FEATURE ARTICLE, DECEMBER 2004

CONVENIENCE-DRIVEN RETAIL
Lehigh Valley retail project to allow for easy shopper access and draw shoppers from neighboring cities.
Susan H. Fishman

Upscale stores and landscaping are the hallmarks of a Summit retail center, a branded name that Birmingham, Alabama-based Bayer Properties has assigned its regional retail projects. The company is introducing its latest Summit project, an open-air, upscale shopping center, called The Summit Lehigh Valley, in Bethlehem Township, Pennsylvania. The retail center is part of a master-planned, mixed-use community that Bayer Properties is co-developing with Cleveland-based Forest City Enterprises.

Bayer Properties is developing The Summit Lehigh Valley at the corner of Route 33 and Freemansburg Avenue in Bethlehem Township, Pennsylvania. The retail center is part of a mixed-use community that Bayer Properties is co-developing with Cleveland-based Forest City Enterprises.

The $500 million development is located at the corner of Route 33 and Freemansburg Avenue, and will include a regional outdoor shopping center, offices, residential units, a hospital and medical suites. The project is designed to attract residents from the growing areas of eastern Pennsylvania and western New Jersey.

“We expect this project to have a major impact on the quality of life in Lehigh Valley,” says Jeffrey Bayer, founder of Bayer Properties. “It will give residents a place to go and shop better retailing versus having to drive to Philadelphia and New York City.”

Bayer Properties owns The Summit Birmingham, a highly successful 850,000-square-foot upscale open-air center that functions as a model for the Lehigh Valley project. The Summit Birmingham features anchors like Parisian, Saks Fifth Avenue, Barnes & Noble, a 16-screen movie theater and specialty stores such as Williams-Sonoma, Ann Taylor, Banana Republic and Pottery Barn. In keeping with Bayer’s other Summit properties, The Summit Lehigh Valley is expected to become nationally recognized for its distinctive architecture, extensive landscaping and shopper-friendly environment.

When Bayer Properties was offered the opportunity to bring another 400 acres into the process at Lehigh Valley, including major residential and office, and become the master developer for the whole 500-acre site, the company called on Forest City Enterprises to partner in the project.

“We felt that Forest City really gave us the size and the expertise,” says Bayer. “We’re not residential developers, and that’s a major part of this.”

The retail and residential portion of the project will occupy 287 acres on the southeast corner of Route 33 and Freemansburg Avenue. St. Luke’s Hospital & Health Network plans to build a multi-million-dollar medical arts campus on 180 acres on the southwest corner of the interchange. Southmont Plaza and Lehigh Valley Industrial Park VI already occupy the northeast and northwest corners, respectively. Southmont is a $36 million, 340,000-square-foot property hosting tenants such as Lowe’s Home Improvement Warehouse, Bed Bath & Beyond, Circuit City and Texas Steakhouse.

When completed, The Summit Lehigh Valley will offer 800,000 square feet of open-air, up-market shopping with two department stores, unique themed anchors, a cinema, a specialty food market and approximately 75 specialty stores and restaurants.

In addition, the developers are providing between 400,000 and 600,000 square feet of office space and up to 800 residential units, ranging in size from 1,200 square feet to 5,000 square feet.

“Unlike many lifestyle centers, our attempt is to build projects that have major regionality and can serve an entire marketplace versus being a niche 100,000- to 300,000-square-foot project that satisfies a market, perhaps, but only to a degree,” Bayer says.

Phase I of The Summit, which includes the cinema, specialty food market, several department stores, anchors and numerous retail shops is projected to be completed by 2006. The second phase, which will include a department store, retail shops, banks and restaurants, is scheduled for completion within the following 2 years.

Designed by nationally renowned planner Peter Calthorpe, the property will employ a town center theme, combining work, recreation and medical care within walking distance. Situated near state park lands and the Lehigh River, the Summit is also located on the recently completed Route 33 extension — the long-awaited major north-south link between Route 22 and Interstate 78. The new highway creates a high-growth corridor of affluence adjacent to the center and will allow easy shopper access from the Lehigh Valley region, plus New Jersey, Philadelphia and the Pocono Mountains.

