YaromirSteiner ... repositioning retail, it is essential to understand the classification of the shopping environments based on the nature of the shopping transaction. 5/17/2016 5

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REINVENTION: Property Redevelopment and Repositioning

Yaromir SteinerSteiner + Associates

RECon – Las Vegas22 May 2016

Presenter

Yaromir Steiner, CRX

- Past Trustee, ICSC- CEO, Steiner + Associates, Columbus, OH

Presenter

• Born in Istanbul, Turkey

• Educated in Toulouse, France

• Experience in the U.S. – Houston, New York, Miami, and Columbus, OH

1. Istanbul, Turkey

2. Toulouse, France

5. Miami, FL3. Houston, TX

4. New York, NY6. Columbus, OH

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Project Experience

Easton Town Center, Columbus, OH

Bayshore Town Center, Glendale, WI Zona Rosa, Kansas City, MO

The Greene, Beavercreek, OH

Peninsula Town Center, Hampton, VA Liberty Center, North Cincinnati, OH

CocoWalk, Miami, FL Centro Ybor, Tampa, FL Newport on the Levee, Newport, KY Newport Aquarium, Newport, KY

Adventure Aquarium, Camden, NJ Easton Gateway, Columbus, OH

In Summary: 5 Urban Infill Projects







In Summary: 2 Redevelopment Projects







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In Summary: 5 Green Field Projects







Presentation

This presentation is biased by our experience:

• Large repositioning projects: > 1,000,000 square feet;

• Suburban locations;

• Anchored by department stores;

• Public Private Partnerships with over 20% of costs funded publicly

Presentation

This presentation will focus and draw from common themes:

• The nature of the shopping trip and its impact on design;

• Technical considerations:

- Clearing the site and eminent domain;

- Increased storm water detention;

- Consideration of mixed-use;

- Legal structure for vertical integration;

- Parking analysis in mixed-use;

- Design guidelines

• Case Study – Bayshore Town Center (Glendale, WI)

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THE NATURE OF THE SHOPPING TRIP

AND ITS IMPACT ON DESIGN

Shopping Classification

Understanding the nature of the shopping trips and their impact on retail environments will allow us not only to address the transformation at a regional retail environment’s level but also to deal with retail environments at the level of neighborhoods,villages, and even streets.

The Greene Town Center, Beavercreek, OH Mashpee Commons, Mashpee, MA Park Avenue, Winter Park, FL


When repositioning retail, it is essential to understand the classification of the shopping environments based on the nature of the shopping transaction.

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Is the transaction for goods and services “Need” based or “Want” based?“Need” “Want”

Shopping Classification“Need” based shopping transactions:

• Provide for objective and basic needs

• Use the first dollars of every household income

• They represent a decreasing percentage of the expenditures as the household income is higher

• The purchase decisions are driven primarily by rational criteria

• Require high frequency of visits to the retailers

Shopping Classification“Want” based shopping transactions:

• Provide for subjective and aspirational needs

• Funded from the discretionary dollars of the household income

• Highly variable between low and high income households

• The purchase decisions are driven primarily by aspirational criteria

• Lower frequency of visits than “need” based trips

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Classification of shopping transactions: Summary

Nature of Shopping Trip “Need” “Want”Type of Purchases Basic Aspirational

Decision Driver Objective & Rational Subjective & Aspirational

Household Dollars First Excess (discretionary)

Frequency of Visits Higher Lower

Example

Shopping Classification“Need” vs. “Want” based shopping environments:“Need” “Want”Florence Mall

Cincinnati, OH

Liberty Center

Kenwood Towne Centre

Regional Trade AreaLocal Trade Areas

Cincinnati, OH

Shopping Classification“Need” vs. “Want” based shopping environments:“Need” – Retailers that provide Value for Dollar “Want” – Experiential and Aspirational Retailers

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Shopping Classification“Need” vs. “Want” based shopping environments:“Need” “Want”Convenient Regional AccessConvenient Local Access

Shopping Classification“Need” vs. “Want” based shopping environments:“Need” “Want”Aspirational DesignFunctional Design


Classification of shopping environments: Summary

Nature of Shopping Trip “Need” “Want”Trade Area Local Regional

Retailers Value Driven Lifestyle Driven

Retailer Example

Access Local Regional

Design Functional Aspirational

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Shopping Classification“Need” based financial model:

• Rents primarily based on costs

• Longer term leases with options

• Better credit tenants

• Financially focused management

• Limited and predictable capital expenditures

• Portfolios of Kimco, Regency, Weingarten Realty

Typical Power Center

Shopping Classification“Want” based financial model:

