Ron Pfohl, director of leasing, Columbia Development

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ATLANTA, GA—Technology is playing a major roleas mixed use developments dominate many of the major markets aroundthe country, as well as here in Georgia. RonPfohl, director of leasing for ColumbiaDevelopment, has spent more than thirty years in theshopping center leasing and development business. He has played akey role in more than seven million square feet of power center,specialty center, and mixed-use developments throughout the US.Before joining Columbia Development,Pfohl was a partner and director of leasing forNorth American Properties–Atlanta.

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He discussed some of the key trends withGlobeSt.com.

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How do you see technology changing mixed-usedevelopments?

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Technology is changing every aspect of retail. One of the moresignificant changes we expect to affect retail over the next fewmonths, and one we are studying closely, is the rapid growth offood delivery services. The year-to-year percentage of sales forapps like Uber Eats is significant, and it's continuing to grow.According to NPD Group, a market research firm,revenue from deliveries increased 20 percent in the last fiveyears, and the overall number of deliveries rose 10 percent. Thesame report indicated that diners are not only placing deliveryorders for dinner, but for breakfast and lunch as well. Familiesand office workers want great meals from quality restaurants – andthey want those meals delivered to their door. Restaurants have toplan ahead to allow for drivers employed by third-party fooddelivery services to park, pick up and leave in an efficientmanner. In mixed-use communities, developers must also account forthis trend in the design of housing and office components. It's notjust about meeting the needs of the delivery services; it's alsoabout meeting the needs of the residents and employees placingthese orders. Forecasting the impact of this trend during the earlystages of design will make mixed-use developments more successfulin the future.

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Another technology trend that will affect mixed-use centers isthe rise of self-driving vehicles. Some experts predict that in 15years, only 20 percent of Americans will own a personal vehicle.Self-driving cars are going to cause a significant change acrossall industries and will be one of the biggest drivers of changewhen it comes to mixed-use developments, specifically. Thistechnology will spark a revolution in the way developers thinkabout parking, and it will completely alter how people get to andfrom these properties.

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What amenities are proving to be most effective forattracting tenants?

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In mixed-use developments, street activation is key. This can beachieved with high-touch amenities like green spaces, specialprogramming and “wow” wellness factors. These additions bring morepeople out to properties, creating a vertically integratedmixed-use development that is merchandised in a way to promotecross-shopping and increase dwell time. For example, in the past,it was fine to have a single gym tenant. That doesn't cut itanymore. Fitness has become a social activity and consumers expecta variety of wellness options, like Barry's Bootcamp, CorePower Yoga and Flywheel. Discoveringthese key ingredients is the first step to curating a recipe forsuccess.

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Concierge is another feature that takes mixed-use developmentsabove and beyond other properties. For example, if a customer oremployee wants tickets to a sports game or a show one evening, theConcierge on property can make that happen – adding an extra levelof convenience and customer service that is unmatched bytraditional retail experiences. It's high-touch amenities likethese that separate mixed-use developments from one another.

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Other than amenities, what can investors do to enhanceROI and increase a building's desirability?

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Sponsorships are a great way to drive value for mixed-usedevelopments. For example, at Avalon inAlpharetta, GA, guests can visit the Children's Healthcareof Atlanta building, where their children have the optionto play with toys, use the restrooms and just get away from thecrowds. Sponsored activations like this offer excellentexposure for brands – and, companies are willing to pay for thoseplacements. These ideal partnerships provide a great amenity forvisitors, sponsorship revenue for the property and brand exposurefor the sponsor.

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A unique sponsorship opportunity catching my eye in recent yearsis sponsored valet service. Automotive companies likeAudi or Mercedes can invest inthese partnerships, which can include a myriad of things. Forexample, Audi's new luxury convertible could beparked near the valet service, allowing visitors and customers tocheck out the latest features and take photographs. The valetattendants could be wearing Audi branded shirts and signage couldbe placed throughout the area.

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What are some of the retail trends you'renoticing?

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Any service that consumers cannot access on a smart phone iscrucial to retail. Dining experiences are one aspect that canreally set a property apart. That's why you're seeing such anemphasis on food halls becoming property anchors – it's anexperience guests can't enjoy online. Sure, a consumer can ordertakeout, but if they really want the experience of going to arestaurant, they have to visit a brick-and-mortar location. Sincemillennials are staying single longer and having kids later, theyare eating out more. They want high-quality dining experiences at areasonable price, which is why food halls have performed so well.These locations are the opposite of the outdated, chain-focusedmall food court of the past. Rather, food halls provide chef-drivenconcepts that offer consumers culinary experiences that are uniqueand interesting. People gravitate towards that.

