DETROIT, MI - There aren't many retail developments in the pipeline these days. And a lot of the condo and office projects have dried up. But mix the three, and developers see some demand. Mixed-use development has become a national real estate buzzword, taking the place of the enclosed mall as the darling of the retail world. Locally, there are six large-scale mixed-use developments under construction, and more are planned. "Nationally, cities are realizing they want higher levels of density, and the suburbs, which started out as sprawl, are turning into more urban areas," said Stan Eichelbaum, a professor of practice in the retail program at Michigan State University. Urban sites are often more efficient and profitable, he said.
Though retail is overbuilt as a sector, mixed-use developments allow developers to build retail for the smaller markets near the residential developments, said Eichelbaum, who is also president of East Lansing-based consulting firm Marketing Developments. "Developers have learned that a lot of residents are finding it fabulous to roll out of bed or walk a few blocks into a retail environment," he said.
The largest local mixed-use projects to be under construction this year are the Bloomfield Park development in Pontiac and the Pavilions of Troy development in Troy. The $300 million Pavilions project is the redevelopment of the former Kmart Corp. headquarters. The first phase of Bloomfield Park represents about $250 million in construction costs and follows eight years of planning and legal and other challenges for the site. Both projects will offer a blend of retail space with restaurants, residential units and office space. Not just a big deal in Oakland County suburbs, such projects are under way in Ann Arbor, Detroit and Chesterfield Township. They are also part of nearly $9 billion in 2008 construction activity.
Broadway Village at Lower Town, a $171 million project, will include 138,000 square feet of retail space, 153,000 square feet of medical office space and 185 rental residential units. It will be developed by East Lansing-based Strathmore Development Co.
Chicago-based Joseph Freed and Associates has the 4 Eleven lofts under construction in Ann Arbor, bringing a 10-story building with student housing and retail underneath.
In Detroit, the Studio One Apartments, under construction on Woodward Avenue in Midtown, will bring 124 market-rate rental units and 30,000 square feet of retail space developed by Grand Rapids-based Prime Development.
Marcel Burgler, a principal with Prime, said there is a benefit to leasing retail and residential spaces together. Residents are excited about the idea of retail spaces so close to their homes, and retailers like the idea of a captive group of customers. "The retailers think of (the residential) as an added benefit," he said. "It's not the reason they want to be there; they want to be there for the location."
The strength of mixing uses also works when projects have medical components, said Dale Watchowski, CEO of Southfield-based developer Redico L.L.C. Redico is developing a former Montgomery Ward site in Dearborn into a $60 million retail, medical and senior housing project called Dearborn Town Center. Dearborn-based Oakwood Healthcare Inc. leased 125,000 square feet of medical space, and Bloomfield Hills-based American House will oversee the senior housing.
"There will be a symbiotic relationship with the uses supporting each other," he said in a December interview. "The medical component gives comfort to the people living in the senior housing. The retail works with the senior housing because the residents can walk across the boulevard and go to the pharmacy or buy a cup of coffee."
Source: CrainsDetroit.com