los Jardines shares its corner of a major intersection with another center owned and anchored by Toys “R” Us, which functions as a shadow anchor for Los Jardines. The two centers have a reciprocal easement agreement that allows Los Jardines customers to use the other center’s parking lot. In return, Toys “R” Us is prominently listed on Los Jardines’s two marquee signs, one of which is located on the other center’s property.
| Land Use and Building Information | |
| Site area | 6.65 acres (2.7 hectares) |
| Gross Building Area | 77,952 square feet (7,245 square meters) |
| Gross Leasable Area | 197,466 square feet (18,350 square meters) |
| Floor/area Ratio | 0.27 |
| Number of levels | 1 |
| Total surface parking spaces | 305 |
| Land Use Plan | ||
| Acres/Hectares | Percent of Site | |
| Buildings | 1.77/0.72 | 27 |
| Surface parking/roads | 4.76/1.93 | 72 |
| Landscaped areas | 0.12/0.05 | 1 |
| Total | 6.65/2.69 | 100 |
| Major Tenants | |
| Square Feet (Square Meters) | |
| Famsa | 30,000 (2,790) |
| Hollywood Video | 6,133 (570) |
| Average Length of Lease | 5-10 years |
| Typical Lease Provisions | Taxes, insurance, CAM, utilities reimbursed |
| Annual Rents | $22-36 per square foot ($237-387 per square meter) |
| Average Annual Sales | $200 per square foot ($2,152 per square meter) |
| Development Cost Information | |
| Site Acquisition Cost | $100,0001 |
| Site Improvement Cost2 | |
| Excavation/grading | $360,000 |
| Paving/curbs/sidewalks | 413,000 |
| Landscaping/irrigation | 300,000 |
| Fees/general conditions | 50,000 |
| Other | 441,000 |
| Total | $1,564,000 |
| Construction Costs | |
| Superstructure3 | $7,647,000 |
| Tenant improvements | 814,000 |
| Total | $8,461,000 |
| Soft Costs | |
| Architecture/engineering | $446,000 |
| Project management | 60,000 |
| Marketing | 50,000 |
| Legal/accounting | 110,000 |
| Taxes/insurance | 85,000 |
| Title fees | 18,000 |
| Construction interest and fees | 549,000 |
| Other | 787,000 |
| Total | $2,105,000 |
| Total Development Cost | $12,230,000 |
| Annual Operating Expenses (2005) | |
| Taxes | $234,050 |
| Insurance | 63,366 |
| Services | 38,500 |
| Maintenance | 94,943 |
| Janitorial | 20,760 |
| Utilities | 32,100 |
| Legal | 4,000 |
| Security | 55,528 |
| Management | 85,105 |
| Miscellaneous4 | 74,160 |
| Total | $702,512 |
| Financing Information | |
| Source | Amount |
| Construction Loan, KeyBank | $9,750,0005 |
| Equity | 2,480,000 |
| Total | $12,230,000 |
Primestor Development
228 South Beverly Drive
Beverly Hills, California 90212
Architect/Planner
Perkowitz + Ruth
111 West Ocean Boulevard/21st Floor
Long Beach, California 90802
Other Key Team Member
CAMCO Pacific—Contractor
| Development Schedule | |
| 4/2001 | Site purchased by redevelopment agency; Primestor selected to develop project; leasing started |
| 10/2001 | Ground lease negotiated |
| 10/2001 | Planning started |
| 10/2002 | Approvals obtained |
| 8/2003 | Construction started |
| 4/2004 | Project opened |
Notes
1 Ground lease is $65,000 per year; approximately $100,000 was capitalized during the construction period.
2 On and off site.
3 Includes all trades.
4 Includes ground rent of $65,000 per year.
5 Construction loan paid off at the end of construction and not rolled into a permanent loan (i.e., there is no mortgage on the project).
Namba Parks is an eight-story urban shopping center topped by an outdoor amphitheater and cascading rooftop green terraces that invite visitors to forget they are in the middle of the city. Most recently occupied by a vacated baseball stadium and off-track betting parlors, this 8.33-acre (3.37-hectare) parcel is in Minami, Osaka’s central business district. The site is part of a narrow strip of land owned by Nankai Electric, which has been progressively developing it over the course of half a century, starting from the densest end on the north. Surrounded by raised railroad tracks to the east and an urban boulevard and elevated viaduct to the west, Namba Parks provides 108 shops and restaurants arranged to form an indoor-outdoor retail and entertainment complex. A 30-story office tower, also incorporated into this site, is a visual anchor for the project.
Osaka is Japan’s second-largest metropolitan area (Tokyo and Yokohama can be considered one continuous metropolitan area). As Japan’s “Second City”—the comparison with U.S. cities and their reputations is apt, with Kyoto being Japan’s Boston and Tokyo being both New York and Los Angeles—Osaka, like Chicago, prides itself on its commercialism and industry, its aggressiveness and rowdiness. Osakans, in fact, traditionally greet each other with the phrase mokarimakka, or “Are you making money?”
Namba Parks extends the southern end of Minami. Minami’s main street is the 2.7-mile (4.4-kilometer) Midosuji (meaning “Great Hall Avenue” and named after a large Buddhist temple that once marked the street), a tree-lined boulevard that is compared with Fifth Avenue or the Champs-Elysées because of its grand proportions and the number of deluxe stores and high-fashion boutiques along its length. At its southern end, Midosuji extends to the Namba rail and subway station. Atop the subway station, starting at street level, is a seven-story branch of the famed Takashimaya department store. Nearby to the north is the 1,968-foot (600-meter) Shinsaibashi arcade mall, with 180 shops targeted to a youthful population. Across Midosuji from Shinsaibashi are more arcade and underground malls, all connected to Namba station and four other railway and subway terminals. Namba Parks sits immediately adjacent to the station to the south.
Namba Parks was jointly developed by Nankai Electric Railway and Takashimaya, a prominent department store chain based in Kyoto, with 24 stores in seven countries, including Japan, China, Singapore, and the United States. Nankai’s development subsidiary was formed in 1991 to maximize the value of the company’s extensive landholdings centered in Osaka. Founded in 1885, Nankai was named after the Nankaido, the ancient seacoast road extending from Nara to the southern end of Japan. The company owns and operates 105 miles (169 kilometers) of rail tracks in the Osaka region and is Japan’s 16th-largest railway company, ranked by its revenue from operations.
Like all Japanese railroad companies—and indeed like all large Japanese corporations with landholdings— Nankai has a long history in, and extensive experience with, real estate development. (In Japan, the sale of corporate real estate assets is stigmatized as a sign of upheaval and desperation for a company. Companies with real estate assets are, by default, also real estate developers.) Subways and railways—and their transit stations—historically have been privately owned. Japan Rail (JR), government owned until privatized and split into seven “baby” JRs in 1987, is an exception.
To comply with Japan’s sun-shadow law, the 30-story Namba Parks office tower was sited to cast its shadow most of the day on the adjacent thoroughfare. To the left (east) are the raised railroad tracks of Nankai’s Main Line to Wakayama, to the right (west), the grade-level Midosuji, a prominent boulevard in Osaka’s central business district, and the elevated Osaka-Kobe Expressway.
Namba station is Nankai’s flagship station. Its main line connects Osaka to Wakayama to the south, with an important spur branching off to Kansai International Airport, Osaka’s major international airport. Nankai’s monopoly on train travel between Osaka and its airport—21.7 miles (35 kilometers) away—brings thousands of travelers to Namba station, where they can transfer to Nankai’s or other subways. In 1957, Nankai and Takashimaya jointly developed a seven-story building atop Namba station to house the latter company’s 742,540-square-foot (69,010-square-meter) store and Namba City, a 300-shop indoor mall. Adjacent to the block, and connected to it, Nankai built the 36-floor, 548-room Nankai South Tower Hotel in 1997. In 2003, the Swissôtel chain was invited to assume its management under a 20-year lease.
Serving as the main entry for patrons, the mouth of Namba Parks’s “canyon” at the left (north) leads to the oval-shaped center at the right (south). Nautilus-shaped motifs pay homage to the discovery of seashells, deposited back when the Namba district was part of Osaka Bay. At the top (east) are Nankai’s elevated railroad tracks.
The next steps in Nankai’s development of its Namba station properties were the construction of a three-level parking structure to serve the hotel, shopping patrons at Namba City, and Nankai’s own office building, and the second phase of Namba City, which added 300 shops under Nankai’s elevated railroad tracks out of Namba station and are open to the street.
Even the recently privatized baby JRs—unaccustomed to having to maximize shareholder value—now follow this model at their new stations. At Shin-Osaka station, which JR built as a terminal for its high-speed Shinkansen lines (one of which is the world-famous “bullet” train), JR erected a Granvia hotel and an entire city within a city of shops and restaurants. So has every other railroad, from the largest, JR East, to Nankai, ranked 16th.
In 1997, with Japan and Osaka still in the midst of a decade-long recession, Nankai began work on a new vision it had for the remaining 24.7 acres (10 hectares) of the Namba parcel. Nankai received encouragement from the Organization for Promoting Urban Development, a quasi-public agency, which had the ability to sponsor a loan guarantee from the Ministry of Land, Infrastructure, and Transport for up to half the development budget for bond issues and private sector loans.
On this underdeveloped portion of Nankai real estate was the 21,000-seat Osaka Stadium, home of the major league Nankai Hawks until 1989. (In 1988, Nankai sold the Hawks to Daiei, a supermarket chain, which moved the team to Fukuoka.) It had been vacant since the team’s sale, its infield used as a parking lot. Under the ballpark’s outfield concourse were the off-track betting parlors of the Japan Racing Association, which had an inviolable long-term lease that required Nankai to construct a new 236,806-square-foot (22,010-square-meter) facility before the stadium could be demolished to make room for new construction. Nankai built it on two levels underground and developed Namba Parks around and over it.
Nankai and Takashimaya have been development partners since 1957, when Nankai contributed the desirable location above Namba station and Takashimaya contributed equity to establish a retail center at Osaka’s busiest commercial intersection. This form of long-term joint venturing is common in Japan, where the famed keiretsu (“brotherhood”) model of business partnerships has been both a blessing (capital formation is simplified) and a curse (it lacks a mechanism for introducing innovations) for the national economy. Indeed, business partnerships of equals are an absolute necessity in initiating large-scale projects.
At the pedestrian level, near Namba Parks’s oval-shaped center, a glass elevator shaft rises to an inverted hemispherical roof that serves as a projection screen for nighttime light shows and advertisements.
Although Nankai and Takashimaya are not engaged as a keiretsu (keiretsus, by definition, involve a merchant-banking relationship), the principles that promote keiretsus apply to the Nankai-Takashimaya partnership. The two have complementary strategies for managing the cyclical nature of their core businesses by strengthening the ancillary businesses that support the central operation. For Nankai, one such ancillary business is the maximization of value of its real estate assets. For Takashimaya, creating and supporting a critical mass of shoppers is vital to its industry-leading position as a chain of anchor department stores. The two have access to capital through their separate banking relationships, and with this source of debt financing, guaranteed by their parent companies and by the national Ministry of Land, Infrastructure, and Transport, the capital to undertake a development like Namba Parks is routinely granted.
