Grocery-Anchored Communities: The Natural Evolution of Urbanization
- Sep 23, 2020
Despite the ongoing growth of e-commerce, retail remains an essential part of walkable communities. Mixed-use centers—often in suburban locations—continue to be built from the ground up in many areas of the U.S. Besides the retail part that is essential to an urban development, the work-from-home model accelerated by the health crisis has put a greater emphasis on other community features, as well.
“Private, individually rentable offices” as part of a residential property might be the future of mixed-use communities, according to Scott Ziegler, senior practice area leader for Urban Residential Architecture at Ziegler Cooper Architects. In the interview below, he talks about the evolution of urbanization and explains which trends are here to stay.
Have your projects changed in the past six months to accommodate health and safety measures? Are there other changes design is facing due to the health crisis?
Ziegler: Most of what has changed due to the pandemic are operational protocols, which we as architects are not involved with. These sorts of protocols might be changes in the type of air filtration used or changing formerly unobtrusive cleaning and sanitation protocols to be more obvious and frequent.
While the situation is still playing out, there is some hesitancy to invest new capital. However, we are noticing an uptick in enquiries for this particular type of development. Multifamily plus grocery is an AAA credit-rated segment that has captured investors’ interest. Grocers tend to be long-term tenants. For a multifamily investor, a long-term, AAA-rated grocer tenant is a very attractive prospect.
Other changes that might involve architectural design include touch-free elevator call systems and other technology, and a rethink of home office and fitness—though we had been steering many of our designs to include more home office and home fitness flex space prior to the pandemic. Perhaps the biggest trend that will be boosted by the pandemic is toward offering furnished private offices to lease as part of a community. In one of our projects in Atlanta that we began prior to the pandemic, we provided 10 by 10-foot private, furnished offices as part of the community space that are performing astonishingly well.
Considering the current economic climate, what would be the pros and cons of developing grocery-anchored communities right now?
Ziegler: We don’t see too much in the cons column. In grocery-anchored developments, tenants don’t need to drive, which helps to lessen the carbon footprint of the development. These communities provide much-needed social interaction—which could be viewed as a con by some people right now. The main pro is that the so called “grocery effect” enhances the return on investment for owners of properties in the immediate area—within half a mile—as well as for the developer who has the apartments on top of the grocery.
It has been our experience that the “grocery effect” boosts values in the submarkets where this type of development exists. For example, most Houston submarkets were hit hard in March and April 2020 by the combined economic downturns of COVID-19 and the oil industry slump that forced downward pressure on apartment rents.
However, the St. Andrie apartments, part of the Buffalo Heights development anchored by an integrated HEB supermarket, actually grew effective rent during that same period. Comparable apartments rated four and five stars in the Houston Heights submarket where St. Andrie is located showed negative effective rent growth.
Tell us about more general challenges when incorporating grocery components into mixed-use properties.
Ziegler: Accommodating ingress and egress for large trucks to access loading docks is one of the most challenging aspects of this mix of uses. The 18-wheeler delivery trucks have a wide turning radius and the sites are generally quite tight. Add to that, there are often pedestrians and parked cars in the area when deliveries need to be made, so safety and traffic flow is a paramount consideration when planning the site.
A grocer is a high-traffic operation so thoughtful separation of residential and grocery patrons’ parking is very important. Visiting grocery patrons are provided convenient access by the structured parking and residents are provided access to the grocer by way of a dedicated elevator.
Not surprisingly, technical coordination is amplified because of the interface of infrastructure on this type of development. For example, in-store kitchen exhaust must travel through the roof of the grocery and out through the apartment roof above. Likewise, apartment waste must be carefully located in chases coming down and thoughtfully diverted through the grocer.
Having a grocery-anchored property could make the community feel a bit crowded due to non-resident shoppers. What can be done, from an architectural point of view, to prevent that?
Ziegler: A grocer has always been the backbone of a community and residents of a grocery-anchored multifamily community don’t need to drive to go grocery shopping. This means less overall traffic and to a degree, offsets the traffic from visiting patrons. That said, it is still the architect’s responsibility to create a comfortable and safe sense of place for the community by incorporating green spaces and promenades that bring a sense of openness and community into a master plan. People who are looking for an urban lifestyle want a lively, energized neighborhood. Inspired designs create places for people to thrive and since our buildings outlive the architects, we must always remember that responsibility.
Do you see grocery-anchored communities as a growing trend?
Ziegler: Yes. It is a new concept for many multifamily developers and perhaps some will be slow adopters because of the complexity of the typology, but as the land they own becomes more precious and the cost of new land acquisition keeps rising, it more often doesn’t make economic sense to develop a single stand-alone apartment property, when having grocer and apartments together increases the return on investment through higher rents on both land uses.
Tell us more about grocery-anchored properties in Houston. Do you see rising demand, more opportunities?
Ziegler: In Houston, as in other major cities, we have a mobility challenge as the city continues to grow. We are addressing that by developing walkable mixed-use communities that deliver an option to live closer to work. We definitely do see a rising demand for this type of development, as it is the natural evolution of urbanization.
What role does sustainability play in your designs?
Ziegler: Most people probably think of sustainability as sustainable materials and the like, which we do employ, of course. But sustainability in urban development is more about walkability and creating a synergy between buildings and building uses that helps each building type perform better than if each stood alone. In this way, sustainable buildings help create sustainable communities that do better, too.
READ ALSO: Tech-Driven Consumers Redefine Mixed-Use
Five years from now, in what way will communities be different from the ones being completed in 2020?
Ziegler: Earlier, I touched on the private, individually rentable offices that we have designed in some of our projects, but another feature that we believe will be adopted more often in future developments is the inclusion of whole suites of rentable creative office space. To use the St. Andrie again as an example, this development integrates grocery, apartments, parking and creative office space all into one structure. When Google made its first venture into Houston with its sales office, they quickly snapped up the entire top floor of the creative offices and their reason was likely because of the development’s positive effect on hiring, according to developer Midway.