What do retail development and professional sports have in common? Location, location, location.
The pace of retail development has increased across the country over the past several months but remains well below pre-recession levels. On the other hand, sports stadium development is exploding. At this very moment approximately 19 new semi-professional and professional sports stadiums are proposed or under construction in the United States, and this sports-related development is stirring up the development of surrounding retail and mixed-use projects.
According to an article in CoStar earlier this year, “Across the country, more owners of major sports teams are pushing plans to build mixed-use projects and expanded entertainment venues on property around their venues…”
Team owners aren’t the only interested parties, however, and with all of the new stadiums in the works across the country, plenty of opportunity exists for developers and retailers to take advantage of the businesses and consumers attracted by major sporting events.
Rendering of proposed Milwaukee Bucks arena
Just this week, the Milwaukee Bucks submitted an arena development plan to the City of Milwaukee that involves 25 acres in downtown Milwaukee. In addition to a new six-story arena, the surrounding property would have office buildings, apartments, retail, a hotel and grocery offerings. The Bucks organization says it is focused on making the area an attraction for more than just Bucks fans and wants to help revitalize the downtown area.
Los Angeles Stadium is a proposed 75,000-seat football stadium planned for Industry, California. The stadium will be the centerpiece of a new 600-acre entertainment and retail complex. The stadium itself will boast restaurants, retail shops and live theatres. Edward Roski, a part-owner of the Los Angeles Lakers and the Los Angeles Kings, says he will not break ground on the project, however, until he has commitment from an NFL team to move to Los Angeles.
Also in the Los Angeles area, a competing project, an 80,000-seat football stadium and “related office and retail development,” is being proposed for Inglewood, California, a project that is predicted to add $18.7 to $28 million per year to the city’s revenue. The stadium is being planned on the site of the former Hollywood Park Racetrack. Stan Kroenke, the owner of the St. Louis Rams, has partnered with Stockbridge Capital to build the stadium. The stadium development will also consist of a large open-air shopping center, several office buildings, and a theater.
U.S. Bank Stadium is under construction in Minneapolis to house the Minnesota Vikings. Expected to open in August 2016, the stadium has prompted nearly $1 billion in downtown Minneapolis development. A $400 million development is planned adjacent to the stadium that will house office, retail and residential space and a community park.
SunTrust Park is a baseball park under construction that will serve as the future home of the Atlanta Braves located northwest of Atlanta, Georgia. According to the stadium’s web site, “SunTrust Park will include a mixed-use development called The Roxy, a 50,000 square-foot indoor entertainment venue that will play host to a variety of concerts and special events.” Several restaurants will surround the plaza as well.
In fact, the Braves organization recently announced plans for a new development on the property called The Battery Atlanta. The $400 million mixed-use project has already drawn five restaurants and the Braves plan to announce additional restaurant and retail tenants for the project every couple of months. According to Creative Loafing Atlanta, “This project is the first time a professional sports team has attempted building a large mixed-use development and a new stadium simultaneously. Ultimately, the Braves hope to attract visitors to the stadium area 365 days a year, which in turn could spark greater economic activity in the area and lead to the ‘generation of additional sales and property tax revenues’ for Cobb County.”
While most of the development buzz is around new and proposed stadiums, some existing facilities are garnering attention as well.
Levi’s Stadium, located in Santa Clara, California and home to the San Francisco 49ers, has prompted a plethora of surrounding development. Dubbed the “stadium effect” by developers, real estate professionals and analysts, the recent uptick in development includes nearly $3 billion worth of retail centers, hotels, offices buildings and residential units surrounding the stadium. One of the most significant projects is a 239-acre area that The Related Companies hopes to master-plan. The company recently worked out preliminary terms for a ground-lease agreement for a 9-acre area on city-owned land. According to an article in the San Jose Business Journal, “Related is contemplating kicking off development of the 9-acre Montana site, dubbed ‘Centennial Gateway,’ first. The project would include 71,000 square feet of retail, 258,000 square feet of office, a 400-room hotel and 200 units of housing.”
In addition to Centennial Gateway, Related is hoping to build a larger mixed-used complex called City Center that would include a whopping 1.4 million square feet of retail along with office space and a hotel.
CenturyLink Field in Seattle has prompted strong retail development on surrounding properties. For example, Stadium Place is being planned for 4 acres of land that today is used for stadium parking. The project will eventually consist of 1.5 million square feet of mixed-use space including an office tower, a mix of retailers, a conference hotel and three multi-family residential towers. Daniels Real Estate Company is partnering with R.D. Merrill Company to develop the project.
The area surrounding Lucas Oil Stadium, an NFL facility that opened in 2008 in Indianapolis, has for years sat idle. However, this past summer, rumblings began to fly about new developments finally taking shape. Following the proposal for a new Marriott hotel and another new hotel in the area, the Stadium Village Business Association “is beginning to lay the groundwork to transform the largely ignored area into a destination,” according to the Indianapolis Business Journal. According to the article, developer Christopher P. White envisions redeveloping more than 1,000 acres into a destination comprised of entertainment, residential and office uses.
Back in 2012, the owners of the United Center in Chicago (built in 1994 and home to the Chicago Bulls) proposed a significant entertainment and retail development for the area. That proposal, made nearly three years ago, may now be altered as the owners of the Chicago Bulls and the Chicago Blackhawks recently announced a proposal for an office project on the property. As reported in Crain’s Chicago Business in 2012, “That project…would have included 260,000 square feet of bars, event spaces and restaurants, as well as office spaces. But ownership has now put the idea on the back burner as it decides whether to simply create a building for a growing number of employees, according to Mr. Pizer.”
It’s clear that team owners are serious about their sports facilities, but they are also interested in building more than just attractions for fans. In most cases, broadening their development vision to include additional uses on their property is a strong selling point to tax payers and the affected municipalities as the developers boast increased sales tax income, added jobs and livelier downtown areas. Are these benefits always realized, however? Find out in Part Two of this blog that will analyze the successes and failures of mixed-use projects attached to sports facilities.
Written by Janie French, Director of Business Development