New Domain

Source: ICSC SCT

Seldom does a developer find 300 acres of land in the heart of a growing metropolis upon which to build an entirely new community. But that is what has happened over the past decade in Austin, Texas.

The city had grown up around IBM’s sprawling corporate campus on the north side of Austin from the 1960s through 1999. Then IBM moved to a 1 million-square-foot campus on the other side of Interstate 30 and sold its former home to a partnership of Austin based Endeavor Real Estate Group, New York City–based Blackstone Group and Washington, D.C.–based JER Partners.

As lead developer, Endeavor planned a transformative, threephase, mixeduse community with retail, offices and a hotel, and named the new project The Domain. The first retail phase opened in March 2007, anchored by a Macy’s and a Neiman Marcus, and was promptly sold to Simon. The second phase, which Simon developed, opened in February 2010, anchored by a Dillard’s and a Dick’s Sporting Goods.

The third and final phase, called Domain Northside, opened last September. As of now some 90 stores are operating there, including Nordstrom’s flagship store in Austin. When it is fully occupied, later this year, the 614,300squarefoot retail center will boast 115 stores. The signature street within the development is Rock Rose Avenue, which has become one of the city’s hot spots through its bars, restaurants, stores and service businesses.

“It has been an incredible transformation,” said Ben Bufkin, the Endeavor principal who is overseeing this final phase of the project. “To see something that is 300 acres go this dense, this fast, and be the top office market, the top retail destination and one of the top residential destinations — it’s just really neat to see it.”

The timing of the third phase has been propitious, given the continued emergence of Austin as a national destination and the changing nature of retailing. “Northside builds on the success of the earlier phases and yet is completely different,” said Bufkin. “While phase one helped make Domain a true shopping destination, there was an opportunity to do something new. The approach was a little bit different, and it incorporated some of the lessons learned, one of those being that Northside was our opportunity to create an intersection of what is Domain and what is Austin.”

That meant a completely new merchandising mix, one that infuses the best of local and national retailers and restaurants, including some newly emergent brands. “We have a much heavier local mix than many malls do today, and we believe that is where these lifestyle centers are headed, and it’s really important if you are going to give them a local feel,” said Bufkin. Foodandbeverage
became a larger component in the Northside tenant mix as well, comprising about 27 percent of the total square footage. “We gave food a much better seat, and not only did we put it front and center, but we’ve threaded it through the project,” said Bufkin. “The lesson learned there was, in these environments, even though you take off the roof of the mall and you create mixeduse, if you don’t have the right uses and the right locations after ‘mall hours,’ it’s going to feel dead, and it’s not going to feel like it’s part of the community.”

The mixed uses at the Domain translate to a community that is alive from about 5:30 a.m., with the first fitness classes, and through the rest of the day until 2:00 a.m., when the bars along Rock Rose close for the night. “The center really operates like a downtown district, which in our mind is what you have to offer if you really want to provide an opportunity for community to take place,” said Bufkin.

Austin is one of the fastestgrowing cities in the U.S., and its compelling demographics have been a major influence in developing the third phase of Domain, Bufkin says. “Austin is a young city overall, and so what that means is, we’ve hit the sweet spot of the Austin demographic,” he said.

The project also contains builtin office space focused on technology users, as well as a growing residential component, and both of these feed the retail. The Domain is the most dense and vertical office market outside downtown. “There is a huge daytime crowd, and we have not been able to deliver office space fast enough over the last three years,” said Bufkin.

Today there are just over 3,200 residents onsite at the Domain, and an additional 1,500 units are being developed. This captive audience, coupled with the city’s younger demographics, created more demand for new retail concepts, reinforcing Austin’s wellpublicized Keep Austin Weird promotional theme, which became a key ingredient in the leasing program for the Northside phase.

“Austin is still the size of market where, even though you may be dealing with national retailers, you’re still a lot of times dealing with firsttomarket concepts,” said Bufkin. “We’ve spent a lot of time communicating to people what is the feel — some people still call it ‘weird’ — but what is the feel and vibe of Austin. With Northside, we’re not talking about another mall; we’re really building a community that incorporates the fabric of Austin. That was a big part of the pitch.”

Traditionally, retailers entering Texas have first considered locating in Dallas, then in Houston, and then in San Antonio or Austin, but now Austin has become an initial focal point. “That’s allowed us to go after emerging brands,” said Bufkin. “And that’s a great thing for a retail environment, because it’s exclusive. We focused on brands that were industry leaders in their segment who were doing it better than others.”

Allowing many of its retailers to take greater liberties with their branding and architectural features also proved rewarding. “In terms of design guidelines and signage criteria, we really broke all the rules,” said Bufkin. “We said, if you want neon, go with neon; if you want to paint the beautiful limestone we just put up, then paint it. The personality of the brands and the retailers has showed up in a much larger way than you would traditionally see in a more controlled mall environment.”