Mixed-Use Development: Nine Case Studies of Complex Projects

On the cover:

Top row, from left: Harper Court (Leslie Schwartz Architectural Photography); Woodward’s (Bob Matheson); Altmarkt-Galerie )Pauline Fabry).

Middle row, from left: Life Hub @ Daning (Chongbang); CityCentre (CityCentre); North Hills (Kane Realty).

Bottom row, from left: King’s Cross (King’s Cross Central Limited Partnership); Knowledge and Innovation Community (Shui On Land); Porta Nuova (Hines Italia).

©2016 Urban Land Institute

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Recommended bibliographic listing:

Schwanke, Dean, et al. Mixed-Use Development: Nine Case Studies of Complex Projects. Washington, D.C.: Urban Land Institute, 2016.

ISBN: 978-0-87420-401-8

About the Urban Land Institute

The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. ULI is committed to

Bringing together leaders from across the fields of real estate and land use policy to exchange best practices and serve community needs;

Fostering collaboration within and beyond ULI’s membership through mentoring, dialogue, and problem solving;

Exploring issues of urbanization, conservation, regeneration, land use, capital formation, and sustainable development;

Advancing land use policies and design practices that respect the uniqueness of both built and natural environments;

Sharing knowledge through education, applied research, publishing, and electronic media; and

Sustaining a diverse global network of local practice and advisory efforts that address current and future challenges.

Established in 1936, the Institute today has more than 37,000 members representing the entire spectrum of the land use and development disciplines. ULI relies heavily on the experience of its members. It is through member involvement and information resources that ULI has been able to set standards of excellence in development practice. The Institute has long been recognized as one of the world’s most respected and widely quoted sources of objective information on urban planning, growth, and development.

Patrick L. Phillips, Global Chief Executive Officer, ULI

About the ULI Case Studies Program

The ULI Case Studies series showcases innovative approaches and best practices in real estate and urban development. Each case study focuses on a specific development project and includes the following features:

A detailed description of the project and the development process;

The story behind the development and the lessons learned, including comments from the developers and other principals involved;

Photos, site plans, floor plans, and a development timeline; and

Site and building data, development cost data, sales and rent figures, vacancy rates, and financial data.

Many of the most recent case studies also feature videos about the project, including interviews with the principals involved, and an interactive map providing easy access to satellite and street views of the site and area.

You can learn more about ULI Case Studies at our website: casestudies.uli.org

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Dean Schwanke, Senior Vice President, Case Studies and Publications

Principal Author

Dean Schwanke

Senior Vice President, Case Studies and Publications

Urban Land Institute

Principal Contributing Authors

Lucy Anna Scott

Freelance Author

Ken Rhee

Chief Representative, ULI Mainland China

Chief Executive Officer, Huhan Advisory

Contributing Authors

Don Johnson

Independent Urban Planner

Robyn Kinsey Mooring

Independent Author

ULI PROJECT STAFF

Kathleen B. Carey

President and Chief Executive Officer

ULI Foundation

Chief Content Officer

Dean Schwanke

Senior Vice President

Case Studies and Publications

Payton Chung

Director

Case Studies and Publications

James A. Mulligan

Senior Editor

David Rose

Editor

Betsy Van Buskirk

Creative Director

Anne Morgan

Graphic Design

Joan Campbell

Information Center Manager

Contents

Introduction

Observations on the Case Studies

Lessons Learned

Mixed-Use Evolution

Compact, Small-Site Mixed-Use Projects

Harper Court, Chicago, Illinois, United States

Woodward’s, Vancouver, British Columbia, Canada

Mixed-Use Projects Combining Retail Malls, Hotels, and Offices

Altmarkt-Galerie, Dresden, Germany

Life Hub @ Daning, Shanghai, China

Mixed-Use Town Centers and Urban Villages in Suburban Areas

CityCentre, Houston, Texas, United States

North Hills, Raleigh, North Carolina, United States

Large, Urban Mixed-Use Development Districts

King’s Cross, London, United Kingdom

Knowledge and Innovation Community, Shanghai, China

Porta Nuova, Milan, Italy

Introduction

Mixed-use development is a complex undertaking that requires a wide variety of skills and expertise. Developers must understand not only how to develop various property types-such as office, retail, residential, and hotel—but also how to put them together to maximize synergy. Developers must also understand the nuances of good urban design and place making. There are few formulas that apply to this type of development. Much of what is known or needs to be known is best derived from looking at past experiences and examples. Every situation is different, and no two projects are alike.

This publication provides a detailed look at nine leading examples of mixed-use projects from around the world that have been developed in recent years. The case studies are drawn from the ULI Case Studies program, which showcases innovative approaches and best practices in real estate and urban development.

