The current school district administration headquarters on Underhill Street in Kelowna will soon give way to a new property development that will include residential and commercial elements. Photo: Capital News files

Two towers proposed for Kelowna site

Mixed residential/commercial plan for property adjacent to Orchard Park Mall

A development proposal for the current school district administration building site on Underhill Street in Kelowna calls for a mix of retail and residential with two towers above 20 storeys in height.

The vision of the property buyers, District Group, is to complement the Orchard Park Shopping Centre across the street while acknowledging the changing trends in commercial retail land development.

The towers are proposed for 24 and 27 storeys high, coupled with a mix of retail, apartments and townhouses maximized to a six-storey height.

Michael Nygren, president and CEO of District Group, said there are two age demographics influencing the current retail development landscape.

For the younger millennials, Nygren said they are looking for a more central urban location, happy to live under more affordable, multi-family residential circumstances.

That is coupled with the aging baby boomers, who want to downsize from single-family home living to a simpler life that makes it easier to travel more and be closer to amenities.

“There will probably always be a component of people wanting to live in the suburban neighbourhood lifestyle, but a changing economic picture and age demographics are driving greater inner city growth,” Nygren said.

The millennials, he noted, are impacted by the rising cost of single-family homes, well beyond what most can afford. So they are increasingly giving up that option as unrealistic in return for living closer to other lifestyle amenities such as shopping and entertainment.

As well, the Underhill project will include a rental component along with condo strata sales, said Brandon Crema, executive vice-president of District Group.

He said the rental component was limited by what he called concrete economics. “Once you exceed six storeys in height, that is the maximum for wood construction, so your construction costs increase significantly making it necessary for the condo sales to make it economically viable,” Crema said.

“But having an aspect of this being rental was important to us in terms of building up our long-term portfolio as a company.”

Nygren and Crema talked about the Underhill development as part of a larger presentation Wednesday at The Harvest golf course clubhouse about the changing dynamics of retail development, an event hosted by the HM Commercial Group.

Their presentation addressed the “Amazon effect,” a disruption to the retail market resulting from Amazon’s e-commerce online sales domination.

While many are calling the growth potential for online shopping as the death-knell for 25 per cent of existing shopping malls across North America, Nygren argued extending that credit to Amazon’s emergence along with the supposed disappearing role of shopping malls in the retail mix is exaggerated.

Related: Millennials will change Kelowna landscape

“Canada is trending at about four per cent in online retail sales and the U.S. is ahead of us at about 10 per cent,” said Nygren. “That means a lot of consumers are still using the brick and mortar shopping option, so it is not going away anytime soon.”

He said the brick and mortar and e-commerce business entities are actually converging into each other’s territories to better reach consumers.

He said retailers must adjust to the online presence or be left behind, while e-commerce retailers need to expand their branding to well thought out store locations to expand their marketplace reach.

“Disruptions have been going on in the retail world for some time, and Amazon is just another of those changes,” Crema said.

Nygren explained how the traditional shopping mall reached its zenith in the 1990s. Over the last 20 years since, that concept was replaced by the PowerCentre concept of introducing big box store tenants into a shopping complex, which then evolved into an open-air shopping concept, to the trend seen today of mixing residential and commercial together in location that offers lifestyle features and options beyond just a shopping experience.

The future for shopping centres to continue to thrive, Nygren said, is for malls to become community hubs, making their space available for community groups and organizations to use and to offer lifestyle recreation and service business options coupled with the residential component.

The Underhill project has yet to be submitted to the City of Kelowna to initiate the planning approval process.

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