Retail space propping up condo boom
Goodbye blank walls; hello windows and storefronts. Once shunned, retail is becoming part of condos' appeal.
By MARK ALBRIGHT
Published July 3, 2005
Prospective buyers for the 30-story condos at Downtown Channelside are wooed by the sweeping views of a teeming downtown waterfront, the polished elegance of the granite countertops and the promise of a Sweetbay Supermarket at ground level.
Hey, people moving into those 6,000 planned condos nearby gotta eat.
"Our grocery store and other on-site retail will be huge amenities that definitely add value to our condo units," said Brooks Byrd, who is developing the $102-million project in downtown Tampa in a venture with Stuart Golding Co.
That's right. The ground-floor stores have become the latest selling point in the ever-heightening urban condo marketing game. It has become a national phenomenon as luxury condos in congested urban areas from New York City to San Francisco hunt for a leg up in a crowded market.
In Florida, the 74-floor Met 3 in downtown Miami recently opened a hip Whole Foods Supermarket by the lobby. And Publix Super Markets, restaurants and other retailers will become ground-floor selling tools at two new condo projects being developed by Tampa's RMC Property Group in downtown Sarasota and Orlando.
"I've got four condo supermarkets on the drawing boards now and many more in the talking stage," said Lonnie Peterson, an Orlando architect who is designing the Tampa Sweetbay condo-style.
Converging forces are driving the trend. Cities are trying to sell their moribund downtowns as a sophisticated place to live, work and play. Yet they don't have stores for the hordes snapping up all those luxury condos to shop in.
Condo builders, keen to strike before their market overheats, have become a willing vehicle to bring retail life to empty downtown sidewalks - especially if it enhances the snob appeal of their pricey projects.
It's the exact opposite of a few years ago, when luxury housing was all about separation from such nuisances as noisy retailers. Evidence is emerging that the right stores built into an urban condo increases unit values 15 percent or more.
"It's all about matching the retailer to the perceived lifestyle of the people who buy the condos," said Michael Beyard, senior resident fellow at the Urban Land Institute. "So trendy gourmet grocers like Whole Foods and Trader Joe's (a quirky Los Angeles chain that specializes in natural and organic foods) are now the gold standard with condo developers. But upper-middle chains (Publix or Sweetbay) have plenty of appeal, too. Day spas are hot. But restaurants better be more upscale than Chili's."
It's not as simple as it sounds. Sweetbay, which is changing its name from Kash n' Karry Food Stores, is working on a deal for a store at Downtown Channelside that would function much differently from its suburban cousins. Banks of air conditioning equipment that normally go on the roof will be stashed out of view along with the loading dock paper compactor. Delivery and garbage trucks must be scheduled to keep peace with the owners upstairs.
The urban Tampa Sweetbay will be tucked under a four-level parking garage. Condo residents will have a private, covered entrance and their own parking garage. Everybody else will wheel their loaded shopping carts into oversized elevators to get back to their cars. Designers are still wrestling with how to diplomatically seal off the store's free 175-space parking garage from people drawn to events at the nearby St. Pete Times Forum.
Perhaps lost in all the hoopla about the Tampa Bay area's relentless condo boom has been the amount of new retail space that's now bundled with it. Armed with renderings of sidewalk cafes, art galleries and boutiques, city governments in Clearwater, St. Petersburg and Tampa are encouraging mixed-use projects anchored by condo towers as their next downtown revival tool. They hope to put some new signs of life on the sidewalks by replacing blank condo walls with store windows.
Most of the spaces are smaller than a corner strip center. But added up, the new retail space would just about fill a regional mall. That's a lot of Starbucks.
In downtown Tampa, about half of the 27 announced condo projects have ground-floor retail components, so these aren't your grandparents' condominiums. In Clearwater, Opus South is developing plans for a mixed-use project that would include a 25-story condo, a new City Hall, hotel, offices and about 50,000 square feet of retail space stocked with four restaurants and a dozen stores.
A rival condo down the street is going after a 12-screen movie theater. Trump Tower in Tampa will have a signature restaurant. In St. Petersburg, three mixed-use condo projects under way will add about 100,000 square feet of new retail space over the next few years.
City officials concede most of the ground-floor condo space will end up filled with dry cleaners, delis, newsstands, hair salons and video stores that support the condo resident population.
Where all those retail tenants will come from is an open question. The national chains are scrambling to come up with prototype stores to fit this long-underserved part of center cities. They know what works in big-city spots like Manhattan, but downtowns that rolled up their sidewalks in the exodus to suburban malls 30 years ago remain uncharted waters.
