Flexibility and Diversity are the Keys to Long-Term Sustainability

Flexibility and Diversity are the Keys to Long-Term Sustainability
 
 

Flexibility and Diversity are the Keys to Long-Term Sustainability

By Glenn Williamson, Faculty, Master’s in Real Estate

When long-term owners develop a mixed-use property, they need to build in flexibility to adapt to changing demands from tenants and buyers over time. Different groups require different amenities; and markets will continue to evolve during the time it takes to fully absorb large in-fill projects. Therefore, the ability to appeal to a more diverse and broad customer base may be the best way to create the most sustainable project. In hockey terms, how can developers skate to where the puck is going to be?

These are some of the key takeaways from the recent “Building for the Future: Four Generations and Beyond,” co-hosted by Georgetown’s master’s in Real Estate program and the DC Building Industry Association (DCBIA). The event was moderated by Lisa Mallory, DCBIA CEO and featured Jason Bonnet, VP at Forest City; developers of The Yards; Marcia Hart, Founder of workplace1080; Urmi Joshi, a graduate of the program; and Kenyattah Robinson, President & CEO of the Mount Vernon Triangle CID.

Forest City promotes the idea that “creative place making” equals “long term gain.”

Here in DC, their Yards project will bring 25 buildings to 48 waterfront acres. Since this absorption will occur over a long time frame, Forest City has planned for anchors and amenities that will appeal to a wide range of customers. Public amenities such as the Yards Park and retail amenities such as the Brewery have drawn residents from Capitol Hill to cross Route 395 and demonstrated to retailers that the Yards can reach a critical mass of customers beyond those living in the new development.

Appeal to a Wider Market is Critical

Currently, there are not enough new residents to support a Whole Foods, for example, but Whole Foods will be there and its presence will draw more new residents. Retail must compete with other amenities for limited space, according to Bonnet, so developers need to determine which type of use in each given space will add the most value and continue to maintain its appeal over time.

According to Kenyattah Robinson, “people move to Mt. Vernon now to be near amenities, but what will make them move out is more space, availability of schools nearby, and green space outside.” Sean Cahill, principal of Property Group Partners—developers of Capitol Crossing—noted, “all developers today recognize this problem. You have to create smaller apartments in such a way that you can knock down walls in the future to create larger units.” The same ground floor space could be a workout room, daycare center, or doctor’s office depending on the current residents.

Targeting the Coveted “HENRY” and Active Senior Markets

People speak of millennials as the new demographic group in DC, but some say that “HENRYs” – high-earners, not rich yet—would be a more accurate description of the subset of millennials that can afford high rents for smaller apartments downtown. Like past adults, millennials’ tastes and priorities will likely evolve as they themselves age.

Are the amenities designed with younger millennials in mind also appealing to older residents? In fact, attributes that are now labeled as millennial may readily appeal to much older age cohorts. Urmi Joshi explored exactly this concept in her master’s Capstone project on an apartment complex targeted at the active senior market. Joshi identified an apartment site in Arlington, VA with a cost basis lower than D.C., which nonetheless offered the walkability and ease of access to downtown amenities. There, the building could be updated and current retail or lobby spaces could be converted for day care, primary care or specialty healthcare offices. The concept of “universal design,” suggested Marcia Hart, supports the creation of apartments which could have the benefit of allowing people to age in place. Use of particular kinds of non-skid flooring or walk-in showers rather than bathtubs for example.

Coincidentally, another Capstone student, Tommy Bylund, made a similar attempt to apply urban-design concepts far outside the CBD by redeveloping an underutilized site in a suburban community planned for a prior generation. His project proposed millennial housing at Lake Anne in Reston, perhaps one of the most famous planned suburbs of an earlier era that has stood the test of time. Suburbs remain more affordable in general, but is there a market for such projects in Reston as well as along the Capitol Riverfront?

He himself a millennial, Bylund noted that “contrary to popular wisdom, data shows that most millennials actually live in the suburbs.”

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