Redoing the Strip

Due to changing demographics and current migration patterns and family structures, there is a large market for the higher density housing of suburban villages, according to John Martin, principal of Martin & Associates, a Newport Beach, California-based strategic marketing firm and one of the many APA speakers who addressed this issue at the conference. Martin noted that the state’s ability to accommodate future housing demand depends on the homebuilding industry’s and government’s ability to plan and build higher density housing. “Builders have been building homes for families with children for more than four decades, but that market demographic has been changing dramatically from families to homeowners without children, and that change will continue through this decade and beyond,” he said. “Along with changing demographics, planners and builders in California are facing the dual challenges of rapidly increasing housing costs and decreasing inventories of land for new residential development. We simply need to find new places, other than suburban environments, in which to build housing.”

Underscoring the need for more new housing, Martin pointed to the U.S. Census Bureau’s figures, which show that 87 percent of the net new household growth projected for the U.S. between 2000 and 2010 will be in the categories of married couples without children and single-person households. “Society is changing,“ he said. “It’s more diverse, and we need to change by producing more diverse and varied housing in more interesting and appealing neighborhoods.”

Analyzing the economics of the commercial component of a suburban village is critical because of a city’s need for maintaining its tax revenue base, noted Jackson. When analyzing existing strip mall sites to determine if they might be successfully redeveloped, cities, developers, and retail property owners look at the revenue generated per square foot, he said. “A good retail center should produce about $500 per square foot, but the marginal ones are only doing about $200. How can we use a mixed-use project to improve on these numbers and what kind of commercial dollars can be captured? Along with understanding the site, answering these questions involves a solid understanding of the community dynamics and its demographics,” said Jackson.

One of the first requirements for converting strip malls into mixed-use communities is finding sites large enough and priced low enough to be feasibly developed. Particularly in the early stages, developers need land at prices that offset the construction costs and risks associated with grayfield development. There may even be sites in city neighborhoods containing abandoned buildings and vacant lots that may be ideal for this type of development — although some may have legal problems like tax delinquency. The best locations are usually marginal sites where productivity and property values are in flux,” said Jackson.

The shopping center sites that would be ideal for redevelopment can range from two to 50 acres in size; developers often can acquire these sites at lower costs, reducing their initial financial outlay and increasing their rate of return. Many of the sites already have the necessary components, including infrastructure and transportation that make them attractive for this type of mixed-use development. Using GIS software, The Planning Center has developed an approach that allows it to identify sites that would be ideal for this type of development. The software can pinpoint parcels in a designated region, which adhere to the criteria desired by the client. This approach allows the firm to identify, analyze, and help its clients acquire land. Continue »