The nine mixed-use projects featured offer a wide range of approaches to mixed-use development globally, including three developments in the United States, two in China, and one each in Canada, the United Kingdom, Germany, and Italy. The case studies range from high-rise projects in central business districts—such as Porta Nuova in Milan, Italy, and Woodward’s in Vancouver, Canada—to suburban town centers, such as CityCentre in Houston, Texas, United States, and North Hills in Raleigh, North Carolina, United States.

In addition to the case studies themselves, this report provides a brief overview of the key traits for this group of case studies, as well as the lessons learned at each project.

Observations on the Case Studies

The mixed-use developments discussed here are characterized by three common features: they have three or more significant revenue-producing uses, they are physically and functionally integrated, and they are developed in conformance with a coherent plan. Beyond these features, mixed-use developments vary greatly—by size, configuration, mix of uses, the process by which they are developed, and many other characteristics. The range of variations for the mixed-use projects discussed in this publication are outlined below.

Site Size

The project sites for these nine case studies range in size from 2.3 acres for Woodward’s and 3.2 acres for Harper Court in Chicago up to 94 acres at North Hills and 121 acres at the Knowledge and Innovation Community (KIC) in Shanghai. The median site is 47 acres, which is the size of CityCentre.

Design and Configuration

The design configurations for these case studies fall into four general categories. Harper Court and Woodward’s are compact, small-site mixed-use projects in urban locations arranged around an internal retail street or courtyard. Altmarkt-Gallerie in Dresden, Germany, and Life Hub @ Daning in Shanghai, China, are essentially retail malls with attached office and hotel uses. CityCentre and North Hills are town center/urban village districts on large sites in suburban locations. And King’s Cross in London, Porta Nuova, and KIC are large, diverse urban districts on redevelopment sites.

Gross Building Area

All the projects are quite large when compared with single-use projects. The largest is KIC, with 8.2 million square feet of space, followed by King’s Cross with about 6 million square feet. The smallest is Harper Court, with 593,502 square feet, followed by Altmarkt-Galerie with 829,000 square feet. The median size is 2.7 million square feet, the size of Life Hub @ Daning.

Office Space

Offices are a key driver in these projects. All nine include office space, ranging from 3.4 million square feet at King’s Cross and 2.3 million square feet at KIC to 67,000 square feet at Woodward’s and 79,000 square feet at Altmarkt-Galerie. The median-sized office component can be found at CityCentre, with 625,000 square feet (more is planned). Office space is a dominant use in several of these developments, including at CityCentre, KIC, King’s Cross, North Hills, and Porta Nuova.

Retail/Restaurant Space

Retail, restaurant, and entertainment uses are also common to all nine of these developments, but the size and importance of these uses vary greatly among the projects.

Life Hub @ Daning has the largest retail/restaurant component, with over 1.1 million square feet, followed by North Hills with 989,000 square feet, KIC with 728,000 square feet, and Altmarkt-Galerie with 693,000 square feet. Retail space and restaurants are also well-represented uses at King’s Cross, Porta Nuova, and CityCentre, each including 400,000 to 500,000 square feet. While Woodward’s and Harper Court both have less than 100,000 square feet of retail/restaurant space, even in these projects this use plays an important role in establishing a sense of place and providing attractive on-site amenities.

In addition, three of the case-study projects have grocery stores—Altmarkt-Galerie, North Hills, and Woodward’s. Many of the developments have cinemas, important drivers of activity on evenings and weekends, including CityCentre, Life Hub @ Daning, North Hills, and Woodward’s. Woodward’s includes not only an art house cinema, but also live theater and other cultural offerings.

Housing

Housing is increasingly important in mixed-use developments and is a critical element in supporting round-the-clock activity. Six of the nine projects include housing, and a seventh—Altmarkt-Galerie—is surrounded on three sides by existing multifamily housing owned by another entity. King’s Cross has the largest number of units planned at 2,000, followed by North Hills with 1,377, KIC with 949, CityCentre with 836, Woodward’s with 746, and Porta Nuova with 403. CityCentre offers primarily rental units, whereas KIC and Porta Nuova favor for-sale units. Woodward’s and King’s Cross include both for-sale housing and a considerable number of affordable housing units for rent.

Hotels

Hotels—also important for activating mixed-use environments throughout the day and week—are included in seven of the nine case-study projects. North Hills has 501 rooms in three separate hotels, followed by Life Hub @ Daning with 326 rooms, CityCentre with 255 in the primary hotel, and Altmarkt-Galerie with 203. Hotel flags include major brands, such as IBIS, Hyatt, Sheraton, and Four Points, as well as much smaller brands, such as Hotel Sorella and Great Northern.

