Q&A: Inside mixed-use development Arbor South’s retail leasing strategy
A new 20-acre, mixed-use development with a sizeable retail component is taking shape roughly two miles from the University of Michigan.
Located on S. State St. near Interstate 94, the Arbor South development in Ann Arbor, Mich., will include more than 1,000 apartments and condominiums, with over 200 affordable housing units available in partnership with the Ann Arbor Housing Commission. The development, led by real estate firms Oxford Companies and Crawford Hoying, will also feature 100,000 square feet of ground-floor commercial retail space, an upscale hotel, parks, green spaces and gathering areas.
Arbor South recently received final state approval from the Michigan Strategic Fund Board, and pre-construction is expected to begin this winter.
According to U.S. Census data, Ann Arbor's population stands at more than 122,000, making it the fifth-largest city in Michigan.
To learn more about the developers' leasing strategy and how they plan to cater the property to students and visitors alike, Chain Store Age spoke with Matt Starr, executive VP of commercial real estate at Crawford Hoying.
How will Crawford Hoying curate the leasing strategy at Arbor South to stand out, while also complementing the existing retail and commercial market in Ann Arbor?
The strategy is really about creating a mix that feels right for Ann Arbor and, at the same time, gives people a unique reason to come to Arbor South. We’re not trying to simply fill the available space. The retail component is only about 100,000 square feet, so we want to be thoughtful about what goes into it.
The approach is centered on entertainment, a mix of food and beverage concepts and service-oriented tenants that complement those uses. We’re particularly focused on finding an entertainment user that can anchor one of the buildings, along with restaurants that can become destinations in their own right. From there, service and wellness uses can help round out the mix and create regular reasons for repeat visits.
We also see an opportunity to bring some new names to the Ann Arbor market as well as attract some local operators. That balance is important to us. The goal is a leasing mix that feels fresh without feeling disconnected from the community.
What makes Arbor South’s location and anticipated customer base (including both students and non-students) attractive to retail owners and operators?
One of the things we like most about Arbor South is the location and the breadth of the customer base it can serve. Ann Arbor has a significant university population.
At the same time, this location is well positioned to draw existing residents, visitors, business travelers and other key audiences. That mix creates opportunities for fitness, entertainment, restaurant and service concepts that resonate with university students and recent graduates while capturing demand from across the broader market.
That combination gives operators access to the energy and demand associated with the university while also reaching a customer base that is broader than a traditional college-town retail environment.
Beyond filling storefronts, how do you evaluate whether a prospective tenant will contribute to the experience you want to create at Arbor South?
For us, it starts with whether the concept gives people a reason to come to Arbor South. We want tenants that contribute to the overall experience rather than just occupy a storefront.
That’s important with the entertainment and restaurant components. Those uses can become drivers for the project and help create activity that benefits the rest of the commercial mix. Service and wellness tenants can play a different but equally important role by driving consistent, repeat visits.
We’re also looking at how the concepts will work together. With a focused commercial footprint, we want to be selective about the uses we bring in and make sure they complement one another. The right tenant is one that fits the customer base, works with the other businesses around it and adds something that isn't already being adequately served.
What will be the ideal mix of national and regional/local tenants for this property?
There’s value in bringing recognizable national and regional concepts to the project, particularly where they can introduce something new to the Ann Arbor market. At the same time, local operators are important because they understand the market and the customer better than anyone.
We’re already looking at both types of tenants and we’ve had a lot of interest early on because of how unique Ann Arbor really is. On the service and wellness side, we’re having conversations with several fitness and wellness concepts. On the food and beverage side, the goal is roughly four to six concepts, including three or four full-service restaurants and one or two quick-service concepts.
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The same thinking applies to entertainment. We’d like to land a larger entertainment user that can serve as an anchor, and we’re looking at concepts that would be new and complementary to the market. Ultimately, it’s less about hitting a specific percentage of national versus local tenants and more about putting together the right overall mix.
Ann Arbor is known for its strong restaurant, retail and wellness scenes. What opportunities or gaps in the local market do you see Arbor South being particularly well positioned to fill?
The biggest opportunity we see is around entertainment and experiential uses, particularly concepts that can serve both the university population and the broader Ann Arbor customer. We’re looking for a larger entertainment user that can serve as an anchor, while also exploring concepts that would be new to the market and could become destinations in their own right.
There is also an opportunity to add to the restaurant landscape with a mix of full-service and quick-service concepts. We don't want Arbor South to just duplicate what is already available elsewhere in Ann Arbor. We want to bring in restaurants that complement the market and give people another reason to visit.
Wellness and service uses are another important part of creating a well-rounded tenant mix. Concepts such as high-intensity fitness and other wellness-oriented services can appeal to students, recent graduates and residents and help create consistent traffic throughout the week.
Because there isn't a lot of new development in Ann Arbor, Arbor South has a chance to introduce a new collection of uses that adds something different to the existing retail and commercial landscape.
