Josh Poag on getting deals done in a challenging market
Faced with ongoing uncertainty, unfavorable macroeconomic fundamentals, and the development headwinds that come with unpredictable and challenging market conditions, it’s not surprising that the pipeline of ground-up developments has slowed considerably.
That trend has been especially pronounced with lifestyle center projects, where the inherent size and complexity increases the degree of difficulty and creates tighter margins. Today there are few operators in this highly specialized space that can identify and capitalize on promising opportunities for ground-up lifestyle center projects. It helps, of course, if you are a company with a rich pedigree in doing just that: an industry institution that not only developed the nation’s first lifestyle center, but quite literally invented the term.
That is Poag Development Group, and no one familiar with Poag’s work would be surprised to learn that it is indeed one of the few commercial real estate developers bringing ground-up lifestyle centers to life. While the Memphis-based developer continues to acquire existing properties and leverage its redevelopment expertise, Poag’s ground-up bona fides are in evidence in a bold new project in Omaha.
Avenue One is a 200-acre mixed-use property positioned on 192nd Street and West Dodge Road across from the 175-acre Lawrence Youngman Lake and the No.1 birthing hospital in Nebraska, Methodist Women’s Hospital. Avenue One features 600,000-plus sq. ft of retail and entertainment and includes more than 2,000 apartment and town home residences and more than 1 million sq. ft. of office and medical.
While Poag’s high-level placemaking expertise, access to resources, and well-established history of lifestyle center development successes are all part of the formula, getting ground-up lifestyle projects off the ground in the current market relies on a few critical elements.
The first is a little bit of good fortune—complemented by longstanding industry relationships and a willingness to explore new opportunities. The genesis of Avenue One was an invitation to visit a project in Omaha, a trip that left the Poag team thoroughly impressed with the city’s vibrant energy, economic dynamism, promising demographics. Its civic landscape, however, was lacking a mixed-use resource with the kind of high-level placemaking that has come to define Poag’s work.
The second is a keen understanding of just how much consumer sentiment and priorities have changed with respect to brick-and-mortar environments—and the corresponding ability to design and deliver lifestyle projects with spaces, experiences, and tenant rosters that reflect that evolution.
For all the popularity of e-commerce, it’s increasingly clear that brick-and-mortar has not, and will not, lose its foundational appeal. However, developers do need to acknowledge and respond to the fact that the brand appeal of a center is increasingly driven by elements and experiences you can’t get online: things like unique restaurant concepts and fitness and entertainment brands. The most successful lifestyle centers have evolved by leaning into the segment’s strengths and adding more restaurants and supercharged placemaking elements. Food and entertainment, while not immune from changing consumer sentiment, also tend to be less susceptible to the shifting sands of consumer preferences and volatile brand popularity.
It isn’t just the tenant roster that needs to be built with today’s consumers and market realities in mind. Like so many other successful Poag lifestyle centers, Avenue One will showcase distinctive districts with their own architectural identity, landmark design elements, and a mix of materials and styles that conveys the impression of a place that has evolved organically over time.
Add in plenty of creative outdoor spaces and landscaping elements, storefront porosity, and abundant opportunities for immersive community activations and placemaking moments, and the result is a memorable and enduring sense of place.
Lastly, ground-up lifestyle requires the right partnerships, such as the one Poag announced last year with Chicago-based retail property management company JLL. Avenue One is the first ground-up project since the partnership became official, and Poag finds it is already paying dividends with JLL generating significant leasing momentum.
Partnering with a local landowner has provided expertise and relationships in the market to bring value and make this project viable. But the reality is that the formula for ground-up lifestyle success demands not just the right opportunity in the right market, but the right people and the right constellation of circumstances to build something special.
Josh Poag is the president and CEO of Poag Development Group in Memphis.