Run or draw.

That was a decision Rick Hill had to make as an undergraduate at the University of Kentucky nearly 40 years ago. A native of Bardstown, he wanted to be an architect but when he signed up for classes and found that mandatory studio times conflicted with running, he picked running.

“I made a career decision right there,” he recalled.

Maybe not so much.

Despite a long career in marketing shopping centers from his base in Charlotte, N.C., and a lifelong interest in running, Hill never lost his urge to design. He just reinvented himself as a real estate strategist and designer.

Recent examples of his mind behind proposed and completed design work in Louisville include the highly touted revitalization by Underhill Associates of Westport Village that h as been called an “against all odds” success. The former grim and decaying Camelot Shopping Center at Westport Rd. and Lyndon Lane won a recent landmark award from the Louisville Historical League. “The main thing was to remove the strip mall look, which was done with creating new traffic patterns and creating a visual axis for the place. It works with small business rather than large ones and it thrives with inexpensive cafés,” Hill said.

Another is an ambitious nearly block-sized make-over for antiques dealer and property owner Joe Ley on East Market St. that could be a major piece of the evolving area. East Market with help from Ley’s anchoring business and a slew of grass roots art galleries, bistros and shops is headed into a new gear with other private owner plans to turn the former campus of Wayside Christian Mission into a downtown farmers’ market and community space.

“What I like about it is that is there’s so much there,” said Hill. “My plan (for Joe Ley properties) is to meet with what is already there and to add to it. This is what I call an in-between area. It needs to be redeveloped from inside out, creating cut-throughs for entire blocks and a sense of meeting places inside the block – a hand-made, home-made locality with all the things that can only be in Louisville, Ky.”

A third project has been the renovation and restoration of Hill’s own new headquarters in the lofty rooms of the former laundry house for the Presbyterian children’s home, Bellwood, in Anchorage.

“A real love is to take an old building and restore it back to its original state,” he said. “I made the commitment to stay true (at Bellwood).” That included copper guttering, a slate roof, new hardwood floors, cleaning the brick. “It was fairly non-economic,” Hill noted.

He is creating his own village, a series of three buildings, including one new one with a quadrangle for public gardens. The group will eventually house his company and other companies. He plans to open a small office in Shanghai and expand staff from three with contract work hired out to a full office with “land planners, an architect with illustration skills, qualified writers, economists and market researchers. “

“I want them to free me up from some of the tedium. . . I want to operate more on the creative side.”

Hill said in his life time he has created plans for 117 real estate developments, created the vision for dozens of projects and directed leasing for more than 10 million square feet.

He helped bring the first IKEA store to the United States in 1985; did the first redevelopment of a regional mall into an off-price center; and created retail planning for Sears Tower in Chicago, so that visitors did more than go up to top and back. The study he produced on how to increase revenue from visitors produced a $2 million stream of income.

He created the sponsor villages, now a park in Atlanta, for the 1996 Olympic Games and led redevelopment planning for the recent redevelopment of Gulfstream Park in Miami from racetrack to up-scale shopping area.

It started with his first “real” job out of college. Hill graduated from UK in 1974 with a degree in general studies, having selected studio art, art history and marketing as his foci.

“The Mall St. Matthews was looking for a marketing advertising specialist. I got the job,” he said. After two years, The Rouse Company that owned The Mall and many other shopping malls, sent him to Tampa, then Philadelphia, then Charlotte, N. C. The Wall Street Journal picked up on his redevelopment of a mall into an off-price center and predicted it was the future. “My phone started ringing off the hook,” Hill recalled. “That was the timing at (age) 29 for me to leave. . . I was young and dumb at that time.”

“I had no money. I began to look for foreclosed shopping centers and would offer to help fix their problems.” In 1990, he took a three week executive program at Stanford University. “I wrote down on a ledger pad all the interesting things I wanted to do. . . I wanted to work in national parks. . . I wanted to work in Africa. . . I wanted to work with the Olympic Games. . . I decided I didn’t want to spend my life taking care of shopping centers and their problems.”

He did strategic planning for national parks, he worked with the Atlanta Olympics, he reclaimed his running and helped start the Nike cross country running series and he made five trips to Ethiopia to work with homeless children and children with AIDS.

“I wanted to change the course of what I was doing,” Hill recalled. “I sold my company headquarters (Hill Partners) in Charlotte, N. C. in early 2001 and had a plan. I was going to semi-retire, spend more time in East Africa and work on this event I had created for Nike. This was to be the rest of my life. Then 9/11 took a lot out of me.”

He got to reading “The City of Collective Memory: Its Historical Imagery and Architectural Entertainments” by urban historian M. Christine Boyer, whose mantra is that the past is prey to invention.

