With local advocates recommending what they call economically sustainable business models and a sluggish economy slowing sales of yet-to-be built retail space, the developer of Oshara Village is courting the latest trend in retail real estate: offering commercial space as retail condominiums.

From the outset, Oshara founder Alan Hoffman has envisioned the new development along Richards Avenue as a showcase of environmentally friendly features in a community built around ideals typically called "New Urbanism."

Sweeping the nation as an alternative to cookie-cutter subdivisions built in recent decades when historic population shifts gutted rural communities and drove residents to suburbs in search of new opportunities, New Urbanism promises walkable communities where diverse, credit-worthy residents can live, work and play without commuting.

Oshara Village, with plans for at least 750 residential units and a plaza park surrounded by commercial buildings, offers a variety of home styles from estate homes to townhouses.

But delivering on the part of the promise that calls for working and shopping near home has proven more difficult

Rancho Viejo, Oshara, Tierra Contenta and other new developments all sprang up in recent years around planned retail centers that lacked qualified tenants. Then the economy took a dive.

"Our stated goal of economic sustainability, the idea of doing it as a retail condo and doing it as a very exciting commercial center, is something that grew out of that. It's ... us responding to a change," Hoffman said.

The fulcrum of change emerged when a prospective buyer of one of Oshara's commercial buildings didn't qualify for credit. So Hoffman looked for alternatives.

Residential real estate for decades has been sold as condominiums, and increasingly so in recent years. Units in several former Santa Fe apartment complexes are now being sold as condos. Individual office units in larger buildings are routinely sold as condominiums, throughout Santa Fe and beyond.

But retail condominiums are the new kids on the block. Their popularity is growing at an astonishing pace.

Shopping Centers Today, a trade publication, in 2006 reported a retail-condominium boom, with retail-condo sales exploding from $44.9 million in 2003 to $654.1 million in 2005. The magazine cited data from Real Capital Analytics.

The same data shows about two-thirds of recent retail-condo sales have been in ultra-dense urban centers of New York City and Chicago. Elsewhere, prime retail space in many cases has proven too lucrative for developers to let go, Hoffman said. For retailers, he said, that can mean a choice between a prime location or a location where they can accrue equity in their building.

What's worse, at least for locally based businesses, is that the steep cost of entry in prime real estate, even as a renter, sets a bar so high sometimes only nationwide companies can afford the ante.

Vicki Pozzebon, executive director of Santa Fe Alliance, a business-advocacy group, said the appeal of commercial real estate to well-heeled national chains became apparent when the city of Santa Fe redeveloped prime downtown space in the Railyard. "That was publicly owned land that was attracting chain stores," Pozzebon said.

The Alliance had urged Oshara's developer to offer local businesses the first opportunity to buy or lease space in commercial buildings planned near Oshara's plaza. Hoffman liked the idea favoring local businesses, but when a buyer backed out, he saw retail condominiums as a different means to the same end.

So far, Hoffman is offering 26,500 square feet of retail condominiums in one building out of an eventual 1.3 million square feet planned for commercial, retail, office and light-industrial space.

Not just any buyer can qualify. Hoffman said he wants businesses that will complement Oshara's appeal, and that stand a strong chance of success.

He has several prospects in line, but declined to disclose details while negotiations are under way. To secure construction financing, Hoffman said he needs to approach his financiers with a package of qualified prospective retail-condo owners.

Contact David Collins at 986-3064 or dcollins@sfnewmexican.com.