Manufacturing the new Main
Street
Lifestyle centers change the face of retail – from malls
to suburbia to downtowns.
By Dan Sadowsky
In 1996, Steve Korth looked out at Oakway Center, his
family’s 1960s-era development across the river from
downtown Eugene, and saw a fully occupied but dowdy hodgepodge
of retail and office buildings in need of more than just a
facelift.
Over the ensuing decade, he turned the mall
“inside-out,” removing all but four of the
site’s 25 original buildings, creating outward-facing
store entrances with high-grade facades, and reorienting the
center around five large oak trees left over from when the
property was his great-grandfather’s farm.
Today, those oaks grace the park-like Heritage Courtyard in
the middle of 220,000 square feet of local and national
retailers such as Borders, Trader Joe’s and
Chico’s. This fall, P.F. Chang’s China Bistro and
women’s clothier Coldwater Creek will move into the
property’s two newest storefronts.
“We basically reformatted what we wanted to do,”
says Korth, director of real estate and development for the
McKay Investment Company, “which was to become a high-end
lifestyle center.”
Lifestyle centers — open-air marketplaces that combine
upscale shopping with fine dining and entertainment in a
strollable, heavily designed landscape — are shaking up
how retail projects are built and rebuilt across Oregon. Big
malls are spending millions to incorporate parts of the popular
concept into their own properties, while more modest-sized
shopping centers also remake themselves in the lifestyle center
mold. For downtowns, which seem less impacted by the trend,
lifestyle centers represent if nothing else a reminder that
they must differentiate themselves in a crowded retail
field.
More than half of the country’s 150 lifestyle centers
opened in the last five years, according to the New-York based
trade group International Council of Shopping Centers,
including a trio in Oregon: the Streets of Tanasbourne in
Hillsboro, Bridgeport Village in Tigard and the Shops at the
Old Mill District in Bend. (Though very similar, Oakway Center
isn’t labeled a center because “upscale national
chain specialty stores” don’t yet occupy at least
50,000 square feet.)
Fred Bruning, whose $270 million Bridgeport Village
development recently won the 2006 Golden Nugget Award for Best
Retail Project, a building-industry award for creative
achievements in architectural design and land-use planning in
the West, says lifestyle centers reflect “a natural
evolution of retail.”
“If you think back 30 years ago when malls were all the
rage, all the tenants who were anyone wanted to be in
malls,” says Bruning. “Malls were very exciting for
a period of time, they grew, and then they started looking very
much the same.”
ALTHOUGH LIFESTYLE CENTERS also will face the challenge of how
to age gracefully, today they’re still enjoying a
teen-like growth spurt. No fewer than 85 lifestyle centers are
in the pipeline, according to the ICSC, though none yet is
slated for Oregon. The most likely site for the state’s
next entrant is a 77-acre landfill in Oregon City that Bruning
has been eyeing for more than a year. Other retail analysts say
lifestyle centers in some form could follow in fast-growing
areas in and around Salem, Bend, Medford and Eugene.
“You look for where is there going to be significant
growth in average household income of $75,000 and up,”
says Dave Cuthill, real estate director with Opus Northwest.
“That is the key.” Opus, a co-developer of
Bridgeport Village, is developing the Landing at Evergreen, a
340,000-square-foot lifestyle center off I-205 in Vancouver,
Wash., slated to open late next year.
While the number of built-from-scratch lifestyle centers
should remain small, the concept is likely to have a much
broader impact on overall retail development. Analysts say more
and more existing shopping centers in the state’s biggest
markets will reconfigure their offerings or add certain
stylistic flourishes that emulate the retail Zeitgeist.
Cedar Hills Crossing, the former Beaverton Mall owned and
managed by C.E. John Co. of Vancouver, Wash., is a good
example. It’s in the midst of a six-year, $35 million
redevelopment that adds three new exterior entrances, 16 movie
screens, and themed restaurants such as Noodlin’ and
McGrath’s Fish House. Local grocer New Seasons plans to
open its eighth location there in September, and bookseller
Powell’s is relocating its Beaverton store into a
32,500-square-foot slot there in November.
“We’re investing in the whole experience of being
there,” says C.E. John vice president Mark Perniconi.
“What used to be the classic strip center is pretty
boring. Shopping now is a social experience, not just a buying
experience.”
Although more modest in size and offerings than the typical
lifestyle centers, Cedar Hill Crossing and Oakway Center
represent a potentially large segment of future retail
redevelopment, industry insiders say.
In Portland, high land costs and the scarcity of buildable
retail-zoned parcels leave Oregon’s largest metro area
“very much poised for a lot of these (redevelopment)
opportunities,” says Marc Strabic, a retail broker with
Trammell Crow Company.