“It’s my Bible” said Hill. “I have to read it a sentence at a time.” But he gets it, said Hill. If the new looks old, it creates a crisis of identity. That is why, he said, “I’m not into new urbanism. I’m into urbanism.”

“I have a love hate relationship with architects. . . I’m anti-city government” in terms of development,” Hill said. He thinks the marketplace is what determines success. As for the proposed controversial sweetheart deal with Cordish Companies for a City Center, he said, “I think it the wrong project in the wrong location at the wrong time. In 10 years, it won’t happen.”

Further, he volunteered, the amount of money being spent on the sports arena at the river front would better be spent $1million at a time in neighborhoods for community design and strategic thinking. “What if you spent $1 million on 30 blocks, or street corners?”

“What makes thing fly,” Hill said, “is when you have a diversity of places and a diversity of people, (when) it’s a 24 hours a day seven days a week action. It’s a living, breathing village. People know each other.”

And that is why his new company formed in 2001 is called Village Solutions.

Today, his projects include creative planning for three projects in India, including a tiger habitat and eco tourism center; a 3,000 acre agriculture village with a hospitality center and a hotel; and a “Bollywood,” a three to four screen cinema complex in Bombay. He is a consultant for the tourist destination of Halong Bay in Vietnam; for an Indo-China gateway to the Himalayas and Tibet for hikers; and the possible development of waterfront sand flats in Redwood Cal.

“I’ve spent a lot of time figuring out where the money is on this globe,” said Hill. “My business is morphing more into what I call marketplace-crafting.” It engages the skills of creative planning and design that drew him to architecture in the first place.

“I try to take projects that stretch me, that teach me, that are fun,” said Hill, “I try to get out those that are not or, not get into them in the first place.”

Part of Louis Vuitton's Mongolia Ad Campaign

The economic crisis has hit the luxury goods market hard. Houses such as Versace closed stores in Japan and Louis Vuitton shelved its Ginza, Tokyo opening. Moscow also saw brands such as Stella McCartney, Alexander McQueen, and Lanvin close. With spending on luxury goods down across the world, luxury brands are increasingly looking far beyond New York, London or Paris for revenue to less familiar locales such as Almaty, Kazakhstan; Shenzhen in China’s Guangdong province and Ulaanbaatar, Mongolia. These countries are generating revenues from energy and manufacturing, and thus have small communities of people with extreme wealth. Therefore, these luxury brands are targeting these pockets of wealth.

Louis Vuitton followed this trend by opening its store in Ulaanbaatar, the capital of Mongolia, on October 23. Mongolia is an Asian country of 2.7 million people with extensive mineral resources but has only an average per capita annual income of just over $1,800 USD. Ulaanbaatar had a 2008 population of just over 1 million. Most of its young residents are the first generation of their family to be born or grow up in the city.

Yves Carcelle, chairman of Louis Vuitton, illuminated their decision to open in Ulaanbaatar by stating “The desire for luxury is more and more universal so the luxury sector has to reach its clients around the world”.

So why target these new markets? As the economic recession worsens for the commercial real estate sector, especially in the west, luxury brands have to find new ways to survive and thrive – either through targeting new markets or adding new concepts. It appears they have chosen to target new markets.

A recent study by Bain & Co showed luxury sales this year will drop by 16% in North America, 10% in Japan and 8% in Europe compared to last year. In the rest of Asia however, sales are set to grow by 10%. Of the 300 luxury store openings in 2009, 15% will be in China, 25% in other Asian countries, 30% in the Middle East, and 15% in Eastern Europe and the Middle East. In contrast, just 15% will be in Western markets. However what the study does not show is that many of these opening are a result of several years of negotiations and leases with large termination fees. The true indicator of the luxury industry health will come in the next few years as the commercial real estate industry continues to deal with the economic recession ramifications.

Besides the major cosmopolitan cities, most of Asia has been untapped by luxury markets; partly due to accessibility and development. Much of Central Asia was isolated from these western luxury brands until the early 1990’s when Communism fell.

The digital revolution has also enabled luxury brands to enter the lives of new markets and consumers. In essence, the internet and media with it global reach has “increased demand by acting as a catalyst for markets” explained Bruno Pavlovsky of Chanel.

While it seems odd that luxury and European stores would be well adapted to Mongolians and their lifestyle, Mongolians have a long history of embracing other cultures. For instance, the Mongol army not only conquered the better part of the known world at the time, but they also embraced and developed the cultures they came across. Under the Mongols, new technologies, various commodities and ideologies were disseminated and exchanged across Eurasia.

Already Mongolia has an impressive number of international brands with Adidas, Mercedes Benz, Dior, Esprit, Swarovski, BMW, Land Rover, Lavazzia and many more. A Hilton and a Shangri La hotels are scheduled to open in the next few years. Additionally, Salvatore Ferragamo is also looking into opening a branch in Mongolia.

