A lack of density and evening traffic makes it challenging for developers to find and keep restaurants and retailers on the ground floor of Downtown apartment buildings. High-end restaurants in isolated locations especially struggle.
Developers are finding that it can be hard to put the mix into mixed-use projects.
While Downtown apartments continue to fill up with ease, ground-floor space in those buildings is a different matter. With Downtown lacking the density of larger cities and having fewer than 10,000 residents, retail and restaurant space can sit empty for years or struggle to keep tenants.Get the news delivered to your inbox: Sign up for our morning, afternoon and evening newsletters
"We need more bodies," said Michael Copella, managing director of the Columbus office of the commercial real estate firm CBRE. "It’s really challenging to build out first-floor space for retail."
Dollar General recently announced that it plans to build one of its new DGX stores in the Highpoint on Columbus Commons building on South High Street, filling a space that has been vacant for more than five years.
"We struggled at first," said Alex Marsh, vice president of The Robert Weiler Co., which is responsible for filling Highpoint's ground-floor space. "But the market’s getting better and better each day for retail, with more people moving Downtown."
A few blocks down High Street, the office and residential building at 250 S. High has been unable to find a restaurant to fill the space vacated almost three years ago by the high-end restaurant Salt & Pine, and the space is now leased to Condado Taco for a test kitchen.
Just east of there, the apartment building at 223 E. Town St. opened two years ago with space that was to include a coffee shop and The Woodbury bar, originally scheduled to open in the spring of 2018. The Woodbury still plans to occupy the space, but Brent Crawford, an owner of the firm that developed the building, Crawford Hoying, acknowledged that opening a restaurant in the space has been a challenge.
"Not being on a main thoroughfare is an obstacle," he said. "Pedestrian traffic is huge, and that location doesn't have a lot of pedestrian traffic."
When Crawford Hoying redesigned plans for an apartment building at South High and Cherry streets Downtown a year ago, it eliminated ground-floor retail space. One reason was to cut costs, but concern about filling the space also played a role.
"There's no question it would have been a tough lease," Crawford said. "I came down to the theater one night and was blown away by the lack of anyone down there. You need the density. That’s why you’ve seen the Downtown core really struggle with restaurants. After the daytime, it’s very quiet at night Downtown. That will continue to change when you get those bodies, not only in apartments but also in hotels, where people eat out."
Nearby, the new mixed-use building 80 on the Commons took a similar approach by leasing space originally meant for retail to an office tenant, Coastal Ridge Real Estate Partners.
At its two new LC RiverSouth buildings on South High Street, Lifestyle Communities didn't even try to find tenants for its ground-floor space. Instead, the developer runs its own restaurant, the Goat, and its own fitness center.
Such an approach might serve as a way to the future — developers keeping ground-floor space for their use or for rotating uses.
"The future of mixed use is programming," said Copella. "We believe sophisticated owners who can offer programming through events, activities and retail experience will be most competitive. You'll see pop-ups continue to happen, so flexibility is crucial. It’s definitely a departure from finding a tenant who will make a significant investment and sign a long-term lease."
One example can be found at Highpoint on the Columbus Commons, where space once occupied by De Novo restaurant is now being used as event space, an easy transition because the space already contains a kitchen.
"Unless a great restaurant operator came along, we will continue to use it this way," Marsh said. "We’ve had events in there; it’s been a big success."
Downtown restaurants that are clustered, such as along Gay and 4th streets, are safest, but most of Downtown doesn't offer that sort of density.
"Critical mass is just incredibly important," said Dan Dunsmoor, executive vice president in the Columbus office of the commercial real estate firm Colliers International. "If you have five or six places you can walk to, then it's different. In much of Downtown, that's five to seven years from now."
Although high-end restaurants can be great for a building's marque, they can struggle in a Downtown that lacks regular nighttime traffic, leaving leasing agents searching for other solutions for first-floor spaces.
"Everyone wants that Salt & Pine moment, but maybe Salt & Pine's not the answer," said Sydney Andrews Federer, the senior leasing director with Casto who's responsible for finding first-floor tenants for some large, new mixed-use buildings, including the Nicholas building on North High Street.
"I think that 'daily needs' is a question we need to be asking. For us, food is important. We think it’s an attraction to the site, especially if we can come up with a flagship opportunity that’s a draw. But we also need to think: Do we need a Fed Ex? Do we need a salon? Do we need creative space? Community space? A fitness space? Not just a big YMCA, but pocket fitness like Orangetheory."
Despite the challenges, developers continue to build first-floor retail. It's attractive to occupants, who would rather head to the first floor for a beer than live or work on the first floor.
"Retail is a critical amenity to the office and multifamily users. In a lot of cases, we’re seeing that landlords almost have to subsidize that retail space because they look on it as an amenity to the building's tenants," Dunsmoor said. "In the Short North, restaurant space can be $50 a square foot (per year). In the core of Downtown, it's a fraction of that."
Because developers see ground-floor retail as a key draw, most apartment buildings under construction Downtown still include ground-floor retail space. Examples are the Nicholas, the new Lifestyle Communities building on West Main Street, and new complexes on Oak Street near the Columbus Metropolitan Library. Those buildings will compete for tenants with a thriving Short North nearby, and with growing urban-style retail areas such as Easton's expansion and Bridge Park.
As for the holy grail of Downtown retail — an urban version of Target, Whole Foods or Trader Joe's — don't bet on it anytime soon.
"Bring the Whole Foods. Bring the Trader Joe's. I am so on board with that," Federer said. "But for a few reasons, we’re just not quite there. Density is a big factor. In another three years, we’ll be in a different place."