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Convenience has become one of the top drivers when it comes to where homeowners choose to live. Their goal is a shorter commute to work and walking distance to grocery stores, retail shops, restaurants, entertainment, cultural venues, health care, and green public spaces. Developers have listened and are delivering larger, denser developments. In fact, results rival entire neighborhoods, towns, and planned communities.
One of the newest of these behemoths, which is becoming a benchmark, is the recently opened Hudson Yards on New York City’s Far West Side. The 1 million-square-foot, $26 billion development from New York–based The Related Companies will have 18 mixed-use structures when it is completed in 2024. Already, its iconic 150-foot-high Vessel public structure has become a landmark with its giant spiral staircase. The site, once rail yards, will contribute close to $500 million to city tax rolls, according to Related and partner Oxford Properties Group.
Other projects coming available may not be as large, but they’re still big for their cities, and they’re bigger than most recent mixed-use projects. Moreover, there’s no let-up expected, as large-scale developments seem to be the goal now that real estate has roared back after the Great Recession.
Here’s what you should know to increase your knowledge about megadevelopments and target clientele who may be interested in buying properties in these lifestyle communities.
Why Now?
On the consumer side, many people now prefer to live in a dense environment with a wide choice of walkable uses. They avoid transportation costs, reduce time spent getting to destinations, and enable a 24/7 lifestyle "more like life used to be,” says John Crossman, whose Crossman & Co. in Orlando, Fla., operates shopping centers in the Southeast. What’s heightened interest of late is the critical mass of choices available at the newest, biggest megadevelopments, says Ken Perlman, principal at John Burns Real Estate Consulting in Irvine, Calif.
Developers have also been looking for investments where they can park large sums of capital after patiently sitting out of the market due to the recession, says Zach Mallow, director of research at Virtus Real Estate Capital in Austin, Texas. Projects with a greatest diversity of uses help developers lower their risk, says Christine Esplanade, managing director at JLL, a Chicago-based commercial real estate services firm. And, the land available for these projects is often located on the fringe of cities and is generally more affordable, says Eugene Flotteron, principal at New York–based architects CetraRuddy, which has worked on megadevelopments.
Then there are the local reasons. The BullStreet District, a 181-acre development in downtown Columbia, S.C., has adapted 10 of the 40 buildings that were part of the city’s 1828 South Carolina Lunatic Asylum, which haven’t been used since the 1990s. “Treatment of the mentally ill has changed and people are no longer institutionalized at the same rate,” says Chandler Cox, project manager for the developer, Hughes Development Corp. in Greenville, S.C. The company collaborated with Columbia Mayor Stephen K. Benjamin after he sought a way to increase tax rolls and build a place where people could work, play, and live in a variety of housing. “BullStreet represented an amazing opportunity to tell the authentic story of Columbia through a high tech, 21st century lens,” Benjamin says.
Best Locations
Megadevelopments in major cities often get the most recognition, but midsize cities are seeing just as much movement in this real estate realm. Take Alexandria, Va., for example, home of Landmark, an urban village going up on the site of the 1965 Landmark Mall. Megadevelopments are also sprouting in suburbs where there’s a need to retrofit properties, says Ralph Zucker, president of Somerset Development in Holmdel, N.J., which focuses on suburban niches where growth is occurring despite the perception that everyone wants to be in the city. His Bell Works “metroburb”—his preferred term—in Holmdel transformed the historic Bell Labs building. The site will have “an urban-style focus but without a commute,” he says.
There are also industry- or business-driven developments, such as Pinewood Forest LLC, a 234-acre new town in Fayetteville, Ga., 22 miles south of Atlanta. It’s located adjacent to its developer’s movie studio, the country’s second largest, and aims to offer a better quality of life, says president, Rob Parker. “We combined the best of urban and rural life,” he says.
Although being next to mass transit isn’t essential, having some transportation—even bicycles and scooters—helps bring people to a site and get them around, says Peter Crowley, partner at LandDesign, which handles a variety of real estate services. The Related Companies got New York’s No. 7 subway line extended to Hudson Yards; BullStreet takes advantage of a stop on the city’s Comet bus line; and The Boro in Tysons, Va., which is transforming a 24-acre suburban office park into a dense mixed-use development, is near a new metro line extension.
