08/18/2015 | By John Cumbelich
I do a lot of work in one of the most desirable, successful and functional downtowns in Northern California – Walnut Creek. Over the years we’ve grown our traditional retail brokerage practice of representing retailers and restaurants with their expansions or representing the owners and developers of shopping centers throughout Northern California, with a High Street business centered around downtown Walnut Creek and its’ super-desirable Neiman and Nordstrom anchored mall – Broadway Plaza.
Today our High Street business is fully one third of the firm’s practice – even more in some years. Because our offices are located in the center of Walnut Creek’s downtown core, we get to experience the vibrant dining, shopping and community scene both as locals who spend our day here, and as a vendor who traffics in real estate sales and lease transactions. We experience the simple pleasures everyday of enjoying breakfast, lunch or dinner, shoe shines, haircuts, shopping and after work drinks all within a block or two of our front door.
This downtown is a delicious mix of international megastores and local / regional retail and restaurant establishments. The downtown is conveniently divided by a sort of Mason Dixon line (Mt Diablo Blvd) that separates the historic old downtown to the north (whose owners you’ve never heard of) from the institutionally owned new downtown to the south (whose owners include Macerich, Kimco, Essex, Vornado, Equity One, etc). This immediate proximity of the old and the new, the big and the small, the local entrepreneur with the world class brand, the chain restaurant and the local artisan bistro creates an ever changing and fascinating tapestry of architectural styles, original offerings, price points and target clientele. It’s as provincial as Mayberry, and as polished as Madison Avenue, all at the same time.
Because you can live, work, dine, shop, date or do hundreds of other things downtown ( …ice skate, visit the library, take an art class…) the offering is broad and all encompassing. It caters to any and every lifestyle. And this, in part, is how the term “lifestyle center” came about, as developers have tried to capture some of the special chemistry that happens in vibrant, organic downtowns like Walnut Creek in their projects.
But what I’ve observed, with just a few exceptions, is how the term “lifestyle center” has become cheapened to the point of becoming meaningless. While at its best, lifestyle centers mix a few small businesses with formulaic chain stores, more often we see any project that boasts a movie theater and bookstore trying to lay claim to the “lifestyle” imprimatur. Ownership of so called lifestyle centers, like most other product types has come to be dominated by a relatively small group of national and regional developers who replicate the same mix of apparel, dining and entertainment chains from one project to the next. Understandably of course. The developer wants reliable credit tenants and financeable projects. Hello Panda Express…goodbye start up Thai bistro.
Another problem is scale. Whereas an organic lifestyle market like Walnut Creek has some 2.5 M square feet of retail space, plus housing, office buildings and civic places, the largest lifestyle centers are but a few hundred thousand square feet.
Before our lives were so convenient, they were authentic. The same can be said of retail environments. I’ve formed the opinion that the words “lifestyle” and “center” really don’t belong together. Any developer that tries to capture the magic of authentic lifestyle in a 100, 200 or even 300,000 square foot center, while meeting underwriting standards and thus de-emphasizing the artisan, the startup, the entrepreneur or the local barber is really just building formula retail with a new name.
The recession of 2008-10 took a far greater toll on lifestyle centers than neighborhood centers, power centers or regional malls. Why? Because so called lifestyle centers, largely filled with apparel, dining and entertainment brands, offered very little in the way of daily needs or essential shopping. Yet our vibrant downtowns held the line far more ably (Walnut Creek’s max recession era vacancy rate was 5.9%). The reason? Because these authentic, original lifestyle environments were essential to their communities on multiple levels, like they always have been. They have been “daily needs” environments since before the concept had a name, and they are much more.
Singer/songwriter Barbara Mandrel famously crooned, “I was country, when country wasn’t cool”. Places like Mountain View, Burlingame, Willow Glen, Walnut Creek and even sleepy little burgs Clayton and Lodi can say something similar. They always have been, and still are, where authentic lifestyle retail is found.
About John Cumbelich & Associates
John Cumbelich & Associates is a San Francisco Bay Area based firm that provides commercial real estate services to Fortune 500 retailers and select owners and developers of retail commercial properties. The firm's expertise is in developing store networks for retailers seeking to penetrate the Northern California marketplace and the representation of premier Power Center and Lifestyle developments.