Parking and Transit

Parking is a substantial use in most of these projects. KIC has more than 7,500 spaces, North Hills has 7,500, CityCentre has more than 3,600, and Porta Nuova has 3,000. The developments with the fewest parking spaces are Altmarkt-Galerie, Harper Court, Woodward’s, and King’s Cross, all with fewer than 1,000. Each of these latter projects is well served by nearby transit, as are KIC, Life Hub @ Daning, and Porta Nuova.

Timeline

The development timeline—from start of construction to substantial completion—for the nine projects ranged from only two years for Harper Court and Life Hub @ Daning, up to 13 years for King’s Cross and Altmarkt-Galerie and 16 years for North Hills. The median time required for development from start to finish was eight years, the development period for CityCentre in Houston. Most of the nine projects were largely completed in the years between 2010 and 2016; several have additional phases planned or underway, including CityCentre, Harper Court, King’s Cross, and North Hills.

University Partnerships

Four of the projects involve universities as partners. Harper Court was essentially initiated by the University of Chicago to improve a site near campus, and the university is a prime tenant in the office space. The developers of King’s Cross worked with the University of the Arts London to add cultural elements to the project, whereas the developers of KIC partnered with Fudan University and several other leading Chinese universities to create a new technology innovation community on the property. The Woodward’s developer worked with the Simon Fraser University School for the Contemporary Arts to develop a major university facility on the site.

Public/Private Development

Several of the developments involved public/private development efforts as well. At Altmarkt-Galerie, the city of Dresden worked with the developer in revitalizing the city center that had been nearly destroyed during World War II; at Harper Court, the city of Chicago and the university worked together on redevelopment; at KIC, the objective of the developer and the city was to create a new technology hub for Shanghai; at Porta Nuova, the city of Milan sought to repair a major blighted industrial and transportation hub; and at Woodward’s, the developer, the city of Vancouver, and the province of British Columbia sought to redevelop a cherished department store site, repair a blighted area, and provide social housing for the poor and the homeless.

Sustainability, Health, and Preservation

Many of the projects also include other special features. For example, seven of the case studies highlight healthy-place features and elements, eight discuss sustainability, and four of the projects involved historic preservation and/or adaptive use (see exhibit 3).

Lessons Learned

Mistakes made and lessons learned are hallmarks of the ULI Case Studies series, and each case study in this publication provides a section that addresses these lessons. Below is a brief overview of each development and a summary of the key lessons learned.

Compact, Small-Site Mixed-Use Projects

Harper Court, Chicago, Illinois, United States

Harper Court is a mixed-use project—including office, retail, hotel, and parking uses—located on a 3.18-acre site in the Hyde Park neighborhood on the South Side of Chicago near the University of Chicago campus. The project was initiated by the city of Chicago and the university with the objective of revitalizing a strategic commercial location important to the university campus and near transit. The project has been integrated into the existing street fabric and includes a new internal street. A second phase is planned.

The initial success of the project, started during a time of significant distress in the commercial real estate market, was due largely to the strong commitment to the project by the University of Chicago and the city. Partnering with cities and educational institutions during down market cycles can be extremely beneficial for all parties involved because 1) it allows developers to stay active and engaged in development during slow periods, and 2) it allows cities and universities to pursue development objectives at reduced costs when development and construction economies are in the doldrums.

Developing strong partnerships is important in complex projects such as Harper Court. The partnership between Vermilion and JFJ was a critical teaming decision for the project, coupling Vermilion’s expertise in public/private partnerships with the experience of a veteran Chicago developer. Partnering with a hotel developer focused on university-based projects was also a good fit, and the partnership with Canyon-Johnson was essential to bringing much-needed equity to the deal. Complex mixed-use projects require good partners who share the same vision but who also can bring complementary skills to the project.

The developer’s listening skills during the community visioning process were essential. The developer worked hard to hear community constituents and make sure their desires were represented in the final product. Having community members behind a development project is invaluable, whereas having them opposed to it can be disastrous.

A layered and phased financing approach, including a variety of capital sources brought into the process over time, was essential to the project. The ground lease and the tax increment financing (TIF) funds reduced upfront equity requirements for Harper Court Partners; the recovery-zone facility bonds secured in late 2010 made the hotel deal possible; Canyon-Johnson’s equity investment and the bank financing were provided at the start of construction in October 2011; and the land sale to the hotel in August 2012 freed up cash during the construction phase. This phasing and layering of financing over time allowed the project to unfold with adequate funding in place for each stage at a time when development financing was very difficult to obtain.