Types of Buildings
Megadevelopment buildings don’t need to be as new or as spread out as they are at Hudson Yards. One giant building can work, as Related’s Time Warner Center demonstrated 15 years ago. Some megadevelopments adapt existing structures to offer a rich, visual patina—the case at BullStreet District—or they use a variety of materials that age differently, mature plantings, and a human scale, which is the approach Pinewood Forest took. “Four stories is our tallest building,” Parker says.
Details help create authenticity, from the right doors, handles, and signage for storefronts to wide enough sidewalks and open green space, says architect Gustavo Rodriguez, a partner at FXCollaborative, a New York–based architecture and design firm that handled the master plan for The Boro. If there’s a single look that dominates, Perlman describes it as “clean, casual, and comfortable,” as well as a style that reflects the region’s architecture.
Essential Components
When it comes to housing, megadevelopments usually include a variety to suit all demographics. At BullStreet, there’s housing for the growing senior population. The 5,000 residents at Pinewood Forest have a choice as well, including microhomes and treehouses, and eventually student housing and cohousing.
Variety in retail is also important, with some that offer an experiential angle “or it risks failure, which is why there are so many vacancies at former clothing stores,” says Jonathan Miller, who writes the weekly “Housing Notes” blog. Esplanade says restaurants—from casual to fine dining—are key because they help prop up retail.
Novel additions also help differentiate one megadevelopment from another. At BullStreet, that means a Class A minor league affiliate of the New York Mets’ baseball team. Jim Terrell, senior managing director at A&G Real Estate Partner, a real estate advisory firm in Melville, N.Y., considers health care amenities important because of the country’s aging population.
The Sites
Some of the most appealing megadevelopment sites represent underdeveloped, affordable assets that a city can expand upon, which is Essex Crossing’s role with its mixed-use development on New York City’s Lower East Side, Miller says. The challenge is to recognize opportunities and integrate the built environment into a cohesive whole.
At BullStreet, the developer saved some but not all of the original asylum buildings, constructing new ones that complemented the historic architecture. They aligned the buildings along a new street grid.
For a public plaza to be successful, there’s a need to be able to get something to eat and sit on a bench, says Don Clinton, at Cooper Robertson, a New York–based architecture and urban planning firm, which prepared the initial urban design framework and zoning plan for Hudson Yards. Green space is vital. More than half of Pinewood’s acreage remains parks and wetlands because healthy living is a focus, Parker says. “The automobile is not the star of the show here,” he says. Greenery includes 15 miles of trails and a pedestrian pathway among houses for more resident interactions.
Crowley says his firm thinks that any home in its mixed-use developments should be within two blocks of an “interesting” open space. At BullStreet’s 20-acre park, an underground stream was “daylighted”—brought to the surface—to meander and improve ecology and stormwater management, Cox says.
Dan Biederman, an urban planner and president of New York–based Biederman Redevelopment Ventures, has developed and programmed green space in 29 states and expects an increased emphasis at megadevelopments. “Almost every new giant mixed-use development in America is including green space, and increasingly active green space with free programming such as yoga, ping-pong, and dance lessons,” says Biederman, whose firm programmed the 8-acre open space at Mission Rock, a new neighborhood on an underutilized parking lot near the San Francisco Giants’ baseball park. “This has a positive impact on the development and real estate values in the surrounding neighborhood.”
Long-Term Viability
Everyone involved—including real estate salespeople who show properties in megadevelopments to their clients—must understand that the communities are planned and constructed over multiple financial cycles, so they will reflect a variety of market conditions. Developments need to be flexible as changes occur, says Crowley. For example, developers may add townhomes with elevators or apartments expanded or upgraded to become condos. The diversification that makes megadevelopments so appealing will help provide that flexibility, says Flotteron. If done well, the development will eventually evolve into the fabric of their area, says David Wolf, president and founding principal of On Collaborative in Chicago, a full-service marketing and sales company. Case in point: Chicago’s Museum Park and Central Station. “They are considered a main part of the South Loop neighborhood, but were megadevelopments several decades ago,” he says.
