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VOL. 8 | NO. 45 | Saturday, October 31, 2015

Mix It Up

Memphis’ real estate development industry on a mixed-use tear

By Madeline Faber

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Memphis’ development eye is turning inward and upward as mixed-use projects are becoming more common than ever before.

Usually a mode of survival for densely packed cities, residential, office, retail and even manufacturing are cohabitating in single mixed-use buildings or lots as a way to recoup Memphis’ sprawl. Downtown and Midtown are being combed for infill and adaptive reuse possibilities as millennials are moving to the urban core in droves.

Crosstown Concourse

(Memphis News/Andrew J. Breig)

Looked-over neighborhoods, like the Memphis Medical Center and Crosstown, are being cultivated into livable, walkable communities. What were once crumbling historic buildings are now seen as hip places to live.

Mixed-use is just the way things are going to be done from now on, according to industry leaders.

“The more we see development in the rebuilding of our traditional core area, the more mixed-use is going to become more commonplace,” said Alex Turley, vice president of Henry Turley Co.

Memphis is at a tipping point in terms of population and development opportunities, said Johnny Lamberson, executive vice president of CB Richard Ellis Memphis.

“For years, all we did was jump to the next intersection. Now we’re seeing that we have to go back to those intersections,” he said.

“There's a higher push to make it more dense because it's more green and you're leaving less of a footprint. With prices, that's the only way you can make these things work is to go up and create more than just that single-level retail we’re used to.”

One of the underlying principles of mixed-use is collaboration. When uses are grouped in close-knit communities or stacked in buildings, city infrastructure works more efficiently.

But mixed-use is not just multiple uses in proximity. A dense New York City high rise and an office complex with a sea of parking aren’t helping cities move forward.

What transforms these projects are connectivity and placemaking. Value is created through the collaborative energy that comes from bumping elbows with different sectors.

“We want to put together organizations that actually want to be next to each other so that they can share resources, share programming, possibly share staff and share space,” said Todd Richardson of his vision for Crosstown Concourse, the most staggering example of Memphis’ mixed-use renaissance. “Their individual missions are elevated because they're next to each other.”

Mixed-Use: Hip and Intuitive

There are more mixed-use projects on Memphis’ radar than ever before, but it is by no means a fad. Architects Looney Ricks Kiss would know: They’ve had a finger on most of Memphis’ mixed-use developments for the past 25 years.

“It’s accelerating now in 2015,” said LRK principal Victor Buccholz. “You don't have to convince someone to do it anymore. It's an established thing.”

Harbor Town features mixed-use in a thriving community.

(Memphis News/Andrew J. Breig)

More than hip, it’s intuitive. It’s a return to the way cities were designed before the onset of highways, parking lots and suburban sprawl.

It’s what Henry Turley had in mind when he developed the Harbor Town community on Mud Island in the late 1980s.

“His goal was to create a place on the river like where he grew up in Midtown, where he could ride his bike and walk everywhere,” said LRK principal Frank Ricks.

At the time, Turley took a 132-acre greenfield development and turned it into a comprehensive, walkable neighborhood with a unique identity.

With single family homes surrounded by restaurants, a school, coffee shop, doctor’s office, grocery store, salon and countless other small businesses, Harbor Town is Memphis’ first example of new urbanism, or mixed-use developments across a horizontal plane.

It’s what Loeb Properties did with its resurrection of Overton Square. Entire blocks of Midtown were left for dead, resigned to being turned into another grocery store center.

Three years later, Overton Square is 100 percent leased and includes restaurants, fitness centers, retail, music venues, public gathering space and a movie theater.

What seals Overton Square as Midtown’s mixed-use entertainment district are its ancillary developments. There are comfortable streets, art installations, public events, alleys to explore and areas to bump into friends.

“It's not about the individual buildings,” Ricks said. “It's more about the uses of the buildings and the space in between the buildings and how they're connected.”

With nowhere to go but up, Loeb Properties is looking to add new mixed-use construction.

Within the next two years, it hopes to start work on two multistory mixed-use buildings in the last remaining surface parking lots, president Bob Loeb said.

Building on the vibrancy of Overton Square, the buildings would be retail on the ground floor with residential and office components above.

Ahead for Loeb is the former Sears factory outlet building on Broad Avenue, which is still on the drawing board to be converted into mixed residential, entertainment, retail and fitness uses.

Mixed-Use Makes For a Healthy Medical Center

Horizontal and vertical mixed-use is what stakeholders are trying to accomplish in the Memphis Medical Center.

Despite seeing 15,000 employees and 8,000 students daily, the area desperately needs a pulse: residential components, enhanced streetscapes and commercial centers.

The area’s nine anchor institutions have come together to direct their massive economic resources and property holdings toward making the medical district livable and walkable.

Coordinating mixed-use projects is part of the overall transformation, according to Tommy Pacello with U3 Advisors, a consulting firm working on a strategy to enliven the medical district.

“The older sections of the neighborhoods, whether it's Victorian Village or the Edge neighborhood that are around the medical district, have historically been a mix of uses,” Pacello said. “(By segregating uses) what we did unsuspectingly was make our places less sustainable because of their monocultures of uses. Part of it is putting those types of things back in.”

New uses are starting to trickle in as the University of Tennessee Health Science Center has issued a request for proposal for a developer to demolish the Medical Center Towers building at the corner of Madison Avenue and Pauline Street and build a new hotel and conference center there.

Though the medical district has a long way to go before it achieves urban vibrancy, the success of other projects shows that Memphians are demanding mixed-use. And it could lead to developers being willing to tackle more challenging, vertical projects.

“(It’s) what's expected, and we've become adept at it,” Pacello said. “We've become much better at building it and understanding it and understanding how do we do the financing for it.”

