On the Waterfront
Mixed-use developments light up shore-side commercial real estate markets.
By Carolyn Bilsky |
For most of history, people have been living, working,
and playing alongside rivers and lakes. Among the first areas to be settled,
early American waterfront developments were mostly industrial factories and
warehouses, situated on shores for convenient access to transportation of
people and goods, according to American Rivers, a national nonprofit
Today shore-side properties are being developed or
redeveloped for other reasons. Cities such as San Antonio,
San Francisco, and Chicago have rehabilitated their riverfronts
to invigorate less-than-robust central business districts. "[These cities]
decided to turn back to their waterfronts, redeveloping them for public
recreation and open space, housing, and office and retail uses to revitalize
sagging downtowns," an American Rivers report states.
To encourage states to pay more attention to their ailing
waterfronts, Congress enacted the Coastal Zone Management Act in 1972
stipulating that states should implement programs to manage their waterfronts
giving consideration to "ecological, cultural, historic, and esthetic
values as well as the needs for compatible economic development." In 1980,
the act was amended to include federal financial assistance, and by 1995 more
than 300 waterfronts had benefited from the act, according to a Washington Sea
Grant study. The redevelopments included public parks, museums, hiking trails,
retail centers, hotels, tourist centers, and festivals, providing economic
benefits to the local communities, the study found.
The desirability of waterfront locations continues to
draw residents and tourists. For example, the condominiums in the Charlotte, N.C., River Center
development are "a prime example of what lifestyle is most desired by the
upcoming generations X and Y," says Edna Chirico, CCIM, owner of
Chirico-Huber Properties in Charlotte,
who is developing the project.
Waterfront properties are being developed into everything
from luxury condominiums to retail lifestyle centers to town squares and
tourist-driven boardwalks. Shore-side properties are evolving in small towns
and large cities across the country. CCIMs nationwide are finding creative and
varied ways to get involved in these projects.
An Economic Turnaround:
When the Charlotte Merchandise Mart's owners hired
Chirico to find a new CMM location, she began by reviewing several possible
local sites. Through her research she identified a property along the Catawba
River situated seven miles from downtown Charlotte,
four miles from Charlotte
Airport, and one mile
downstream from the U.S. National Whitewater Center, an outdoor recreation and
environmental learning facility slated to open this spring.
The undeveloped county park was a strategic location for
the new CMM for several reasons, Chirico says. Primarily, the CMM, which hosted
approximately 240 days of trade shows per year at its old location, would draw
visitors to the economically depressed area. The new CMM also could stimulate
additional development along the riverfront leading to an entertainment
district. Chirico realized that using environmentally conscious development
strategies would allow the project to set environmental standards for the
region. "We will be dealing with 200-foot buffers and a new set of
ordinance rules relating to absolutely no runoff into the river. All the green
market standards and Leadership in Energy and Environmental Design standards
will be required in these buildings," Chirico says.
Center evolved into a
public/private venture that includes the 250,000-square-foot CMM as well as 120
condominiums, 150,000 square feet of retail, a 200-room hotel, and a county
park. In addition to funding received from the city of Charlotte
and Mecklenburg County, the project will be partially
funded by the developer whom Chirico found using her CCIM connections. As a
small-business owner, Chirico realized the project would
benefit from the involvement of a larger company. She brought the prospective
project to Robert L. Smith, CCIM, president of Lockard Reed Development Group
in Waterloo, Iowa, who quickly signed on. Smith found the
project intriguing. He had worked on similar projects before, but this project
varied from others in some important ways. "This is not your typical,
uniform project. It involves moving an existing business [the CMM] as well as
redevelopment ... the opportunity involved finding a way to maximize the use of
this city-owned parcel in an environmentally friendly way that kept in line
with floodplain issues," he says.
"About half the local portion of the sales tax
generated by the exhibition center will be used to pay off revenue bonds - for
infrastructure and the 250,000-sf exhibition hall. The hotel, condos, and
retail will all be private sector, secured by Lockard Reed," Chirico says.
While construction is slated to begin later this year and
exact financing amounts have not been confirmed, "the total economic
impact of the exhibition hall construction [will be] $86 million, supporting a
total of 836 jobs and $38 million in local income," an August 2005 University of North Carolina
economic study estimates.
Rendering: Chirico-Huber Properties
A Public/Private Showcase:
"They were the first to develop, so they are the
oldest," says Robert R. Huels, CCIM, broker manager with CJR Commercial
Group in Branson, Mo., explaining why waterfront properties
such as the one he is part of in Branson need to be rebuilt. "The whole
site had to be razed. It was a blighted area that needed to be
redeveloped," Huels says of the land acquired for the project.
