If you think all your retail owners have to do is hold out for the upturn, think again. Major demographic changes—especially Generation Y’s preference for more urban environments—are altering what kind of retail will survive in the suburbia of the future, says Ellen Dunham-Jones, associate professor of architecture at the Georgia Institute of Technology.
Giving suburbs a more urban feel will require a blending of property functions, says Dunham-Jones, coauthor (with June Williamson, the City College of New York) of Retrofitting Suburbia (Wiley, 2008). In place of stand-alone buildings on large lots and cul de sac streets, suburbs need to emphasize New Urbanism principles such as street-oriented retail, mixed use, and a reduced reliance on cars.
Dunham-Jones sees three options for visionary retailers.
1. Reinvent the downtown mall.
Reconfiguring an enclosed mall to add streets and increase density with residential and office space gives new life to aging sites. Example: Belmar in Lakewood, Colo. (www.belmarcolorado.com) At this 100-acre site, an underperforming mall was refocused around a 1.1-acre plaza and is now home to 1,500 residents as well as 85 retail and entertainment tenants.
2. Reposition to a new use.
Following an area’s demographic or cultural shifts can give new life to underperforming retail. Example: La Grande Orange grocery (www.lagrandeorangegrocery.com) in Phoenix. A dilapidated neighborhood center that once housed a laundromat and convenience store refocused on upscale food with a gourmet market and several restaurants. Soon, it represented the cool factor of the neighborhood.
3. Knock it down.
In a shrinking market area with lots of unused retail space, scrapping and regreening the site for a park or wetland may be a more productive use. Example: City Center Mall, Columbus, Ohio. Opened in 1988, the mall was demolished in 2009. Plans call for a park, eventually ringed by housing and shops.
Five Tech Tools to Make You More Productive
A new tech tool is announced nearly every day. How do you separate the merely cool from those that will truly boost productivity? Jim Kimmons, a commercial and residential broker with Gallery Realty in Taos, N.M., who also writes on real estate technology for About.com, shares his favorites.
SugarSync (www.sugarsync.com) allows you to back up, copy, store, and share e-mails and files in folders online, as well as sync with your desktop and smartphone. Free for 2 GB; $4.99 per month for 30 GB.
LogMeIn (www.logmein.com) lets you access your desktop computer remotely. Free for many features; $69.95 per year for the Pro version brings enhancements such as remote printing and sound.
Zoho (www.zoho.com) offers a suite of online tools for functions such as database and customer relationship management, invoicing, and document management. Priced per function, ranging from $3 to $19 for a single user.
Nitro PDF Express (www.nitropdf.com) lets you create PDF files, convert PDFs to Word format, split pages, and merge multiple files into a PDF. $49.99.
ReadNotify (www.readnotify.com) lets you track e-mails (including attachments) and see when they were received and opened. $24 per year.
Loan Help from Lenders, But No Free Lunch
It may seem illogical, but if you’re a struggling commercial property owner, but still making loan payments, lenders probably won’t talk to you about a loan modification, says Kevin Levine, executive vice president of Strategic Asset Solutions in Woodland Hills, Calif.
But if your payments are behind, lenders have become more receptive in recent months to approving modifications, says Levine. He’s recently had success in getting lenders to reduce interest from around 6 percent to 3 percent, at least for a few years. Lenders may also be willing to give a discount on the principal for recourse loans, he says.
The key to getting a modification: Have a plan to explain how you’re going to reposition the property and solve your cash flow shortfall. Lenders also want to see that the funds you’re not spending on the mortgage are being spent on the property to improve occupancy, he says. It’s also likely that owners will have to give a personal guarantee on the loan.
Finally, not every property is a candidate for loan modification. If lenders don’t see the light at the end of the tunnel, they’d rather cut their losses now, says Levine.