The market isn't big enough for another major office park. Nor is it wealthy enough to support yet another high-end shopping center.
So goes the quandary, real estate observers say, facing Sen. John C. Watkins, R-Powhatan, and four other development partners who are planning a massive residential, office and retail complex in western Chesterfield County at the intersection of Routes 288 and 60.
It's the first major development proposal to emerge along 288 since the roadway was completed last fall. All told, the development would cover about 655 acres, about 20 acres more than Henrico County's Innsbrook.
But there's a problem. The county wants Watkins and his developers to build the regional employment center — an office park — first, and it is reluctant to support anything other than "high-end" retail. Watkins insists that the shopping center, all 900,000 square feet of it, must get first priority. He says the revenue generated by the shopping center is needed to pay for the sewer lines for the rest of the development.
To plead their case, Watkins and his developers recently began meeting with neighborhood associations and nearby property owners to win support. The county's board of supervisors will hold a hearing on the rezoning case May 25.
"Folks, this is a big deal. Nobody has attempted this in the metropolitan area," Watkins told a roomful of property owners last week. "We are trying to put it together in a comprehensive way so that the county is comfortable with it, the community is comfortable with it."
The project represents the first major test for Chesterfield county leaders, who desperately want to prevent the corridors around 288 from turning into giant subdivisions filled with people who work and spend money in Henrico and Goochland counties. Chesterfield's role as the de facto bedroom community for Henrico and Richmond has long been a drain on its tax base.
All of the development groups — Watkins Land LLC, Grey Land Co., Trammel Crow Co., Metropolitan Partnership of Reston and Cleveland-based Zaremba Group LLC — are working together to ensure that the architectural design and development of each portion of Watkins Centre is consistent. Apartments and condos would be built on top of retail shops and offices, mimicking an urban streetscape. The office development would meld architecturally with the new lifestyle center, and vice versa. On paper, Watkins Centre is the biggest planned office, retail and residential development in the county's history.
"This is going to catch us up with those other places that win out on these excellent economic development opportunities," says Ed Barber, chairman of Chesterfield's board of supervisors.
The problem is, the market isn't ready for it, some real estate observers say. If county officials only want an upscale shopping center, forget about it, says Brian Glass, senior vice president of retail for the commercial real estate firm Grubb & Ellis/Harrison & Bates.
"The market has absorbed two high-end malls, and there truly isn't room for a third anytime soon," Glass says. "Had Stony Point [Fashion Park] not been built, there would have been an opportunity. In my opinion, the time has passed."
Richmond's two upscale centers — Stony Point Fashion Park and Short Pump Town Center — opened in the fall of 2003 to much fanfare. They boast a bevy of boutique shops and restaurants anchored by high-end department stores such as Saks Fifth Avenue, Nordstrom and Lord & Taylor. Developers for those two centers, however, duked it out for more than four years, competing to secure the same limited pool of tenants.
Begrudgingly, Watkins concurs that another upscale lifestyle center isn't possible. In 1999, the Watkins family, which owns most of the property around the 288 interchange, contracted with upscale mall developer Simon Property Group, based in Indianapolis, which briefly attempted to develop the site for an upscale mall.
Delays in the construction of 288, however, and the county's concerns that retail at Watkins Centre would cannibalize an existing shopping mall just minutes away — Chesterfield Towne Center on Route 60 — nixed those plans.
"There is not going to be another Short Pump," Watkins says tersely. "That left six years ago when Simon left."
Still, the county is sticking to its guns. The county's comprehensive plan for the 288 corridor at Route 60 doesn't call for any retail, but it does allow for a possible "high fashion mall" as part of a regional employment center, subject to certain conditions. Among those conditions, county planners list a variety of retailers that would be suitable for such a development, such as Nieman Marcus, Saks and Lord & Taylor.
Kirkland A. Turner, Chesterfield's planning director, says the point is for Watkins Centre to not "detract or hurt the feasibility of Chesterfield Towne Center" by luring middle-market department stores and mass retailers such as Target and Kohl's away from the existing retail corridors, creating blight. "We have a little problem with that," he says.
Options are limited, though. Glass says the market probably would support a "supermarket-anchored center, your typical Target, Wal-Mart type of center" at Watkins but not much else. And even that's not guaranteed, Glass says.
"Nine hundred thousand square feet is a lot of retail to absorb in this market in the foreseeable future," Glass says.
Cary Euwer Jr., chief executive of Reston-based Metropolitan Partnership, one of Watkins Centre's two retail developers, says he's studied the market enough to know that there is demand to support the new shopping center. But his company hasn't lined up tenants just yet. When asked if the lifestyle center would be upscale, as required in the comprehensive plan, he couldn't say for sure.
"That's up to consumers," Euwer says.
Meanwhile, the county's expectation that Watkins Centre becomes an office park and regional employment center seems unlikely anytime soon. Mark Douglas, senior vice president and partner at Thalhimer Commercial Real Estate, says the current market in Richmond won't support a major speculative office development south of the river.
"If you went in there and built 40,000 or 50,000 square feet [of office space], I think you are making a big mistake," Douglas says. "Most decision makers in the city of Richmond live in the West End. You have an office market [in Henrico] that is four times what it is in Chesterfield."
Douglas says there is a market for smaller office developments at Watkins, such as office condominiums, but not much else. Watkins needs a spark, he says, some exposure to generate interest from the business community.
A retail shopping center, he says, would be just the thing. S
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