• Rents primarily based on tenant sales

• Shorter leases with no options

• Lower credit tenants

• Experience delivery focused management

• Extensive and variable capital expenditures

• Portfolios of Taubman, Simon, GGP

The Greene Town Center


Classification of financial model: Summary

Driver of Shopping Trip “Need” “Want”Rent Base Cost Sales

Lease Terms Longer Shorter

Credit Stronger Weaker

Management Focus Financial Experience Delivery

Capital Needs Limited/Predictable Extensive/Variable

REIT Example Kimco Taubman

Financial Instrument Bonds Stocks

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Contribution to community value…..

• “Need” based shopping environments are a part of the basic amenities or infrastructure of a community: i.e. streets, sidewalks, utilities, sewers, garbage collection, etc.

• “Want” based shopping environments define and add value to a community and contribute to its economic development.

Shopping Classification - Conclusion

Conclusion:

• A successful mixed-use development (from a street to a regional project) must be conceived to be responsive to the ‘need’and‘want’ transactions of its trade area.

• The‘want’ retail environments that add significant value to a community must be conceived to be responsive to the changing existential aspirations of its customers.

• Whereas the ‘need’ retail, while not adding extra value, must be accommodated consistent with its functional requirements.

A Question That is Always Asked….

How do we integrate “Need” and “Want” uses in a single project?

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Deciding How to Integrate “Need” and “Want” Based Retail

• ACCESS - “Need” requires local access, “Want” depends on scale of project

Peninsula Town Center Bayshore Town Center

- Non-retail uses are generally enhanced by “want” retail

- Retail should always be studied as a single use independent of non-retail uses

• FEASIBILITY – The process is similar

• FOOD venues are different in “Need” and “Want” environments.“Need” – fast, casual, and convenient “Want” – celebratory and special occasions


• PARKING criteria differs…….“Need” – Requires adjacent parking & functional “Want” – Pleasant parking experience; pedestrian walkability


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• AESTHETICS differ“Need” – Environment attractiveness is a ‘nice to have’ but not necessary; functionality and low maintenance is key

“Want” – Environment and architecture MUST be attractive and aspirational


• NON-RETAIL USES are impacted differently.“Need” – Functionally EnhancedUses that enhance are mostly high

frequency lifestyle uses (i.e. grocery, convenience, take-out)

“Want” – Lifestyle EnhancedResidential, hospitality, and office uses are always enhanced by ‘want’ uses.


Integrating “Need” and “Want” Retail: Summary


Shopping Classification “Need” “Want”Access Convenient & Local Regional

FeasibilityIndependent of

non-retail uses

Independent of

non-retail uses

Food Venues Quick Casual Celebratory

Parking Functional Pleasant

Environment Attractiveness Nice to Have Essential

Non-Retail Uses Functionally Enhanced Lifestyle Enhanced

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TECHNICAL CONSIDERATIONS

Technical considerations:

- Clearing the site and eminent domain

- Increased storm water detention

- Consideration of Mixed-use

- Legal structure for vertical integration

- Parking analysis in mixed-use

- Design guidelines

Technical Considerations

Peninsula Town Center BEFORE (Coliseum Mall)

Technical Considerations: clearing site and eminent domain

Peninsula Town Center AFTER

Hampton, VA

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- Design guidelines


Storm water management regulations have evolved over the last decade and will continue to do so.

• For example, in 2003, Ohio EPA implemented new requirements for post-construction storm water management for projects disturbing > 1-acre of land

• Regulations attempt to detain storm water runoff for protection of stream channels, stream erosion control, and improved water quality

• Prescribed best management practices consist of storage of storm water runoff, in addition to that required by local detention/retention regulations

• Estimates of this additional storage volume vary between 1,400 cubic feet/acre for high density residential projects to 2,200 cubic feet/acre for commercial projects

• Additional costs for an underground storage scenario can be estimated between $10,000 - $15,000/acre

Technical Considerations: increased storm water detention

Storm water management regulations have evolved over the last decade and will continue to do so.

