The appeal of “new-urbanistic” developments
As many of the malls that dominated physical retail for decades close or attempt to reinvent themselves, retail real estate developers are exploring and executing new ideas and designs for the brick-and-mortar centers that will define the marketplaces of the 21st Century.
One movement called “new urbanism” development harks back to the Euclidean Zoning established in the 1920s, a system influenced by a lawsuit in Euclid, Ohio, that separated residential zones from commercial zones. That’s one of the principles we used to design and program Tuscan Village, a 170-acre mixed-use project on the former site of the Rockingham Park Racetrack in Salem, N.H. that opened in 2021. Its retail tenants include Arhaus, Nike, Pottery Barn, Tuscan Market, The Container Store, Williams Sonoma, Sam Adams Beer Garden and nearly 1,000 residents—many of whom migrated to tax-free New Hampshire from Boston, just 32 miles away.
Developments like Tuscan Village, however, need time to fully define themselves. All too often, developers put blueprints together for a big new project and 10 years later realize they didn’t get the recipe right in terms of the programming. To create what we intend to be a long-term enduring property, we have to have the ability to develop the land in phases. And to do that, we don’t tell the market what it needs; we let the market drive the programming. It also helps to have a local government willing to work with you as the programming strategy changes due to twists and turns in market reaction and resulting demand.
One of those first twists affected us while we were still building phase one was the pandemic. It hit, and all of a sudden droves of Boston residents were looking to move out of the city and work from home. Our residential development partners quickly occupied the 600 apartments and town homes in our blueprint for the first phase. Right now, we are planning for many more residential units as a function of our success in phase one.
With so many potential customers living right on the property, our change in strategy altered the future character of the development and, in turn, made it more appealing to some retail, restaurant, and experiential tenants that might not have been considering space at Tuscan Village previously.
Arhaus furniture had some expansion demand bandwidth in the Boston market and we were fortunate to get on their list. They made three or four visits to the market, not just exploring Tuscan Village, but driving from neighborhood to neighborhood in the area. With Lake Winnipesaukee, the White Mountains, and the seacoast nearby, southern New Hampshire is a tremendously popular second-home market. Arhaus decided to open a 15,000-sq.-ft. store and exceeded their expectations--and ours, as well.
With projects this big and impactful, developers have to maintain flexibility in their strategic plans to maximize the productivity of their assets. You have to imagine your environment three-dimensionally. How will shoppers experience the space? And what about residents? Workers? Patients and families of people seeking medical attention from the first Mass General Brigham Medical Center in the state? What new demands will all these different guests bring to our space?
How will each of those groups of residents and guests overlap each other? And how might that change? One has to blend those possibilities together and make synergistic decisions. What will wedding parties staying at our hotel want to do? What leads people to want to live at Tuscan Village? How do we make it pedestrian while also making parking convenient for our various categories of guests?
More and more mainstream retailers are starting to get an understanding of this evolution of retail center shopping behavior. More open-minded omnichannel and digitally native retailers understand that there are certain brand connections in our environment that matter to them. Currently, retailers who think this way relative to site selection are a small, but they are becoming a growing percentage of the total.
Retail tenants and retail real estate developers have to maintain flexibility in their strategic plans if they want to maximize the productivity of their physical assets. Neither of us can afford to draw up a plan, lay it on the table, and wonder why it didn’t work.
Michael Powers is senior vice president of retail leasing at Tuscan Village.