Woodward’s, Vancouver, British Columbia, Canada

Woodward’s is a mixed-use, urban redevelopment project in the Gastown area of Vancouver’s east side, very near downtown on the site of the former Woodward’s department store. The redevelopment involved demolition of several of the department store buildings, the restoration and adaptive use of one historic structure for office space, and the construction of two new residential towers, nonmarket housing units for both singles and families, new educational and cultural space for Simon Fraser University, an atrium, a daycare center, and ground-level retail space that includes a grocery—all within the confines of a 2.32-acre site in an area with a variety of social and poverty issues. The project includes a total of 1.07 million square feet of space.

The Woodward’s project is a mixed-use social experiment, including substantial social housing, and many drivers and entities came together to make it work. The commitment and cooperation of the city, the provincial government, the university, two private sector developers, a number of social housing groups, the grocery and drugstore anchors, and numerous community groups were exemplary. The fact that the condominium buyers supported the project enthusiastically was also a sign of community support.

Critical to the success of the project was the ongoing dialogue that the developers, architect, and city had with community groups to address the neighborhood’s unique social needs. In the end, the Woodward’s project was about the Vancouver community coming together to bring about an important transformation of a historic site at the heart of the city. Most of the participants were on the same page in terms of achieving both social and economic objectives.

Also critical was getting representatives of all the uses to commit to it, because each component was vital. This was achieved through leasing momentum. Because the provincial government committed to the project, the federal government committed to rent space. Because Nesters grocery committed to rent space, London Drugs also committed to the space. Because of the condos, the retail shop space leased for reasonable rents.

A project can respect the heritage of a site in many ways that go beyond simply restoring historic buildings. The commissioning of a photographer/artist to create a large photograph that depicts the Gastown riots is one example of this. Videos in the atrium and panels around the building also highlight the history of the site.

Some aspects of the project still need attention. For instance, the community arts space on the second level of the office building failed and now is largely underused, as is one of the retail spaces facing the atrium. Community groups often need more help to succeed than initially expected. It is not enough to offer free space and hope the programming comes.

Cost sharing and operating expenses among uses are an ongoing challenge, as is the case with many mixed-use developments. Allocating the costs for maintaining common spaces and elements is always a sensitive matter. Each use had different concerns: social housing operators want low expenses; retail users want high standards for maintenance and security; market-rate condo associations want low costs but also strong security. Complaints from the condominium owners regarding shared expenses are a consistent source of conflict.

The Woodward’s redevelopment changed the neighborhood for the better in a number of ways. People who were homeless or living in substandard housing now have good housing. High-quality groceries are readily available now. The streets are safer. There is a diverse mix of people in the neighborhood. There is new culture and nightlife. Property values and the property tax base have increased, generating new revenue for the city. Woodward’s was one of the first examples in Canada of mixing social housing and market-rate condo housing, and the success of the project was a landmark in demonstrating that such a mix could work.

Mixed-Use Projects Combining Retail Malls, Hotels, and Offices

Altmarkt-Galerie, Dresden, Germany

Altmarkt-Galerie is a retail-oriented mixed-use development in the center of Dresden, Germany, that features a shopping center containing 64,400 square meters (693,200 sq ft) of gross leasable area (GLA) that was originally opened in 2002 and then expanded in 2009-2011. The project also includes a 5,300-square-meter (57,049 sq ft) hotel and 7,300 square meters (78,577 sq ft) of office space. The first phase of the project includes three modern retail blocks, arranged north to south in a courtyard—surrounded on three sides by existing four- to six-story apartment buildings. The retail blocks are connected by glass-covered pedestrian walkways. An extension, which opened in 2011, added 19,200 square meters (206,700 sq ft) across a T-shaped block at the north of the original site. During the expansion, an existing 1960s office block was demolished and replaced with a modern building, while a listed building was renovated. The expansion added 93 retail shops on three floors, with offices and a hotel above.

Altmarkt-Galerie has ignited and revitalized Dresden’s city center, thanks to close collaboration between developers and the local government, a great central location, a strong leasing operation, and a compelling plan and design.

According to developer ECE, one of the main reasons for the project’s success is a cooperative working relationship with Dresden’s city council, with which it established a steering committee. The committee, which had a municipal coordinator for the coordination of all city offices, was in place from the beginning so that politicians and all other stakeholders of the city were committed to the project and promoted it.

Altmarkt-Galerie also illustrates how a prime, central location and creative urban design solutions can elevate a project and allow it to overcome other challenges. The fact that the first phase of the project was surrounded on three sides by multistory housing blocks and had no frontage on a heavily traveled fourth side did not deter the developers nor hinder the performance of the shopping center. By creating numerous, highly visible entrances into the courtyard and the shopping center, and by designing compelling courtyard and interior spaces within the center, the developers were able to shape a highly successful retail center that attracted both retailers and customers