2010 will see the opening of other luxury brand stores, including Hugo Boss, Ermenegildo Zegna, Emporio Armani, Burberry and Versace. Gucci has already started advertising its new scent on TV, so perhaps a Gucci store is in the works.

While these brands have very different target consumers in their more developed markets, in Mongolia they may have to compete for the same handful of customers who can afford their products and are brand-conscious enough to purchase them.

Apparently, there seems to be sufficient number of high-net-worth Mongolian individuals for the luxury brands. Likewise, the LV store is another additional vote of confidence in the dynamic growth of Mongolia that some predicted could become the next Qatar. The internet is already filled with companies offering luxury vacations to Mongolia.

JUST THE FACTS
1. The apparel industry is a $191 billion industry.
2. Back to school sales in the U.S. were expected to reach $38.3 billion, up .06% from 2008.
3. A recent study found that in locations with a strong independent retail culture, 45% of every dollar spent at an independent bookstore remained in the local market.
4. In the first half of 2009, the sale of luxury goods dropped 15%-20% over 2009.
5. American families account for 40% of all borrowing in the U.S.
6. Between 2003 and 2004 handbag sales grew by 26%.
7. Handbag sales reached a peak in 2007 of $9 billion, up 100% over 2001.

Go Figure
1. Emanuel Ungaro recently announced that it hired Lindsay Lohan as its artistic advisor.
2. Vera Wang dropped prices for next spring’s resort collection and was told by many department store buyers that her price of $600-$800 for dresses maybe too low for a designer department.
3. Designers are wondering why their clothes are being seen as exotically pricey after doing quick-and-dirty lines for fast fashion retailers.
4. Consumers now expect merchandise more frequently with the rise of Zara, H & M, and Forever 21. Yet, designers are trying to reduce the number of lines they create each year (fall, holiday, resort, spring, and summer).
5. In the last quarter ending September 30, 2009, Neiman Marcus sales were down 23% from the previous year.
6. In 2006 and 2007, Chanel introduced clear “naked” handbags. The next year in 2008 total handbag sales dropped $1.1 billion.
7. Luxury consumers are still buying at the high end, which has become somewhat relative, but entry level shoppers are looking for items at lower prices.
8. Gourmet tea is now selling for up to $1000 a pound and sells for 30% more than standard teas in restaurants. The French are the leading connoisseurs and they are bringing as much discernment to tea drinking as wine. The leading purveyors of tea include TWG Tea based in Singapore, and Le Palais des Thes and Dammann Freres in Pairs.

Rise of the Frugal Consumer
1. Consumers have adopted a prolonged frugality, especially in the purchase of luxury goods.
2. Higher income individuals are restricting purchases to items that have a more practical purpose and forgoing items that are trendy and may go out of style in one season.
3. The consumer is moving toward individuality and away from fashion commands on cue such as hem length.
4. Consumers are spending more time at home eating and not as much time eating out.
5. Home improvement shoppers have turned to purchasing repair and maintenance items, instead of buying discretionary goods.
6. Consumers still value high quality, convenience, and healthfulness.
7. The back-to-basics shift in consumer sentiment will likely remain permanent, even after the recession.
8. Consumer behavior as a result of this recession has been modified for an entire generation.
9. While traditional toys sales have declined as a result of competition with video games, iPods, and the internet, Lego’s sales jumped 32% in 2008 and double digit sales gain continue in 2009.
10. Consumers have cut back on all forms of travel: gas, new auto and airplane tickets. Yet, consumer expenditure on all forms of entertainment is up in 2008 and 2009 over 2007.
11. Unemployment, salary freezes, and salary and benefit cutbacks will remain a significant drag on consumer expenditures for some time.

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]]> http://villagesolutionscompany.com/blog/recap/feed/ 0 http://villagesolutionscompany.com/blog/pedestrian-thoughts-3/ http://villagesolutionscompany.com/blog/pedestrian-thoughts-3/#comments Fri, 09 Oct 2009 19:28:11 +0000 Rick Hill http://villagesolutionscompany.com/blog/?p=179 Lego
Lego has opened its first concept store in Concord Mills, located north of Charlotte, NC. The 4,520 square foot store has been designed to create an interaction between children with on-site master builders. The store has room for birthday parties and classes.

Versace
Recently announced it was closing all thirty (30) of its stores in Japan.

New World
A new world is likely to emerge in which designers rebel against long lead times and where they take their collections directly to the consumer through their own boutiques, trunk shows, and over the web.

