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MIXED-USE DEBUT

Crosland’s first mixed-use project has produced Birkdale Village, near Charlotte, N.C. — a new neighborhood in the style of an old town

BY IAN RITTER

A boulevard with two-way traffic provides plenty of room for parked and moving cars and adds to the sense of a busy little town center.

Charlotte, N.C.-based developer Crosland has built a wide variety of commercial real estate projects in its 66-year history, but it has never built anything quite like Birkdale Village.

Birkdale, a mixed-use center in Huntersville, about 15 miles north of downtown Charlotte, is Crosland’s first mixed-use endeavor. Though the company has built what it calls multiuse developments before — projects with more than one real estate use on a site — this was the first where the various uses shared buildings. The $110 million Birkdale, which opened in September, has 320 rental apartments sitting on top of its 280,000 square feet of retail.

Even for an experienced company that has engaged in just about every type of commercial real estate — retail, residential, office and industrial — taking on a mixed-use project is no cakewalk, Crosland executives discovered.

“It is not a rapid undertaking,” said Crosland president Alexander M. Dmyterko, explaining that the company faced challenges involving financing, design, maintenance and even the tenants themselves. Birkdale Village took three years to plan and build, he said.

First, Crosland had to convince the city that this was the right kind of development for the area, recalls Charlie Dulin, senior vice president of investment sales at Commercial Carolina, a real estate services firm that is an affiliate of Cushman & Wakefield.

“A lot of Charlotte felt it was too much too soon for the area,” Dulin said. “It was underestimated by most of Charlotte, who thought, ‘They’ll never anchor that out.’” After all, the city already had the 90,000-square-foot Phillips Place, an upscale mixed-use project developed by the Charlotte-based Harris Group in the mid-1990s. But Crosland insisted that there was a need for retail in the northern suburbs of Charlotte. Moreover, Birkdale Village is much larger and more affordable than Phillips Place, Dulin notes.

“It’s certainly the first retail village in that area of town,” said Dulin. “[Crosland] had foresight and understood the market.”

Then the company had to convince the banks. A retail market may be strong in a certain geographical area, while the apartment housing market there may be weak, or vice versa, said Crosland CEO Todd Mansfield. This reliance on several — at times volatile — market segments can lead to difficulty in financing, Mansfield said.

“Each component has to work independently,” he said. “The costs are, without a doubt, higher.”

Once the approvals and financing were in place, the next test was to make the buildings suitable for both retailers and residents. Because retailers come in all shapes and sizes, the architects had to tailor the apartments that would sit above them. In all, the company had to build the units according to 47 different floor plans.

And the tenants themselves raised additional issues. Crosland discovered that residential tenants like to move in on Saturdays, parking their trucks and cars directly in front of the stores on their busiest day of the week. Garbage collection was also an issue. Because all the spaces around the buildings at Birkdale were put to use, the developer could not put trash collection areas behind them. Instead, there are dumpsters across restaurant parking areas and inside an enclosed lot. Timing was also an issue with the garbage, Mansfield said. Restaurants must avoid putting out trash at night, when residential tenants are trying to sleep, for example.

All in all, there are lots of potential problems when catering to a diverse group of tenants, said Peter B. Pappas, a Crosland senior vice president of retail. “It takes fanatical execution.”

An observer looking down Birkdale’s main thoroughfare, however, might have no clue that every aspect of the project was planned and executed at the same time. The buildings on each side resemble a New England town that has evolved over centuries, with a mixture of colonial, Victorian and modern styles, and varying rooflines and colors. The thoroughfare itself is a spacious boulevard divided by a richly planted green strip. The ample parking outside the stores completes the picture of a busy little town center.

The stores are a mix of national and local retailers. (Crosland says it wants to keep the mix 80 percent national, 20 percent local). They include Barnes & Noble, Pier 1 Imports and Williams-Sonoma, among such local stores as Belle Ville, a boutique; a Brixx pizza restaurant; and a wine bar called Barone’s Wine Room.

“One way to make each project unique is by adding local flavor,” Pappas said. “You want to have a variety of storefronts, and one way to do that is to integrate the locals.”

Eric Horsley, a managing partner of Brixx, which sells wood-fired pizza at three locations in Charlotte and one in Chapel Hill, N.C., said he wanted his business to be in Birkdale because the national tenants there mirror those found in regional malls.

“Crosland has done a tremendous job marketing the center,” Horsley said. Though Birkdale’s tenants probably draw customers from a 15-mile radius, according to local industry observers, it can also rely on its apartment units and growing neighborhoods surrounding the development.

Among the multiuse projects that Crosland has built over the years are CrownPoint, a 220-acre Charlotte development that includes retail, office and warehouses, and NorthCross in Huntersville, a business park with a shopping center.

The company was founded by John Crosland Sr., who started out building houses, but put up his first retail project, a grocery-store-anchored center in Charlotte, in 1938. In 1965 John Crosland Jr. — now retired but still serving as the company’s chairman — took over as president and CEO. Crosland started building apartments in 1968 and moved into office and industrial development in 1977. In 1987 the company sold its home-building business, but returned to the sector in 2000 with the Lillian Floyd Homes affiliate (named after John Crosland Jr.’s mother).

Today, retail accounts for about half of its total business. The firm also has an unusual structure. In 2000 John Crosland Jr. put it under the control of a private foundation and trust. This structure, which does not allow Crosland to go public, gives both the foundation and trust a portion of the firm’s income, with the rest going to operations.

Birkdale might be Crosland’s first mixed-use development, but it won’t be its last. The company is now developing the 130,000-square-foot Poyner Place, Raleigh, N.C., and plans to do more in the future.

“We’re seeing communities pushing for mixed-use products much more than I’ve seen in the past,” said Mansfield. “Mixed-use is a cornerstone of our business strategy.”

Michelle L. Buckley, a retail specialist at commercial real estate firm Grubb & Ellis Bissell Patrick, said this first effort in the genre has been a hit.

“What they’ve created is a town of retail,” she said. “It’s an absolutely fabulous shopping experience.”

Birkdale Village needs to be good, Buckley noted, because Taubman Centers plans to open a regional mall about midway between Birkdale and downtown Charlotte in the fall of 2005.

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