Vertical mixed-use buildings can be expensive, tricky to finance and demand complicated construction and zoning codes compliance. One building can even have multiple owners and lead to unwanted friction between tenants.

A view inside the massive renovation project at Crosstown Concourse  

(Memphis News/Andrew J. Breig)

For the Crosstown Concourse developers, it’s that friction that transforms the building into a community.

“Our challenge from a design perspective was to create a built environment that nudged people to interconnect in unexpected ways in order for those conversations to take place,” said Richardson.

Turning the 1.5 million-square-foot Sears regional distribution center into a vertical urban village couldn’t have happened without anchor tenants that were willing to play and work together.

"At least the two of us feel that the output is worth the expense and worth the complexity because it allows for something that's more special,” said McLean Wilson, co-leader of the development, which will connect the greater community with residential, retail, office, health and wellness, education, and arts components in 2017.

Adaptive Reuse Comes Along, Too

A double punch for sustainability, adaptive reuse is growing with Memphis’ trend of mixed-use.

From the Tennessee Brewery to the Hotel Chisca, redevelopment projects in the urban core are tacking on ground-up construction and commercial components to historic buildings.

“Memphis is at the point where the sprawl of it has gotten to where people don't want to go as far as they can go,” said Parrish Taylor, vice president with CBRE Memphis. “You’ve got to start looking back behind you to what was developed 30 or 60 years ago. You have to figure out how to use the existing buildings.”

Central Station on South Main is an upcoming project that combines a historic building with mixed-use and multi-modal transit.

Rendering of six-screen Malco theater to be included as part of Central Station

“Inherent in the word repurposing is that you're changing the uses,” Alex Turley said. “So it's a balance between maintaining the historic integrity of the building and redeveloping it, which is expensive and takes a lot of care and thought.”

The train station is about to make a host of new connections with added residential units, a six-screen movie theater, boutique hotel, restaurant and retail offerings and a new home for the Downtown Farmers Market.

It also has the opportunity to change the way Memphis thinks about transit and regional tourism once the Main to Main Multi-Modal Connector Project activates the Harahan Bridge, Ricks added.

“Coming over from the Big River Crossing, this will be one of the first mixture of uses that you'll get to from the bridge at that end of South Main,” he said, pointing to the energy sparked by a functioning Amtrak train feeding into a hotel with cruise ships arriving and departing nearby on Beale Street Landing.

“Inherently, mixed-use means a polyrhythmic dynamic where you have all these different kinds of things going on, and that's the kind of thing that you'd expect out of urban life,” Turley added.

And From the Ground Up

New ground-up construction is taking mixed-use higher than it’s gone before.

The two proposed One Beale towers at the base of the Mississippi River will be Memphis’ first mixed-use skyscrapers with a Hyatt Regency hotel and adjoining conference space and spa; residences; two signature restaurants and a coffee shop going up in 2018.

The $160 million project will dramatically change Memphis’ landscape and could lead the way for denser projects.

Rendering of proposed mixed-use development at McLean and Union in Midtown

In Midtown, Belz Enterprises plans to transform the southwest corner of McLean Boulevard and Union Avenue into a sleek mixed-use center, replacing the blighted Artisan Hotel with apartments, retail and a gourmet grocery store. It would be Midtown’s first apartments built since the Bristol went up on Union in 2004.

Josh Poag, president of Poag & McEwan Lifestyle Centers, believes that an ambitious project like Belz’s has the potential to drive up rates and attract the eye of outside developers, potentially bringing more mixed-use projects.

The Downtown Memphis Commission agreed, calling the project catalytic and high-impact for the area. In a rare move, it granted a $10.5 million tax break to the project even though it’s outside of Downtown’s traditional boundaries.

A little farther east, Poag is at work with Milhaus Ventures on the $61 million Highland Row development. Apartments, townhomes, two restaurants, a coffee shop, specialty grocery store and signature retail aim to connect the University of Memphis area with a vibrant community center.

Similar to the goal of the Memphis Medical Center redevelopment, the U of M realized that it’s strengthened as an institution when the surrounding area is attractive.

Poag came on board with the project nearly 10 years ago when university president Shirley Raines sent out a call to action.

“She said the historic view of universities was to put up walls to the surrounding community because our natural inclination was to try to protect the students,” Poag said. “What was done was that we created a fortress.”

Highland Row will create a walkable environment that is attractive to all demographics and also helps the university with student recruitment and retention.

“It does lend itself to a younger generation, around 20 to 35, that is looking for that more urban environment, but there's a great patch of the population that are empty nesters that are looking to give up their houses and live in a more vibrant environment as well,” he said of the development’s reach.

Buildings, Neighborhoods Become Cities

Driven by millennials but attractive to a much broader audience, buildings and neighborhoods are becoming cities within themselves where people can work, play, shop and even live in the same spot.

Memphis is going to see more of it incrementally in Downtown and Midtown because the older building stock is easier to fix, the street grid is more comfortable and blocks are easier to redevelop, Ricks said.

However, the office parks and shopping centers of East Memphis aren’t impossible to convert. A big box store could hold a charter school or be broken up into retail bays with a parking lot-turned-plaza connecting the center to nearby residential.

For decades, the trend was to build a structure for one condition, and then abandon it and build another one when it no longer fit demand.

But LRK and others are trying to move Memphis away from that practice by designing buildings that can evolve.

“The more flexible we can make the buildings as we build them, then the more likely they’ll get reused in a mixed-use condition, which is the ultimate sustainability,” Ricks said. “Things will change, markets will change, so things that are successful now might not be in operation 20 to 30 years from now.

“If the building's flexible enough, it will be there facilitating whatever is the next trend from a use standpoint.”

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