Earlier this year I posted a piece on General Growth Properties expansion of the Natick Mall. This project included an expansion of retail and dining at the Natick Mall and the construction of Condos on the mall property. Given the similarities between Natick and Columbia, I believe it is possible that General Growth may attempt to replicate the Natick project here as part of their stated intent to expand the mall. I believe the tell-tale sign will be if General Growth proposes to change the name of the Mall in Columbia. In Natick, General Growth first attempted to change the name from “Natick Mall” to “Natick.” After experiencing local opposition, General Growth settled on the name “the Natick Collection.”
Another piece of the puzzle may have been revealed at the March 8-9, 2007 Hotel Developers Conference in Rancho Mirage, CA. As reported on HospitalityNet, representatives from General Growth Properties touted the success of hotel/mixed use development.
Hotel mixed-use has emerged as one of the few ways hotel developers may be able to make a new development economically feasible, with skyrocketing construction costs. It has also become one of the hottest things going as developers of other real estate uses (shopping centers, office, retail, residential and entertainment) discover the big “IRR Premiums” that may harvested from well-planned and tightly integrated hotel mixed-use projects.
And that is why General Growth Properties (one of the largest owners of shopping malls in the world) is looking at its 200+ malls and retail centers to see where it can accomplish superior results — and believes that it may have identified 80 opportunities.
The above-linked piece on HospitalityNet.com also includes slides direct from General Growth Properties to describe the magnitude of profit to be made with hotel/mixed use. I strongly encourage all to link and view, but here is a summary (as reported on HospitalityNet.com):
- General Growth Properties has found that 32% of U.S. domestic leisure travel activities are spent on shopping. This represents a trip volume of 490.1 million trips, with an average of $372 per household spent on each trip (excluding the transportation). An amazing 77% of those trips were overnight, and averaged 2.9 nights at a hotel.
- Understanding this in the terms of a specific project, like the Dallas Galleria Mall is an interesting exercise. This chart shows how only 32% of the Dallas Galleria’s business came from local shoppers, and 32% of the business came from customers 50 miles away or more.
- the benefit of hotel mixed-use flows both ways — each component of the mixed-use project enhances and improves the other. So here is GGP’s analysis of the enhanced performance of its office component at The Woodlands, their MPC in Houston.
- Certainly some of the benefit is attributed to superior product, and to limited supply in a Master Planned Community. Nonetheless, a 1% vacancy factor compared to 12-14% in the immediately surrounding market areas, and average rent premiums of at least 30% are pretty strong evidence for the value of hotel mixed-use. (These figures -- and others --shared by GGP execs at The Hotel Developers Conference® earlier this month created a flurry of interest among participants!)
- And if the earlier synergies of leisure travelers loving to shop were lost on you, here is a chart showing how GGP figures that its retail sales increased by more than 403% from 1995 to 2006 — at least in significant part because of the hotel mixed-use nature of the project (and also all the usual developer’s points of pride, including superior design, location, and exclusivity created in an MPC[Master Planned Community]).
Once again, I have to stress that any connection between the above mentioned material and Columbia is purely speculation; however, if this was presented with an eye toward the “garden of people,” where would this type of development find itself in Downtown Columbia? If I was using house money, I would say that it would wind up on the Crescent Property.
Taken to the hypothetical end, we need to start asking some serious questions here. Not just questions about height or number of traffic lanes, but deeper, fundamental questions. Would this type of development be complimentary to Columbia in any way? Would a boutique or five-star hotel, with possible condos and surrounded by retail become an island, or could it be integrated into the general pedestrian plan?
Beyond these (and other, unmentioned questions), a broader class of questions should also be addressed. Columbia was founded and has been in my lifetime an experiment that has resided in the alchemist wing of modern planning. Whether it is mixed income housing, interfaith centers, or the village concept; we the population of Columbia expect innovation and typically deride the importation of ideas from elsewhere. At what point would condos at the Mall in Columbia become our own and not be “Natick South?” Where is the dividing line between a hotel/condo/retail complex that is truly Columbian, and not just “the Woodlands on the Little Patuxent?”