Recently published: Live, Work Shop

Financial Times, December 13th 2008

Homebuyers are finding a blend of retail and residential property increasingly desirable, reports Tracey Taylor


For the past five years Christmas shopping has not been a problem for photographer Frank Anzalone. He simply rolls out of bed and walks out of his apartment directly into an open-air mall with 70 high-end shops, including Burberry, Sur La Table and Bang & Olufsen. His home is in Santana Row, a surburban retail-residential community that is increasingly being replicated around the US and the world.

“I enjoy this time of year when the lights sparkle and there is a fun holiday energy at the Row,” Anzalone says. “It feels more like a small hometown community than a bustling shopping mall and I really enjoy talking to the different merchants. It’s nice when you’re on a first-name basis and not treated as just another sale. People are friendly and the atmosphere is safe and comfortable. I hope to be here for another five-plus years.”

A few decades ago living above the shop was seen as a rather pedestrian existence; former British prime minister Margaret Thatcher used to cite the fact that she was born above her father’s grocery store in Grantham, Lincolnshire, eastern England, as a reminder of her humble roots. Now, however, residential and retail property are being blended together for the opposite reason. Developers are persuading homebuyers to see living above the shop as something to aspire to – especially when the establishment in question is operated by Gucci or Salvatore Ferragamo.

This phenomenon can be seen in new-build developments and regeneration projects around the world, especially in city centres. There are older neighbourhoods, such as Soho in Hong Kong and Le Marais in Paris, with apartments above trendy stores and restaurants, and modern malls with housing attached, such as Avenue K in Kuala Lumpur and Westfield in White City, London. Going forward, we can only expect more of the same. European developer Uplace, for example, wants to roll out its “experience destination” communities, where people can shop, work, play and live, to cities across the continent.

“The industrial age was marked by the construction of single-family homes [but] the hallmark of the new spatial fix will be denser use of land and increased compactness,” says Richard Florida, professor of business and creativity at the Rotman School of Management at the University of Toronto, Canada, whose latest book, Who’s Your City?, focuses on the “where to live” question. “The demand for central locations is motivated by people’s desire to conserve time – by eliminating commuting, for instance.”

But, perhaps not surprisingly, it is in the consumerist US where the retail-residential concept is really taking off. Developers are bringing it not just to cities but to towns and suburbs, manufacturing entirely new, upmarket communities around pre-packaged, open-air malls. Call it instant yet sanitised urbanism – with a focus on shopping.

Santana Row, five miles from the nearest city, San José, is an ideal case in point. Designed to resemble a large urban block with a main street running through the centre, it has 70 retailers, 20 restaurants, nine spas and salons and more than 1,000 residents on its 42-acre footprint. Having opened in 2002, it has become the go-to spot for young professionals looking for upmarket shopping, a vibrant restaurant scene, a buzzy nightlife and, crucially, a convenient place to live.

The location of the development is significant. San José is California’s third largest city and, as the capital of Silicon Valley with its concentration of high-tech industries and wealth, its inhabitants rank among those with the highest median incomes in the country. But it has long drawn unfavourable comparisons with San Francisco, 50 miles north, for its lack of animation. And, if anything, the vibrancy of Santana Row has exacerbated the situation, luring not only shoppers but also homebuyers with its promise of a new kind of community.

“I’m addicted to the convenience. Everything is at your fingertips,” says Casey De Carlo, a software company sales executive and former suburbanite who now lives in The Heights, a Santana Row apartment building flanking an open courtyard with a swimming pool. “I made more friends here in six months than in six years in the suburbs and I could write a book about what goes on around the hot tub,” he adds wryly.

To walk the streets of Santana Row is to confront a melange of architectural styles and cultural references. Jan Sweetman, a vice-president at developer Federal Realty, says designers were sent to France and Europe to source ideas before blueprints were drawn up. Several architects were contracted to work on different buildings to avoid a “Disneyland-type product”. There are fountains imported from Barcelona, grassy plazas, fragments of ironwork and distressed stucco from Tunisia and Italy and Gaudi-esque pillars encrusted with broken tiles. The façade of a 17th-century French chapel is affixed to the front of a wine bar.