Brokers in Eugene, Bend and Medford say these cities are also
running short on large buildable tracts — a result, they
say, of the state’s urban growth boundaries, which limit
the spread of new development, and the absence of a sales tax,
which deprives municipalities of a financial incentive to zone
commercial.
“The inventory of available commercially zoned property
in the Medford area is practically nonexistent. It’s all
been used up,” says Bill Leever of Pulver & Leever
Real Estate Company in Medford. “Even if a developer
comes here with that [lifestyle center] vision, until that
urban growth boundary is changed, there’s no land to
accommodate that.”
FORTRESS-STYLE MALLS TAKE UP MORE LAND than any other retail
concept. Most of these older centers remain viable and
relatively healthy, according to analysts and tenancy figures.
Fewer than 1,500 of the 5 million square feet in the Portland
area’s four “super-regional malls” were
unoccupied as of June 30, according to CoStar Group, which
provides information services to the commercial real estate
industry.
But that’s not to say they are content with dated looks
and store formats. Across Oregon, says Opus Northwest’s
John Bartell, “mall owners are adapting their regional
malls to the lifestyle concept and marrying it to their
existing property.”
In the Portland area, Washington Square Mall recently sank $50
million into a new 80,000-square-foot retail wing with exterior
storefronts that house the Cheesecake Factory, Abercrombie
& Fitch and other high-end retailers. Clackamas Town Center
is spending an undisclosed amount to add 40 new stores, a
20-screen theater complex and two new outdoor shopping
“villages” with a special Northwest-themed
design.
Bend River Mall changed its name to Bend River Promenade last
December to reflect a $6.5 million refurbishment that razed the
mall’s southern half and added outward-facing retail
spaces, landscaping and nicer building facades. And in Salem,
Lancaster Mall gutted shop space to make room for an 11-screen
cinema.
Three miles from Eugene’s Oakway Center, Gateway Mall in
Springfield is both mimicking and distinguishing itself from
its lifestyle center neighbor. The 850,000-square-foot enclosed
mall recently built a streetscaped breezeway to connect the
mall to a new Kohl’s department store, and tried to
burnish its image as a safe, family-friendly destination by
filling its largest interior courtyard with a new kids’
play space. “The best approach to competing with a
lifestyle center is to complement it,” says general
manager Ron Glover.
Downtowns have pursued a similar strategy. When shops like
Banana Republic and the Gap first started opening in the Old
Mill District five years ago, Bend broker Gardner Williams and
others thought the unique riverfront project “was going
to kill downtown Bend,” but, “it hasn’t
touched it,” he says.
Although the Old Mill’s owners say its retail sales per
square foot exceed the national average, and a planned
50,000-square-foot build-out is already 40% leased, Williams
describes the nearby central retail district as “full and
healthy,” which he attributes to Bend’s surging
population and downtown’s complementary tenant lineup of
boutiques, specialty shops and galleries.
Downtown backers in Portland and Eugene agree that lifestyle
centers don’t take away business from the inner core.
“It’s not an either-or,” says Sandra
McDonough, president of the Portland Business Alliance. If
anything, she says, lifestyle centers are another reminder that
central-city interests need to focus on “what makes the
downtown experience unique and attractive to shoppers,”
like independent retailers and cultural institutions.
That’s true for Eugene as well, says Michelle Emmons, a
marketing consultant for Downtown Eugene Inc. And planners
trying to revitalize Eugene’s West Broadway District, she
notes, have to worry about drawing not only attractive
retailers, but getting the right mix of residences, offices and
arts-related amenities, too.
Emmons says downtowns should emulate lifestyle centers’
focus on assembling a roster of mutually beneficial tenants.
Recognizing the interplay among retailers “will become
increasingly more important as we provide for a mix of
different uses in downtown Eugene,” she says.
Less than two miles away at Oakway Center, the ideal mix for
Steve Korth is liable to evolve. Analysts say lifestyle centers
are still finding their way in the retail landscape; some argue
that because of their multiple-building layouts and distinct
storefront looks, they can readily adapt to changing consumer
tastes or shift to residential or office uses if demand
warrants.
Korth’s present task is to build out approximately
35,000 square feet for new retailers in the coming year.
Redevelopment at his 25-acre site, it seems, is ongoing.
“With any major center like this,” he says,
“you’re never really done.”
Dan Sadowsky is a Portland writer who began his journalism
career in Atlanta, where he spent four years covering urban
education, regional sprawl and other topics for several news
organizations. He’s previously explored poultry growers,
green builders and immigration law for Oregon
Business.
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