Nankai has had a longstanding relationship with the giant Japanese general contracting firm Obayashi, which in turn had previously worked with the Jerde Partnership, a U.S.-based architecture firm. Having made its mark with Horton Plaza in San Diego, Jerde had expanded its practice in the design of retail environments in Japan and China. With each of its Japanese projects, the firm had experimented with different design concepts: at Canal City in Fukuoka, which opened in 1996, the conceptual premise was a canal extension of the underused Naka River; at La Cittadella in Kawasaki, it was a Tuscan hill-climbing circulation system for a site that had an existing Italian-themed nightclub; and at Roppongi Hills in Tokyo, it was an organic circulation system for the development’s 28.7-acre (11.6-hectare) site.
The oval center of the project opens to the sky. The curved facade of Namba Parks’s office tower and the landmark elevator tower’s finial face complement each other. The canyon is bridged by pedestrian walkways enclosed in glass, connecting the two eight-level retail wings.
Glass bridges reveal Namba Parks’s eight retail levels, giving patrons glimpses of shopping activity throughout the complex.
At Namba Parks, the conceptual premise is that of a canyon coursing through an urban park. A terraced complex of retail spaces envelopes an open space in the center, starting out as an oval vertical space, open to the sky and flowing out to the entrance. Near the entrance, up a ramp from street level, replicas of a home plate and pitcher’s rubber are set in the paving to mark the exact location of the demolished Osaka Stadium. During excavations, deposits of prehistoric seashells were discovered in the soil beneath Namba Parks, the location of which was once Osaka Bay, now 2.5 miles (4 kilometers) to the west. The use of replica seashells as a motif throughout Namba Parks lends further meaning to the theme of a canyon cutting across the layers of time.
The open space is irregular, curvilinear, and nonplanar in all dimensions. An elevator tower rises in the oval center, and glass-enclosed pedestrian bridges traverse the canyon at various points at different levels, connecting the interior spaces. Jerde’s other projects in Japan were precedents, but Namba Parks accomplishes in a much smaller space the same intermeshing of people and spaces—of pedestrian and shopping traffic as entertainment. Indeed, its density intensifies the experience.
Rooftop terraces offer views of Namba Parks’s office tower (to the west) and the 36-story Swissôtel atop Namba station (to the north), all framed by trees and shrubs.
At the uppermost roof level surrounding the central opening—the mouth of the “canyon”—are hardscaped common areas where people can congregate outdoors. Its apex is a terraced amphitheater, circular in plan and facing a flat stage area. Nearby is the crown of the elevator tower, terminating in an inverted hemispherical finial. The underside of the hemisphere reflects a laser light show that can be programmed for different nighttime occasions and serves as a light beacon when entertainment is being produced.
Cascading down from the eighth-level rooftop is another Jerde innovation: a series of green terraces atop the roofs of the retail spaces below. Extending the canyon theme to the roof, Jerde brought the canyon-top landscape to its very precipice. Forming 2.8 acres (1.1 hectares) of rooftop park space, one of Japan’s largest, this “Big Park” is a counterpart to the “Big City” contained below in Namba Parks’s retail spaces.
The roof park features trees, miniature ponds, shrubbery, and planting beds—all irrigated by recycled water filtered from the graywater of the restaurants in the complex. During the summer, when asphalt can reach a surface temperature of 124 degrees Fahrenheit (51 degrees Celsius) and concrete is 113 degrees Fahrenheit (45 degrees Celsius), the rooftop park is only 93 degrees Fahrenheit (34 degrees Celsius).
The retail complex is of steel-frame construction, clad on all nonglazed surfaces with preformed exposed-aggregate concrete panels in banded colors reminiscent of a desert canyon. The storefronts that open to the roof terraces and those in the canyon itself feature extensive glazing.
At street level facing the already developed Namba City, Namba Parks completes the street arcade that the earlier Namba City complex began, with retail shops tucked under the overhead railroad tracks. The open-air, pedestrian-scale arcade is 46 feet (14 meters) wide and allows for vehicular traffic for maintenance and deliveries during off hours.
This northward sectional view shows the relative narrowness of the canyon as it cuts through the eight levels of retail uses above grade. At the extreme left is the elevated viaduct of the Osaka-Kobe Expressway and, at grade, Midosuji. Facing the street, the 30-story office tower provides a buffer for Namba Parks.
Standing at the street-side periphery of the complex, the 30-story office tower casts its extensive shadow most of the day on the adjacent north-south thoroughfare, thus complying with Japan’s singular sun-shadow law, which guarantees a measure of sunlight to affected buildings. Its architect, Nikken Sekkei, designed one of the biggest floor plates in Osaka—about 16,146 square feet (1,500 square meters) per floor and steel framed— using the latest in earthquake-resistant design technology. The rectilinear street facade is banded with glazing, and the curvilinear facade facing Namba Parks is clad in concrete panels with patterned fenestration.
Three levels of subterranean parking accommodate 363 cars. Like most development projects in Japan, the construction drawings and contract administration were completed by the general contractor—in this case, Obayashi.
Phase II opened in spring 2007. It is about half the size of Phase I of Namba Parks and is seamlessly contiguous with, and essentially lengthens, the canyon concept. Although the canyon in the first phase flows north, the canyon in the second phase emanates from the same source but flows south. It adds 328,200 square feet (30,500 square meters) of retail space and 0.86 acre (0.35 hectare) of rooftop green space. The major anchor is an 11-screen, 12,164-seat cinema. A residential tower developed with Oryx Real Estate stands at the southwest corner of the completed Namba Parks complex.
The retail spaces in Namba Parks are occupied primarily by popular mid- and upscale Japanese and international chains. Typical stores take up less than 3,767 square feet (350 square meters). The largest anchor, aside from the JRA off-track betting facility, is a 53,821-square-foot (5,000-square-meter) Sports Authority on three floors. Unlike in U.S. malls, Namba Parks has no food courts; for the most part, restaurants are situated to take advantage of rooftop terraces.
The entrances to the office tower and the Japan Racing Association’s off-track betting facility are at street level. The curved Carnival Street is a 46-foot-wide (14-meter-wide) pedestrian arcade serving Nankai’s Namba City shops, built under the Nankai rail tracks and the first level of Namba Parks.
The JRA’s betting facility holds a long-term lease and is managed separately from Namba Parks.
The Class A office space is 91 percent occupied, comparable with the Osaka market, which is recording 93 percent occupancy for Class A space and 90 percent occupancy throughout the city’s CBD. The tower’s rental rates represent a premium for its 28 levels of uninterrupted large floor plates (46 by 213 feet [14 by 65 meters]).
Nankai provides open-air entertainment in the rooftop amphitheater and light shows on the underside of the highly visible hemispherical elevator roof.
Nankai was able to apply lessons learned during the development of Namba Parks as it designed and built the second phase. The only area in which Nankai sought improvement was the provision of more entertainment venues at Namba Parks. The development has syner-gistically attracted more patrons to the retail-oriented Namba City and Takashimaya department store. With the additional attractions of Phase I, customers and hotel guests of the Swissôtel are inclined to spend more time at the Namba complex of developments but tend to leave the premises for entertainment venues such as cinemas and amusement parlors. This lack will be alleviated somewhat by Phase II.
| Land Use and Building Information | ||
| Site Area | 8.33 acres (3.37 hectares) | |
| Building Area | Gross Area (Square Feet/Square Meters) | Leasable Area (Square Feet/Square Meters) |
| Retail | 430,571 (40,000) | 263,724 (24,500) |
| Office | 645,856 (60,000) | 355,221 (33,000) |
| Parking | 182,992 (17,000) | N/A |
| Japan Racing Association | 236,814 (22,000) | 236,814 (22,000) |
| Floor/area ratio | 3.01 | |
| Land Use Plan | ||
| Acres/Hectares | Percent of Site | |
| Buildings | 6.9/2.8 | 76 |
| Open space | 2.2/0.9 | 24 |
| Total | 9.1/3.7 | 100 |
| Retail Tenant Information2 | ||
| Total GLA2 (Square Feet/Square Meters) | Percent of GLA | |
| General merchandise | 43,272 (4,020) | 16.4 |
| Food service | 56,297 (5,230) | 21.3 |
| Clothing and accessories | 53,391 (5,000) | 20.2 |
| Home furnishings | 3,875 (360) | 1.5 |
| Sports Authority | 53,821 (5,000) | 20.4 |
| Hobby/special interest | 23,251 (2,160) | 8.8 |
| Jewelry | 3,875 (360) | 1.5 |
| Other | 25,942 (2,410) | 9.8 |
| Total | 263,724 (24,540) | 100.0 |
| Average Length of Restaurant Lease 6 years | |
| Average Length of Retail Lease | 10 years |
| Average Annual Sales3 | $56 per square foot (¥65,300 per square meter) |
| Total Annual Sales | $148,000,000 (¥16,000,000,000) per year4 |
| Office Tenant Information | |
| Percent of NRA occupied | 91 |
| Under 5,380 square feet (500 square meters) | 8 |
| 5,380-10,764 square feet (500-1,000 square meters) | 3 |
| More than 10,764 square feet (1,000 square meters) | 12 |
| Tenants | 23 |
| Average Tenant Space | 14,166 square feet (1,316 square meters) |
| Annual Rents | $68.25 per square foot (¥79,860 per square meter5 |
| Average Length of Lease | 7.4 years |
| Typical Lease Term | 10 years |
| Development Cost Information | |
| Total Development Cost | $552,840,000 (¥60,000,000,000) |
Developer
Nankai Electric Railway Co. Ltd.
1-60, Namba 5-chome, Chuo-ku
Osaka, Japan
Takashimaya
1-5, Namba 5-chome, Chuo-ku
Osaka, Japan
Architect of Record/General Contractor
Obayashi Co. Ltd.
4-33, Kitahama-Higashi, Chuo-ku
Osaka, Japan
Architect (Retail)
The Jerde Partnership
913 Oceanfront Walk
Venice, California 90291
Nikken Sekkei
4-6-2 Koraibashi, Chuo-ko
Osaka, Japan
| Development Schedule | |
| 11/1997 | Planning started |
| 11/1999 | Construction started |
| 8/2003 | Phase I completed |
| 10/2003 | Sales/leasing started |
| 4/2007 | Project completed |
Notes
1 Excludes underground parking and betting facility.
2 Numbers may not add because of rounding.
3 Currency conversions based on ¥1 = $0.00912188.
4 Does not include 237,000 square feet (22,000 square meters) leased to Japan Racing Association (off-track betting facilities), which held a preexisting longterm lease.
5 Includes common service fee.
Starting in 1940 with completion of the Arroyo Seco Parkway, the first freeway on the West Coast, Pasadena transformed itself from a pedestrian-friendly town into an automobile-dependent community. Paseo Colorado is part of a coordinated citywide effort to return Pasadena to its walkable roots. Developed by TrizecHahn Development Corporation, with Post Properties as the residential developer, the three-square-block “urban village” replaces an earlier enclosed mall built as part of a 1970s redevelopment effort. Both the old mall—Plaza Pasadena—and the new center—Paseo Colorado—were developed as public/private partnerships, with partial financing and other support from the city of Pasadena.
Paseo Colorado, built on top of the previous mall’s two-level underground parking structure, mixes retail space, restaurants, entertainment uses, and housing. The project includes 56 retail shops, a full-line Macy’s department store, seven destination restaurants, six quick-service cafés, a health club, a day spa, a supermarket, a 14-screen cinema, and 387 rental housing units.
