Published: December 15, 2003

For two days during the first week of December, architects and consultants from across the country met in a quiet room at the Westin La Cantera to contribute their unique expertise and creativity in the development of an unprecedented $1billion project known as North Rim Village. The economic impact of such a project is significant on its own. However, combined with the neighboring Shops at La Cantera, the synergy that will be created in the northwest corner of San Antonio is no less than phenomenal.

In April 2003, developers began site work on North Rim Village, a new urbanist development weaving environmental assets into a mixed-used, pedestrian-friendly combination of office, retail, residential and public spaces. Developers expect the first phase, a 1.5 million-square-foot power retail center called The Rim, to be open by Fall 2004.

When North Rim is finally built out, there could be over 600 acres of recycled land, including the retail center, several thousand homes and apartments and up to 2 million square feet of office space. The development is expected to stretch from Interstate Highway 10 and Loop 1604 to Camp Bullis Road, encompassing two miles of frontage.

New urbanist developments traditionally yield higher mid- and long-term returns and have longer lives than conventional developments. This leads to a stable, appreciating tax base that translates into increased revenue to municipalities over the long run, according to Christopher Leinberger in a paper for The Brookings Institution. Right now, the property is on the tax role for about $15,000 per acre, according to Jim Ray, vice president for Atlanta-based Thomas Enterprises Inc., The Rim's new developer/owner. That amount is expected to increase to approximately $1.6 million per developed acre annually, once the project is complete.

In the end, the city of San Antonio will get back a projected $3 to $4 of new revenue for every $1 reinvested back in the project's infrastructure, according to developers.

Beyond financial impact, there are environmental benefits as well. In addition to North Rim's efforts to preserve and protect the natural environment, the redevelopment of brownfield areas like the quarry on which North Rim sits saves pristine land. According to the Environmental Protection Agency, an estimated 4.5 acres of greenspace are saved for every one acre of brownfield redevelopment.

The Shops at La Cantera, a partnership between The Rouse Co. and USAA Real Estate Co., is expected to be a highlight in the country's regional mall landscape, with innovative design and one-of-a-kind anchors. With Nordstrom and Neiman Marcus as flagship anchors, The Shops will change the face of shopping in San Antonio by bringing in a level of retail that hasn't been seen since the days of Frost Bros.

Under construction now (with much of the work still at ground and underground levels), the center will take two years to build and is expected to open in September 2005.

When the first phase is complete, The Shops will house 1 million square feet of retail space with shops and restaurants new to the market. There are also opportunities, according to Rouse, for retailers from Mexico and Europe to come to the United States for the first time.

Another 300,000 adjacent square feet will be added in the second phase as part of a lifestyle center for larger tenants. Rouse is considering other uses for the second phase, including housing of a "new and different kind to San Antonio."

In all, the project brings a $400 million overall investment to the city, about half of which is being funded by the landlord/developer partnership. The Shops will generate 1,000 construction jobs per year for the next two years, culminating in 3,100 permanent jobs once the center opens.

Generally speaking, residential drives the retail train. So, it makes sense these two developments are located at the vibrant intersection of Interstate 10 and Loop 1604.

However, in an interesting twist to the real estate standard of rooftops determining retail, new urbanist developments and -- to a lesser extent lifestyle centers that include housing elements -- do impact residential development by adding housing options. What's more, homebuyers are willing to pay between $5,000 and $30,000 more to live in new urban developments than in conventional suburban developments, according to a study released by the Urban Land Institute. Residents are drawn to the interconnectedness of the community, diversity of public spaces and activities, pedestrian-oriented design and good retail.

The entrance of new retailers and concepts in these two blockbuster developments will effect the single most significant change to our retail landscape.

These new companies are attracted to San Antonio for some very good reasons. Our employment rate is the lowest among large Texas cities. We have the strongest annual growth rate, continued increases in housing permits, and per capita consumer spending that exceeds the state average. Tourism is a major driver of local retail sales with close to 20 million visitors each year.

Whereas the average U.S. malls produce about $300 in sales per square foot, North Star Mall boasts between $450 and $500 in sales per square foot. Add in waiting list of high quality tenants who want to get into North Star. Take into account the demographics of the Loop 1604/I-10 intersection. Mix in the star anchors of Nordstrom and Neiman Marcus, and you have a recipe for successful retail venture, says Christopher B. Carlaw, vice president at Rouse. Carlaw expects The Shops to match North Star at producing above average sales per square foot.

While North Rim and The Shops are expected to draw consumers away from other centers -- Carlaw estimates a 10 percent decrease in sales at North Star, they will draw new spending power from across the region and into Mexico. (In addition to its equity stake in The Shops, Rouse owns North Star Mall.)

Project the area's energy five years in the future, and you have a "pretty exciting intersection," says North Rim co-developer Jim Bastoni of Worth Enterprises, "particularly, if we are successful in connecting all the assets of the area together."

An economic powerhouse? No doubt. This dynamic duo is already attracting new companies, jobs and spending. Once built, they will draw in expenditures from across the region, generating additional revenues for businesses, wages for employees and tax receipts for the city. An attention getter? Absolutely. These developments will put San Antonio on the retail map. San Antonio has needed this for a long time. We are finally beginning to see it come to fruition.

Michael D. Hoover is vice president of D.B. Harrell Management, a division of D.B. Harrell Companies, and a member of the International Council of Shopping Centers. You can reach him through the company's Web site, www.dbharrell.com Copyright(c) American City Business Journals Inc. All rights reserved.

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