Three Rules For Retail
The Hudson and DeSoto apartments on P Street in Washington present exactly the kind of mixed-use Mecca all developers and residents seem to want. You can go to downstairs to the ATM for cash and spend it on a sandwich and a soda next door at Logan Tavern. If you crave something more unusual, you can go for Latin cuisine at Merkado or pick up sesame noodles from the Whole Foods across the street. And, except for the grocery store, all of these urban amenities sit below PN Hoffman’s DeSoto and Hudson apartment complexes in street-level retail space. Here’s Monty Hoffman’s advice for setting up your mixed-use project for similar success:
1. Vary the lease terms. A key to long-term success with any mixed-use project: keeping the project as full as possible. “We have leases that go 10 years and some that go three and an option for two,” Hoffman says. “We do that intentionally so the building isn’t vulnerable to all of the tenants leaving or negotiating at the same time.”
2. Vary the retail occupants. Restaurants and coffee shops are the best retail customers because they can become meeting spots–but a developer can’t be closed-minded. “Logan Tavern, Merkado, and Starbucks are the [retail customers] you need,” Monty Hoffman says. “Wachovia is the least desirable neighborhood amenity there, but you need banks.”
3. Vary the sizes. The debate over large chains versus a local business plays out all the time, and it’s something Monty Hoffman considers in his retail space. Large chains offer stability but aren’t always the best choice. “Starbucks is a national chain and has a much better credit rating than a smaller shop,” he says. “But if you have the uniqueness and character of a local business, everybody loves that. We’re looking for a combination of unique retail and financial strength that can stay for the long term.”