Paseo Colorado is located in Pasadena’s Civic Center district, between Old Pasadena to the west and the Playhouse District and the post-World War II Lake Avenue retail area to the east. The central focus of Pasadena’s Civic Center is Garfield Avenue. The avenue runs through Paseo Colorado, but access is limited to pedestrians. On the other side of Green Street, Paseo Colorado’s southern border, is the Pasadena Civic Auditorium. On the north side of Colorado Boulevard, Paseo Colorado’s northern border, are City Hall and the main library. These three buildings (each an example of California Mediterranean architectural style) form a view corridor designed in 1925 at the height of the City Beautiful movement.
Within a half mile (0.8 kilometer) of Paseo Colorado are two light-rail stations along the Los Angeles Metropolitan Transportation Authority’s Gold Line. The Memorial Park station is to the northwest of Paseo Colorado, the Del Mar Station to the southwest.
The project faces Colorado Boulevard, a major commercial thoroughfare linking Old Pasadena, the Civic Center, the Playhouse District, and the Lake Avenue retail area. The design and siting of Paseo Colorado follow the city’s plans to make Colorado Boulevard an inviting pedestrian link that encourages more people to walk to Pasadena’s attractions.
As retail stores shifted eastward during the 1950s and 1960s from Old Pasadena to Lake Street, much of the Colorado Boulevard retail property between those districts began to decline. In an attempt to revitalize Colorado Boulevard in the 1970s, the city pursued what was then a progressive idea: building an enclosed regional mall downtown. Through its redevelopment agency, the city acquired 14.9 acres (6 hectares) of land along Colorado Boulevard and adjacent streets for the project that came to be known as Plaza Pasadena. As part of this effort, the city demolished 35 structures (some considered historic), relocated 122 businesses and individuals, constructed public improvements including parking, and sold the air rights at a highly subsidized rate. To finance the redevelopment agency’s expenditures, $58 million in tax increment bonds was sold.
The Paseo links Garfield Promenade on the west with Macy’s on the east. A curving interior walkway, it ranges from 18 to 43 feet (5.5 to 13 meters) wide and is lined with smaller shops.
Buildings facing the street sit right at the property line on Colorado Boulevard, a major commercial thoroughfare. The blank facade of Macy’s, the only original building left in place, was set back sufficiently to allow the facade line to continue.
The 600,000-square-foot (55,800-square-meter) Plaza Pasadena, which opened in 1980, was in all respects, except its location, a suburban mall. With three department store anchors (Broadway, May Company, and JCPenney), the mall was almost completely inward looking, leaving a two-block-long retail dead zone along Colorado Boulevard. Though built with the best intentions, the mall was perhaps the worst possible intervention from an urban point of view. In addition to severing the pedestrian and retail continuity of Colorado Boulevard, the mall closed off Garfield Avenue, a key north-south street. Previously, the vista down Garfield Avenue terminated at the historic central library at one end of the street and the Pasadena Civic Auditorium at the other. In the Plaza Pasadena plan, the grand axis was replaced with a glass entry wall, signifying the axial view that was lost. And in place of the beaux arts and Mediterranean-style structures that preceded it, the new mall presented a mostly blank brick facade to the street.
The introduction of Plaza Pasadena to the downtown streetscape coincided with—and in some manner was responsible for—the growing historic preservation movement in Pasadena. Through the 1980s and 1990s, Old Pasadena came back to life through the efforts of building owners and developers and the substantial public investment in parking and other improvements. While Old Pasadena prospered, however, Plaza Pasadena began to decline. And as Old Pasadena’s tax revenues steadily increased, Plaza Pasadena’s tax contributions withered as the center struggled to remain competitive. Overall, according to calculations prepared by the city’s former development administrator, Marsha Rood, although the city’s $28.8 million investment in Old Pasadena has netted approximately $400 million to $500 million in private investment ($14 of private investment for every $1 of city funds), the city’s $58 million investment in Plaza Pasadena netted only $40 million in private investment, or $2 of private investment for every $3 in public investment. In addition, the deadened streetscape along Colorado Boulevard was clearly an impediment to the regeneration of the Civic Center area and the Playhouse District just to the east.
Grand staircases on either side of the street-level passageway to the Paseo lead from Colorado Boulevard to the second-level cinema. An office building across the street from Paseo Colorado is reflected in the cinema’s windows.
To address these and other issues, the city formed the Civic Center Task Force in 1997. The task force formulated several objectives for the Plaza Pasadena site: 1) restore the city street grid, in particular the Garfield Avenue view corridor; 2) reintroduce retail activity to Colorado Boulevard; 3) provide for pedestrian circulation and gathering spaces; and 4) offer a mix of uses, including housing as well as retail. The TrizecHahn Development Corporation, which, through its forebear, the Hahn Company, had an ownership interest in Plaza Pasadena, participated in the task force’s deliberations.
TrizecHahn was both philosophically attuned to the task force’s objectives and economically inclined toward the city’s recommendations. “We were sitting on gold,” notes Jennifer Mares, general manager of Paseo Colorado, referring to the site’s 3,000-plus parking spaces and the key location of Plaza Pasadena, “but renovation for retail alone just didn’t pencil out.” TrizecHahn therefore sought an experienced urban housing developer, ultimately selecting Post Properties of Atlanta.
Euclid Court, at the west end of the Paseo, offers an intimate outdoor space and surrounds the interior entrance to Macy’s with Paseo-level retail shops and upper-level apartments. A canopy covers the escalator leading to below-grade parking.
As the project was structured, the city of Pasadena contributed $26 million in financing to the project in the form of certificates of participation backed by the lease on the center’s parking structures. TrizecHahn maintains an ownership interest in the air rights above the parking, and Post Properties owns the air rights above the two-level retail podium.
The two levels of retail space were constructed on top of the concrete parking garage, maintaining to the greatest extent possible the same structural grid as the garage. Above the retail construction, the residential portion sits on its own concrete base, which is raised four feet (1.2 meters) above the retail roof. This separation allowed for the routing of utilities horizontally in the four-foot (1.2-meter) plenum space.
The concept for Paseo Colorado, which entailed the demolition of everything above the subterranean parking structure except the Macy’s department store, is described as an urban village. Based on a design by Ehrenkrantz Eckstut & Kuhn Architects, the project is divided into several neighborhoods that respond to its urban context and mixed-use program. Inspired by Old Pasadena, Paseo Colorado has both street-fronting retail space on Colorado Boulevard and interior block walkways lined with more intimately scaled shops.
Although the old Plaza Pasadena was set back from the street in a more suburban style of planning, Paseo Colorado is built right up to the street-facing property line. In a bit of good fortune, the blank brick facade of the Macy’s store was set back sufficiently to allow new shops to be built in front, thus continuing the facade line of Paseo Colorado and providing an additional increment of street activity.
Perpendicular to Colorado Boulevard, Garfield Avenue has been opened up once again, this time as Garfield Promenade, a 77-foot-wide (23.5-meter-wide) pedestrian walkway. Flanked by formal plantings and period light fixtures, the promenade restores the intent of the 1925 City Beautiful plan and reveals the previously hidden vista to the Civic Auditorium. Freestanding kiosks and retail storefronts activate the linear space, which is anchored by a mosaic-tiled fountain by artist Margaret Nielsen.
The lower-level plaza sits at the juncture of the Paseo and Garfield Promenade. More than two-thirds of the project’s 387 housing units overlook the second-level Fountain Court and its destination restaurants and outdoor dining terraces. Access between the residential and retail areas is strictly controlled.
From Garfield Promenade, a grand stairway leads up to the Fountain Court, a second-level plaza with destination restaurants and outdoor dining terraces. Most of Paseo Colorado’s housing is located in a mid-rise block overlooking Fountain Court.
The interior mid-block walkway is called the Paseo. Running parallel to Colorado Boulevard, the Paseo is a slightly curving walkway connecting Garfield Promenade and Fountain Court on the west to Euclid Court and Macy’s on the east. The Paseo varies in width from 43 feet (13.1 meters) at Garfield Promenade to just 18 feet (5.5 meters). The narrow Paseo results in a more intimate space, and the curving plan invites exploration, as one end cannot be seen fully from the other.
A cinema multiplex anchors the second level of Paseo Colorado. The theater has its own forecourt and plaza fronting on Colorado Boulevard; two grand stair ways lead up to the box office and theaters. The theaters are connected through second-level walkways to Paseo Colorado’s food court and restaurants.
Three parking structures totaling more than 3,000 parking spaces serve Paseo Colorado. The largest is the two-level below-grade structure; the other two, which were also part of the Plaza Pasadena project, are located across the side streets from Paseo Colorado and provide direct access to the second level of Paseo Colorado via pedestrian bridges over the street. The three garages were substantially upgraded with the funds from the city. The garage beneath Paseo Colorado required localized strengthening to support the weight of the new project and seismic strengthening as well. New lighting, signage, and elevator/escalator access were also provided. The garages are all owned and operated by the city of Pasadena.
The 387 Paseo apartments are grouped into two structures. The larger building, which includes 276 luxury apartments, overlooks Fountain Court. The second structure, which overlooks Euclid Court, contains 111 loft-style units. Apartment types include studio, one-bedroom, and two-bedroom units, but because of the articulated massing of the residential towers, RTKL, the architects responsible for the residential design, had to develop more than 90 individual floor plans.
The residential units are well appointed, with ten-foot (3-meter) ceilings, open floor plans, and balconies. Black-on-black appliances and counters, polished concrete floors, industrial-type lighting, and brick accent walls lend contemporary style to the units. The project includes eight rooftop courtyards with amenities ranging from a swimming pool to barbecues to an outdoor fireplace. Units on the higher floors offer views of the San Gabriel Mountains, Pasadena’s beaux arts city hall, the Civic Center, and the plazas of Paseo Colorado. One of the courtyards overlooks the Rose Parade route, and others overlook the Civic Auditorium. Residents can enjoy the restaurants, shops, and cinema, which are all within short walking distances. An upscale supermarket, located at the street level beneath the housing, includes a coffee bar, a sushi bar, and outdoor dining tables.
The developers of Paseo Colorado and their designers sought to re-create not only the more intimate scale of the old city but also the textures and materials of Old Pasadena. Prospective tenants receive two very detailed publications that convey this concern for appropriate materials. The first, Athens of the West, Pasadena Style, is a coffee table-style book with full-color images on glossy paper that details the Pasadena heritage, the design objectives for each Paseo Colorado neighborhood, and development standards for storefronts, signage, and similar elements. The second publication, a paperback titled Craftsman’s Journal, provides additional technical criteria and contacts for artisans and artists. The introduction to Craftsman’s Journal describes TrizecHahn’s philosophy and objectives: “The creative contributions of individual tenants are critical to Paseo Colorado’s success in creating an environment where the visitor feels a tangible sense of place. Each merchant will be required to creatively alter or adopt [his or her] predetermined design concepts to meet the specific existing conditions.”
Stylistically, Paseo Colorado reflects Mediterranean design motifs and materials, though in a more modern idiom. Facades are finished in smooth plaster and colored in various earth tones and pastels. Decorative lighting includes modern and art deco light standards as well as Craftsman-style lanterns strung across the Paseo, providing a canopy of light. Custom-designed and -fabricated art elements are evident throughout the project, ranging from delicate floral patterns in the stair and guard railings to a tiled fountain with mosaic “postcards” of Pasadena.
