Alberta Development's Provost

Like lifestyle centers, possibly one of the biggest new trends in the shopping center industry is New Urbanism, mixed-use open-air centers that create an environment where people can dine, shop and live. Some municipalities love the idea of these projects because they can create density, cut down on sprawl and revitalize neighborhoods. And developers like Steiner + Associates, which in 2001 unveiled Easton Town Center in Columbus, OH, one of the first such projects, opens them in suburban areas. One session at ICSC’s Spring Convention, entitled “Lifestyle Centers – Is New Urbanism the Next Wave?” examines these projects. One of the panel speakers is Donald Provost, a principal at Englewood, CO-based Alberta Development Partners. His firm is building four projects in the Denver area that incorporate aspects of New Urbanism. Provost spoke with GSR Ticket about the trend of New Urbanism and how it will impact the future of retail real estate.

GSR: Why do developers like New Urbanism projects?

Provost: Fundamentally, it’s what’s right for the real estate. Developers are, for a lack of other adjectives that come their way, are fairly smart folks and are not going to engage in the development of a piece of property that’s not financially feasible and/or a good business model. So I think what a lot of the progressive developers are starting to see is that mixed-use, New Urbanism planning principles integrated into their sites makes a lot of sense. It helps the long-term viability of a piece of real estate as well as the financial model.

GSR: Are construction costs a factor when building these complex developments?

Provost: It’s huge. It’s the number one issue, trying to manage the construction cost of a mixed-use project in a rising construction cost environment and being able to underwrite your cost against your pro forma economics and not get caught in a situation where your costs outstrip your revenues.

GSR: How do developers curb those costs?

Provost: You’ve got to bring your team in from day one. We’re a big believer in collaborative design efforts, which involve our contractor, architects, design team and everybody else from day one. When you start working on your assumptions with respects to construction types and extraordinary costs associated with your project and price it all out, you continue to get smarter as the weeks go by and your drawings progress and your contractor talks to the marketplace. You’ve got to have great partnership with your contractor or you’re going to be in big trouble.

GSR: How do you think New Urbanism projects will eventually impact enclosed malls?

Provost: I think that the core top 20% or 30% of malls are unaffected because they are what they are and they have established their dominance in the marketplace, are well-anchored, well-tenanted and their sales per sf are very strong. We have a mall that we’re redeveloping that is five miles away from Park Meadows Mall, which is a very successful, core mall in South Denver. But we’re not trying to be an enclosed mall. We’re tearing down our mall and developing the Streets of SouthGlenn, which is open-air and anchored by grocery, books and a theater, so we’re coming at it from a different angle with a different experience. I think that to the extent that projects are affected in trade areas by strong regional malls, they need to differentiate themselves and get their fair share of the action.

GSR: Are retailers showing interest in these types of projects or are they hesitant?

Provost: If you talk to the Barnes & Nobles of the world, and many other tenants, if these things are done right and are in the right trade area, they’re very successful. I don’t think you should try to draw the distinction between whether retailers like New Urbanism, or malls, or lifestyle centers or strip centers. I think retailers like strong, fundamental real estate. All of the same things have to exist, strong traffic count, demographics, density of population, all of those things have to be there, or a retail site is not going to work, irregardless of what you think your mousetrap is.

GSR: Speaking of lifestyle centers, will their building boom continue, or do you see it slowing down?

Provost: I think it continues as long as there’s good real estate to develop and the retailers continue to evolve their concepts and grow their concepts. That’s the format most of those new stores are going to go in.

GSR: What are your main objectives at the ICSC convention this year?

Provost: To see old friends, make new friends and just generally continue to move any transactions forward or create new transactions with retailers and financial partners. We’ve got four projects we’ll continue to market. Vegas is a great one-time opportunity to see everybody in the industry, but it can’t be your sole focus every year. You’ve got to market your projects 365 days a year.