Speakers Dissect Mixed Use

"It's got to be financially viable," says Sandeep Mathrani, an executive vice president at Vornado Realty Trust. "It doesn't work everywhere." Not every locale, like Vornado's recently opened 731 Lexington in Midtown Manhattan, with Bloomberg LP as its main office tenant and H&M as retail anchor, can support multiple uses, he says.

And as much as some retailers may say they like mixed-use projects, very few will enter them unless the developments meet those firms' parking, visibility and access requirements. "Unless you have that hard-to-find location in a major urban area, don't expect them to break their rules," says Emerick Corsi, a Forest City Enterprises executive vice president.

Corsi also points out that when Forest City plans residential units above retail, the company only offers rental units instead for-sale spaces because, "you need to be able to change the format" if other uses become more attractive.

Kimco Realty Corp., one of the largest open-air owners with 1,000 centers, is evaluating its portfolio and looking for mixed-use opportunities, says Jeffrey Olson, president of the company's Eastern and Western shopping center divisions. For example, at Westlake Shopping Center in Daly City, CA, 60,000 sf is leased as medical office space.

But Olson cautions that shopping-center owners shouldn't lose sight of the main objective of their properties. "I believe we need to protect our retailers," he says. "We don't want to do anything that would dilute their sales."