When the city bought a parcel of land on the banks of Lake Taneycomo
it planned to build a convention center. But in the end, "It just didn't
make economic sense. They needed a retail tax base," Huels says. The city
instead determined the land should be used to create a waterfront entertainment
district and the convention center was relocated to an adjacent property.
A tourist-attracting entertainment district was an
especially appropriate use for the land considering Branson's demographics.
While the city has a year-round population of about 6,000, Branson's 45 music
theaters and excellent fishing opportunities attract nearly 8 million visitors
a year, Huels says. The retail, restaurants, hotels, condominiums, convention
center, and town square that Branson Landing will include are expected to
attract up to 4 million visitors per year according to the project's Web site,
www.bransonlanding.com. The total project will encompass 445,000 sf and its
centerpiece will be a town square featuring a "water/fire/sound
fountain" designed by Wet Design of Sun Valley, Calif.
Huels has been involved with the project from the
beginning. "I helped formulate the early marketing and acquisition of
additional land for the convention center," Huels explains. But as the
project took off, it became clear that a professional marketing team was
needed. "It would have taken years for me to do it on my own," he
says. Urban Retail Properties Co. in Chicago
was hired to work closely with Huels to market the property. As of last
October, approximately 90 percent of the retail space had been leased with
occupancy expected in April.
While finding interested tenants has not been a problem,
Huels says the project has faced some obstacles. "There have been a lot of
concerns from businesses in Branson. They are concerned about competition so we
specifically designed it to avoid competing," he says. For example, they
were careful to not include any music theaters on the property. "That
would have been a mistake," Huels says.
A local company, HCW Development Co., was hired to
develop Branson Landing, but a large portion of the financing came from local
and state funds. In 2003 the Missouri Department of Economic Development
approved the state's largest-ever tax increment financing district for the
project, providing $54 million in funding over 19 years for the convention
center and infrastructure. Politics were another challenge. A number of public
meetings and discussions were held to discuss funding. "The city is
issuing bonds that have to be repaid, which had to be discussed in public many,
many times," Huels says.
Rendering: HCW Development Co.
A Private Partnership:
"I became a CCIM because I wanted to sell this
developer a piece of land," says Anne N. Anderson, CCIM, co-owner of
Lakeshore Realty in Coeur d'Alene,
Idaho. She ended up developing
the land herself, but her contact with the developer, Harry A. Green, owner of
Harry A. Green & Associates in Spokane,
Wash., turned into a long-term
professional relationship. Even though Green had a history of working on
seniors housing and condominiums, "I knew he had this vision of a
mixed-use development," she says. Finally, the perfect piece of land for
such a development came on the market at the right price. "I heard another
CCIM talking about this waterfront property [in Post Falls, Idaho]
- an old lumber mill - that had been on the market for $6 million. It had gone
down to $2 million," Anderson
says. She immediately told Green about the property and they quickly purchased,
closing on it for less than the asking price.
Anderson and Green came up with a plan for a town center
and waterfront boardwalk, which developed into Post Falls Landing, a mixed-use
project along the banks of the Spokane
River that includes
condominiums, retail, and office space.
While the project is privately funded and has received no
urban renewal funds, the city of Post Falls has
been very supportive, Anderson
says. "The community of Post
Falls has a zoning class
... that is designed for mixed uses within one area, permitting this type of
design from the get-go." The city is also supportive due to the project's
prime location adjacent to city hall, a public beach, and a public park.
"We want it to be public and open to the community. The city has no real
downtown and they have wanted to establish a town center," she
says.Construction began in early October 2005, and the first phase of condominiums
will be complete in May. So far Anderson
primarily has focused on marketing the condominiums, which range in price from
$370,000 to $800,000 per unit. "We knew the immediate market would be
residential and the commercial will follow that," she says.
While interest in the condominiums has been strong, Anderson finds that
potential tenants do have one concern: privacy. "There has been a lot of
talk about 'lifestyle properties,' but we found that people want privacy and
security," she says. In order to answer these concerns, the condominiums
have been designed with enclosed courtyards that separate them from the
boardwalk and other public spaces.
Rendering: Lake Shore Realty
Waterfront developments not only have the aesthetics of a
shoreline view, they also have the advantages of a strategic location.
All three developments mentioned here are located near other cities or
downtowns, but rather than compete with the nearby communities, each
development offers something unique. Huels sums it up best: "Branson
Landing brings with it a lifestyle not currently available to this area -
living above restaurants, shopping, and nightlife."