In cities, retail brings ‘first contact' with neighborhood

September 19. 2011 10:03AM

In cities, retail brings ‘first contact' with neighborhood

Ron Beit, developer of the Teachers Village project, in Newark, says including a retail component into residential development brings more street life and tax revenue to city streets.

For developer Ron Beit, the Teachers Village project he's building in downtown Newark will bring new life to a stretch of Halsey Street.

The $142 million teacher-centered project will include 224 residences, three charter schools and — what may be the most important element at the street level — 67,000 square feet of retail space.

"It's your first contact, your first visual experience on the street" of a project, Beit said.

Retail, whether it is restaurants or pharmacies, has become a crucial component of nearly any proposed residential development in New Jersey cities, potentially bringing more street life and tax revenue to city streets that otherwise can be empty on weekends. As New Jersey real estate continues to struggle, the benefits of including retail in the mix are proving attractive in some of the few major developments under way.

While Jersey City's waterfront has long been a beacon for office and residential development, the current poster children for downtown residential building are in Newark and New Brunswick, where the state's Urban Transit Hub Tax Credit program is supporting projects that prominently feature ground-floor retail.

Beit said the energy provided by retail is a necessary component of urban residential projects, leading to a 24/7 neighborhood.

"In essence, that is having different uses at different times of the day, creating this community," he said.

Downtowns can supply the third necessary ingredient — workplaces — which Teachers Village will accomplish through its charter schools.

"Now, all of a sudden, you have your residential, you have your retail — which introduce(s) boots on the ground — and you're truly getting to a 24/7 community when you have almost 1,000 families dropping off students in the morning and picking (them) up after school," Beit said.

Beit foresees entertainment businesses, like restaurants, alongside service uses, like a grocery that is being considered for Teachers Village.

"It fits right into the fabric of the existing retail, and it gives us the opportunity to introduce a new character of retail that exists today in Newark, but is not aggregated," Beit said, as restaurants are spread in neighborhoods throughout the city.

Beit, whose New York-based RBH Group is planning to hold a groundbreaking ceremony for the project this fall, is not the only developer prominently featuring retail in Newark.

"The more the merrier," Beit said. "Once we succeed in getting all of these projects out of the ground, I think you'll find (there will) be a shortage of property to handle the demand that this city is capable of."

Marc Berson, chairman of the Millburn-based Fidelco Group, recently finished the renovation of 191 Market St. with the Hanini Group, which includes market-rate residential units above retail space. Berson also is planning a residential project in coordination with new student housing built by Rutgers University's Newark campus by 2014.

"People don't want (to) move where it's inconvenient — if they don't have evening activities, like theater and the like, it doesn't all work and come together," Berson said. "The concept of mixed use is so appropriate for developing a vibrant place. Newark is unique — we have a multiplicity of locations in the downtown" anchored by Newark Penn Station, the Prudential Center and the universities bringing potential retail customers.

"The mixed-use development, when you put that it into this structure — the balance is there," he said.

Other Newark projects, like RPM Development's Studebaker Lofts and Dubrow Management's Packard Lofts, also rely on first-floor retail.

"I think this is happening in spite of the market, and is kind of a signal of where the market is today," Berson said, referring to residents who are not looking for suburban homes. "There's something special about getting up in the morning and walking to a couple of stores."

Retail fits into a web of amenities, from urban parks to public transit, that are essential for attracting new residents to both cities and dense town centers, according to Peter Kasabach, executive director for New Jersey Future, a nonprofit that advocates for smart growth.

"It's thinking about how people live their lives and what they want to have access to," Kasabach said of the planning that makes successful neighborhoods.

Kasabach said cities don't need to fill every consumer need, but they need to find the right balance of businesses and other uses.

"All of these things get rolled together in an amenity package that is a high value add to a person who wants to live in a place where they spend less time in a car and more time walking, biking, enjoying the things they like to enjoy," he said. "You need a certain amount of retail — but there are very few places in New Jersey where you are going to have all of the retail amenities that you need at your front door."
Kasabach said urban developers are adding value to places that have existing infrastructure.

"You're creating these unique, interesting places that people like," he said. "There's a little bit of a backlash against the generic."

The recession has given both developers and town planners the time to plan projects that will meet this demand, Kasabach said, adding that they would be wise to use it.
"They can be thinking about projects holistically, but time doesn't automatically do that," he said.

One of the more prominent local officials responsible for such thinking is Stefan Pryor, Newark Mayor Cory Booker's deputy mayor for economic development, who will soon be leaving to become education commissioner of Connecticut.

"One of things that we did ... going in our administration is we modified the zoning code, so that it was easier to convert upstairs commercial units in commercial corridors into residential units," Pryor said.

Pryor said there are 25 projects either under construction or soon to be under way, with retail prominent role alongside hotel and corporate headquarters projects.
"Residents look for locations where there are many more residential developments surrounding them, and businesses are looking for 24/7, lively environs," he said. "These developments build on themselves."

He noted that eight new restaurants participated in the city's restaurant week this year, not including two new businesses in the "restaurant row" next to the Prudential Center — Loft 47 and Edison Ale House.

"There's a new scene in Newark, and residents and businesses alike are discovering that scene," Pryor said.

E-mail to: akitchenman@njbiz.com