By Robert H. Spratt Jr., President, Hill Partners Inc.
Commercial real estate developers across the country are being called upon to revitalize historic districts and urban areas in many aging cities. As this demand increases, it is essential that developers maintain a careful and watchful eye for preserving the historic fabric of these landmarks, while also avoiding typical challenges associated with adaptive reuse. Specifically, developers must balance the need for retail visibility, with the subtlety often desired for historic venues. Below are some tips that can help guide a more successful venture for all parties involved.
Break new ground, but preserve the old
From a design and architectural standpoint, ground-up developments often have a strategic advantage due to not being historically designated. It affords the architect to select designs and other elements that are indigenous to the area, such as integrating aspects of the area, into the design. In the end, the goal should always be for the building to look as if it’s always been there, weaving seamlessly into the fabric of the historic district itself. To do so, however, requires careful planning and a commitment to process. The key to working with historic or architectural committees is to successfully create a solution where everybody is happy with the end design. In doing so, no one really achieves 100 percent of their initial wants, needs and dreams. Instead, through careful communication, everyone ends up with a product that addresses sensitive areas, does not diminish the retail vibrancy, yet delivers an end result that works for everyone.
Jackson Brewery in New Orleans
Know what it is … and what it can become
The long-term potential of a historic project really depends on the nature of the building and the area surrounding it. Many historic buildings that redeveloped earlier into festive retail centers in tourist markets have struggled as the preservation attempts on the historic fabric have limited the retail visibility, among other factors. The buildings in the Jackson Brewery in New Orleans were created in a grand scheme at the time, but subsequently became obsolete for its original use and then a retail redevelopment failed for multiple reasons. To create long-term stability, the building required correcting the fundamental flaws in the retail configuration to position the retail for success and to look at other new retail uses for the upper floors.
Specifically, many of the historic buildings redeveloped into retail offerings that tended to lack exterior street level visibility, be limited in the amount of retail gross leasable area (GLA), have difficult space configuration or impediments due to the original construction and have vast common areas. With the case of Jackson Brewery, where the redevelopment configuration was a six-story building with four levels of retail, the lack of visibility for the retailers on the street level proved to be problematic. Due to the vertical nature of the retail offering, large common areas, escalators and elevators were necessary to circulate the consumers, which resulted in a GLA configuration that limited the size of the retail spaces. With high minimum rent and extra charges associated with operating the center, small retail spaces and a lack of visibility, the long-term success of the center was fragile and resulted in high retail turnover/failure as retail sales could not be generated to profitably operate with the high minimum rents and extra charges.
To turn the project around required a new emphasis on recapturing much of that common area by converting it into income producing GLA, which was more usable by retailers. In general, redeveloping the asset in a manner that was more consistent with what was successful in today’s retail environment. In the end, retail was placed back on the street where it could thrive and attract customers, and the upper floors were repositioned for redevelopment as multifamily units (and subsequently sold to an owner with the interest of completing the upper floor residential conversion).
The Old Post Office Pavilion in Washington, D.C.
The Old Post Office Pavilion in Washington, D.C., has experienced many of its own struggles for many of the same reasons. There’s a beautiful historic building on the outside with very few clues to the consumer as to what you can really expect, or become attracted to, on the inside. In this center’s case, the highest and best use for the building is a mixed-use project with a smaller amount of retail, a world-class hotel and luxury residential apartments on the upper levels. In summary, for both of these high profile properties, a more sustainable solution was born.
A mindful eye on the trends … not the trendy
In a best-case scenario, historic districts and buildings should be carefully preserved and enhanced to provide stability as new developments come along. Better guidelines via the overall design criteria have gone a long way to control the new development and the redevelopment as well. Critically thinking through such issues as the acceptable color palates, acceptable finishes, the anticipated end-result at a street level that incorporates brick pavers and landscapers, lighting, signage and so on, is imperative.
However, as long as everybody is working within the overall design criteria – maintaining a standard of design, look, and feel that has a way of ensuring the consistency, typically associated with a first-class design, in a historic district – the historic fabric is actually enhanced, without destroying it altogether, and success often follows.
In general, the role of historic developers must be to breathe new life into the historic district, while balancing the preservation of the historic fabric. There is a skill involved that is always somewhat of a balancing act between what needs to be preserved, and what needs to be done to create asset stability. But if the developer is experienced, in the end, there’s less of a blocking approach, and more of an overall balancing out of the preservation and changes necessary to position the asset/tenants for success. A proper team consisting of architects, designers, and general contractors must be assembled to assist the developer in creating a successful end product. Together, committees, historic agencies and developers must work hard to uncover new ways to develop the property from both a historic and a tenant standpoint to ensure long-term success.
Hill Partners, Inc. is a commercial real estate firm based in Charlotte, N.C., specializing in shopping center development or redevelopment. Hill Partners creates successful lifestyle, mixed-use and specialty centers through Project Conceptualization, Project Implementation and Property/Asset Management.