COVER STORY, APRIL 2007

SMART DESIGN
Utilizing smart design maximizes investment value.
John Clifford, PE

GreenbergFarrow designed this Bronx, New York City, Target to include rooftop parking and partially submerged the building to conserve space and meet zoning requirements.

In the wake of anti-growth regulations in the Northeast and across the country — along with a heightened awareness of urban sprawl in and around major metropolitan areas — architects and developers have been seeking innovative and creative ways to incorporate all of a project’s elements into smaller parcels of land, giving rise to a wave of mixed-use developments. 

Once solely a big city phenomenon, the vertical concept was especially popular in cities like New York, Miami, Los Angeles and San Francisco, where high land and construction costs tend to prohibit new development. However, as city centers across America gained popularity as hip places to live, vertical centers gained popularity in cities like Atlanta, Chicago and Dallas. By increasing the square footage of a given project and incorporating different elements — such as retail, office or residential space, or entertainment venues — developers are able to maximize their investment and offer projects that are more attractive, more profitable and less risky for lenders.

Cost, leasing and return on investment (ROI) are primary objectives for developers. Often developers and tenants have different objectives, so balancing the demands of both parties can require constant negotiation. Architects act as a mediator of sorts, making design recommendations that satisfy the needs of all interests and maximize investor ROI, while taking into account possible site-related constraints associated with site configuration, building codes, landmarking, zoning and other factors.

In Rego Park, Queens, New York City, GreenbergFarrow is designing a new mixed-use project that incorporates residential towers soaring above a retail base that will house national big-box retailers. Initiatives like this are common in high-density areas like New York City, where smart developers are frequently using mixed-use vertical as a cost-effective design solution.

From a lender’s standpoint, when millions of dollars are being invested into a project, it pays to spread the risk around. The investment community’s favorable attitude toward risk-sharing is helping to accelerate the trend toward mixed-use development. In the case of a mixed-use project, the property’s steady, stable income is typically generated by the residential component. A 500-unit condominium project along with a 75,000-square-foot retail base will clearly be more attractive to lenders than a stand-alone, 500-unit condominium tower. This type of development requires developers to be flexible with their plans and make certain allowances to accommodate retailers’ needs into the design, even if it means altering an already successful model. 

Critical in attracting future tenants, the space must be designed so that it is flexible. An often-recited industry statistic is that nearly one in five retailers will disappear within a decade or so. Therefore, the retail portion of the project will need to be redeveloped roughly every 15 years to stay viable. In contrast, the residential portion will typically be strong and remain stable for decades.

It is thus easy to see why stacked projects are enticing for developers. And while it may be tempting to squeeze in some “throwaway” retail space just to reap the extra benefits, a project that lacks the proper planning and quality assurance is sure to fail in the long term. A successful residential developer that wants to build a mixed-use building must exercise the discipline to think about the project’s retail component with the same level of subtlety and sophistication as its residential portion.  

Parking is one area where mixed-use designers frequently make mistakes. Shoppers will not return to a mixed-use center if they need to struggle to remember where they were parked — if they feel unsafe waiting for an elevator in a dark garage — or if they have trouble navigating a parking lot.  Retail customers seek a parking lot that is bright, safe and easy to enter and exit. 

In the case of residential, segregated parking is a must. Also, residents understandably do not want to encounter shopping carts in their lot on a daily basis. For residential parking, it is acceptable to use columns, ramps, or turns to designate certain areas because, over time, residents will become familiar with the layout and may even have a reserved space. Designers must also possess a thorough understanding of local building and zoning laws when dealing with parking issues. Ultimately, parking challenges can be overcome through a thoughtful combination of creativity and design acrobatics.

In the borough of the Bronx in New York City, GreenbergFarrow designed River Plaza, a 235,000-square-foot retail center anchored with a Target department store. With a tight, irregularly shaped site bordered by major highways and a train line, parking posed a significant challenge. The solution was found with rooftop parking and a partially submerged building. This not only conserved space and met zoning requirements, but also contributed to the project’s becoming one of the city’s most successful Target stores.

Although mixed-use vertical centers were previously only seen in major cities, the trend has spread across the Northeast and around the country. More and more, developers are ready to go vertical as a way to maximize their investments. The creation of a top-quality, stimulating, mixed-use project, however, requires flexibility on the part of the developer. By paying attention to such key factors as accessibility, parking and long-term flexibility of space, developers can control costs, while maximizing leasing and ROI. A successful mixed-use developer is prepared to undertake a carefully planned and well-executed design that fulfills the particular needs of each of the property’s separate components.

John Clifford, PE, is a principal at GreenbergFarrow.


©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.