Revitalizing Commercial Corridors for Economic Development

1. Revitalizing Commercial Corridors forEconomic Development Understanding Impacts of US 19 Construction, Or: “How the Will I Get Over There?!” WTL+a Real Estate & Economic Advisors Washington, DC & Provincetown, MA 2017 Pinellas County Economic Leadership Symposium April 21, 2017

2. The Challenge: Grade-Separated Interchanges • FDOT built 3 elevated interchanges 2009—2014: • Bellair Road • Gulf-to-Bay Blvd. • Seville Blvd. • $124 million project allows uninterrupted travel—49th St. to Sunset Point Rd. • FDOT proposes to elevate portions from Curlew to Pasco County line • County & MPO seek to guide design, mitigate impacts • Conducting market & land use analysis for 5.1 miles from Curlew to Klosterman

3. Clearwater: Impacts During Construction From Main Street/580 to SR 60: • Challenge of isolating real estate impacts of both 2007—2009 recession & highway construction • Critical decisions among commercial property owners: • Dramatically lowered retail rents to maintain occupancies • Offered short-term retail leases • Key findings: • 4 years of positive leasing activity: +154,400 SF • Rents declined by 39%

4. Clearwater: Impacts During Construction • From Main Street/580 to SR 60: • Office vacancies peaked at 21% (2010) • Limited office leasing reduced vacancies to 15%—19% (2011—2015) • Retail impacts since construction completed (2014): • Negative absorption: -162,000 SF • Vacancies jumped from 2% in 2013 to 8%

5. Clearwater: Impacts During Construction

6. Study Area Today: Demographics & Housing • 27,900 (aging) residents in 13,600 households • Annual retail spending: $16,200 per HH—slightly higher than County average • Stable & diverse housing stock: • 60% owner/26% renter • Average value: $228,500 • 14% “unoccupied” but true vacancy is 5.5% • Limited available land for new residential development suggests infill redevelopment driven by: • Population/HH growth • Very low MF vacancies (1.8%) & absorption (40 units/year) • Site assemblage

7. Study Area Today: Retail • Corridor serves as destination for larger retail trade area • Store sales of $418 million/year indicate larger trade area, limited competition • 2.6 million SF of retail inventory (<5% of County’s supply): • 455 retailers (33% of total businesses) • 80 restaurants (65% locally-owned) • Fluctuating vacancies, uneven/negative commercial leasing, declining rents • Retail sales average $161 per SF: below national underwriting criteria • Key findings: • As HHs age, retail spending declines • Conversion of obsolete/vacant retail to medical use

8. Study Area Today: Office & Lodging • Tertiary market: 1.2 million SF of office inventory (<3% of County) • Vacancies peaked at 21% (2014); currently 17% • Significant negative absorption over past 10 years: -173,000 SF • Estimated 364,000 SF of medical office • Geographic Solutions: example of targeted recruitment strategy • 1,600 hotel rooms (11% of County) • Hotel occupancies averaged 59% over past 5 years—improving but in recovery

9. Case Studies • Case studies of commercial corridor revitalization strategies explored: • Nodes—a necessity in linear corridors of several miles • Public transportation/infrastructure improvements • Private investment—on specific parcels using public regulatory incentives

10. Case Study: Mercury Boulevard—Hampton, VA • 9.6-mile corridor around downtown & periphery (City population: 137,500) • Major commercial destination with multiple retail centers • Coliseum Mall: 800,000 SF, 4-anchor center built in 1973; largest single property taxpayer in City • Challenges of retail industry: shifting anchors, store closings, high vacancies; closed in 2007 • Average daily traffic: 20,000 on nearby roads; 76,000 at I-64 interchange I-64 Interchange Mercury Boulevard

11. Case Study: Mercury Boulevard—Hampton, VA • 80% of former mall re-used to accommodate 1.1 million SF mixed-use project rebranded “Peninsula Town Center”: • 850,000 SF retail • 158 housing units • 131,800 SF office • New parking structure • Owner defaulted on $168.5 million loan (2013), new ownership secured (2016) • Redevelopment catalyzing reinvestment in 4 nearby centers • Public Role: City provided $93 million TIF (2007) to protect property tax base, fund streetscape & infrastructure

12. Case Study: Columbia Pike—Arlington, VA • 4-mile, 4-lane arterial from Pentagon to Arlington/Fairfax County border • Average daily traffic: 28,000; busiest bus transit corridor in VA: 17,000 passengers/day • 1950s auto-orientation: low-scale commercial, small MF buildings, established locally-owned businesses • 5 commercial nodes • High-growth region: corridor serves as concentration of affordable housing & immigrant populations

13. Case Study: Columbia Pike—Arlington, VA • Public role: In 2003, County proposes TOD form-based codes regulating densities, heights, affordable housing, mix of uses • 2004: Arlington & Fairfax propose 4.9-mile fixed rail streetcar line • 2014: costs escalate from $242 million to $550 million; streetcar cancelled • 2015: Counties propose return to bus transit with $200 million infrastructure & pedestrian improvements (streetscape, bike lanes, lighting, transit shelters)

14. Case Study: Columbia Pike—Arlington, VA • Arlington County planning & zoning incentives: • Form-based codes restrict heights, densities, uses • Up-zoning for edge sites: 25% density & height limit exceptions; denser infill • TDRs for open space, historic preservation, affordable housing, public facilities, recreation • County capital investment of $2 million for streetcar planning & $200 million for phased infrastructure & streetscape • 2040 growth projections: • 3,900 MF units & 7,300 new residents • 7,000 new jobs & 2.2 million SF new commercial uses

15. Case Study: Hill Center—Nashville, TN • Former 1950s-era, 90,000 SF grocery-anchored center on 10-acre site • 2007: redeveloped into 225,000 SF mixed-use lifestyle center anchored by Whole Foods, West Elm & Pottery Barn; supporting office • New 90-unit MF residential to start 2017 • Public role: In 2006, Metro Nashville Government implemented Green Hills Urban Design Overlay (UDO)—one of 21 across metro area

16. Case Study: Hill Center—Nashville, TN • UDOs provide development incentives for mixed-use projects with 3 or more qualified revenue uses that comply with “build to” provisions: • Floor area bonus for shared parking • Parking structure FAR exemption • Increased setback & building heights to accommodate outdoor dining • Increased FAR bonus for plazas & transportation • 10% reduction in parking if developer funds pedestrian, transit & bicycle facilities • 2017: developer partners with Hytch, LLC to offer ride-sharing options

17. Key Findings: Corridor Revitalization • Requires comprehensive view of entire corridor in planning, regulatory & development policies to avoid piecemeal, inconsistent development • Successful revitalization strategies take decades even with consistent policies • ‘Prime the pump’ with public realm/infrastructure improvements • Value-enhancement created in projects with walkable environments • Measure market support/investment viability—is there demand for specific uses? • Challenges of suburban/transitioning locations—can parking ratios realistically be reduced given uncertainties of public transit service? • Suburban corridor revitalization is a relatively new national issue—there are no standards & few benchmarks • Developers want predictability—revitalization plans are critical, as is long-term, public-sector commitment to following plans

18. Thank You! WTL+a: Real Estate & Economic Advisors Washington, DC WThomas.Lavash@wtl-a.com