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7 trends in commercial revitalization

Here’s what we're thinking about as we tackle new downtown and retail revitalization projects.

The Experts:

  • David Dougherty, RE3 Partner and Principal at Dougherty Landscape Architects

  • Mary Bosch, RE3 Partner and Principal at Marketek

  • Audrey Taylor, RE3 Partner and President & CEO at Chabin Concepts

  • Jeff Farrar, developer at Main and Main Properties, was interviewed by Audrey for his real estate perspective

1. Shopping districts must be quick-change artists

Mary Bosch has worked hundreds of retail projects, and she says many shopping centers struggle unnecessarily by trying to fill space with traditional retail. “Creative entrepreneurs are the lifeblood of downtowns and successful small centers,” explains Bosch. Downtowns and strip malls benefit from smaller scale spaces with more flexibility. Independent creative retailers operating in small spaces are more able to adapt to a fast-changing market. This is their key competitive advantage.

Developer, Jeff Farrar, concurs: “‘Amazon-proof’ tenants are what to look for—offerings that don't compete head on with Amazon.” He says brand companies, particularly at the high end, will close stores and sell online because brick & mortar is no longer financially feasible for them.

2. Pop-up retail will evolve

Pop-up stores, flexible spaces and public space programming for entertainment, are the ultimate outcome of this rapid-change environment. Pop-ups are expanding from fashion into tech, art, wellness, and concept stores. However, developer Jeff Farrar cautions that pop-ups offer no long-term value for the investor. But he acknowledges that periodically changing the mix, as pop-ups do, is effective for attracting more shopper activity. The Urban Land Institute points out that retailers are less willing to commit to long-term leases or risk long-term contracts as they frequently reinvent themselves and introduce new brands. Property owners will have to adapt to this new way of doing business.

Rotterdamse Markthal (Rotterdam Market hall) – An apartment building covering open air food stalls plus restaurants, a supermarket and underground parking, The Netherlands. Photo Credit: iStock / AlbertPego

3. Retail is not dead, the mall might be

With so much news of closing chains, Bosch wants to clarify that “retail is far from dead; the marketplace is in a period of intense adjustment to a future of blended online and in-store purchasing, a balance of chains and independents, and complex demographic shifts.” Retailers that thrive, says Bosch, are those that creatively respond to the boredom of retail chain store predictability. Farrar expects additional closures among big chains including Pier 1, Bed Bath & Beyond, Kohl's, and Office Depot. Food is a category that can survive with new services such as walk-up, delivery, and food halls. Overall, malls and strip shopping centers will continue to lose traditional tenants, says Farrar as medical, entertainment, fitness centers and education take their place. This is likely to cause disruption for investors as rental values adjust to the changing market. What about turning malls into housing? Farrar believes that portions of malls could be repurposed for residential use but he says it would require 4 to 5 stories to be financially feasible.

4. Retail hubs popping up near suburban transportation nodes

As they look to stretch housing dollars, millennials are moving to the suburbs. They are looking for walkable neighborhoods near transportation hubs that have both amenities and retail options. Cities such as Beaverton, Oregon, are taking note and pitching directly to this demographic. Retail behemoth, Walmart, is also responding to this trend by developing several “Town Centers” and converting some of their vast parking lots into pedestrian-friendly activity centers featuring food, shops, parks and even homes, in some cases.

5. Climate patterns will alter design choices

Changing weather patterns are affecting how we plan sustainable places, says David Dougherty. Increasingly, cities will be most impacted by weather events, migration, and resource scarcity. Policy and design need to work together to make cities more resilient and prepare for these changes. For example, green roofs are being introduced into the development code in Portland to reduce runoff and minimize the urban heat island effect in the downtown core. Trees also play an important role in minimizing the urban heat island effect and many professionals in the field of landscape architecture are beginning to question the current development standards.

Green building and public art
This "green goddess" has over 1000 plants growing in her hair at the SolTerra building in Portland, Oregon. Twenty full-size trees grace the rooftop. Foliage and public art are more than afterthoughts.

6. Amenities and open spaces are a key component to design

Well-designed open spaces are now key to successful development, says Dougherty. This, in turn, means that more money is being allocated to the public realm. Simple additions, like entertainment plazas, family-friendly games, art, and food carts help create an element of fun and promote community involvement. Going forward, there will be more exploration around the kinds of amenities people want and the influence of tech on these amenities.

7. Community input is essential, not optional

Radical thinking and change are part of most projects that repurposes property is all about change. Local residents may push back, wanting to retain the property in its "before" state. Urban residents are concerned about gentrification and displacement. In Oakland, California, an existing arts community took matters in their own hands and purchased their property rather than vacate as a luxury development rose up around them. At the opposite end of the spectrum, wealthy neighbors in Cupertino, California, were concerned when a mall was slated for conversion to affordable housing. Soliciting input from local stakeholders is not just a PR stunt; it can yield insights that only locals possess. This is the underlying basis for the charrette process we employ in our RE3 projects.