The Lifestyle Center, Walmart, and Chattanooga's Development & Planning Tension

addendum/qualification: I am not opposed to a Walgreens on Frazier. The Northshore needs a drug store. What I am opposed to is the low-standards & low expectations the current administration has for this property. Its certainly easier to simply build "another Walgreens". A more creative (and profitable) solution with far greater long term benefits to the area would be a multi-story mixed use facility built according to our design standards with a Walgreens on the first floor. How cool would that be?

...that would require creativity.

Maybe developers could place a restored Town & Country on the second floor, and a Walgreens on the first. Then diners need only walk downstairs for the inevitable Rolaids purchase.

Please explain more profitable.

Hancock,

There's a number of reasons why a mixed-use facility is more profitable for its owners, if only for the fact they're talking about that many more renters, plus a significantly more valuable building (appreciating etc.), plus the fact the building itself contributes to the overall value of the neighborhood, which conversely contributes to the value of the building, which allows you to have higher rent rates, and on and on and on.

Oh, and for the city it means more $$ in property taxes etc. as a much more valuable building.

Further, the building also works in something like a domino effect: if one developer builds a multistory mixed-use building, then another will, and another, and another. The entire area starts becomes a great place to live, play, and do business. Which can mean in the most particular of fashions, all that many more people using that Walgreens. Why wouldn't they, its just right down the street?

The key is not to view the development of any one piece of property in an isolated and individual fashion. To some extent you always think about the surrounding area, the key is to think comprehensively and wholistically: in other words, be smart, work as a team, and everyone will make exponentially more money.

You assume that two vacancies means two renters, but you have to find two renters who can coexist. If you are talking about a retail/residential mixed used facility, it is not easy to get someone to rent above a retail location. Even if we’re talking about two business establishments, you have to find two tenants who can co-exist. For example, would the restaurant upstairs want to share parking with a Walgreens? Would a law firm want their office located on top of a Walgreens (pretty classy)? If the answer is no, you have a vacancy and less rental income (and don’t forget your mortgage payment is fixed regardless of how many tenants you have). You also seem to equate rents with profits. One must pay various expenses with rental income. One also has to finance the construction of such a property. A larger building capable of housing two tenants will be more expensive to build (If we’re not talking about a bigger building then we have two tenants sharing a fixed amount of space and rents are based on square footage. So, whether we have one tenant or two you would still have the same amount of rent). This means a bigger mortgage, more repairs, more maintenance, etc. So, even if you have more rental income you don’t necessarily have more profits. In theory, if a mixed use building was more profitable (rents – debt payments – expenses), developers would build more of such buildings. So maybe the fact that this isn’t happening is proof that such facilities are not more profitable. Additionally, have you ever seen an appraisal for a commercial property? One means estimating a property’s value is the present value of cash flow. Do you really know if a mixed use facility is more profitable than a single use facility?

Dave, finding renters, especially in an appealing neighborhood, isn't a problem. If that weren't the case, cities (and yes I mean cities) wouldn't exist. I'll refer you to any metropolitan area, any building higher than one story, etc. etc.

In terms of equating appraised value etc., I get your point, but a vacant piece of property is going to be vacant for any number of reasons, and I have a hard time seeing why it'd be vacant ONLY because the facility is mixed use. I dont' think that makes a whole lotta sense.

Developers have been inclined towards urban sprawl only for the last 50 years or so, and for a awhile it was the de facto manner in which cities were planned, zoning laws were enforced, etc., and that's changing, in a big way, in alot of cities, in particular Chattanooga (though the new administration is shifting).

I suggest picking up a book by Jane Jacobs, "The Death and Life of Great American Cities". It'll blow your mind.