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Sunday, April 29, 2007

They built it.... But they didn't come!

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posted by Bob at Sunday, April 29, 2007

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Blogger Bob said...

Many condominium buyers have found their urban village dreams unfulfilled as developers have had a hard time finding and keeping merchants for the first-floor retail spaces.

By Chris Serres, Star Tribune

Last update: April 28, 2007 – 2:31 PM


The Skyscape Condominiums in Minneapolis: Residents start moving in next month, but the retail space remains empty.

Glen Stubbe , Star Tribune

When Virel Kapadia moved into Laurel Village apartments in downtown Minneapolis nearly four years ago, the 26-year-old computer engineer thought he'd found a place where he could escape life's daily grind without climbing into his car.

Outside his apartment on Hennepin Avenue was virtually every retail amenity he could imagine, including a food market, two restaurants and a printing shop. On Thursday nights, he would go salsa dancing with other residents at one of the restaurants, and the Latin beat often would spill onto the street.

But over the past year, many of those stores have vanished. So, too, has Kapadia's dream of an urban lifestyle. "I miss having places to walk to," he said.

Not long ago, projects such as Laurel Village, which combine shops and housing in a city-within-a-city atmosphere, were considered the height of smart development. The idea was simple: With shops and restaurants at the base of apartment towers and condominium projects, people would have less reason to get in their cars and would interact with their neighbors, creating vibrant, compact, pedestrian-friendly communities.

But while residents came, retailers didn't necessarily follow. Across the Twin Cities, thousands of square feet of retail space lie vacant in the ground floors of apartment and condominium towers. Residents who moved in expecting coffee shops, art galleries and grocery stores within walking distance now find themselves on urban islands, as isolated and as dependent on their automobiles as if they lived in the suburbs.

The empty storefronts have become so visible that some developers are abandoning plans to include retail in their condo projects for fear of being left with blighted ground floors that would deflate the value of their projects. In some cases, space that was slated for shops or restaurants now is being filled with office or medical tenants.

Although such mixed-use developments often are touted as urban villages, they often lack the parking, road access and population base to support more than just a coffee shop and a few service businesses. The ones that are successful usually have a large anchor tenant that will attract people from several miles away.

"There is a false assumption that people want to shop where they live," said David Crockett, developer of Olin Crossing, a condo project at 53rd Street and Minnehaha Avenue in Minneapolis. "The bottom line is, if people can save a dollar by driving to Target or some other big-box retailer, they'll do it, whether they live in a downtown highrise or in the suburbs."

The high density of retail development in the Twin Cities is another factor working against mixed-use developments. In many neighborhoods, stores and restaurants are within walking distance.

That makes ground-floor retail less of a condo amenity.

Danica Santos, 30, said she passed up buying a condo with a wine bar on the ground floor near Lyndale Avenue in south Minneapolis, opting instead for a quieter condo project known as the Steel Flats at 45th Street and Chicago Avenue S. that had no retail but was three blocks away from a cluster of shops and restaurants.

"We wanted to be in a place where there was retail, but we didn't necessarily want to live right above it," she said. "It's noisier."

No sure bets

Diane Ingram, owner of the E.P. Atelier coffee shop, thought the intersection of 10th Street and Portland Avenue S. in Minneapolis' Elliot Park neighborhood was as close to a sure bet as she could find in retail. More than 6,000 people live within several square blocks, and the nearest coffee shop was six blocks away. Her goal when she opened in 2004 was to create a "great third place," as she called it, where neighbors would gather for live music and discussion.

But nearby residents didn't come in the numbers Ingram expected, which she attributed to high turnover in the apartments and a lack of other retailers nearby. "Look around. We have no dry cleaner. No hardware store. No beauty salon," said Ingram, who recently took out a second mortgage to pay the bills.

Ingram also is concerned by what she sees across the street: A 27-story highrise known as Skyscape Condominiums, with a ground floor that still is vacant even though residents begin moving in next month. "Retail Space For Lease" signs cover the front windows, though an agent handling the property says she's close to finalizing a retail tenant.

"If they can't get retail, in a building that large, what does it say about anyone starting retail in a condo project?" Ingram said.

Even successful mixed-use projects have taken longer than expected to find retail tenants. Excelsior & Grand in St. Louis Park opened with 337 luxury apartments in late 2004 but didn't fill its last retail space for 18 months. The project boasts a Trader Joe's supermarket, Pier 1 furniture store, Starbucks and Panera Bread.

Large retail chains often expect space and parking better suited for suburban strip centers and malls, said Gary Wilson, asset manager for Told Development Co., which developed and owns Excelsior & Grand. "A mixed-use environment will never satisfy some chains," he said. "The complexity of mixed use doesn't lend itself to a cookie-cutter, one-size-fits-all approach."

Parking, parking parking

In many cases, condo developers view retail as an afterthought, which makes it difficult to find tenants once the project is finished. Many projects lack adequate venting, storage and space for trash disposal, Realtors said.

"The problem is, too many of these condo projects are geared toward people who live in them -- that is, single people with plenty of time to walk around," said Kathy Doyle Thomas, executive vice president of Half Price Books, a Texas chain that has six stores in the Twin Cities -- none in mixed-use projects. "But the reality is, I've got a car with three screaming kids, and I'm not going to go there if there's a problem with parking."

Molly Bird, president of M2 Real Estate Group in St. Paul, said scarcity of parking was a major reason more than one-third of the retail space remains unfilled in Sibley Court and Sibley Park, two adjacent apartment projects developed about three years ago in downtown St. Paul.

"There are people who moved there thinking it would be this urban neighborhood environment," Bird said. "They're still having to get in their cars and drive to Grand Avenue if they want to shop."

At Laurel Village, parking was a problem from the beginning. Most of the parking spaces were behind the building and were controlled by just a few of the project's larger retailers. One by one, tenants started pulling out, including a City Market grocery store and a Sir Speedy printing shop. Now, the few tenants that remain include two fast-food chains: Subway and Davanni's.

Chuck Howard, a partner with Equity Commercial Services who handles retail leasing at Laurel Village, said CVS Pharmacy recently signed a lease and should open early next year. A Lunds grocery store is planned for a site across the street at S. 12th Street and Hennepin Avenue, though a spokesman for Lunds said there is no set timetable for its opening.

"We hope that CVS and Lunds will generate some new interest in this project and attract some quality tenants," Howard said.

But even if all the empty storefronts at Laurel Village were filled, Jessica Siemens, 24, who recently bought an apartment there, suspects she would still drive to Uptown to get a lot of her essentials. "It's nice to walk places," she said, "but sometimes you just want to get in your car and drive somewhere."


Staff writer Susan Feyder contributed to this report. Chris Serres • 612-673-4308 • cserres@startribune.com

10:29 PM  
Anonymous Anonymous said...

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10:43 PM  

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