At the heart of the community people sit under mature oak trees; there’s a fire pit, chess tables and live music. A concierge is on hand to make restaurant reservations or secure transportation and residents can also take advantage of a regular onsite farmers market, “mommy and me” events and jazz evenings. Staff seem to appear from nowhere to sweep up the first hint of a discarded coffee cup or ice cream wrapper. And the streets are patrolled 24/7 by private security firms in addition to being overseen by the San José police department. As the San Francisco Chronicle put it when reviewing the development in 2006: “It’s as if San José, having surpassed San Francisco in population, decided one day to catch up on the urban lifestyle thing but without the gridlock, the grime or the poor people.”

Carlos Dunlap, a former resident of Los Angeles who moved to northern California five years ago intending to settle in San Francisco, is now on his second Santana Row home. He first bought an open-plan loft, then switched to a three-level town house with views of the nearby hills. His office is a 10-minute drive away and he says he loves the fact the Row is both “immaculate” and safe. “There’s something going on here all the time for everybody,” he says.

Property prices vary depending on size and location. A three-bedroom, two-and-a half bathroom, 2,161 sq ft town house across the street from The Valencia, the development’s boutique hotel, is listed at $1.8m while $3.3m will buy an extra 1,600 sq ft, cathedral ceilings and a balcony and terrace. Monthly rental rates for flats range from $2,700 to $4,000.

Federal Realty has built several other surburban retail-residential developments on the US east coast, including the Village at Shirlington and Pentagon Row, both in Virginia, and Bethesda Row in Maryland. And the formula is being mirrored all over California. Outside Los Angeles, in Glendale, there is the Americana at Brand, marrying high-end stores such as Tiffany & Co and Barneys, luxury condominiums and the amenities of a five-star resort, in a project that developer Rick Caruso says was inspired by Newbury Street in Boston. And west of San Francisco in Emeryville there is Bay Street, a development where more than 1,000 residents live above 60 retailers, 10 restaurants and a 16-screen cinema.

These new communities don’t appeal to everyone. Former suburbanities can be put off by the crowds, says Mike Pynn, residential manager at Santana Row. “Some of our first customers thought they wanted the urban experience but then complained about the noise and left,” he says. And, perversely for a place focused on walkability, most outsiders arrive by car, keeping valet parking attendants busy.

Those used to a traditional city will have the opposite problem. As John King, architecture critic of the San Francisco Chronicle, points out, Santana Row and its sisters are “artificial urbanity”. “For people who define the idea of a cosmopolitan urban scene as essentially a stage set to live the sort of life they want to live, it’s a terrific stage set,” he says. But “it’s not part of San José. It’s like suburbia with an urban jolt. If it was parachuted into lower Manhattan there would be a sense of ‘Why do we want it?’” Even residents of a small town might question where the post office, fire station and library are.

Richard Florida also thinks manufactured “urban villages” are better if they are linked to a historic neighbourhood, rather than “out in the middle of nowhere”. He points to SouthSide Works in Pittsburgh, which saw the addition of high-end housing units, retailers and restaurants to an old mill site, and the Distillery District in Toronto, a pedestrian-only village with Victorian architecture that dates back to 1832, as examples.

But it’s difficult to argue with Santana Row’s thriving retail trade and 98 per cent residential occupancy rate. And the development is expanding: construction began on a 95,000 sq ft glass-and-steel building for offices and more retail space this summer.

Whether growth can be maintained in the current economic downturn remains to be seen. But Pynn is optimistic. He says he still gives regular tours of the Row to goverment officials and developers from all over the US who say they are looking for inspiration on how to fashion the perfect community. “Everyone wants their MTV and everyone wants their Santana Row,” he says.

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