Defending against the online dragon

Some entertainment districts are going light on retail, partly because “the bulk of the leasing demand is for dining and entertainment,” say Barry Hand, a Principal with design mega-firm Gensler in Dallas.

September 22, 2017 |

Developer ARK Group is hoping that its newly opened, 17-acre Irving Music Factory in Texas has the same drawing power as ARK’s entertainment district in Charlotte, N.C., AvidXchange MusicFactory, which had around 1.8 million visitors in 2016. Courtesy Gensler

Cambridge Properties is primarily a retail developer. But its proposed University City entertainment district in Charlotte, N.C., is unlikely to include soft-goods retailers as tenants.

“We’re looking to ‘Amazon proof’ the district,” explains Jay Priester, Jr., Cambridge’s Vice President of Leasing and Development. In other words, Cambridge is looking for tenants that don’t compete with the online monolith.

Good luck with that. Online shopping captured nearly 12% of total U.S. retail sales last year, according to Commerce Department estimates. It is expected to grow at an 8–12% clip annually through 2020, according to National Retail Federation projections.

Consequently, some entertainment districts are going light on retail, partly because “the bulk of the leasing demand is for dining and entertainment,” say Barry Hand, a Principal with design mega-firm Gensler in Dallas.

But not every developer or AEC firm believes that retailing is anathema to an entertainment district. The Gila River Indian Community in Arizona intends to develop a 68,000-sf entertainment district in Phoenix that would bridge its Wild Horse Pass Hotel & Casino and Phoenix Premium Outlets.

Quite a bit of the new development around the L.A. Live entertainment district in downtown Los Angeles is mixed-use with a strong retail component. “When you’re adding residential to an entertainment district, retail becomes an ‘I need’ space,” says Daun St. Amand, a Senior Vice President for CallisonRTKL.

Callison designed Oceanwide Plaza, a three-tower, 1.5-million-sf residential and hotel building that is scheduled to open across the street from L.A. Live in early 2019. Oceanwide will include roughly 153,000 sf of specialty retail shops. St. Amand says that AEG, L.A. Live’s developer, has been keen on new construction around the district that offers retail options, which downtown Los Angeles lacks.

Five hundred thousand people work in downtown L.A.; 50,000-60,000 live there. Another 10,000 housing units in downtown’s South Park neighborhood will be delivered within the next two years. “Entertainment districts are becoming more like community centers, where people can come and hang out,” says Ed Sachse, Executive Managing Director–Investments and Leasing Brokerage for Kennedy Wilson Properties, Oceanside’s leasing broker. “People are looking for experiential environments, and retail is becoming more like that.”

He points to sports apparel and high-end boutiques as examples of retailers that continue to lure shoppers. Oceanside, he says, will have around 25 shops ranging from 1,500 to 10,000 sf, all selling “affordable luxury” products.

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