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Old dirt, new uses

Retail helps revive dormant sites and the areas around them

By Dees Stribling

Baltimore is in Maryland, and Sacramento is the capital of California, so the two are nearly 2,400 miles apart. Yet, in terms of retail development, they could not be closer together. This is because both cities are home to adaptive reuse projects involving retail that are changing their landscapes significantly.

In Baltimore, a partnership of Struever Bros. Eccles & Rouse and H&S Property Development Corp. is working on redeveloping the 65-acre HarborEast site along Baltimore Harbor into 3 million square feet of residential, retail and office space. In downtown Sacramento, meanwhile, Thomas Enterprises plans to redevelop the 240-acre Union Pacific rail yard site, which is adjacent to and roughly equal in area to the city’s downtown.

As a general development concept, adaptive reuse is nothing new. It could be argued that ancient civilizations were practicing it thousands of years ago whenever buildings or even entire cities were redone. Modern adaptive reuse, however, represents a broad spectrum of real estate projects, from the reinvention of a hole-in-the-wall as a stylish coffee shop to the multimillion-dollar redevelopment of entire districts of underused areas and structures. The Baltimore and Sacramento projects are of the latter type, of course.

By no stretch are they the only large or retail-intensive projects of this kind under way in the U.S. But they are good examples of how the urge to redevelop places all but abandoned is proving to be a boon for retail. More than that, a successful adaptive reuse project can change an entire neighborhood for the better, bringing new life and financial rewards for all involved.

“Retail is a big part of the energy and vitality of any urban neighborhood — grocery stores, coffee shops and cafés, wine bars and stores, and on and on,” said Bill Struever, president and CEO of Baltimore-based Struever Bros. Eccles & Rouse, which specializes in large adaptive reuse projects in urban settings. “A strong adaptive reuse project is going to be a magnet for a core of successful retailers who weren’t there before. Many retailers love being in older buildings, and many shoppers love them too.”

As with any real estate proposition, location is the foundation of everything else, and these two projects have a fair amount in common in that regard. Both boast strong demographics.

Considered a city in decline just a decade ago, Baltimore is a far-flung part of a now fast-growing conurbation centered on Washington, D.C. There has been a lot of redevelopment in Baltimore’s Harbor District in recent years, and HarborEast has been a part. Besides being a convention and tourist draw, the Baltimore Harbor District now also has a residential base. The Baltimore Harbor District claims a daytime population of nearly 12,000, according to Struever Bros., a figure calculated from the 15 million who visit the city every year, the 200,000 office workers in the nearby downtown daily, and the district’s 6,500 hotel rooms.

The Sacramento metro area, too, has grown in recent years, fed especially by an influx from other, more expensive parts of California. According to Thomas Enterprises, the rail yard redevelopment site will benefit from the current population of 1.64 million within a 30-mile radius, and the average household here earns about $70,000 yearly. These numbers will continue to grow, observers say.

Both sites are rich in local history, which is very nearly a sine qua non of successful adaptive reuse — historic sites tend to leave behind more-interesting raw material, after all. Baltimore’s waterfront, with its wharfs and brick warehouses set among narrow streets, is reminiscent of a time when tall ships sailed in and out of this, one of the busiest ports on the East Coast. The Sacramento site, though less dense with surviving structures, harkens back to the early days of railroads in the West. In fact, the Union Pacific rail yard marked the Western terminus of the famed first transcontinental railroad, completed in 1869.

Both projects demonstrate that adaptive reuse, at least on the scale of these projects, is the purview of specialists. “You have to work with what’s there,” Struever said. “You need to adapt an old building to a new use and a new use to an old building. It’s creative in a way that ordinary development isn’t.”

This is by no means the first adaptive reuse project for Struever Bros. In Baltimore it has redeveloped historic brewery complexes in the Brewers Hill neighborhood and undertaken historic renovation at Greater Fells Point and Locus Point, both on Baltimore Harbor. In Boston the firm is redeveloping Fenway Park and surrounding structures, and in Durham, N.C., it is working in the American Tobacco Historic District, among other projects in various regions.

Thomas Enterprises brings experience as a developer of master-planned communities to the table in the Railyards project, as it is called. The 1,500-acre Boulevard mixed-use development, in Orlando, Fla., containing office, residential and about 550,000 square feet of retail space, and the 800-acre Rim project, in San Antonio, most of which will comprise retail, are among the firm’s current projects.

Thomas Enterprises faces some environmental issues with Railyards, relating to lingering contamination. The firm declined to discuss the issue, but division of the responsibility for remediation has held up transfer of the site. Negotiations continue as of this writing.

Plans call for seven brick structures the railroad company built at the site in the late 1800s to become the Central Shops, the retail hub of the redevelopment, which will also include a performing arts center. One of the buildings is to be made into an open-air marketplace for California wines and regional specialty foods.

Construction has yet to start on Railyards, but retailers are expressing interest already. Earlier in the year Bass Pro Shops signed a letter of intent to be the first national retailer there. “It was exactly the kind of experience we wanted to bring to the Railyards,” said Suheil J. Totah, vice president of development at Thomas Enterprises, according to published reports.

For one thing, Bass Pro Shops is known as a destination in its own right. The sporting goods retailer says some 78 million customers visit yearly, even though the chain operates only 33 stores. “Bass Pro Shops will attract customers from across northern California,” Totah said. The agreement is only a starting point for negotiations, so it is still unclear what Bass Pro Shops’ exact position at Railyards will be.

HarborEast is fairly far along in creating and leasing retail space. It includes locals, such as wine merchant Bin 604, and Handbags and the City, which came over from another part of the city. On the national side, HarborEast has a Cingular Wireless, a City Sports and a Whole Foods.

Struever says interest in adaptive reuse projects often begins among local retailers first, and then nationals follow. “Usually, we start with local retailers, because we’re in edge neighborhoods at first,” Struever said. “But by the time we’re done, national retailers, who’ve discovered the buying power in urban markets, are also interested. The mix of the two makes for a much more interesting retail experience than anything you might find at a mall.”