"Retail is an important part of mixed-use from an economic point of view," said Lee H. Wagman, CEO of Santa Monica-based Martin Group in a session entitled, "Making Retail Successful in a Mixed-Use Development," at the ICSC convention here yesterday afternoon. "It also gives a project character," so the types of retailers that occupy a project can have a significant impact on its overall image.This kind of format, Wagman noted, is conducive to a blend of retailers that would not normally come together under one roof.

Mixed-use enables mall mainstays to coexist with typical open-air or lifestyle tenants, offering a wide range of merchandise.A key component to a successful development is food and entertainment, remarked the panelists. "Restaurants are critical to a mixed-use project," stated Robert Breslau, president of the Stiles Retail Group in Ft. Lauderdale, FL. "Most of them are the anchor tenants and drive the sales volume that we need to make projects work. They also help to make it a daytime/nighttime destination."

The growing popularity of mixed-use could be evidenced by the overflow crowd that attended the session, which was held in collaboration with the National Association of Industrial and Office Properties.

While mixed-use is becoming increasingly popular, these projects are also difficult to do, the experts noted. "It's harder to pull off mixed-use," remarked Jon Peterson, SVP of the Peterson Cos. in Fairfax, VA. "You need to have all of the components working simultaneously to get it to pay off."

Wagman agreed that with so many different uses, "you have multiple chances to trip and fall on your face." However, mixed-use clearly has its benefits. Chief among them are that municipalities and zoning entities are likely to look more favorably on mixed-use as a smart-growth-type initiative than they would a straight-forward retail project. Secondly, "If you can get it done, and it works, it's more sustainable." A successful mixed-use complex, Wagman stated, is less susceptible to competition.

Mixed-use projects tend to be costly and need higher rents in order to make fiscal sense. Moderator Alan J. Beaudette, SVP of Lowe Enterprises Real Estate Group in Irvine, CA, asked the panelists how are they able to get higher rates.

"You have to give them something that they can't get elsewhere," stated Breslau, "a destination, where they can achieve sales volumes that can justify the higher rent numbers."

Breslau added that the CAMs tend to be much more for a mixed-use asset, because of things like parking and security. CAMs for mixed-use can be between 30% and 35% more than suburban centers, the Stiles Co. president noted.

The discussion also touched on issues such as parking and the competition for prominent positioning among the various components of a project.

"All the uses — hotel, retail, office, residential - want that prime corner," said William Lacey, principal of Callison Architecture Inc. in Santa Monica, CA. Therefore, it is important for the developer to "to create a place where they each have visibility and identity."