Calthorpe was brought into the project by Forest City, which worked with him on the redevelopment of the former Stapleton Airport in Denver, a 4,000-acre mixed-use project. (Forest City was selected to be the master developer for that project.) A principal of Berkeley, California-based urban designers Calthorpe Associates, Calthorpe is a leading proponent of New Urbanism, which promotes multiple use development while protecting open space. Forest City knew of Calthorpe’s expertise and commitment to quality, and the city of Bethlehem Township welcomed him into the fold. The developers were intimately involved with the city in the planning process of The Summit Lehigh Valley.

“The city was initially opposed to bringing any new retail into its boundaries,” Bayer notes. “Everybody is starved for tax dollars, but when you start talking about regionality, they think of these large monolithic structures because they’re all so accustomed to enclosed malls. So when we came forth with Peter Calthorpe and showed that we were going to build a true town center, they became very excited.”

The developers are also keeping the project in character with its surroundings. The open-air town center will form the core of the property, with trees lining all of the interior roads and flowers bordering the walkways. A nature center will buffer the southern edge of the site, and designers are planning to expand the property’s existing “rails-to-trails” path into a hiking network that will encompass the perimeter of the development.

When completed, The Summit Lehigh Valley is expected to create more than 6,000 jobs, 4,000 through direct employment and more than 2,000 through indirect employment. Some 200 jobs are expected to be high-quality managerial positions. The project is also expected to have a total state and local tax impact of $24.7 million per year.

Total construction costs for the site will exceed $500 million. To accommodate the additional commerce in the area, the developers are also planning to provide several million dollars in infrastructure improvements, including the widening of the Freemansburg Avenue Bridge over Route 33 from four to eight lanes. And the utility road that currently runs beneath Route 33 from The Summit to the St. Luke’s property will be expanded and improved. The developers will also contribute an estimated $22.5 million in off-site traffic improvements, $4 million in storm drainage improvements and $2.5 million in sewer system improvements.

According to Bayer, a retail property needs to become part of the fabric of a community. It needs to be easy for the consumer to get to, close to the target demographic and very shopper friendly. It’s generally a collection of better tenants who appeal to consumers with annual incomes of $75,000 and above.

“Regional enclosed malls used to be out on the fringe,” Bayer notes. People came to them from all around, and the development built up around it. We think our property needs to be large and regional with critical mass, but it needs to be convenient to the target market. We’re not building these to appeal to all income categories. Because of the editing of the tenant mix, it doesn’t appeal to all aspects of socio-economic ranges.”

A Summit project, according to Bayer, is a strategy that involves six major points: a regional site location; considerable size; configuration of the anchor mix; specialty store mix; shopper-friendly features; and a community-centric atmosphere. It’s essential to have critical mass, notes Bayer.

“To build anything less exposes us, in the long term, to being usurped in the marketplace and being very vulnerable to someone who comes in and builds a major project of size and scope.”

Bayer also says that it’s important to be pre-emptive with the placement of the centers, which are primarily located in secondary cities.

“If we were going into Boston, then we could do an infill project that is smaller because you have such critical mass of not only retailing, but of people,” he notes. “But when you go into markets like Allentown, Birmingham, Reno and Fort Collins, these are much smaller markets and one large product that’s well done and inviting to the consumer can satisfy that market for a long time.”

In addition to The Summit Birmingham, Bayer Properties also has a Summit property in Louisville, Kentucky, and two others in the works in Reno, Nevada and Fort Collins, Colorado. The Summit Front Range, a 450,000-square-foot retail project planned for Fort Collins, has just signed the fourth of five anchors needed to make the project a success. Retailers signed so far include Dillard’s, Cost Plus World Market, Borders and Wild Oats.

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