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Furthermore, the way retailers make real estate decisions isfundamentally changing. More retailers are experimenting withpop-up shops as a result of the growth of online sales. E-commercemakes it possible to track your most successful zip codes, givingretailers the power to test pop-up brick-and-mortar stores in theselocations before committing to a long-term lease or making a majorfinancial investment.

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There are many other visible trends in retail. Store footprintsare shrinking. Shops are getting smaller, and much of the back ofhouse space has disappeared. Fashion is a tougher market nowbecause it is easy and convenient for consumers to shop online.This means that interactive retail is becoming more and moreimportant. Stores that can build a sense of community both onlineand in-store are seeing greater success. For example,Lululemon hosts yoga classes andREI has hiking classes.

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Cause-related marketing is also becoming a key driver ofsuccess. Retailers are making it an important piece of theirbusiness model to donate a percentage of their profits to causesthey have taken on. This is enticing to consumers because they seetheir dollars going towards a good cause and not just towards acorporate bottom line.

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Online retail is huge. How do you envision brands takingtheir online presence and integrating it into brick andmortar?

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Omnichannel retail is no longer the future – it's happening now.Retailers are discovering how an online presence drives foottraffic to physical stores, and vice versa. If a retailer hasa strong online presence, it can easily determine which ZIP code ismost successful and put a brick and mortar store there. This methodremoves a lot of risk, and it also helps online stores across theboard increase their web traffic at a minimum of 30 percent.Retailers that successfully strike this balance and create synergybetween physical and online stores are achieving betterresults.

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Why is the inclusion of a hotel important for mixed-usedevelopments?

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Developers set the tone of their properties with the types ofretailers, restaurants and tenants they secure. The same conceptapplies to hotels. If a development has a hotel like aLoews or a Ritz Carlton, thatgoes a long way in establishing the character and the level of theproperty. Different hotels bring in different types of travelersand guests, so it is important that the hotel's brand is consistentwith the overall brand of the mixed-use development.

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Additionally, consider the sales and foot traffic generated byhotel guests. If a property has a 300-key hotel and runs at 80percent occupancy, it would bring the development 86,000+ roomnights per year. Imagine what that does for the restaurantsand retailers on the property. When people are out of town onbusiness or vacation, they are typically eating out and shopping.Hotels have a significant impact on just the sheer amount ofdollars pumping into the property. They are a critical component ina mixed-use community from this standpoint.

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NIght aerial view of Fenton, Columbia Development's mixed-use project in Cary, NC.

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There are tons of mixed-use projects in the UnitedStates. What will make Fenton stand out?

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There are a lot of mixed-use properties across the country, butI don't think all of them are great. When I worked on retailleasing for Avalon, we had the opportunity tostart from the ground up on a blank canvas at a phenomenalintersection in a high-growth market. Fenton, themixed-use community I'm currently working on with ColumbiaDevelopment, is very similar. It's 90 contiguous acres ata popular intersection in Cary, a thriving suburb in the ResearchTriangle region of North Carolina. Cary is consistently ranked asone of the fastest growing MSAs in the country. The area isexperiencing increased population and job growth with a phenomenalcollege system surrounding it. The demographics are shiftingbecause highly educated college graduates are now choosing to stayin the market. From the quality of life to the low cost of living,everything about this area is attractive. This gives us anopportunity to fill a void in the region. Fenton will introduce anexperiential mixed-use destination to Cary, creating a vibrantemployment center and community gathering place where people canlive, work, dine and shop.

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There are a lot of components that will make this developmentunbelievable. We have a blank canvas. We have the uniqueopportunity to create the experience we want to create from dayone. We can curate every aspect from the beginning without havingto come back and do a lot of manipulation. We can look at what'shappening in the market, ask “what's next?” and we can build thisproperty specifically for Cary.

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What factors do you see driving office growth in2018?

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Single-use office developments are becoming a thing of the past.There is a new era of employees demanding more work/life balanceand better office experiences in a highly amenitized workenvironment. The mixed-use experience is increasingly sought-afterby both workers and employers in urban and suburban communities.Whether people are hosting breakfast meetings, grocery shopping atlunch, enjoying happy hour with coworkers, celebrating with familyor meeting friends for outdoor yoga, they are looking to spend timein dynamic, activated places that ultimately result in a higherquality of life. This is driving the rapid growth of office spacein mixed-use communities, like Fenton.

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In Cary, specifically, office growth is being driven by thetalent pool that Cary already has access to. The quality of life inthe Raleigh/Cary area is just unbelievable. Statistics in thisparticular area make it ripe for growth and development. Raleigh isone of the most affordable areas in the United States, it's thenumber one area in technology and it's rated one of the safestplaces to live in America. All of these factors are driving peopleand employers to the region and driving office growth andemployment as a result. Fenton will become a vibrant mixed-usedestination in Cary, helping to recruit and retain major companiesand serving as an economic catalyst.

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Steve Lubetkin

Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].