• Redevelopment or expansion of projects begun prior to 2003 are not exempt and must comply with these new regulations by implementing post-construction water quality management practices

• Storm water regulations will continue to evolve and future regulations may require:

- post-development runoff volumes be reduced to pre-development levels

- official testing and reporting of storm water quality

- new and innovative best management practices


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Storage Under Garage, Easton


Pervious Pavers, Easton Gateway

Roof Garden, Liberty CenterPool at Unity Chapel, Liberty Center




- Consideration of mixed-use



- Design guidelines


Advantages of mixed-use development:

- The mixing of uses:

o retail

o hospitality

o office

o residential

o civic

creates a symbiotic and synergistic environment

Technical Considerations: consideration of mixed-use

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Synergy/SynergisticThe creation of a whole that is greater than the simple sum of its parts.


Symbiosis/SymbioticA relationship of mutual benefit or dependence.


Bayshore Town Center

The Greene

Fenlon Square, EastonEaston

EastonLiberty Center

Synergistic

• The most common benefit is infrastructure sharing:- common areas- parking- utility- infrastructure


Example: A public park can benefit restaurants, residential, office, retail, community events, etc.

Liberty Center

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Symbiotic

• Retail is mostly justified independent of other uses

• Whereas retail significantly increases the feasibility of other uses


Liberty Center Easton The Greene







- Design guidelines


Technical Considerations: legal structure for vertical integration

• Mixed-use often requires integration of multiple uses in single buildings

• Very often office, apartments, entertainment, hotels over retail

Bayshore Town Center, Glendale, WICityCentre, Houston, TXAmericana at Brand, Glendale, CA

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Liberty Center

hotel

office

residential


Example: Office integration at Liberty Center



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officeoffice

retailretail


Vertical integration transaction:

• Sale (no capital gain!) or contribution of parcel to third party developer

• CC&R (Covenants, Conditions and Restrictions) Agreement

• Development and Use Agreement

• 99-year master lease of the retail condominium

• Purchase options of the retail condominium







- Design guidelines


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Technical Considerations: parking analysis in mixed-use

• In mixed-use environments the parking calculations must take into account both the timing of the parking needs and the potential for sharing.

• In our “biased” experience the global number varies between 4 and 5 spaces per 1,000sqft.


TPS Parking Requirements

Timing and Proximity Shared Parking RequirementsFor large scale (>500,000sf) retail dominated mixed-use projects

Retail

Free-standing (not sharing) 4.00/1000 sf

In-line (integrated) tenants 3.75/1000 sf

Anchors (greater than 30,000 sf) 3.25/1000 sf

Restaurant

Free-standing (not sharing) 13.0/1000 sf

In-line (integrated) restaurants 12.0/1000 sf

Fast food (free-standing) 8.0/1000 sf

Food Court and other impulse food tenants 0.0/1000 sf

Entertainment

Night Clubs or similar assembly (not shared) 20.0/1000 sf

In-line (integrated) 10.0/1000 sf

Cinema

Free-standing 1/3 seats

Integrated 1/4 seats

PARTIAL EXCERPT OF

STEINER PARKING

GUIDELINES

PARTIAL EXCERPT OF

STEINER PARKING

GUIDELINES


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- Design guidelines


Technical Considerations: design guidelines

Place making is critical if “want” based retail uses are integrated:

• Negative space geometrics is the primary consideration

• The furnishing of the negative space is the next most important consideration

• All restaurant venues must be planned with outdoor (3-4 season) seating

• Streets with parallel parking are ideal

• Plan for community event spaces: outdoor and/or indoor



• Negative space geometrics is the primary consideration

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• The furnishing of the negative space is the next most important consideration



• All restaurant venues must be planned with outdoor (3-4 season) seating



• Streets with parallel parking are ideal

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• Plan for community event spaces: outdoor and/or indoor

CASE STUDY:

BAYSHORE TOWN CENTER

Glendale (Milwaukee), WI

Case Study: Bayshore Town Center

Bayshore Town Center is a redevelopment of a traditional enclosed shopping mall into a mixed-use town center:

• Consisting of over 1.2 million square feet (111,480 sq m) of retail, office, and residential space• Part new construction and part renovation• Project required extensive environmental remediation and faced a complicated land assembly process

BEFORE:• Traditional enclosed mall• 550,000 leasable square feet of retail

AFTER:• Mixed-use town center• 1.2 million square feet of retail, office, entertainment, and residential

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Site Plan



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THANK YOU

Yaromir SteinerSteiner + [email protected]

Please Complete Your Evaluation Now.

1. Take Out Your Smartphone or Tablet

2. Go to survey.icsc.org/2016RECON

3. Select this course: Reinvention: Property Redevelopment and Repositioning

Course Evaluation

Documents

YaromirSteiner ... repositioning retail, it is essential to understand the classification of the shopping environments based on the nature of the shopping transaction. 5/17/2016 5