Toast of the Town

All is not as quiet on the town-center construction front as recent headlines might suggest. Though there has been a slowdown in development—a complete stall in some municipalities—town centers and Main Street-style projects, particularly those in the form of mixed-use lifestyle centers, are continuing to get built and leased.

“Will mixed-use lifestyle centers become the white elephants that many of their regional mall counterparts have? Not likely,” said Robert Spratt Jr., president, Charlotte, N.C.-based Hill Partners. The reason, he said, is two-fold.

First, the mix of uses is insulating the format from the economic downturn. “The opportunity to build mixed-use lifestyle centers hasn’t gone away; it’s too powerful a concept,” said Spratt. “It’s simply taking longer to execute because of the slowdown of retailer expansion, a weakened office market and a tightening of the lending community.”

One way around that is for developers to secure a diverse property portfolio, he said, which spans different geographic regions.

Another route to success is through phased development. “The first wave of leasing should shift to other uses still expanding, such as movie theaters, fitness centers and natural/organic specialty grocers,” advised Spratt. In short, if you can’t get the core of the project merchandised at the moment, concentrate on the components that offer more immediate opportunities.

A Hill Partners’ open-air town center that is flourishing is the Town Center at Levis Commons, situated in the shadow of Detroit, in Perrysburg, Ohio. Despite the troubled times, particularly in hard-hit Detroit, many of the 319,000-sq.-ft. town center’s merchants recorded double-digit increases in March, said Spratt, and at presstime April was expected to continue the positive trend. “Our consumer at this center is more upscale and, while scaling back, is still spending money. This shows that if your center is well-merchandised and well-marketed, it will perform well.”

Another Main Street stalwart is Biltmore Village, near the Vanderbilt estate in Asheville, N.C. “It used to be a support village for the estate, but over the years has evolved into an urban pedestrian village in its own right,” said Spratt. The mixed-use, phased project features a hotel and retail, with a large medical office component adjacent.

“Tenants at Biltmore Village are performing at or above pro forma, including J. Crew, Talbots, Chico’s and Aveda,” he said. Phase 2—an infill project with a Main Street retail environment and a mix of uses, including residential—is currently leasing.

Uptown action: In suburban Philadelphia is a vibrant corridor with high-tech and financial businesses, bioscience industries and more than 8 million visitors each year—but no downtown to speak of. Locally based O’Neill Properties Group aims to change that, with its new Uptown Worthington project opening fall 2009.

Located at a “Main and Main” address, in the heart of the corridor, the 2.2-million-sq.-ft., mixed-use Worthington features a Main Street and town-center component anchored by Wegman’s, Target, Muvico and L.L. Bean.

“The town center component isn’t just important to the Uptown Worthington development,” said Brian O’Neill, founder and chairman of O’Neill Properties. “It is the development.” The developer is constructing a de facto downtown for the township of Malvern, Pa., in Chester County.

“We are creating the downtown, the place to go, to see and be seen,” said O’Neill. “There are 190,000 daytime employees around the site, and 20,000 connect to the site. They’ve been in these offices for years, and now we are giving them a downtown, a place to have lunch, to do some shopping, to see a movie.”

Wegman’s is building a 140,000-sq.-ft. store in Uptown Worthington, joined by a same-sized Target, an 85,000-sq.-ft. Muvico complex complete with luxury box seats and 14 all-digital theaters, L.L. Bean and Arhaus. O’Neill considers each of these the best in its category, and their selection to the project is by design.

“This is the wealthiest suburb in the state of Pennsylvania, and it has no retail,” he said. “Picking the best of each category is our leasing strategy.”

The project is currently under construction, with delivery for interior fit-out in fourth quarter 2009 and opening starting in spring 2010.