Credit crunch stalls growth of new urban shopping centres, developers say
The economic downturn in the U.S. has cast a chill on the growth of new work-live-shop developments — centres that were once highly touted as models of convenience and profitability, developers at a Toronto conference suggested Tuesday.
The multi-use development models, which have flourished in parts of the U.S. and in regions of the Middle East, integrate shopping plazas with condos, office space and hotels. In recent years, developers have suggested the open-air, mixed-use centres were more dynamic than the indoor, single-use shopping malls and big-box power centres common in Canadian and American suburbs.
However, developers speaking in a panel discussion hosted by the International Council of Shopping Centers said big-scale, multi-use projects may become increasingly difficult to finance and realize.
"The financial model has a big crack," said Gar Herring, president and chief operating officer of the MGHerring Group, which builds malls and lifestyle centres in the U.S.
"It's hard, it's expensive, the legal bills alone would choke a horse," he said, adding that tenants often don't embrace the concepts behind the village-like lifestyle of new urbanism.
Donald Provost, the founding principal of Alberta Development Partners, said juggling the different up- and down-swings in the retail, office space and real estate markets is indeed tricky. Provost's company is slated to develop Calgary's Stampede Trail, bringing new retail and office space to the Stampede Park neighbourhood.
"Mixed-use is messy," he said, noting that securing financing for such projects among today's nervous investors would be an uphill battle. "It's an all-in bet."
Putt 'n' prayThe multi-use model is enjoying perhaps its greatest success in the Middle East, where new projects aim to bring together amusement parks, golf courses, stores, parks, places of worship and condos. For example, the Dubai Mall — which will feature a skating rink, shopping mall, aquarium and promenade — is scheduled to open in October.
Meanwhile, North American developers will have to negotiate financial uncertainties if they want the mixed-use models to succeed, said Stephen Messinger, a senior partner with the commercial leasing group Minden Gross.
"It's not the end," he said, acknowledging nervous investors will likely be cautious given the tightening economy.
But he noted many municipalities continue to actively seek out these developments because of their functionality and design.
"In the end, if it gives consumers what they want, it could work out," he said.
0 comments:
Post a Comment