Kite Realty’s Educated Approach
With three new mixed-use developments underway in highly educated, affluent areas, Kite Realty Group shows why it pays to be smart in today’s market.
Katie Lee

Indianapolis-based Kite Realty Group is mixing it up with three highly anticipated mixed-use projects in Cary, North Carolina; Delray Beach, Florida; and South Bend, Indiana. The three developments, which will open in 2008 and 2009, each plan to capitalize on the highly educated, highly affluent population that surrounds them. Kite anticipates that these key demographic factors — along with great daytime and nighttime traffic — will propel the markets toward continued growth and away from the economic slowdown hurting much of the country.

Parkside Town Commons
Cary, North Carolina

Kite Realty Group is developing Parkside Town Commons, a 1.5 million-square-foot mixed-use project in Cary, North Carolina, on 128 acres adjoining Research Triangle Park.

Education is second to none in North Carolina’s famously successful Research Triangle Park, a 7,000-acre science park with 40,000 workers located between prestigious Duke University in Durham, the University of North Carolina in Chapel Hill, and North Carolina State University in Raleigh. In fact, some of the most highly educated people in the world live in the Triangle, with 53 percent of the Raleigh-Durham-Chapel Hill population having earned a bachelor’s degree or higher. Located on 128 acres adjoining Research Triangle Park in northwest Cary, Kite Realty Group aims to meet the needs of residents and workers alike with the 1.5 million-square-foot Parkside Town Commons.

According to Mark Jenkins, senior vice president of development for Kite Realty Group, Parkside Town Commons is expected to deliver between 600,000 and 700,000 square feet of retail space, approximately 500 residential units and 100,000 square feet of office space. The $134 million project is scheduled to open in spring 2009.

This dynamic development will tap into unique demographics, says Jenkins. “In the Triangle, you’re surrounded by Duke, UNC and N.C. State; those three schools dominate the landscape from an educational standpoint,” he says. “We’ve got a pretty affluent, highly educated demographic.”

Parkside Town Commons (Cary, North Carolina) is scheduled to open in spring 2009.

As icing on the cake, a new loop is being built around Raleigh, Interstate 540, which is expected to drive even more traffic to the site. A portion of the new loop opened in July of this year, terminating at Parkside Town Commons’ interchange with NC-55. Currently, the center’s trade area is 170,000 residents based on 2006 postal records, and future growth is projected at 7 percent to 8 percent annually through 2009, when the project opens.

Parkside Town Commons also boasts strong daytime and nighttime populations, unlike many new centers that are built on the fringe of high-growth areas, says Gregg Poetz, senior vice president of leasing for Kite Realty Group.

“Our site is unique because we have an existing population base that already is fairly strong, and then we have 20,000 new residential units being built within close proximity to our site,” Poetz says. He adds that this part of North Carolina currently has one of the strongest housing markets in the country, having avoided the recent housing slump that most of the country is still reeling from.

“Home prices have actually gone up in the last month here,” adds Jenkins.

In addition to that good news, there are over 40,000 employees in Research Triangle Park, and Kite’s center will have direct access into the Triangle. “From a retail and even a restaurant standpoint, that gives you a great daytime population and shopper base, and you obviously have the existing nighttime population,” Poetz says. “It’s really unique to have both, and that’s been a huge selling point.”

Another big plus is convenience. Citing recent research on suburban office shopping patterns by the International Council on Shopping Centers (ICSC), Poetz says that many people today are so pressed for time that they end up doing a lot of their shopping near their office, either on a lunch hour or on their way home from work. Today, people are less inclined to take time out of their weekends to shop; therefore, the added convenience of having shopping opportunities within close proximity to work is very appealing to many potential customers.

Parkside Town Commons’ pedestrian-friendly main street design also helps serve as a gathering place for Research Triangle Park, which itself is the downtown for the entire Triangle area. “To be able to find a 128-acre site that you can do over 1 million square feet of development immediately adjacent to a downtown, any downtown — that is really unique,” says Jenkins.

Delray Marketplace
Delray Beach, Florida

Delray Marketplace is another mixed-use development by Kite Realty Group, opening fall 2008. Located in Delray Beach, Florida, the $90 million project will offer 300,000 square feet of retail and 82 residential units.

