COVER STORY, MAY 2006

REDEVELOPING THE LANDSCAPE OF NORTHEAST RETAIL
With retail demand continuing to intensify, developers look for new options.
Dan Marcec

“Out with the old, in with the new.” The cliché describes the fact that developers across the Northeast continually are looking for ways to create interesting and appealing projects to meet insatiable consumer demand for new and exciting retail. Thus, in a day and age where land is not cheap or readily available, redevelopment and repositioning initiatives are quite popular. Northeast Real Estate Business  recently spoke with executives from three commercial real estate companies on their current activities; from redesigning existing properties to undertaking full-scale redevelopments of underutilized sites, these companies all are finding unique ways to redefine the landscape of Northeast retail.

Redefining the Regional Mall

General Growth Properties is redeveloping the 1.2 million-square-foot Natick Mall in Natick, Massachusetts. The company also is constructing an additional 650,000 square feet of retail space as well as 220 condominiums and a hotel.

“Natick Mall always has benefited tremendously from being strategically located due west of Boston in an excellent position to attract shoppers from the North Shore, South Shore and western suburbs,” says Michael McNaughton, vice president of asset management for the Northeast with General Growth Properties. “Even though the property has been very successful over the years — providing a home to many first-in-market stores — there hasn’t been any rollover or tenant vacancy. So when we were able to identify the adjacent parcel, we took advantage of the opportunity to meet the demands of this growing market.”

The theme of the project’s design is inspired by traditional New England, and the architects have utilized aspects such as stone walls, birch trees and other elements that suggest a Northeastern flavor. In addition, the design seeks to implement resources such as natural light and luxury materials to set itself apart from any traditional regional mall.            

Nordstrom and Neiman Marcus are the lead tenants of the expansion, employing new prototypes for this location. With regard to other tenants, General Growth — which is also leasing agent — is aiming to create a central luxury retail environment. The luxury market in Boston is fragmented; while several areas offer this type of retail, there is not one focal point. The project engenders a true mixed-use environment with retail, residential and hospitality components, and within the retail portion itself, tenants have a variety of opportunities. By including a hybrid retail segment with aspects of both an enclosed regional mall as well as an outdoor lifestyle streetscape, Natick Mall can cater to the needs of any prospective tenant.

“We’re essentially applying an urban model of living and shopping to the ultimate suburban idea — the regional mall,” McNaughton says. “By converging luxury shopping, premium dining, hotel accommodations and high-end residential, elements traditionally only found in central business districts, we’ve taken what traditionally is known as the suburban enclosed regional mall and turned that on its ear.”

In terms of amenities, 1.9 million square feet of luxury retail within a full-scale mixed-use development speaks for itself. Further, the occupants of The Residences at Natick Mall have the opportunity to live in an urban setting at approximately 60 percent of the cost of a similar condominium downtown, while still residing only 20 minutes from downtown Boston.

“Natick Mall is going to change the way Boston shops, and our goal is to make this a must-see attraction for anyone coming to the city,” notes McNaughton. “In terms of marketing and creativity, we define the project with four words: hip, luxurious, inspired and unique. We feel like this project has hit the nail on the head in all four of these areas.”

Sign of the Times

Route 1 in Princeton is a popular site for commercial development in the central New Jersey city, which recently has seen changes in the marketplace, both in terms of residential growth as well as business growth. Situated on this avenue is Princeton Forrestal Village, a property that was developed as a mixed-use/lifestyle center-type project approximately 15 years ago. At the time, the design was ahead of the curve, but due to market conditions and trends, the center converted to an outlet center, and after competition rendered the development less advantageous than expected, the retail component became due for an upgrade.

Currently, Princeton Forrestal Village includes more than 700,000 total square feet, encompassing 300,000 square feet of office, 110,000 square feet of mixed-use, service-related space and 125,000 square feet of retail, in addition to featuring a 340-room Westin hotel and conference center. Gale Company, the property owner, has just started on construction of the $17 million repositioning, and completion is scheduled for first quarter 2007. KSS Architects is designing the redevelopment.