The relationship between the residential and commercial areas of Paseo Colorado has been carefully considered and controlled. Three residential lobbies have been created at the street level (two for the luxury apartments and one for the loft-style building), separated from the access to the commercial areas. Parking is similarly segregated: residents park in a physically separated section of the lower level of the two-story subterranean garage and have card keys to access the express lanes of the garage entries. The garage has 494 assigned parking spaces for the 387 dwelling units, or 1.3 spaces per unit. For security, garage elevators serving the residential portion of the project do not stop on the retail levels, and retail access elevators do not allow access to the apartments. To facilitate access from the apartments to the restaurants and other areas of Paseo Colorado, however, stairs with electronically controlled gates are provided from the lower level of the housing to Fountain Court and Euclid Court.
Loading is also controlled. Six loading docks, located on a side street, serve Paseo Colorado. Four of the docks are dedicated to the retail/restaurant portions of the project, and the remaining two serve the housing and the supermarket. These two bays are further controlled by hours of use; the supermarket accepts deliveries in the early morning hours, and the apartments have access to the docks between 10:00 a.m. and 5:00 p.m.
Noise levels are controlled in several ways. Operating hours for restaurants with outdoor dining terraces end at midnight on weekdays and 2 a.m. on weekends, and loud music is prohibited. Noise limitations are similarly written into the residential leases, and the pool deck, which sometimes can be noisy, has been located away from Fountain Court to preclude disturbances.
Retail leasing for Paseo Colorado was complicated by the fact that the city of Pasadena had political and financial interests in the adjacent retail areas of Old Pasadena, the Playhouse District, and Lake Street. The city’s mandate to TrizecHahn, in effect, was to provide an active and successful mix of retailers but not to steal from other Pasadena venues. In addition, the competition facing Paseo Colorado included two successful regional malls in nearby communities. And although Old Pasadena was a proven success for retailers, the Paseo Colorado location had not been successful, and the concept of an urban village was somewhat new to the retail community.
The developers of Paseo Colorado could look to four complementary market strengths, however, to offset these constraints: a large primary trade area (941,000 persons within a radius of 7.5 miles [12 kilometers]); a daytime office market within walking distance; a visitor/tourist market (including the adjacent Pasadena Conference Center); and the planned on-site residential market and a growing nearby residential base. Playing to these multiple markets, Paseo Colorado has pieced together a roster of tenants that fulfills the objectives of creating an active, mixed-use destination while not duplicating (or stealing) tenants from nearby retail areas. Macy’s, the one tenant to remain from the original mall, invested approximately $1 million to remodel its store, converting the space from a discount outlet to a full-line store.
Residents were attracted to the urban lifestyle that Paseo Colorado affords, especially the convenient shopping and entertainment opportunities. Moving in from Pasadena and surrounding communities, the residents are mainly singles and couples ranging from young professionals to empty nesters. Tenants of the loft-style apartments are younger than the tenants of the conventional units.
One attraction of Paseo Colorado for both retailers and patrons, notes Mares, is the “village experience.” The developer is working to create a “marriage between retailers and residents not unlike the friendly, first-name-basis lifestyle of a traditional village.” To that end, “community teas” were held during planning of the project to acquaint people with the developer’s concept. The results of the teas were shared with prospective tenants to make sure they understood and would advance the project’s broader objectives. Similarly, the security guards who patrol Paseo Colorado are called “public safety ambassadors” and are trained to approach and assist visitors while making eye contact.
Since the project opened in early 2002, retail sales have exceeded expectations, notes Mares. Several tenants are posting sales that place them near the top of their outlets nationally. Brand-name lines are doing especially well, while the public is just discovering some of the newer tenants. The mixture of market segments and uses at Paseo Colorado appears to explain some of the success: the professional crowd supports the center Monday through Friday, says Mares, and the stroller crowd and cinema-goers round out the weekend. Sales are unexpectedly strong on Sundays, partly because of Gelson’s Supermarket.
Paseo Colorado’s success is partly the result of how its design has addressed the context, uses, and architectural styles of its surroundings. By adding to and enhancing the existing pedestrian fabric of downtown Pasadena, the developers have benefited from the synergy created by walkable mixed-use environments.
As one of the first projects to mark the sea change in public and private thinking about urban retail centers, Paseo Colorado has replaced the inward-looking mall previously built on the site with a project that reintroduces retail uses to street frontages, restores the urban block pattern and the axial view intended for the site, and provides for mixed uses and interior mid-block retail space. The success of the project is spurring proposals for development of long-neglected vacant parcels adjacent to the site.
Although substantial competition exists from nearby retail areas, Paseo Colorado appears to be forging a successful niche for itself based on its mixed and complementary uses. It taps demand from several markets, activating the project seven days a week over a wide range of operating hours.
Destination restaurants appear to be a successful anchor at Paseo Colorado. “People go to the food,” notes Mares, but the lively, festive atmosphere encourages them to stay—and to come back later.
Second-floor commercial uses can be successful, but access is critical. At Paseo Colorado, access is achieved by several grand stairways and visible second-level plazas as well as by multiple elevators and escalators throughout the project.
| Land Use and Building Information | |
| Site area | 10.9 acres (4.4 hectares) |
| Gross building area | Square Feet (Square Meters) |
| Retail/restaurants Residential | 644,942 (59,940) 397,202 (36,915) |
| Floor/area ratio | 0.86 |
| Parking spaces | 3,046 |
| Retail Tenant Information | ||
| Total GLA (Square Feet/Square Meters) | Percentage of GLA | |
| Retail | 208,387/19,367 | 37.4 |
| Restaurants | 68,470/6,363 | 12.3 |
| Health club | 24,393/2,267 | 4.4 |
| Market | 37,009/3,439 | 6.6 |
| Cinema | 66,517/6,182 | 11.9 |
| Department store | 152,547/14,177 | 27.4 |
| Total | 557,323/51,796 | 100.0 |
| Development Cost Information | |
| Site Acquisition Cost | $25,200,000 |
| Site Improvement Costs1 | |
| Demolition | $3,600,000 |
| Site work | 1,150,000 |
| Landscaping | 1,200,000 |
| Parking garages | 7,100,000 |
| Off-site improvements | 2,000,000 |
| Total | $15,050,000 |
| Retail Construction | $49,770,000 |
| Soft Costs | |
| Architecture/engineering | $7,300,000 |
| Project management | 4,500,000 |
| Marketing and leasing | 26,550,000 |
| Legal | 1,800,000 |
| Taxes and insurance | 980,000 |
| Construction interest | 8,200,000 |
| Furniture, fixtures, and equipment | 5,250,000 |
| Other costs | 2,100,000 |
| Total | $71,730,000 |
| Residential Construction | $75,000,000 |
| Total Development Cost | $236,750,000 |
Master Developer
TrizecHahn Development Corporation
Ernst & Young Plaza
725 South Figueroa Street/Suite 1850
Los Angeles, California 90017
Residential Developer
Post Properties, Inc.
4401 Northside Parkway/Suite 800
Atlanta, Georgia 30327-3057
Architect
Ehrenkrantz Eckstut & Kuhn
2379 Glendale Boulevard
Los Angeles, California 90039
Residential Architect
RTKL Associates, Inc.
333 South Hope Street
Los Angeles, California 90071
| Development Schedule | |
| 6/1998 | Planning started |
| 3/1999 | Sales and leasing started |
| 11/1999 | Site purchased |
| 6/2000 | Construction started |
| 9/2001 | Retail project completed |
| Spring 2002 | Residential project completed |
Notes
1 On and off site.
Shanghai Xintiandi—pronounced “shintien-dee” and translated “new world”—is a two-square-block complex of shops, restaurants, cultural attractions, and offices in central Shanghai. Functioning as an outdoor pedestrian mall, it is divided into two blocks. The North Block, comprising primarily restored and reconstructed historic courtyard homes known as shikumen houses, has the feel of an old Shanghai street with shopfronts and outdoor eating and sitting areas. Its walkways connect to the adjacent South Block, which is a new retail, entertainment, and hotel complex designed in a contemporary style with architectural elements and materials that complement the historic character of the North Block. Anchored by a cinema and fitness center, the South Block features a variety of shops and restaurants at its exterior perimeter as well as at its interior courtyard area. Underground parking for the development is located beneath the South Block.
The site area of the two blocks is about 7.4 acres (just under 3 hectares), the gross commercial floor area 610,100 square feet (56,700 square meters). It is part of the first phases of development of the 128-acre (52-hectare) Taipingqiao redevelopment area in downtown Shanghai being led by Hong Kong-based Shui On Land Limited, property flagship of the Shui On Group.
Shanghai Xintiandi is located in central Shanghai in a formerly low-rise residential district that is undergoing a transition to higher-density, modern development. The two-square-block site occupies the northwest corner of the Taipingqiao redevelopment area. East of Xintiandi is Taipingqiao Park, a landscaped open space that serves as the centerpiece of the redevelopment area. North of the park (and east of Xintiandi) lies Corporate Avenue, a commercial office area, and south of the park is the Lakeville luxury residential area, all components of the project. Areas to the south include older low-rise houses and shops, and areas to the west are made up of high-density apartments.
Xintiandi lies one block south of Huai Hai Zhong Road, a busy, upscale shopping street that also is the site of the nearest underground subway station. Numerous bus lines run along nearby streets.
The Shui On Group was founded in 1971 in Hong Kong by Vincent H.S. Lo. Shui On is in the real estate, construction, and cement-manufacturing businesses. In 1985, the company entered the mainland China market and has spent years building connections and investing there. To consolidate its prime developments on the mainland, the group established its property flagship—Shui On Land Limited—in 2004. The company focuses on two key business segments in mainland China: large-scale city core development projects and high-quality residential projects. The developer’s intention is to fully integrate both types of projects into urban planning schemes.
Over the past two decades, the transformation of Shanghai has been rapid. New urban infrastructure has been put into place, including an underground public transit system, elevated expressways, ring roads, and even a magnetic levitation (Maglev) rail system running between the city and the new Shanghai Pudong International Airport. High-rise offices, hotels, and residential towers have been inserted into the fabric of the old city. Across the Huangpu River to the east is the Pudong Special Economic Zone, home to dozens of new skyscrapers. One result of this massive building boom is the loss of many of the city’s low-rise neighborhoods and historic buildings.
Shanghai Xintiandi functions as an outdoor pedestrian mall, divided into two blocks. The North Block, in the foreground, features rehabilitated historic courtyard houses serving as shops and restaurants, and the South Block contains a retail, entertainment, and hotel complex designed in a contemporary style. These two blocks are the northwest corner of the Taipingqiao redevelopment area, undertaken by Shui On Land. To the east of Xintiandi is Taipingqiao Park, which serves as the centerpiece of the redevelopment area.
During the late 1990s, the Luwan district government in Shanghai asked various developers to submit development concepts for a large area in the center of the city. The Shui On Group subsequently received the rights to develop this 128-acre (52-hectare) area. Known as Taipingqiao, this redevelopment area is planned to include a mix of commercial and residential buildings focused around a 10.9-acre (4.4-hectare) landscaped park and manmade lake. Major components of the district include the already completed Xintiandi North and South blocks, Corporate Avenue, Class A office buildings, an entertainment and commercial complex, and Lakeville, a 44.5-acre (18-hectare) luxury residential area. Ten office buildings are planned for Corporate Avenue; two office structures with a gross floor area of 840,000 square feet (78,000 square meters) have been completed and are fully occupied. The first phase of Lakeville features three low-rise apartment buildings, two towers, and villas. In 2005, sale prices of $5,000 per square foot ($53,800 per square meter) were achieved there, the highest residential prices paid to date in Shanghai.
