Multi-use buildings becoming the rule, not the exception

by Dave Gallagher
    Jeff McClure thought change for the better would happen, but not this quickly.
    McClure, who has an office in the Marketplace Building on the corner of Railroad Avenue and Holly Street, said he was surprised at how different the atmosphere is on that oft-maligned corner since the new Starbucks went in last month.
    “I’m amazed at the amount of pedestrian traffic we now have in this part of town now that Starbucks is open on the corner location,” said McClure, who has an office in the building. “I had hoped the pedestrian traffic would increase, but I didn’t think it would happen this quickly.”

Jeff McClure said the mixed-use building formula has worked well for his Marketplace Building on the corner of Railroad and Holly.

    The mixed-use building concept of having commercial tenants on the first floor followed by residential or office spaces on the upper floors has been a popular one in Bellingham over the past few years, and for the downtown business district, it is becoming more than a trend.
    In April, the Bellingham City Council directed its planning staff to create design rules for the downtown area which includes requiring new multi-story residential building proposals to have commercial spaces on the first floor.
    This rule will only apply to those developers applying for the downtown tax exemptions, which give a 10-year tax exemption for new apartments and condominiums.
    The city will grant the tax exemptions for the residential uses of the project, but then collect taxes on the commercial uses on the first floor, said Bellingham Planner Chris Koch.
    “It is a way for the city to encourage redevelopment of the downtown area as well as bring in revenue,” Koch said. “The mixed-use buildings add to the vibrancy of downtown, where people can live and work. We are also getting more revenues with a mixed-use building where the residential part is tax exempt compared to having a vacant building.”
    Developers can appeal to the council for a variance if they have a special situation in terms of location and design.
    Bellingham City Councilwoman Louise Bjornson said the rule is needed as a way to make the downtown a successful district.
    “The mixed-use building concept has been proven to work in downtowns across the country, and our own local surveys have said the public wants to have shops on the ground floor,” Bjornson said. “This is our way of encouraging this concept.”
    The rule proposal appears to have the approval of the development community.
    “It is important to have retail on the first floor,” said McClure, a partner in RMC Architects. “I believe the street level is public domain, and people walking around downtown get uncomfortable when they walk by a residential window; many of them avert their eyes. You need to create that separation between the public downtown sidewalk and private residences.”
    Bellingham developer Bob Hall agreed, saying this is something that is happening in urban downtown areas across the country.
    “To keep a downtown vibrant, you want people walking around, looking in shops, not into other people’s private rooms or blank walls,” Hall said. “Mixed-use buildings have been a great way to improve decaying downtowns.”
    The mixed-use building concept has also won over public officials because of the benefits it creates: It is a way to prevent sprawl; it creates a district that has people in the area 24 hours a day, preventing the city-closes-down-at-5 p.m. feeling, and it encourages people to get out of their cars and walk around and ease traffic congestion.
    “This concept solves a lot of problems that every city has to contend with, and it’s already working in Bellingham,” Bjornson said. “A few years ago Railroad Avenue and Holly Street was the worst intersection in town. Now each corner has been redeveloped and has completely changed the area for the better.”

Overcoming the hurdles
    While there are benefits to using the mixed-use building concept when it comes to downtown planning, there are drawbacks if it isn’t done correctly.
    One of the biggest things to consider is the noise factor. If there is a noisy nightclub on the first floor, it won’t sit well with the residents who live in the upper floors. That’s something McClure and his partners kept in mind when they were leasing space in the Marketplace Building on the corner of Railroad Avenue and Holly Street. When the building was completed, the residential units were quickly leased first, followed by the commercial spaces.
    McClure said they had offers from people interested in opening a sports bar in the corner location, but they decided against it and kept it empty until Starbucks leased the space.
    “We just didn’t think something like a sports bar that was open late would be a good fit with the other residents,” McClure said. “We wanted the commercial tenants to be an extension of the residents who live in the building. I think the residents will be regular visitors to Starbucks, and that’s what we had in mind when we were considering who we wanted in the commercial spaces.”
    Brian Finnegan, a commercial real estate agent who helped with the leasing of the Marketplace Building, said he has seen situations where the commercial tenants on the first floor were not a good fit for the rest of the building.
    “You really have to be careful. If you have a business that is noisy , open late at night or creates odors, you can drive a lot of people out of those residential units,” Finnegan said. “You want to find commercial uses that are complementary to the rest of the building.”
    Another challenge is getting the public to buy into the concept of downtown living.
    “There is a certain amount of noise that comes with living in a downtown neighborhood, which has surprised some of the people who have moved in to the (Marketplace) building,” McClure said. “But over all, it works. We’ve consistently been full and the other mixed-use building projects seem to be doing well.”
    One other challenge that seems to have disappeared is uneasiness from the development and banking community, Koch said.
    “It was tough to get developers and banking institutions to get on board because it is a relatively new concept for the West Coast,” Koch said. “But that seems to have changed as more of these projects are successfully completed and leased.”
    As for the tax-exemption program, which has been granted for several residential projects in the downtown district, City Council members are expected to keep it in place for the time being to further encourage residential development in the area.
    “There are still quite a few empty downtown buildings that need to be redeveloped, and we want to encourage that,” Bjornson said. “There has been quite a bit of improvement downtown, and we want to keep that momentum going.”


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