While Research Triangle Park is overflowing with the smartest of scholars, Delray Beach, Florida, is burgeoning with some of the wealthiest, most fashionable consumers in the nation. The average household income tops $82,000 — and this substantial customer base demands top-quality retail. A new $90 million project by Kite Realty Group hopes to deliver.

Located in southern Palm Beach County, Delray Marketplace will offer more than 300,000 square feet of upscale retail and dining options and 82 residential units when it debuts in fall 2008. Like Parkside Town Commons, Delray Marketplace is an urban development with a main street feel, with emphasis placed on pedestrian mobility and access. The center’s trade area consists of more than 271,000 people — and that number is growing with the number of new high-end housing.

“From a housing standpoint, generally, Florida has suffered,” says Jenkins. “But one of the things that’s unique about Delray Marketplace is this is such a higher price point [for housing] that you still see tremendous housing growth going on.”

“Literally 3 miles to the north of us,” Jenkins continues, “you’ve got $350,000 to $500,000 homes, which is very nice, but then 1.5 miles to the south you’ve got brand-new $2 million homes! There is a really nice cross-section of what we think we can attract.”

Chances are, nearly everyone attracted to Delray Marketplace will have an enviable disposable income, which is always a nice coup for retailers. Currently, Poetz and his leasing team are busy negotiating letters of intent for approximately 60 percent of the shop space. The center will be anchored by a movie theater, a grocery component, and a junior anchor about 15,000 square feet in size. The balance will consist of lifestyle and specialty shops  and four restaurants located at the entry to the development.

“We really look at the restaurants that we’re going after as an anchor for the project and to help promote the entertainment component of the project,” Jenkins says.

Eddy Street Commons at Notre Dame
South Bend, Indiana

Eddy Street Commons at Notre Dame is located in South Bend, Indiana, with convenient access to the University of Notre Dame campus and stadium.

Gravitating again toward a highly educated market, Kite is developing a mixed-use project in South Bend, Indiana, home to a venerable collegiate institution, the University of Notre Dame. Called Eddy Street Commons at Notre Dame, the project will feature 90,000 square feet of retail space, as well as a sizeable housing component: 268 apartments, 49 condominiums, 20 courtyard town homes, 52 flats and 61 city homes. In addition, the site will include a 255-room full-service hotel with an additional 50 condominiums on floors 7 through 9 (located just south of Notre Dame Stadium) and a 139-room limited-service hotel, as well as 75,000 square feet of office space overlooking the university campus.

“This one truly is a mixed-use project,” says Jenkins. “The other two [Parkside Town Commons and Delray Marketplace] are mostly retail.”

Poetz says the anchor tenant, a bookstore, has been signed, though it is too early to mention them by name. Other tenants will include a diverse mix of men’s and women’s fashion stores, entertainment and a restaurant component. “We probably have 65 percent to 70 percent of our shops committed or at least negotiating letters of intent,” he says. “It’s been very well received.”

Eddy Street Commons at Notre Dame is expected to open in spring 2009.

Kite’s Educational Focus

Kite Realty Group has projects from Florida to Washington and from Texas to Oregon, with a more recent concentration in North Carolina. With such widespread coverage, what exactly attracts Kite to the markets it enters?

“Standing back and looking at it, it probably looks like a shotgun approach, but we really do have a method to it,” Jenkins explains. “Right now, we’re focusing on the Southeast. With the position we have in the Florida market and trying to establish ourselves in North Carolina, it just makes sense to start connecting the two.”

Another area of the country that is very much on Kite’s radar is the Pacific Northwest. “We’ve worked out there for quite some time, and we’re pursuing more projects out there now,” Jenkins says. The Pacific Northwest is also highly educated with high rates of growth, both of which make it a stable and attractive market during volatile economic times.

“The Seattle market, the Raleigh market — those are great markets for us to integrate uses,” Jenkins says. “I don’t know if I’d call them ‘recession-proof,’ but right now those markets have something that is hard to be affected by the recession, and that’s the education level.”