A swell of ground-up retail destination development is continuing to gain momentum across the nation. The expansion of retail brands has been shrinking the inventory of existing vacant space, resulting in an increase in demand for new ground-up retail space. However, these new destinations are not carbon copies of pre-2008 centers. The economic downturn had a profound impact on consumer's lifestyles and this paradigm shift has resulted in exciting and positive changes in our industry. Additionally, a few key factors have contributed to the need for new ground-up retail development.
Culinary outlets are the new entertainment anchor as guests want to make an evening of a great dining experience. Importantly, for centers, the right mix and critical mass of dining offerings will keep an active flow of guests in the evening and on weekends. Owing its popularity to the economic downturn and focus on value, the food truck culture introduced a generation of Americans with tightened purse strings to inexpensive yet high-quality authentic cuisines from all over the globe. As a result, Americans have been lured out of their comfort zones into new culinary territory, in turn forcing the restaurant sector to increase the quality of their offerings. We are seeing an unprecedented variety of new dining concepts finding their way into centers, not only offering exotic menus, but also a more sophisticated offering of domestic dishes. From building one's own pizza to burgers and salads, there is an emphasis on quality, organic, locally sourced food that consumers of all ages and demographic demand. Nadel Architects recently completed the Juanita Tate Marketplace in Los Angeles for Regency Centers. This is a new ground-up center, where 53 percent of the tenants are restaurant and food related. In addition to several quick-serve restaurant options, the anchor, Northgate Gonzalez Market, provides a plethora of fresh, locally sourced, healthy food options that were nonexistent in the area prior to the development.
As a result of the economic crisis, people now realize the value of investing in their health over pure consumerism. This behavioral shift from the consumption of "stuff" to purchases that contribute to a healthy lifestyle has led to a change in tenant mixes, contributing to the demand for new ground-up retail. Athletic and fitness apparel lines are the new casual wear. Offerers of health and wellness products – including vitamins, supplements and personal technology items – are new tenants in many centers. Supporting and driving business to these retailers, as well as contributing to the need for additional ground-up retail, are athletic activity tenants such as yoga studios, dance studios, CrossFit gyms and martial arts centers.
New ground-up retail post-recession is taking a positive and sustainable turn. The Millennial Generation is an altruistic group, concerned for the well-being of the environment. Just as they are committed to a sustainable lifestyle in their own actions, they expect it as a rule of the brands they support.
Millennials recognize sustainable landscaping and repurposed materials, and are more likely to frequent retail destinations that provide and embrace sustainability. For example, Nadel recently completed Azalea, a new ground-up 32-acre lifestyle center in South Gate, California, for Primestor Development Inc., which is seeking LEED Silver certification from the U.S. Green Building Council. The plaza area, lined with boutique retail shops and al fresco dining options, incorporates several sustainable design elements. Nadel utilized innovative and sustainable building materials, including repurposed barn wood and landscaping elements such as the largest outdoor installation of one-of-a-kind living walls. The center has been very well received by the community at large.
Coming out of the recession, the commercial real estate industry finds itself in an environment in which retail destination shoppers, guests and visitors have rebooted their expectations. This rebirth is positive and refreshing, with a shift toward a lifestyle focused on acquiring not only consumer goods, but experiences that support culinary curiosities, a healthy lifestyle and environmentalism.
— Greg Lyon is principal and design director with Nadel Architects' retail practice, which has worked with major tenants and retail developers for more than 30 years and has completed more than 700 projects throughout the western United States. Lyon has worked most notably with Universal Studios, where he designed retail and entertainment components for Universal projects in international markets.