In the cool, cool, cool of the city

More and more these days, shopping center developers find themselves in the role of town planner. Once dedicated to creating pleasant spaces for people to shop in, they now are challenged to create places for people to live, play, eat and be entertained in. Build that, they’re told, and shoppers will come. But droves of millennials fleeing suburbs in search of more fulfilling urban lifestyles are giving developers an assist. In some cases, they’re hewing their own downtowns out of rough old sections of town. In others, old downtowns are remaking themselves to welcome this new city stock. Yet, in both cases, valuable lessons in lifestyle and retailing are being dispensed to developers open to new ideas.



Total population grew 10% during the first decade of this century, according to the U.S. Census Bureau, but cities swelled by 12%. It’s no surprise millennials escaping their suburban upbringings — and their suburban malls — led this metropolitan migration. A 2015 study conducted by the Urban Land Institute found 46% of this burgeoning generation preferring city life, exactly twice as many as said they’d stick to the ‘burbs.



The most compelling byproduct of this trend for retail center developers is the rise of what Cushman & Wakefield calls “Cool Streets” in a report that ranks the 100 hippest neighborhoods in the nation. No matter the town, the circumstances of their creation are strikingly similar: Millennials with meager means move to the city, find run-down or abandoned nabes, infuse them with art and music and make them destinations for the hipster hordes that follow.



“For retailers that are struggling, these are the incubator neighborhoods. Rents can be a fraction of what they pay on the high streets,” said Garrick Brown, VP of retail research at Cushman & Wakefield. “This is where you experiment and be bold. Companies who’ve been successful here, like Shinola and Bonobos, are finding ways to connect at that mid price point.”



So-called Cool Streets are a fast-moving target, real-estate wise. The prototype for the breed — Williamsburg, Brooklyn — got hipsterized in the late ’90s, flourished in the 2000s and was gentrified by lawyers and bankers in the past decade. “Williamsburg is over” as a Cool Street, Brown said.



Tops on Cushman’s cool ranking is another Brooklyn ‘hood — Sunset Park, home to Industry City, a 6 million-sq.-ft. former industrial complex that houses Bed Bath & Beyond, Cost Plus and, soon, Saks OFF 5th. In Sunset Park’s case, retail tenants arrived along with residential ones, and it’s still positioning to get its “hip” on, according to the Cool Streets report. Areas currently reigning as the kings and queens of cool, according to Cushman, include Chicago’s Logan Square, Denver’s RiNo district, Los Angeles’s Silver Lake and Miami’s Wynwood.



But the suitability to retail that made Sunset Park No. 1 is an uncommon feature of these trend-setting areas. Space availability and rising land costs do not lend themselves to special-built retail space. In Brooklyn, outside of Industry City, said Cushman’s head of North American retail services Gene Spiegelman, “It’s really difficult to satisfy the demand by national retailers looking for traditional four-wall profitability.”



Then there’s Detroit. The troubled downtown whose most prominent features a decade ago were burnt-out houses and boarded-up old skyscrapers is undergoing a renaissance inspired in part by the Cool Streets and the social trends fueling them. But a wholesale redevelopment — District Detroit — has since taken shape in a 50-block area in the heart of downtown. Led by Christopher Ilitch — son of Mike Ilitch, founder of the Detroit-based Little Caesars chain — the project includes the company’s new headquarters building and the new home of the NHL’s Detroit Red Wings, the Little Caesars Arena.



Taking inspiration from hip enclaves cropping up in the Motor City and elsewhere, District Detroit has been master-planned to consist of five neighborhoods. Columbia Street will appeal to the high end with art galleries and boutique. Wildcat Alley will appeal to the masses, surrounding a troika of professional sports venues — Comerica Park, Ford Field and Little Caesars Arena — with bars, restaurants and shops.



“It’s been a dramatic change, almost 180 degrees, in the last five years,” said Mike Atwell, VP of real estate for Olympia Development of Michigan, which is overseeing the project. “Millennials started moving into Detroit to take part in what they saw as an opportunity to build Detroit back. Office occupancy is now high. The Little Caesars headquarters is the first modern office building to be built downtown in a couple of decades. It’s almost impossible to find a place to live there now.”



With the major infrastructure in place, Atwell said District Detroit is now developing plans for the retail landscape in the remade urban center. Woodward Square, near the hockey arena, will be a hotbed of ground-floor retail, he said, as will The Via, a natural light-infused, enclosed concourse extending out from the main floor of Little Caesars Arena, which is situated below ground level.



“We’re going to be developing a curated mix of local Detroit retailers and regional and national retailers,” Atwell said.



While cities may be the incubators of future retail chic, they won’t be the future of mass retail. The real estate is too scarce and too expensive. The trend that is sure to emanate out of the Cool Streets is the urbanification of centers and mixed-use developments in secondary markets.



“Retail construction is low in big cities because prices have become so high, so you’re going to see retail growth in secondary markets like Austin, Denver and Atlanta where they have the consumer base and job growth to support retail,” said Melina Cordero, CBRE’s head of retail research for the Americas.



Retail strategy consultant Jerry Hoffman agreed.



“If you look at Denver’s RiNo district, there’s hip apartments and restaurants and fitness centers, but very little retail,” Hoffman said. “What’s really emerging is that millennials are starting families and moving back to the suburbs and they’re demanding something different from their shopping centers.”



Added Cordero: “They can’t live in San Francisco or Manhattan at current prices, but they want that lifestyle.”