“Princeton has changed demographically, the office market has grown substantially, bringing new daytime customers to the trade area, and mixed-use projects are more attractive to retailers than in the past,” says Matthew Harding, president of Levin Management Company, which handles leasing for the retail component of Princeton Forrestal Village. “All these things converged and created a great opportunity to take a new look at the retail component of this project and reinvent it.”

Salt Creek Grill is one of the new tenants within the redeveloped Princeton Forrestal Village in Princeton, New Jersey, which includes 125,000 square feet of retail space. Levin Management Company is handling leasing for the retail portion of the project.

“We’re really trying to create something unique, bringing new retailers to a site that’s different from what you’ll see traditionally in this area,” Harding notes. “Designed in a beautiful campus-like setting, the initiative to reposition the retail is going to present a real rebirth for this project, and that will have a positive impact on the market.”

Revitalization and Renaissance

As part of the revitalization of downtown Hartford, Connecticut, The HB Nitkin Group is developing a retail and residential project that is situated on 7 acres at the center of the city. Currently dubbed Adriaen’s Landing by the state of Connecticut, which is a partner in the project, the site also is known as Front Street, named for the avenue that runs through the middle of the project.

The redevelopment of this area in Hartford was initiated when a major portion of downtown — approximately 27 acres — was demolished several years ago to make way for a new stadium to house the New England Patriots of the National Football League. When the team decided to remain in its current home of Foxboro, Massachusetts, the state had to re-evaluate the site. Thus, it set out upon a four-phased project to revitalize the area. First, a convention center was constructed, which cost approximately $400 million, and is now up and running as one of the major convention centers in the Northeast. Second, concurrent with the development of the convention center, a Marriott Hotel was erected to provide hospitality services for this new initiative. The third piece of the puzzle is the $130 million Connecticut Center for Science & Exploration, a 160,000-square-foot development featuring hands-on, interactive science and technology exhibits and programs designed by Cesar Pelli & Associates. The final portion of the project is HB Nitkin’s retail and entertainment district, which includes 200 rental residential units and 125,000 square feet of restaurant, entertainment and retail space.

“About a year ago, I came to look at this project after the state put out a request for proposal, and in that moment I had an epiphany,” says Bradley Nitkin, president of The HB Nitkin Group. “I realized what was happening in Hartford with the revitalization and renaissance of the city, and I wanted to be a part of that.”

HB Nitkin’s retail component will break down where approximately 65 percent of the space will be restaurant and entertainment venues, and the remainder of the space will consist of a combination of retailers that want to service the residents of the project as well as fashion retailers who want to claim a stake in the Hartford market. The residences will be built above the retail shops, spanning six blocks starting at the convention center and running to the Wadsworth Atheneum, the major art museum in town. Construction on this portion of the project will begin in spring 2007, with completion scheduled for spring 2008. The state of Connecticut has committed approximately $75 million of public money for the project, and HB Nitkin is adding somewhere between $75 million and $100 million of additional funding.

“In addition to numerous commercial projects, nearly 2,000 residential units are under development in Hartford, and the state has invested a substantial amount of money into renewing the city,” says Nitkin. “This project is a true public-private partnership, and while the challenge of bringing all these different uses together makes it very complex, everyone wants to see this succeed.”

Due to the nature of this development complementing the rebirth of Hartford’s downtown sector, the impact is plain to see. With high quality design by Robert AM Stern Architects, the project is landscaped with a park in the middle, the restaurants will have seating on the streets, and it runs along the Connecticut River as well, adding an element of natural beauty.

“As the city of Hartford is coming out of a period of economic distress, this project will have a great impact toward its revival,” Nitkin says. “It creates jobs and really serves the needs of the convention center and the downtown Hartford market. From a retail perspective, it will affect the market in a positive way because we’re building residential; by creating consumers and then providing restaurant and entertainment venues for the existing residents, we concurrently supply and meet demand.”

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