The San Francisco office of U.S. architecture firm Skidmore, Owings & Merrill created a master plan to guide development of the Taipingqiao redevelopment project. Previously, the Xintiandi area housed some 2,300 families totaling more than 8,000 people. The Luwan government, with $75 million from Shui On, assisted in the relocation of a large number of these residents.
Several factors led to the concept for Xintiandi. Because a national historic site (the former school where Mao Zedong held the first Congress of the Chinese Communist Party in 1921—now a museum) is located in what is now the center of the district, the local government required that the developer preserve the building and limit the height of new construction in the immediate area. In addressing these requirements, the Shui On Group realized that it needed to create a distinctive project that would not only attract a market on its own but also raise the value of land in the surrounding areas that it controlled. When the Boston-based architectural firm Wood + Zapata was brought on board in 1998, it was proposed that the original buildings surrounding the historic shrine be maintained and reused as much as possible, the concept that became the basis for the project.
Xintiandi’s shikumen-style (“stone gate”) houses are a unique form of Shanghai residential architecture that developed during the 1860s in response to an influx of a large number of refugees from outside Shanghai into the city’s foreign settlement areas. To accommodate these new residents, real estate developers of the period erected rows of shikumen homes on an unprecedented scale.
Built in a dense courtyard configuration, these attached rowhouses were accessed by narrow alleys. Generally standing three stories tall, many featured elaborately carved stone frames surrounding a heavy wooden door. European ornamentation borrowed from the city’s colonial architecture was combined with Chinese design, layout, and materials to create an eclectic housing style. Though largely constructed as single-family units, the homes became more crowded over the years, sometimes housing multiple families who shared kitchens and bathrooms.
To determine which structures could be saved and which had to be rebuilt, nearly a year was spent inventorying every building on the North Block site. Preserving every historic edifice in the area was not feasible because of poor building conditions and prohibitive preservation costs; the need to install new systems for power, water, sewage, and fire prevention also presented serious challenges to the preservation efforts. In addition, the original density of the block needed to be opened up with spaces to allow access to shops and areas for outdoor events and dining. In many cases, structures were so severely deteriorated that the developer and architect opted to rebuild them using portions of the original facades and significant architectural features such as the stone doorway frames, wooden windows, and exterior walls. Even in cases where partial preservation was possible, it was necessary to replace old timber structures with steel. The original bricks and tiles that were reused had to be treated with special agents to strengthen them and prevent corrosion.
Built in a dense courtyard configuration and accessed by narrow alleys, the shikumen-style (“stone gate”) houses of the North Block are a distinctive form of Shanghai residential architecture that developed in the 1860s and blended colonial European ornamentation with Chinese design, layout, and materials.
Because the old houses lacked basic utility services, it was necessary to dig deep trenches under every building to lay water supply and drainage pipes, sewage treatment systems, gas pipes, electric lines, and telecommunication cables. With very little room for heavy machinery, workers had to install these new systems by hand.
In the North Block, the combination of old and new construction resulted in a cleaned-up version of the old shikumen neighborhoods. The narrow alleyways in the North Block were retained and paved with the same gray flagstones originally used in the area.
Converting the structures to commercial use has involved combining modern materials and architectural features with the traditional style. At the ground-floor level, for example, large glass doors and panels have been used to open up the interior spaces and allow visitors and shoppers to see inside. At the western boundary of the North Block, two new modern four-story office buildings were inserted into the block. Facing outward to the street to the west, they have little functional or visual connection with the historic architecture on the remainder of the site.
Some of the original density of the North Block was opened up with spaces to allow access to shops and areas for outdoor events and dining. This view looks north.
The South Block consists of new construction and features a new four-story retail complex with a fitness center and spa on the third floor and a cinema on the top floor. The South Block is also home to 88 Xintiandi Executive Suites, a 53-room service hotel that was one of the first boutique hotels in China.
A “soft” opening of the North Block took place in January 2001, and the South Block opened in mid-2002. Tenants today include a mix of cafés, restaurants, clubs, and boutiques selling gifts, art, jewelry, clothing, and upscale household items. The North Block contains 28 food outlets ranging from Starbucks Coffee to upscale international restaurants and trendy bars. Tenants on the first and second floors of the South Block include a similar mix of restaurants, clubs, and boutiques.
Located on the North Block, but not part of the development, is the First Congress Meeting Hall Museum. Another museum—which is part of Xintiandi—traces the history of the shikumen style of architecture through displays, photos, and furnished period rooms.
The project has received considerable recognition, and the North Block was awarded the ULI Award for Excellence in 2003.
When the Xintiandi project was initiated in 1997, there was no precedent in China for this type of low-rise mul-tiuse commercial center involving the reuse and reconstruction of historic structures, so potential investors were skeptical. As a result, the Shui On Group was the sole investor in the initial stages of the project, and it was not until the end of 1999 that outside investors began to be interested. Eventually, a consortium of four banks came on board, injecting $45 million into the development. A bank loan of $5 million was also obtained.
Preserving every historic structure in the North Block was not feasible because of poor building conditions and prohibitive preservation costs; the need to install new systems for power, water, sewage, and fire prevention also presented serious challenges to preservation.
The Shui On Group holds 97 percent interest in the project. The remaining 3 percent interest is owned by Shanghai Fuxing Development Corporation.
Leasing and management are handled in house by Shui On Land. The Xintiandi gift shops are owned by the developer; all other retail and restaurant units are rented to outside tenants, although in some cases the developer has a small interest in the shop or restaurant. In addition to monthly rents paid per square meter, a percentage of retail sales is charged. As leases come up for renewal, rental income is increased to reflect the project’s popularity and escalating property values in the area.
Strict standards are in place to control the exterior and interior design of each unit; tenants are responsible for interior finishes and improvements.
Shui On Land also handles marketing and promotion. Doing little traditional advertising, the company instead sponsors special events such as concerts, fashion shows, and themed promotions. It also publishes a monthly magazine and e-newsletter and works with foreign travel agencies to include Xintiandi on their itineraries.
Shanghai Xintiandi serves as an important branding tool for the Shui On Group and for the entire Taipingqiao redevelopment area, which has helped mitigate the project’s relatively high development costs. (As one of the first projects of its kind, Xintiandi incurred construction costs ten times the current standard in China at the time.)
While the rest of Shui On’s Taipingqiao project takes shape, the developer hopes that nearby projects increase in value as a result of Xintiandi’s popularity. The project received widespread publicity as the first of its kind in China and has become a well-known destination. As of 2007, there is a waiting list of retailers, rents have risen steadily, and the project is a financial success. Still, developers of stand-alone projects in secondary cities should be very careful to balance construction costs with potential financial feasibility.
The process of adapting older structures for modern commercial uses was a learning experience for the developer and design team. Historical, aesthetic, and commercial values governed the architectural treatment of the buildings. The final product illustrates that attention to detail is very important to the overall image and function of the project.
Although small in terms of area, a specialized retail destination such as Xintiandi requires a strong mix of daytime and evening uses for the retailers to succeed. The market for upscale restaurants and shops is still in its infancy in China, and businesses in Xintiandi still depend to a large extent on foreign tourists and expatriate residents of Shanghai. The project’s location in the dense downtown area of Shanghai has been an important factor in attracting lunchtime and after-working-hours business.
Parking is an important consideration. Although Xintiandi is well served by public transportation, the project features 220 underground parking spaces. With many evening attractions (such as restaurants and cinemas) that are appealing to expatriates—who are more likely to drive, especially at night—it was important for Shui On to provide ample and easily accessible parking. Daytime uses, however, are more likely to be visited by people who use public transit or walk to the site.
Xintiandi has breathed new life into a once-dilapidated district of Shanghai. In the broader sense, it has changed the way government officials and developers throughout China view historic buildings and low-rise neighborhoods and how they can be reused. Today several projects similar to Xintiandi are planned in other cities across China.
Never before had this type of low-rise multiuse commercial center involving the reuse and reconstruction of historic structures been undertaken in China, so potential investors were skeptical. As a result, the Shui On Group was the sole investor in the initial stages of the project.
| Land Use and Building Information | |
| Site Area | 7.4 acres (3 hectares) |
| North Block | 155,417 square feet (14,444 square meters) |
| South Block | 164,219 square feet (15,262 square meters) |
| Gross Building Area1 | Square Feet (Square Meters) |
| Total, including underground parking | 694,000 (64,497) |
| Retail, food, and beverage | 373,400 (34,699) |
| Cinema | 33,530 (3,116) |
| Spa and fitness center | 79,000 (7,341) |
| Residential/service hotel | 50,850 (4,726) |
| Office | 50,700 (4,710) |
| Clubhouse | 13,280 (1,234) |
| Museum | 3,500 (325) |
| Other | 5,885 (547) |
| Total | 610,070 (56,698) |
| Parking | |
| Total underground parking spaces “FAR” by “Parking” | 220 |
| Floor/Area Ratio1 | 1.87 |
| Land Use Plan | ||
| Acres/Hectares2 | Percent of Site | |
| Buildings | 4.2/1.7 | 56 |
| Streets/surface parking | 1.7/0.7 | 23 |
| Landscaping/open space | 1.6/0.6 | 21 |
| Total | 7.4/3.0 | 100 |
| Retail Tenant Information3 | ||
| Total GLA2 (Square Feet/Square Meters) | Percent of GLA | |
| General merchandise | 6,305 (586) | 1.2 |
| Food service | 246,600 (22,918) | 47.8 |
| Clothing and accessories | 55,038 (5,115) | 10.7 |
| Shoes | 1,668 (155) | 0.3 |
| Home appliances/music | 22,424 (2,084) | 4.3 |
| Gift/specialty | 2,744 (255) | 0.5 |
| Drugs | 366 (34) | 0.1 |
| Personal services | 1,194 (111) | 0.2 |
| Financial | 54 (5) | - |
| Museum | 5,886 (547) | 1.1 |
| Gallery | 613 (57) | 0.1 |
| Press office | 323 (30) | 0.1 |
| Chamber of commerce | 3,927 (365) | 0.7 |
| Cinema | 33,528 (3,116) | 6.5 |
| Fitness center | 79,000 (7,341) | 15.3 |
| Other/vacant | 56,684 (5,268) | 11.0 |
| Total | 516,340 (47,987) | 100.0 |
| Average Length of Lease | 1-3 years |
| Office Tenant Information | |
| Annual rents (2005) | $23.80-33.90 per square foot ($256-365 per square meter) |
| Average length of lease | 1-3 years |
| Estimated Development Cost | $168 million |
Shui On Land Limited
26/F, Shui On Plaza
333 Huai Hai Zhong Road
Shanghai, China
Master Planner
Wood + Zapata
368 Congress Street
Boston, Massachusetts 02210
Architect of Record
Nikken Sekkei International, Singapore
51 Neil Road #02-06 to #02-08
Historic Tanjong Pager
Singapore 088829
Construction Consultant
Architectural Design & Research Institute
Tongji University
1239 Siping Road
Shanghai 200092
People’s Republic of China
| Development Schedule | |
| 1997 | Site purchased |
| 1998 | Planning started |
| 1998 | Construction started |
| 1999 | Sales and leasing started |
| 9/2000 | Phase I completed |
| 10/2001 | North Block completed |
| Mid-2002 | South Block completed |
Notes
1 Not including underground parking.
2 Numbers may not add because of rounding.
3 Retail rents are charged per square meter plus a percentage of sales.
University Square as originally developed is a stack of three anchors—Kaufmann’s Department Store, Target, and Tops Supermarket—each a destination in itself. The center, with this particular mix of anchors, does not easily fit into any traditional shopping center categories, nor is it a typical vertical shopping center with anchor department stores and inline tenants on each level of an enclosed atrium with internal escalator and elevator circulation. University Square, developed on an obsolete Kaufmann’s site in an inner suburb of Cleveland, provides a mid-price alternative to nearby upscale centers and is a product of a public/private joint venture. The private development partners were Starwood Wasserman, Kaufmann’s Department store—a division of the May Department Stores Company—and Target Corporation. Starwood Wasserman formed this group of partners in a joint venture with the city of University Heights and the Cleveland-Cuyahoga County Port Authority. The port authority’s participation was needed as the funding agent for the construction of a parking structure, because the city of University Heights did not have the needed borrowing power. A great deal of creativity was required on the part of all partners to bring together the various participants, both within the group of private partners and between the public and private partners.
