LAS VEGAS-John Bucksbaum , CEO of Chicago-based General Growth Properties, and the chairman of the International Council of Shopping Centers, stressed the “importance of public/private partnerships” in the mixed-use development equation. And Mayor Douglas Palmer of Trenton, NJ, who is also the current president of the US Conference of Mayors, described the nation’s cities as, “the engines of growth in our economy.” With those opening remarks, the duo set the table for a discussion by a panel of developers and mayors on mixed-use as an engine for transforming America’s cities here at the ICSC’s annual Spring Convention.
“Mixed-use development is clearly today’s biggest trend,” panel moderator LeeWagman, CEO of the Martin Group of Santa Monica, CA, told attendees at the ICSC spring convention here on Monday. Explaining that MXD is “nothing new,” having evolved organically as far back as the Middle Ages, he noted that from the 1920s on in the US, single-use development emerged as the development vehicle of choice, and it “ultimately drained the life from many of our cities,” because single-use development mostly took place outside of the cities.
What has emerged more recently has been a mix of master-planned urban projects, transit villages and the like. “Mixed-use, once a rarity, is now the preferred product type,” Wagman said. “It’s limited only by the creativity of the development community. It’s transforming the real estate landscape and re-forming our cities.”
All of the panelists conceded that there are challenges and risks, and Wagman tossed out a general question, “what’s taking so long” to get these projects done?
“Proper financing to make it happen,” responded Michael V. Roberts Jr., CEO of St. Louis-based Roberts Brothers Real Estate and Management. “You have to be creative. Financing is still a challenge – a lot of banks still don’t get it.”
“There are so many untapped opportunities,” Bucksbaum said. “But there is still skepticism among the retailers. And there are still suburban opportunities for them. Retailers are coming around,” he said, noting that many have modified their traditional store footprints to suit urban applications.
“The numbers still have to work,” said Bucksbaum , following with a segue into the public/private partnership as a vehicle for making that happen.
And what does it take to make public/private partnerships themselves work? “Strong political leadership is a key,” said Mayor Shirley Franklin of Atlanta. “And you have to be straightforward about what it takes to get it done.”
“It’s not just the mayor,” added Trenton’s Palmer. “The bureaucrats have to learn from the mayor. They have to ‘get it,’ so projects don’t languish.” And beyond that, “the public sector needs to understand what the private sector wants and needs,” he continued, noting that his wife is a private-sector developer. “There has to be an upfront dialog to make sure it’s economically feasible.”
And beyond the dollars and cents, the onus is on the public sector to “breed the context for success,” said Denver Mayor John Hickenlooper. Explaining that it involves everything from public safety to infrastructure, the goal is “to convince the public” that any public expenditures, i.e. incentives, “are worth it.”
Ultimately, it has to come down to “a broad consensus of what you’re bringing to the city,” said Forest City Enterprises EVP James Ratner. Atlanta Mayor Franklin agreed: “It has to be clearly defined. There can be no hidden agenda on either side. And you need a big dose of flexibility.
And while much of the talk focused on getting national retailers to come into the cities, “it’s also important to support the local folks,” Franklin told attendees. It is important to have a mix.”
Ultimately, “the importance of the public/private partnership doesn’t end when the ribbon is cut,” Ratner concluded. “The dialog must continue. The cities must realize that they have to be involved in the project for a long time.