What do you get when you combine a hot housing market, strong consumer confidence, land shortages, increasing demand for convenience and access and a collective shift toward a community-oriented lifestyle? Not your father's retail center, that's for sure -- especially if your dad grew up in San Diego.

"The face of retail in San Diego is evolving right alongside changing market characteristics and demands," said Bill Sharon, director of retail design for Smith Consulting Architects, which is designing a growing number of retail developments across the county. "Retail development is continuing to help fuel the regional economy, spurred in part by renewed consumer confidence in recent months, as well as the desire of many cities to attract retail sales tax dollars."

Industry experts have attributed renewed consumer optimism to the recent turnaround in the stock market, an easing in unemployment claims and the dying down of the Iraq conflict. In addition, the buoyancy of San Diego's strong housing market has only strengthened the retail market, with new homebuyers in need of nearby shopping.

"The San Diego retail market is faring extremely well," said Colton Sudberry, vice president of development for Sudberry Properties Inc. "Currently, our retail portfolio is 99.8 percent leased. We are now under construction on more than 435,000 square feet of retail space in two separate San Diego projects, which have been 100 percent leased for some time. Although San Diego's retail market is very segmented and some trade areas are more susceptible to vacancy and rent softening than others, I believe the retail market as a whole will continue to be strong into the foreseeable future."

Millions of square feet of new and renovated retail projects are currently under way across the county, with "lifestyle centers," community-oriented centers and mixed-use developments leading the way as the more popular product types.

Are lifestyle centers replacing mega malls?

Anchor tenants that have been gaining stride in the retail market, such as Wal-Mart (NYSE: WMT), Costco (Nasdaq: COST), Lowe's (NYSE: LOW), Target (NYSE: TGT) and Home Depot (NYSE: HD), offer two key assets that have caused some mega malls to suffer: easier access and convenience.

Subsequently, lifestyle centers -- smaller power centers such as Mission Valley's Fenton Marketplace, with a mix of medium-sized stores, possibly a theater, and at least one "big-box" retailer -- are one of the hottest trends in retail development.

"The days of shoppers going to the mall and spending half a day at five, six or seven stores in an enclosed, controlled atmosphere are waning," said Dennis Mulligan, senior vice president of IPC Commercial Real Estate, which has brokered sales and leasing for dozens of retail centers throughout the region. "A growing number of consumers just don't have time anymore to trudge through mega malls. They want convenience. The new Mira Mesa Market Center, for example, is anchored by a large theater complex and a couple of big-box retailers, and even has its own convenient entry street."

With the exception of tourist-driven mega centers such as Fashion Valley and Horton Plaza, which continue to exert a strong retail presence, more consumers are patronizing lifestyle centers vs. mega malls. According to the International Council of Shopping Centers, 13 traditional mega malls opened in the United States in 1999; with 11 malls opening in 2001. Of the three malls opening this year, none of them are located in San Diego County. The last traditional mall to be constructed in the region was the North County Fair, which opened in Escondido in 1986.

"Developers looking to build mega malls in the current climate also are dealing with a lack of available land, high tenant costs and struggling department stores," Mulligan said. "From a builder's standpoint, it just makes more sense to go the lifestyle center route."

In an attempt to follow in the footsteps of dominating retailer Wal-Mart, department stores such as Sears (NYSE: S) and Robinsons-May are establishing stand-alone outlets removed from the enclosed mall environment. Also following suit is the Kohl's (NYSE: KSS) department chain, which is opening stores -- as stand-alones or lifestyle center anchors -- all over the West Coast, including five stores in San Diego County.

"The appeal of lifestyle centers is that they offer consumers a healthy variety of retail product in one easy-to-access location," said Gary London, principal of The London Group Realty Advisors Inc. "Target and Wal-Mart, for example, house many kinds of shopping trips -- at discounted prices -- under one roof."

The London Group currently is conducting market and feasibility analysis for The Paseo, a planned a 240,000-square-foot lifestyle center anchored by a theater. The Paseo will be the new "gateway" to San Diego State University. The project, being developed by the SDSU Foundation, is now in the final conceptual stages and is targeted for completion by 2007.

Community-oriented centers

Another trend, reflective of San Diego's City of Villages strategy, is the development of community-oriented retail centers. The idea is to further develop the city's neighborhoods into pedestrian-friendly urban villages. Neighborhoods that exemplify the City of Villages concept include Hillcrest, Kensington, Little Italy and the Gaslamp Quarter.

"Unfortunately, a major challenge is that most retail centers today must be designed around the automobile, which perhaps is the biggest factor separating suburban San Diego retail centers from other urban centers that originally were built with the infrastructure necessary for primarily pedestrian traffic," Sharon said. "This is especially evident in more rural areas such as South County, East County and the booming desert communities."

In the interest of offering the best of both worlds, Smith Consulting Architects is designing retail facilities that meet public demand for accessibility and convenience, while still reflecting the urban village ideal. The firm's current projects include the Pavilion at La Quinta, a 17.4-acre, 175,000-square-foot complex; La Costa Town Square, a 460,000-square-foot retail/mixed-use campus in Carlsbad; Eastlake Terraces, a 401,000-square-foot retail center in Chula Vista; and Village Center East, a $13 million, 115,297-square-foot retail center in Chula Vista.

The 460,000-square-foot La Costa Town Square in Carlsbad is one example of a community-oriented, retail/mixed-use campus.

According to Sharon, a community-oriented retail center is not all that different from a lifestyle center. "The ideal community retail center serves as a place where people can come to both shop and socialize with neighbors, that is also convenient for day-to-day use via automobile. A typical community center includes a grocery store -- such as Albertsons, Vons, or Ralph's -- a selection of casual dining venues, an outdoor pavilion/plaza, a handful of smaller retail shops and maybe one or two big-box anchors, depending on the location."

In support of the community-oriented development trend, a recent survey by consumer research firm Yankelovich Partners reports that consumers nationwide are embracing the concept of "hiving" -- seeking out neighborhood social scenes such as shopping centers, libraries and other locations where people can connect with neighbors and chat. Hiving typifies a general shift in priorities post-Sept. 11, 2001 from career, money and other tangibles, to intangibles that encompass family, relationships and community involvement.

"There is strong evidence that supports the notion that people want to get out and socialize with their neighbors," Sharon said. "Community-oriented retail centers enable people to have that social interaction, while doing their grocery shopping at the same time."

Kutch is president of Kutch & Company, a full-service public relations agency specializing in integrated marketing for companies within the building industry.