The developer of University Square, Starwood Wasserman, is a medium-size development company headquartered in Providence, Rhode Island. The firm, organized by members of the Wasserman family, seeks to acquire and develop a diversified portfolio of income-producing properties across the United States and Europe. The company’s 40-plus-year history of successful and innovative developments consists of mixed-use developments, shopping center properties with national tenants, industrial/warehouse buildings, office buildings, and multifamily developments.
The site is located at the intersection of Cedar and Warrensville Center roads in the Cleveland suburb of University Heights, approximately eight miles (12.9 kilometers) east of downtown Cleveland. Surrounding communities include South Euclid, Beachwood, Shaker Heights, and Cleveland Heights. For many years, it was the site of a Kaufmann’s Department Store that, before this development proposal, had been sold by the May Company to Royal Ahold Real Estate Company. May’s intent at that time was to close this oversized and obsolete Kaufmann’s store, Ahold’s to build a Top’s supermarket.
Site acquisition was quite complex. Starwood Wasserman assembled the site (a total of 19.06 acres [7.7 hectares]) by purchasing 15.587 acres (6.3 hectares) from Ahold in 2000 and acquiring two adjacent parcels to the south from the city of University Heights under a project development agreement and contract for sale of land. The site boundaries were subsequently adjusted through a land swap with Jewish Community Housing (JCH) on the eastern side of the site. This swap created a new ingressegress easement for JCH that would work better for the University Square site; existing easement rights in favor of JCH were released. In addition, easements between the University Square site and Waterstone Medical Building, also located to the east of the site, were reconfigured to conform to University Square’s road design for the easterly access drive from Cedar Road.
The total acquisition includes two outparcels—the 0.7-acre (0.3-hectare) National City Bank site and a 1.3-acre (0.5-hectare) site with a small medical building that was torn down and is the site of small shops. Starwood Wasserman owns, has developed, and manages these sites separately from the lands in the joint venture with Target and May.
Signage on the street facade announces upper-level tenants as prominently as street-level retailers, even though entry to the upper levels is from the parking structures in the back. Entry to street-level stores is from both the sidewalk and the back.
Excluding the outparcels and easements, the remaining large parcel was 17.1 acres (6.9 hectares). As the project evolved, this acreage was subdivided into four land parcels and one air-rights parcel. Three land parcels and one air-rights parcel make up University Square. One parcel of 2.2 acres (0.9 hectare) conveyed back to the original owner—the May Company—for a new Kaufmann’s Department Store. A land parcel of 0.8 acre (0.3 hectare) and the air-rights parcel of 1.3 acres (0.5 hectare) conveyed to Target. The third parcel is the developer’s site of 10.1 acres (4 hectares). The fourth land parcel—four acres (1.6 hectares)—is the site of the parking facility that, because of the legal basis for its financing and construction, is technically not a part of University Square.
The entire project is legally tied together by a construction, operation, and reciprocal easements agreement (COREA) among the developer, May, and Target, supplemented by separate agreements between the developer and May and between the developer and Target. Although the project has multiple owners, Starwood Wasserman constructed the entire project with the exception of the Kaufmann’s store under contract agreements with the various parties.
Structured parking for about 90 percent of the total parking spaces was financed using tax increment financing by the city of University Heights but funded by a bond issue of $40.5 million by the Cleveland-Cuyahoga County Port Authority. Bond interest rates were 7 percent for $10.945 million and 7.35 percent for $29.555 million. This development and financing strategy came about as it became apparent that structured parking with public funding was necessary to make the project feasible. The developer worked with the city of University Heights and various other public agencies to identify an agency that could provide the funding for city-initiated TIF. A change in legislation allowed the port authority to participate. The TIF bond sale had to be closed before closing the real estate transfers to May and Target and recording the COREA.
Signs on the sidewalk level add to the pedestrian environment of the street-level facade.
To establish ownership and operating arrangements for the parking facility, University Square Parking (USP), a Delaware limited liability company, was formed in December 2001 as a single member. As organized, the company consists of the developer as managing member, with a 48 percent interest, and May and Target as nonmanaging members, each with a 26 percent interest.
The site of the parking facility was first ground leased by the developer to the city of University Heights for 40 years, then subleased to the port authority, and then conveyed in fee, subject to the ground lease, to USP. The ground lease to the city permits the city, as a government entity, to impose use restrictions on the port authority’s interest in the parking parcel for the benefit of the University Square development, for example, restricted employee parking and exclusive use of designated spaces that the developer as a private entity could not impose without jeopardizing the tax-exempt status of the bonds. To date, however, no such restrictions have been deemed necessary.
The site of the parking facility was transferred to USP to give May and Target, as well as the developer, some control over change of use or terms of use of the facility and transfer of the parking facility and its site. USP was also made the operator of the common area in the center for convenience; it is subject to removal as operator with respect to those areas under the “takeover of maintenance” provisions of the COREA. Likewise, May and Target also have the ability to take over management of the parking facility pursuant to the agreement under the takeover of maintenance provisions of the COREA.
The five-level parking facility is connected by bridges to stores on four of the five levels. The fourth level is designated as employee parking or seasonal overflow and requires use of stairs or elevator to reach a level with store access. Not seen here are connections to buildings along other sides of the parking structure.
A number of developers looked at the site for University Square. Although it was a great infill location, the stand-alone Kaufmann’s store of 350,000 square feet (32,530 square meters) was both obsolete and too big. It almost looked closed when it was actually open. May planned to close this store when it opened a new one at Richmond Mall; therefore, May had sold the site to Ahold, which was looking at the site for ground-level parking for Tops Supermarket.
We thought there was a better opportunity for a more ambitious project. We were known in the area for our other developments and had good contacts with both May and the president of Ahold. A few days before an International Council of Shopping Centers meeting, we decided we might be able to make a deal with both Ahold and May if we got in the middle. Two days later, we had independent meetings with both parties.
Ahold wanted a supermarket site, and May wanted one-year options so it could close the store at its convenience when the Kaufmann’s store at Richmond Mall was operational. May then decided not to close the University Heights Kaufmann’s store when the Richmond Mall store opened, because sales did not go down appreciably at this location as anticipated; however, it still had a deteriorated asset. Ahold was trapped with a high cost basis in the land for a standalone supermarket. Starwood Wasserman presented a new department store and supermarket on a flat layout to Ahold and May, but the site cost prevented the plan from penciling out. In the meantime, the city of University Heights had enacted a new zoning designation applicable to this site that called for stores fronting on the street, not set back with surface parking.
Our market analysis suggested that this site had strong demographics for popular-income retail goods; Rich Kelly, a broker in Cleveland we had worked with who had a relationship with Target, approached Target to determine its interest in an intensified development on the site. Target had two-level stores elsewhere, so there was a potential for a two-level store on this site. We did not see this multilevel concept as a vertical mall but as four stacked destination shopping centers with supporting retail at each level, with one additional level of parking.
The city found this concept an exciting alternative to a more traditional approach and expressed its willingness to help find a way to fund structured parking and thus have the stores built to the edge of the streets. Much of the city’s real estate tax income flows to the school district, so a conflict developed between the city and the school district regarding use of the city’s bonding authority for a TIF. Ultimately, Kenneth Fisher, counsel to the city, and Dennis Wilcox, our counsel, explored all state and local possibilities and found that the Cleveland Port Authority could provide bonding capacity. Thus, with Starwood Wasserman as the strategist in the middle, we were able to structure an ownership and financing plan that met the needs of the three anchor tenants and ourselves.
The parking facility is to be managed by USP pursuant to the terms of a management agreement (the parking management agreement) with the port authority, whose term is 40 years, same as the ground lease and bond terms.
A reciprocal easement agreement (REA) among the port authority, the city of University Heights, Starwood Wasserman, May, and Target was executed to deal with connections between adjacent buildings and other matters of common concern. The port REA, because of federal income tax exemption considerations with respect to the bond financing, does not grant parking easement rights to the parties of the COREA. Thus, the rights of the COREA to use the parking facility are the same as those of the general public and arise under the terms of the enabling ordinances; the cooperative agreement among the developer, the city, and the port authority; and the bond documentation.
The bondholders have the right to require use of the parking facility for its intended purpose, i.e., free public parking. The developer, Target, and May were concerned that they needed to have some control of this process through participation in the bond issue. Thus, the bond issue was structured with two series of bonds, the approval of the holders of each series being necessary for a change. Series A bonds were sold through a general public offering; the developer and May purchased the Series B bonds. Target had been expected to purchase approximately one-third of the Series B bonds but chose not to do so.
The merchandising concept of University Square is that each anchor tenant is a destination. The design of the speed ramp reinforces this concept by allowing direct access to each level of the parking structure without requiring internal vehicular circulation.
Financing for University Square (excluding the parking structure) started with the May Company’s sale of the original Kaufmann’s site to Royal Ahold USA for $15 million. This sale provided for the Kaufmann’s store to continue in operation until its new store elsewhere was completed. At this juncture, Starwood Wasserman was not yet involved. When the University Square project was structured, Starwood Wasserman paid Ahold $12.5 million, with Ahold holding a $1.5 million note and participation with its Tops supermarket. The May Company paid Starwood Wasserman $1 for its site and built its own building. Target paid $8.6 million to Starwood Wasserman for the land and air rights and $9.7 million for Starwood Wasserman’s construction of the building shell. Starwood Wasserman constructed all the other commercial space, about 300,000 square feet (27,900 square meters), and the parking facility.
Fleet Financial financed construction with a 75 percent construction loan, with the interest rate at LIBOR plus a spread of 2.25 percent. Preleasing 60 percent of the developer’s space was a requirement of the loan. Long-term financing will be sought when the center is fully leased. Initial expectations regarding return on investment and assessment of risk for the project assume a 10 to 12 percent return on cost.
University Square is an atypical multilevel center. The site’s slope from west to east allows both Kaufmann’s and Target to have at-grade entrances, while Target’s main entrance is on level five of the parking structure. The parking structure has five levels, but the adjacent buildings have higher floor-to-floor dimensions, and lateral connections between parking and retailers thus occur only on four of the five levels of the garage.
Thus, Kaufmann’s main floor fronts Warrensville Center Road and is served by parking level one, with entrances from both Cedar Road and Warrensville Center Road. Kaufmann’s upper floor is served from parking level three, which is also the lower merchandising floor of the Target store and, because of sloping topography, has at-grade access from Cedar Road and below-grade loading docks. Tops Supermarket is served exclusively from level two, and Target’s main level is served from level five. Level four of the garage does not have direct access to any retail level; it is used for employee parking and peak-hour customer parking. Strategically located and color-coded signs direct customers. Ramps in the parking structure are designed to allow direct access to each level of the garage without requiring internal circulation.
