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MIXED-USE EASY ON ENVIRONMENT, TOUGH TO PLAN

By Edmund Mander

Mixed-use centers could profoundly help the environment as the U.S. population continues its rapid rise over the coming decades, panelists said at ICSC’s first conference devoted to the format.

The U.S. population, which passed the 300 million mark in the fall, is projected to reach 400 million by 2045. Some 20 million acres of traditional development would be needed to provide space for those additional people to live, work and shop in if the post-World War II pattern of suburban expansion continues, said Ronald A. Ratner, president and CEO of Forest City Residential Group. The mixed-use approach to development, on the other hand, would consume only 5 million acres, he said. Ratner was addressing ICSC’s Conference on Mixed-Use Development, which drew nearly 1,100 developers, architects, finance executives and other professionals to Hollywood, Fla., in November.

“There is an incredible pent-up demand for this,” said Yaromir Steiner, CEO of Steiner + Associates, which has built multiblock, mixed-use developments in Columbus, Ohio, Kansas City, Mo., and elsewhere in the U.S. Mixed-use development is as old as the history of urban settlement, said Steiner. Thus, America’s 70-year pursuit of the single-use, zoned development that is responsible for sprawl should be viewed as an aberration from a model that is thousands of years old, he said, noting that urban development came to a halt in America during the Depression.

But for all of mankind’s experience with mixed-use development, the format remains anything but easy to plan and execute. The “critical challenge” is to achieve cooperation between public officials and developers, Steiner said, without which the multiblock “town centers” for which he has become known would be impossible.

There are scores of other complications too, panelists said, including parking and liability. Once residential condominiums built above retail are sold and occupied, how can the operators of the retail component know that those will be maintained in a manner that ensures the development remains attractive to shoppers? What if a broken condo pipe floods a store at the height of the holiday shopping season?

Design is a complicated issue too. Take parking. Office workers arrive at 8 a.m. and want the best parking spots. Retailers need those same spots for shoppers who start arriving at 10 a.m. Residents, for their part, want their parking areas closed off and secured altogether, whereas retailers and office inhabitants want the space open and accessible. Meanwhile, residents might like the convenience of restaurants on the ground floor, but they certainly do not like the cooking smells that come with them, said Dougal M. Casey, managing director of ING Clarion, in Washington, D.C., which has mixed-use centers in its portfolio.

A solution to the friction arising from the conflicting interests of homeowners and merchants is not to sell off the housing above at all, but to rent it instead, said Charles Berman, managing principal of MacFarlane Partners, a New Canaan, Conn.-based real estate investment management firm. “It’s always the condos that cause the problems,” he said.

If developers must sell off the housing and other nonretail components, it is essential that they maintain control, said Jeffrey H. Newman, a lawyer at the Newark, N.J., firm of Sills Cummis Epstein & Gross. Ideally, he said, they should also maintain overall control over their partners.