Web Sales
Web sales are projected to reach $156 billion in 2009, representing 6% of the total U.S. retail pie

The Web Fashion Consumer
Consumers have come to expect new merchandise more frequently, thanks to the web and fast fashion retailers such as H & M. Many cannot understand why they have to wait 6 months to see the fashions seen on the runways. Buyers at department stores generally base their orders on the past, while fashion editors gravitate to the most photogenic and future looking styles, leaving the consumer stuck in the middle. This results in one facet of the fashion industry looking forward and the other looking backwards. The consequence: a consumer on one hand is told what to buy but on the other, not where to buy it.

In response, a new generation of fashion retailers is emerging on the web where news is freely given and fashion is sold. Net-a-porter with average sales of $820.00 per transaction and customers from 170 countries is one example of this new generation of merchants. The company has successfully merged its web retail site with a fashion news site catering to a new consumer who wants credible news over magazine advertisements and the most up to date fashion now.


Entertainment
Families spent 5.1% more on entertainment in 2008 than in 2009, something that has surprised many economists. As consumers tightened their pocket books and wallets one would expect entertainment to be one of the first categories to see significant decreases. But the 5.1% increase in spending equated to 16.5 billion more dollars spent in the category over 2007.

Household debt
The American family is trying to put money into savings and reduce their overall debt, but they are clearly not faring as well as one might expect in this recession. Household debt now amounts to about 125% of after tax income.

High Net Worth Individuals
Luxury retailers are faced with a significant decline in Americans with a high net worth defined as having $1,000,000 of assets available for investment. In 2008 the assets of these individuals dropped by as much as 22%. The result is a major decrease in sales at retailers such as Neiman Marcus where sales have decreased by over 20% in 2009 over 2008.

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]]> http://villagesolutionscompany.com/blog/pedestrian-thoughts-3/feed/ 0 http://villagesolutionscompany.com/blog/commercial-real-estate-vacancies/ http://villagesolutionscompany.com/blog/commercial-real-estate-vacancies/#comments Fri, 09 Oct 2009 17:17:14 +0000 Rick Hill http://villagesolutionscompany.com/blog/?p=168 While the residential market may be showing some signs of recovery, vacancies in commercial properties continue to rise at an alarming rate. In short, non-enclosed shopping centers reached a 10.3% vacancy rate ending in the third quarter of 2009, and enclosed malls jumped to 8.6%.

And it certainly is not looking to get better for some time. As vacancies increased, average rents declined to $16.89 per square foot for non-enclosed centers and down to $39.18 for enclosed malls. Likewise, the Federal Reserve has reported 8,300 store closings including 1,500 large anchor stores in 2009 alone.

Nationwide, office vacancies and rents are faring worse. The vacancy rate, in office properties hit a five-year high at 16.5% in the third quarter of this year. The decline in occupancy came as 19.6 million square feet of office space was returned to landlords in the third quarter and 64.2 million for the year.

As bad as the current environment is for landlords, things will become bleaker as unemployment rises because office occupancy tends to trail employment by 18 to 24 months.

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]]> http://villagesolutionscompany.com/blog/commercial-real-estate-vacancies/feed/ 0 http://villagesolutionscompany.com/blog/coney-island/ http://villagesolutionscompany.com/blog/coney-island/#comments Fri, 09 Oct 2009 16:49:57 +0000 Rick Hill http://villagesolutionscompany.com/blog/?p=161 In the past several years, much has been written about the proposed and controversial redevelopment plans for the boardwalk and adjacent amusement parks of Coney Island. While a great deal of the attention has been focused on the redevelopment plans of Thor Equities, the once popular Brooklyn seaside resort does not lack in alternative schemes suggested by everyone from theme park managers to the Bloomberg administration to the Municipal Art Society of New York.


In short, opposition to Thor’s plan have been centered around the firm’s plan for as many as a 1,000 hotel rooms and 500,000 square feet of retail space including some big boxes. Alternative suggestions for Coney Island range from “three or four wind in your face rides” to an “eye-popping” attraction akin to the London Eye – not bad suggestions but clearly the product of observers that lack a real sense of the historic Coney Island, let alone what is requires to make the redevelopment an economic success.

To be sure, Coney Island will obviously have rides and a dramatic center piece, but size and the newest form of exhilaration hardly made Coney Island special in the first place, nor will they return Coney Island to its glory. It is clear that the current alternative visions to Thor’s plans retreat to a gimmicky skyline of twist-and-spin steel thrill rides, favored by a small percentage of the market. What is missing is the essence of the place where one is immersed into a world unlike any other amusement park, be it Disney or Six Flags.

That said, come next spring Andrew Lloyd Webber will present his vision of Coney Island, circa 1907 with Love Never Dies, the sequel to Phantom of the Opera. Let’s hope that Lloyd Weber’s vision changes the discourse to a more intimate Coney Island where one’s imagination is illuminated at a more intimate scale rather than a pile of twisting metal that looks like the junk yard from Cats.

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