University Square opened in phases, so a traditional opening event was never held. Kaufmann’s opened while the rest of the center was still under construction. Subsequently, Tops and three smaller tenants opened, then Target and additional smaller tenants. Because the developer’s objective was to have each retail level function as a destination, the acquisition of appropriate tenants required a longer lease-up period. Management created an attractive printed marketing package of plans, elevations, and cross sections, but most prospective tenants have difficulty understanding the center until they can be brought on site.
Marketing is limited to decorations for the holiday season and participation on behalf of tenants in local fundraisers. All the national tenants have their own specific sales and promotional events.
Starwood Wasserman is the manager of the entire center, including the outparcels and the parking structure.
The building structure wraps around the parking structure, allowing for street frontage as required by new zoning regulations as well as direct access to all retail levels from the parking structure. The parking structure was constructed with tax increment financing, unusual for such a closely integrated element of an otherwise privately developed shopping center. The city of University Heights pursued it, however, to encourage a nontraditional, intensive use of the site and have stores built to the edge of the site.
In September 2005, Inland Western acquired the center and placed it in a REIT. In December 2006, Ahold divested itself of the Tops brand in the United States, although Tops/Ahold continues to pay rent on the leased space. With Federated Department Stores’s purchase of the May Company in 2005, the future of all the May Company brands, including Kaufmann’s, was uncertain, and in September 2006, Kaufmann’s was converted to Macy’s. As of 2007, Inland Western was in the process of developing a strategy for the vacant spaces and has yet to announce its plans, but it still believes the design concept of a stacked big-box center is valid in a location such as that found at University Square.
An innovative project like University Square requires significantly more patience, creativity, and staying power than a more traditional retail project.
Significant effort was made to provide clear and well-placed signage to direct shoppers to their destination level in the parking structure and to find their car when returning from shopping. Experience since the center opened has resulted in a new effort to modify and improve the directional and parking location signs to further assist shoppers.
Because this concept is fairly new, a scale model would have been helpful during preleasing to show how a multilevel project works.
The top level of the parking garage is a sea of cars when full or a vast area of concrete when empty. Greater effort should have been made to introduce landscape elements on this parking level in the agreement with the port authority. (Within the limits of current agreements, holiday banners will be installed on light fixtures; if they prove successful, tenants will be offered the opportunity to use them for specific sales periods or events.)
| Land Use and Building Information (Phase I) | |
| Site Area | 19.06 acres (7.7 hectares) |
| Developer’s site | 10.09 acres (4.1 hectares) |
| Kaufmann’s1 | 2.20 acres (0.9 hectare) |
| Target | 0.82 acre (0.3 hectare) |
| plus 1.28 acres (0.5 hectare) of air rights | |
| Outparcels | 1.910 acres (0.8 hectare) |
| Parking facility | 4.043 acres (1.6 hectares) |
| Gross Building Area | 636,217 square feet (59,130 square meters)—center 18,643 square feet (1,735 square meters)—outparcels |
| Gross Leasable Area | 620,095 square feet (57,630 square meters)—center and outparcels |
| Floor/Area Ratio | 1.95 |
| Parking | |
| Parking facility spaces | 2,358 |
| Surface parking spaces | 266 |
| Total parking spaces | 2,624 |
| Major Tenants | |
| Square Feet (Square Meters) | |
| Kaufmann’s Department Store1 | 164,684 (15,305)2 |
| Target | 164,590 (15,295)3 |
| Pier One | 12,139 (1,130) |
| Applebee’s | 5,500 (510) |
| Tops Supermarket4 | 58,790 (5,465) |
| T.J. Maxx ’n More | 45,562 (4,235) |
| Famous Footwear | 12,520 (1,165) |
| Jo-Ann Stores | 35,234 (3,275) |
| Average Length of Lease | 10 years + options |
| Initial Annual Rents for Developer Space5 | $12-30 per square foot ($130-325 per square meter) |
| Development Cost Information (Phase I) | |
| Site Acquisition Cost | $14,000,000 |
| Site Improvement Costs6 | |
| Excavation/grading | $2,430,805 |
| Sewer/water/drainage/utilities | 2,884,283 |
| Paving and surfacing | 2,001,487 |
| Fire loop, lighting, and power systems | 723,947 |
| Landscaping | 724,903 |
| Site signage | 916,734 |
| Subtotal | $9,682,159 |
| Building Construction6 | |
| Masonry and building shell | $10,323,320 |
| Finishes | 2,586,924 |
| HVAC/plumbing/fire protection | 4,386,610 |
| Electrical systems/emergency power | 3,576,317 |
| Other systems | 609,394 |
| Protective specialties | 21,703 |
| Signage | 13,351 |
| Subtotal | $21,517,619 |
| Total Site Improvement and Construction Costs6 | $31,199,778 |
| Tenant Improvements7 | |
| Site improvements | $126,536 |
| Building | 1,326,881 |
| Finishes | 214,431 |
| HVAC/plumbing/fire protection | 323,727 |
| Various systems | 144,319 |
| Electrical | 211,808 |
| Signage | 2,825 |
| Total | $2,350,527 |
| Architecture/Engineering8 | $1,752,105 |
| Parking Facility | |
| General Contractor Costs | |
| Allowances | $344,527 |
| Sitework | 221,738 |
| Concrete/masonry | 15,089,113 |
| Stairs, doors, windows | 723,957 |
| Finishes and specialties | 136,975 |
| Elevators | 534,150 |
| Plumbing/fire protection | 386,658 |
| Electrical | 970,670 |
| General conditions, mobilization, bond, insurance | 1,366,462 |
| Fees | 390,000 |
| Subtotal | $20,164,250 |
| Annual Operating Expenses9 | |
| Taxes | $4.00 ($43.00) |
| Insurance | $0.50 ($5.40) |
| Common area maintenance | $2.75 ($29.60) |
| Public improvement fund | $1.00 ($10.80) |
| Development Schedule | |
| 2000 | Planning started |
| 3/2001 | Public approvals obtained from |
| Cleveland-Cuyahoga Port Authority | |
| 4/2001 | Site purchased |
| 4/2001 | Construction and leasing started |
| 12/2001 | Parking facility bonds issued |
| 4/2002 | Joint venture agreement with |
| Kaufmann’s and Target completed | |
| 7/2004 | Project opened |
| 4/2005 | Project sold |
Developer
Starwood Wasserman
One Park Row/Fourth Floor
Providence, Rhode Island 02903
Architect/Landscape Architect
James B. Heller
Cleveland, Ohio
Other Key Team Members
Suffolk Construction—General Contractor
Chagrin Valley Engineering—Civil engineer
Hach & Ebersole—Structural engineer
Byers Engineering—Mechanical and electrical engineer
Bergensons Property Management—Property management
Owner as of 2005
Inland Western
2901 Butterfield Road
Oakbrook, Illinois 60523
Notes
1 Became Macy’s in 2006.
2 Plus parking levels 1 and 3.
3 Plus parking levels 3 and 5.
4 Closed in 2006.
5 2004.
6 Developer spaces only.
7 For entire project though 2004. Tenant improvements are based on each individual tenant’s lease.
8 For Starwood Wasserman.
9 Per square foot (per square meter) of GLA for 2003.
Named after a neighborhood in Mexico City by the previous owner of the site, Zona Rosa is a new town center intended to create a “there” in the Northland, the northern suburbs of Kansas City. The developer incorporated traditional urban design principals with internal streets, city blocks, and public spaces. The public spaces for civic and social activities as well as a collection of restaurants, branded stores, and entertainment in the form of a three-screen cinema and comedy club venue serve as anchors. To create a mixed-use space, Phase I of the project includes 532,000 square feet (49,440 square meters) of specialty retail, restaurant, and entertainment and 67,000 square feet (6,225 square meters) of second-story Class A office space. Twenty-four loft-style apartments rising three stories above retail shops invigorate the town center landscape. This project was the developer’s first with residential units, and it was undertaken in house. A second phase, scheduled to open in 2008, will include a three-story, 200,000-square-foot (18,600-square-meter) Dillard’s department store, additional retail and residential units, and a hotel, bringing the project to approximately 1 million square feet (93,000 square meters).
As Yaromir Steiner, chief executive officer of Steiner + Associates, says, “People want shopping environments to give them a ‘sense of place.’ Their demand for good-feeling spaces is increasing. We’re going to go back to development inspired by city blocks that will be convertible to other things.” Zona Rosa, with its shopping districts, parks, and community areas, is intended to survive not just a few decades but also for future generations.
Steiner + Associates, formed in 1993, specializes in the design, construction, leasing, and marketing of new town centers, focusing on master planning. The company concentrates on suburban locations, actively incorporates the ideals of the new urbanism, and shares the responsibility for planned public spaces, with the public sector providing public spaces that are attractive, commercially vital, and universally accessible. To achieve these objectives, the company consists of three cooperative divisions focusing on the company’s core businesses: development, property management, and entertainment/animation. Steiner + Associates retains property management responsibility for each development project.
When the previous owner, a member of the family that had owned the property for years, became interested in creating a town center in the new urbanist style, this 93-acre (37.6-hectare) tract of land came to the developer’s attention. The previous landowner researched projects across the country and contacted the developer after learning about Steiner’s Easton Town Center outside Columbus, Ohio.
The developer’s subsequent evaluation of the market concluded that the conditions in the Northland were ripe for development. The Northland was understored and had relatively few restaurants and entertainment venues—key elements in a new town center. At the time, only one major competitor existed—an enclosed mall in decline—four miles (6.5 kilometers) to the east. The developer also noted projections of strong population growth for the area. At the same time, the focus of retail development in the Northland was shifting from several miles east to the vicinity of the site. A small upscale open-air center, a power center, a Super Wal-Mart, and a Lowe’s sit across I-29 from the site.
Three floors of residential loft units rise above retail at one of the main intersections in Zona Rosa. Structured parking is connected to the units by an elevated walkway, accessible by residents only.
Despite the developer’s positive assessment of the market, some people in Kansas City believed that the market was too thin to support an urban concept in a suburban setting. Today, Zona Rosa draws from a large regional market of 450,000 people. Its trade area extends south about 12 miles (19.5 kilometers) to the Missouri River, north about 30 miles (48 kilometers), east about 16 miles (26 kilometers), and west about 20 miles (32 kilometers).
The site sits along I-29, which continues south about 14 miles (22.5 kilometers) to downtown Kansas City. Route 152, an east-west state highway, abuts the site to the north, and Barry Road, the first retail arterial in the Northland, is on the south.
The site formerly was rolling farmland, distinguished by a stream in terrible condition, with eroded banks and polluted waters, partly the result of freeway construction that had interrupted its natural flow. The pollution had been an ongoing concern of the neighborhood to the west of the site, as the polluted stream flowed into its lake. Development of the site entailed wetland mitigation as well as straightening out the stream path at certain points. To address these issues and find a plan acceptable to the neighborhood, Steiner hired an ecologist, who developed a plan to create a series of ponds that purify the stream water on an ongoing basis. All relevant agencies—the Missouri Department of Natural Resources, the U.S. Army Corps of Engineers, and the city of Kansas City—accepted the plan. Steiner also adopted a landscape theme that introduced an ecologically designed stormwater management and treatment system, known as a stormwater treatment train.
