Washington Post: Why developers are offering ‘experiences’ to attract suburbanites
By Katherine Shaver
January 3 at 3:52 PM
The new Strathmore Square being planned for Montgomery County will have all the markings of an urban-suburban development: upscale apartments in mid- and high-rise buildings and perhaps office space or a hotel — all at a Metro Red Line station.
More striking is what it won’t have: The usual slew of well-known chain stores and restaurants. No Gap or Anthropologie. Not even a Starbucks.
Instead, the ground floor of the new buildings in North Bethesda will have performance space and classrooms for lectures or music and dance classes. At the center will be a 1.2-acre “civic green” with an amphitheater.
Any stores or restaurants will be small and locally owned. The emphasis, the developers say, will be on helping residents and visitors connect over the arts and nature, not shopping and eating.
“Our goal,” said Ron Kaplan, of Fivesquares Development, “is to capitalize on amenities to create experiences.”
It’s the latest buzzword among developers seeking to transform automobile-centric inner suburbs into walkable urban hubs. Increasingly, offerings of “experience” are replacing “vibrancy” as a way to appeal to suburbanites.
The shift has occurred as the bricks-and-mortar stores intended to help provide that vibrancy and “sense of place” in compact, mixed-use developments — places where residents can easily walk between work, shopping and entertainment — continue to suffer from online shopping.
Developers say they’re also tapping into a market hungry for social connection, especially among suburbanites isolated in cars. They cite studies showing that people in general feel lonelier, particularly as social media and working from home have increasingly replaced personal interactions.
“What I think isn’t spoken about enough is creating authentic communities, places people want to go,” Kaplan said. “Retail was one way of connecting people — you saw people sitting outside at restaurants — but the success of that really was allowing people to gather . . . You can create that without retail being at the core. I think people are going to do that more and more.”
Most developers aren’t shunning traditional retail as much as Kaplan plans to. But many say they, too, are focusing on more “experiential” ways to attract people and hold on to them long enough that they’ll browse and buy instead of stay home and click. Providing experience now goes well beyond the traditional winter ice rink or summer movie night.
It’s why you’re seeing so many more restaurants, food halls, cooking demonstrations, outdoor yoga classes, smaller concert venues, bars and lounges, farmers markets, tot lots, fire pits, splashable fountains, restaurant-like bowling alleys, and cocktail-serving movie theaters — anything that helps people interact in a way they can’t online.
Robert Gibbs, a Michigan-based urban planning and retail consultant, said the approach is grounded in the same reason that DVDs didn’t kill movie theaters: “Most people like to be around people.”
More developers see a financial upside, too, said real estate consultant Erin Talkington.
“Experience is something people are really making a business case for now,” Talkington said. “Having an experience makes people want to come and spend more time . . . People are looking at great experience that’s not driven first by the need to acquire something.”
The most successful offerings, developers say, are ready-made for Instagram, Facebook and Snapchat. People might be more willing to hang around and eventually wander into a store if they can first snap selfies during their yoga on the green.
At Pike & Rose, a development partially open in North Bethesda, an Asian food hall is scheduled to open next summer. Along with stores and restaurants, Pike & Rose has a live music venue, an Ipic luxury movie theater with cocktails and reclining leather seats, and Pinstripes bowling and bocce ball.
Winter weekends bring snow-making machines to the central plaza. In the summer, in sand trucked in from Delaware, children dig on a “beach” while grown-ups sip cocktails.
Mike Ennes, vice president of customer development and marketing for Rockville-based Federal Realty Investment Trust, which owns Pike & Rose, said experiences need to be share-worthy.
“People are looking for what I’ll call cocktail currency — things people can do to give them a great story to tell,” Ennes said. “You see people posting [on social media] about a great dish or cocktail they had or a photo with a great background behind them. Acquisition of experience is driving a lot of this.”
Jodie McLean, CEO of retail real estate developer Edens, said developers are offering ways for people to start conversations and “feel part of something bigger.”
At the company’s Mosaic District in Fairfax County, McLean said, neighbors who bump into each other can chat about an interesting piece of public art. Parents can meet at the central green’s large outdoor screen for “Cartoons & Coffee” on warm-weather Saturday mornings.
“I think our work is extremely important because we’re building community,” McLean said. “We’re the living room of the community.”
Christopher Leinberger, professor of urban real estate at the George Washington University School of Business, said today’s knowledge-based workplaces see how ideas flourish when people interact and bounce ideas off each other. Many people want that in all aspects of their lives, he said.
“The market is demanding unique experiences,” Leinberger said. “That’s the next economy — the experience economy.”
Local governments and urban planners need the approach to work, as many are counting on compact mixed-use developments to revitalize inner suburbs and curb traffic.
Employers also are demanding such places as a way to recruit talent, particularly younger workers. In two of the largest recent economic development competitions in the Washington area — Amazon’s and Marriott International’s searches for new headquarters — the companies specified areas walkable to transit and plenty of amenities.
Some developers say bricks-and-mortar stores can continue to thrive, even as online shopping grows. (Amazon founder and CEO Jeffrey P. Bezos owns The Washington Post.) They note that online purchases, while getting a lot of attention, are about 10 percent of all retail sales. Stores in mixed-use developments, they say, still do well in densely populated, walkable areas close to transit, particularly in relatively high-income communities.
But some are suffering.
Gibbs, the urban planning and retail consultant, said about 30 percent of his firm’s business now stems from advising banks on how failing or underperforming suburban town centers can turn things around — a line of business practically unheard of 10 years ago.
“Everyone is worried about it,” Gibbs said of the decline in mixed-use developments’ shopping. Healthy retail “is the glue that holds them together.”
In Rockville, more than 400 people packed an emergency public meeting in October about prospects for Rockville Town Square, a mixed-use development at the core of the city’s downtown, according to Bethesda Magazine. Residents said they were concerned about the number of long-term vacant storefronts and recent closings, including the grocery anchor, Dawson’s Market. (The market has since reopened under new ownership.)
Rockville City Manager Rob DiSpirito said he “most definitely” believes online shopping and food ordering have hurt the town square. He said businesses complain about a lack of foot traffic, even with the winter ice skating rink, pop-up artwork, concerts and other events.
The danger, he said, is “when you start to lose a critical mass of retail and there start to be vacancies, people don’t see it as a destination anymore.”
DiSpirito said the development, which is a public-private partnership, is trying to compete against developments with more entertainment, including Rio Washingtonian Center in Gaithersburg, which has paddleboat rides.
In addition to continuing to underwrite “place-making” events, he said, the city’s revitalization plan for the area includes better signage, cheaper parking and a retail study to gauge its competitiveness.
“It’s a war on many fronts,” DiSpirito said. “We just have to find any way we can to support the businesses.”
Wendy Seher, of Federal Realty, which owns the development’s retail space, said additional apartments and offices anticipated to be built in the area will bring more customers to the stores and restaurants.
“Rockville Town Square is poised to ‘grow into its shoes,’ ” Seher said, “and we continue to believe in the vision of Rockville Town Square and Town Center.”