And the parking garages, congested city streets and lack of mass transit alternatives still have not addressed the reason why destination retailers left city centers decades ago: easy access to their stores.
"This is the urbanization of places that really may have been downtown, but were not that urban or densely populated to start out with," Beyard said.
Meanwhile, bankers are leery of mixed-use projects that lean on retailers with no track record. "Bankers have trepidations about tenant mix," said Phil Carroll, senior vice president of real estate capital in Florida for Key Bank. "That's code for too many restaurants."
Mixed-use is the polar opposite of zoning codes that controlled Florida development for most of the past 50 years. Zoning is about separating dwellings from such commercial buildings as hotels, stores and offices. Mixed-use projects pile them up in one spot.
But city officials love them because getting their permission to build a project becomes more of an open negotiation for amenities they want rather than an up or down vote on a project.
Instead of blank exterior walls, city planners prefer storefronts and restaurants that open to the street, awnings or overhangs that make pedestrians feel more comfortable, planters and on-street parking that create a safety buffer and slow traffic.
"We want more pedestrian activity at the street level," said Wilson Stair, urban design manager for the city of Tampa. "Branch banks and travel agencies are fine, but they don't add to the street life like a cafe, an art gallery or other types of stores."
Added Rick Mussett, economic development director for the city of St. Petersburg: "We have been chipping away at getting more retail downtown, but it has been a long battle. BayWalk helped us turn the corner, but we are nowhere near having too much."
People clamoring to live in "new urban" settings downtown are asked to let go of the suburban development demands that would have been unthinkable a decade ago.
"By its very nature a mixed-use project is full of conflicts, so as a developer you are creating your own enemies," said Dan McCaffery, founder of a Chicago company that built more than $1-billion in developments that blend stores with offices, hotels and condos. "In a condo, the retail has 300 people upstairs who think they own the place."
Developers engineer solutions to keep the peace.
At Parkshore Plaza, a ground-floor retail development that will cover two blocks in downtown St. Petersburg, extra-thick ceilings and soundproofing are supposed to prevent noise from a pair of restaurants from spilling into the $1-million condos on the second floor. The Dumpsters will be in an enclosed, air-conditioned space to contain smells and keep all those tossed salads from rotting so quickly.
"We intend to maintain the quality of Beach Drive retail as sort of the Worth Avenue of St. Petersburg," said John Hamilton, who co-heads leasing the 40,000 square feet of new retail space that will create a pedestrian shopping link between BayWalk and the Renaissance Vinoy Resort. The family has turned down insurance agents and branch banks to keep the walk from having dead spots between stores.
The company developing the condos upstairs put in writing a ban on Parkshore tenants that ranges from physicians' offices to tattoo parlors.
At Downtown Channelside, the Tampa Port Authority, which provided the land to developers, required condo buyers to sign away their right to sue over noise from the working port next door. The project shares a service road used by the six truckloads of food needed to restock every docked cruise ship.
Some developers use creative ways to parlay the exposure into more business.
In St. Petersburg, the 222-room Grand Bohemian Hotel will share a mixed-use project with a new office tower for Progress Energy Corp. and 58 luxury condos. Instead of sticking the hotel restaurants in the back, they will face the street, making a line of glassed-in storefronts 100 yards long that wraps around First Avenue and Second Street N.
"We use our retail space to create a destination within a destination that invites people from the sidewalk into the rest of the project," explained Brian Py, vice president of development for Kessler Collection, the Orlando company developing the project. "Our properties are designed to be an experience in art and music, which we use to integrate all the different uses of the property."
The storefronts - all operated by Kessler - will include a white-tablecloth restaurant, a European market-style deli, an art gallery, gift shops and a lounge offering live jazz or classical music nightly.
In Clearwater, Opus Group is about to begin construction on a 25-story condo on the site of the old Calgary Baptist Church. There is space for a restaurant. But the Minneapolis developer has a bigger plan cooking for a 6-acre, mixed-use project next door that's in negotiation with the city of Clearwater. That phase is being described as a BayWalk-style development for downtown Clearwater.
Opus called off a November public vote on the project after rethinking its moving parts. The big change doubled the amount of retail space in the project to 50,000 square feet by creating a promenade anchored by four restaurants and about a dozen specialty retailers that leads down the bluff from City Hall to the waterfront.
"It will take a lot of thought to get the tenant mix right, but we want to develop a town center, a gathering place for downtown Clearwater," said Jerry Shaw, development vice president for Opus. "We went with more retail because we think there is a much larger demand among tourists on Clearwater Beach looking for a place to go at night or a place that provides a reason for people in places like Countryside to come downtown."
--Mark Albright can be reached at 727 893-8252 or albright@sptimes.com