Despite these efforts, the neighborhood disputed Steiner’s commitment to implement the plan. To settle the dispute, the developer agreed to work with the neighborhood to improve the water farther downstream and to pool resources of both the neighborhood and the developer. The total cost of addressing the stream-related concerns was about $2 million. For their work in preserving and enhancing the Rush Creek watershed area at Zona Rosa, Steiner and TranSystems received an award from the American Council of Engineering Companies of Missouri in February 2005.
Al fresco dining and creative lighting enliven Zona Rosa in the evening.
A second community issue was the neighborhood adjacent to the site on the west. The site is roughly an inverted, backward L shape and envelopes a neighborhood of single-family homes on two sides. The developer worked with the neighborhood to explain how a town center would differ from standard retail development. To allay neighbors’ concerns, the developer not only provided the required 50-foot (15-meter) buffer with a fence along the project’s border with the neighborhood but also gave the buffer to the neighborhood. The developer continues to provide the landscaping for the buffer. In addition, a walkway was created between the neighborhood and the project. Subsequent to the opening of Zona Rosa, the neighborhood requested a street connection, which will be added in Phase II.
Because new streets were created on the site, the developer approached Platte County to assist in financing the interior streets and related improvements—sidewalks, garages, street lights in the right-of-way, signals, benches, and walking paths. The county issued bonds and created a transportation development district, which allows a one-cent tax on every dollar of sales to pay off the bonds. The developer constructed interior roads and related improvements and deeded them to the county. Steiner then signed a management agreement with the county to care for the facilities.
The third issue with the neighborhood was traffic congestion on Barry Road. The city issued a bond for additional improvements—widening Barry Road in the vicinity of the site and North Congress Avenue west of the site, modifying the Highway 152 off-ramp to North Congress Avenue, and extending two city roads through the project. Congestion has been much alleviated by the widening. A portion of this debt is also paid off by the transportation development district tax.
Steiner + Associates partnered with Mall Properties, Inc., on Zona Rosa, with both parties contributing a portion of the equity. Steiner + Associates is the developer and manager of the property.
A consortium of five banks led by HSBC Bank USA provided a construction loan of $103 million. At the time the construction loan was closed, 60 to 70 percent of the space was in some stage of leasing.
Industrial Revenue Authority bonds provided a total of $17 million to support the project.
The design of the center is based on a street grid, buildings close to the streets, public parks, and a variety of vertically and horizontally integrated uses.
A split boulevard creates islands or blocks surrounded by internal streets, allowing for more street fronts, double-loaded streets, and places for public spaces. Zona Rosa has two parks: a town square with a performance stage at one end, a children’s pop fountain in the middle, and a restaurant whose veranda overlooks the park at the other; and a children’s park with some child-oriented retail stores (children’s shoes, ice cream) nearby.
In the event of inclement weather, Zona Rosa includes several shelters. For example, at Barnes & Noble visitors can browse or sit at the café. Dick’s Sporting Goods also offers shelter. The first floor of the building occupied by Marshalls contains an open space and a children’s play area populated with colorful, giant fruit.
To avoid creating space that could accommodate only retail or office uses and thus run the risk of failure if the retail market could not support all the space at some future time, Steiner built buildings with the potential for reuse. For example, the second-story office space has two feet (0.6 meter) of additional ceiling space so it could be used as retail space in the future. Because of the window placement, the second-story retail space could be used as office space.
Big-box retailers, typically hesitant to pay lease premiums to be in the center of an upscale shopping center, are accommodated by second-story space in two central locations. Both the 25,000-square-foot (2,325-square-meter) DSW and the 50,000-square-foot (4,645-square-meter) Marshalls ’n More are accessed by escalators ascending from two-story spacious lobbies. Other large stores are located on the eastern edge of the town center.
The street that takes visitors into Zona Rosa from Barry Road is along the long leg of an inverted L. Additional freestanding restaurants, home furnishing and clothing stores, and Gateway Plaza, a 30,000-square-foot (2,790-square-meter) retail center occupied primarily by service tenants, line this leg.
Parking is available in a structure on the north perimeter of Phase I, surface parking lots on all other perimeters, and on-street metered parallel parking on the internal streets. All off-street parking is free, and the net proceeds from the meters go to charity. The placement of the off-street parking in all directions reduces the size and visual impact of each parking area and allows for easy pedestrian accessibility from all parking areas to the internal streets. The structured parking, while available to all visitors, provides an elevated walkway directly to the residential units that is restricted to residents’ use. The total of 2,600 parking spaces exceeds the city’s requirement. The number resulted from the developer’s calculations, which took into account the variety of uses and when each would be used.
A small, intimate children’s park is on an “island,” a block surrounded by internal streets. The park is fenced, and child-oriented stores such as children’s apparel and ice cream are located nearby.
Taken together, the many diverse architectural styles in Zona Rosa suggest infill and development in Kansas City through the years.
The architectural style of the buildings suggests development over several periods of Kansas City history. The buildings suggest a street that was reworked through time to form an authentic urban fabric.
The leasing team does not lease space simply to fill it. The goal is to ensure that each restaurant, retailer, and entertainment venue selected fills a need defined by the community. The team strives to reach a balance between strong national and local retail, restaurant, and entertainment tenants. Although most tenants are major national retailers, the developer is also responsible for the growth of several local small- and medium-sized businesses. Local businesses that opened an additional branch or moved into Zona Rosa include an Indian restaurant, a jewelry store, an Irish pub, and a children’s hair-cutting salon. Office tenants include business and medical services such as a law office, a mortgage company, and a dentist.
The residential units are leased through a Web site that allows for online submission of the application form and payment by credit card or directly from the applicant’s bank. The Web site provides the layout of each unit provided as well as actual shots of the views from each unit.
The project also includes classrooms for the National American University, a fully accredited university offering a complete range of business degrees and nursing degrees, whose current weekly enrollment is more than 500.
Steiner requires that its management teams seek opportunities to increase revenues from activities other than cost control. Property management teams are responsible for extending the earning power of the property through programs like marketing and sponsorship agreements.
Marketing and events that promote Zona Rosa as a civic center with community value and function are described as “animation.” For example, Steiner revived a Kansas City holiday tradition—a lighting ceremony for holiday crowns. Zona Rosa’s holiday crowns are based on the original designs that graced downtown Kansas City from the 1950s to the 1970s. According to Zona Rosa’s general manager, “The crowns bring Kansas City back to a time gone by. People can relive their memories while creating a new holiday tradition that they can share with their families.” Each year, Zona Rosa plans to add more crowns to its collection. Events held by civic organizations at Zona Rosa receive logistical, staff, and monetary support from the center’s management.
Zona Rosa also connects with the community through the Zona Rosa Foundation Fund, which receives income through parking meter proceeds and ticket revenues. The fund focuses on providing support to nonprofit organizations in the greater Kansas City area through the Change for Charity Meter Program, the Zona Rosa Scholarship Fund, and community event sponsorships.
The developer has chosen not to place signs with Zona Rosa’s name at the site or nearby because the company considers it a place, not a shopping center. It does advertise in places such as hotels where visitors may not know about Zona Rosa. The developer does promote events in tenant and public spaces, particularly when activities are held in the public space.
A strict code of conduct posted in Zona Rosa includes the parental escort policy, which states that children under the age of 16 may not remain in the public spaces of Zona Rosa after 9:30 p.m. unless accompanied by a parent or legal guardian older than 21.
The developer, drawing from previous experience to refine the components of a new town center, was able to effectively integrate residential space with retail space for a true mixed-use project; construct buildings with the potential for reuse by constructing many individual buildings rather than strip buildings and by using appropriate ceiling height and window placement on the second floors to permit use as office or retail space; and remove the barrier between types of tenants found in power centers and malls by placing big-box stores, which typically do not pay regular rents, on the second floor.
The developer also learned that resolving environmental issues resulting from the stream on the site was achievable, although quite complex. The original vision included tall trees along the stream, but even that solution was not possible, as the trees were found not to be indigenous. The developer was able to plan around all the concerns related to the stream.
| Land Use and Building Information (Phase I) | ||
| Site Area | 66 acres (26.7 hectares) | |
| Gross Building Area | 608,000 square feet (56,505 square meters) | |
| Gross Leasable Area | 598,616 square feet (55,635 square meters) | |
| Floor/Area Ratio1 | 0.21 | |
| Levels | 1-4 | |
| Parking | ||
| Surface spaces | 1,900 | |
| Structured spaces | 700 | |
| Total | 2,600 | |
| Land Use Plan | ||
| Acres/Hectares | Percent of Site | |
| Buildings | 13/5.3 | 19.7 |
| Parking structures | 3/1.2 | 4.5 |
| Surface parking/roads | 25/10.1 | 37.9 |
| Landscaped areas | 14/5.7 | 21.2 |
| Creek/detention basin | 11/4.4 | 16.7 |
| Total | 66/26.7 | 100.0 |
| Retail Tenant Information | ||
| Classification | Total GLA Square Feet (Square Meters) | Percent of GLA |
| General merchandise | 52,350 (4,865) | 8.7 |
| Food service | 76,619 (7,120) | 12.8 |
| Clothing and accessories | 124,920 (11,610) | 20.9 |
| Shoes | 29,320 (2,725) | 4.9 |
| Home furnishings | 26,962 (2,505) | 4.5 |
| Theaters | 28,285 (2,639) | 4.8 |
| Hobby/special interest | 128,439 (11,935) | 21.5 |
| Gifts/specialty | 14,887 (1,385) | 2.5 |
| Jewelry | 6,872 (640) | 1.1 |
| Other retail | 27,214 (2,530) | 4.5 |
| Personal services | 15,748 (1,465) | 2.6 |
| Offices (other than financial) | 67,000 (6,225) | 11.2 |
| Total | 598,616 (55,635) | 100.0 |
| Major Tenants | |
| Square Feet (Square Meters) | |
| Dick’s Sporting Goods | 72,609 (6,750) |
| Barnes & Noble | 37,995 (3,530) |
| Marshalls ’n More | 52,350 (4,865) |
| DSW | 25,980 (2,415) |
| Average Length of Lease | 5-10 years |
| Annual Rents | $25-75 per square foot ($270-805 per square meter) |
| Average Annual Sales | $350+ per square foot ($3,765 per square meter) |
| Development Cost Information (Phase I) | |
| Site acquisition cost | $16,000,000 |
| Site improvement costs2 | 11,000,000 |
| Construction costs | 66,000,000 |
| Soft costs | 28,000,000 |
| Total | $121,000,000 |
| Financing Information | |
| Construction loan (HSBC-led consortium) | $103,000,000 |
Developer and Manager
Steiner + Associates
4016 Townsfair Way/Suite 201 Columbus, Ohio 43219
Co-Owner
Mall Properties, Inc.
654 Madison Avenue/11th Floor
New York, New York 10021
Project Architect
Gould Evans Associates
4041 Mill Street
Kansas City, Missouri 64111
Development Design Group, Inc.
7 St. Paul Street Baltimore, Maryland 21202
General Contractor
Walton Construction
3252 Roanoke
Kansas City, Missouri 64111
| Development Schedule | |
| 5/2001 | Planning started |
| 12/2001 | Approvals obtained |
| 5/2002 | Leasing started |
| 9/2002 | Construction started |
| 5/2003 | Site purchased3 |
| 5/2004 | Project opened |
Notes
1 Excluding parking structure.
2 On and off site.
3 Site available through access agreement before purchase.
