Hey guys!

I love the website. I’ve been doing some writing about malls that have been repurposed into other non-retail functions, like Shepherd Mall in Oklahoma City () and 100 Oaks Mall in Nashville. (Forthcomring on 12/29/10 at ) I’m heading up to one in North Denver in the next few weeks, which was turned into a “tech center” that is now struggling. I’ll let you know how that goes. H

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You should add The Tallahassee Mall
& Governors Square Mall.
Both in Tallahassee

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Shopping Center and Mall Fundamentals Stable, But Challenges Remain
Jan 11, 2011 2:58 PM, By David Bodamer

Real estate research firm Reis Inc.’s preliminary data for the fourth quarter of 2010 shows that fundamentals continue to stabilize at neighborhood and community centers and regional malls.

Vacancies at malls declined and at shopping centers remained flat from the third quarter. For shopping centers, it is the second straight quarter where vacancies have been stable and the second straight quarter of improvement for malls.

Neighborhood and shopping centers appear to be “meandering around a bit after the temporary reprieve from deterioration in fundamentals for retail properties last quarter,” according to Reis economist Ryan Severino.

Vacancy levels remain at 10.9 percent, just a shade lower than the all-time high of 11 percent hit in 1991. Reis expects that the broader economic challenges mean that the vacancy rate could continue to tick upward in 2011, despite the recent stability. In addition, asking and effective rents declined by 0.1 percent, which Severino described as “a slight resumption of the downward trend in rents that began in mid‐2008 and persisted until last quarter.”

The vacancy rate for neighborhood and community centers remained flat or declined in 45 of the primary 80 metropolitan areas Reis monitors and effective rents remained flat or increased in 35 out of 80 markets.

Although a slight majority of markets Reis covers posted flat or even improving fundamentals last quarter, a minority of markets posted flat or improving effective rents this quarter. “This provides further evidence that retail is not yet on the road to recovery and any apparent optimism from last quarter about a recovery beginning to take hold and spread to a larger number of markets has clearly been squelched,” according to Severino. Looking forward, the market will remain choppy.

Developers brought just 594,000 square feet of neighborhood and community center space online, reflecting both the tight credit conditions and still weak fundamentals for retail real estate. This represents the lowest level of completions on record since Reis began tracking quarterly data in 1999.

Brighter outlook for malls

While the outlook for neighborhood and community centers remains muddy, the regional mall sector is showing clearer signs of recovery. Vacancies declined by 10 basis points, from 8.8 percent to 8.7 percent during the fourth quarter. This is the second consecutive quarter that vacancy for regional mall figures has declined after rising from the third quarter of 2007 and peaking in the second quarter of 2010 at 9.0 percent.

In addition, asking rents increased for the first time since the third quarter of 2008. According to Severino, “It is not entirely surprising to observe regional malls performing relatively better than neighborhood and community centers as the economy recovers. Regional malls did not experience massive supply increases like neighborhood and community centers during the last decade.”

Still, regional mall asking rents are still at a level last observed in the second quarter of 2006, which is providing an incentive for former tenants of smaller strip malls to consider leasing space in malls. What this means is that, to some extent, the success of regional malls is coming at the expense of neighborhood and shopping centers. This view is bolstered by the fact that the blended vacancy rate for both sectors sits at 10.4 percent and has been flat for three quarters.

Hmmm, interesting contrast to the article on lifestyle centers linked in the prior post.

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Has anyone ever heard of Lakeview Centre in Manitowoc, Wisconsin. Look at this place () it looks like Dixie Square in Harvey, IL. What a sad pit, of a former mall!

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I think Labelscar must be hacked, or something, because when Google-searching, the header of the site is always BUY [drug] ONLINE WITHOUT PRESCRIPTION | Labelscar: The Retail History Blog.

Also, there’s ads when arriving from Google on the top, from a service called “Chitika”. This is aggravating when browsing on public computers as it believes it is an “exploit” and refuses to load as being a security risk.

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Caldor Reply:
February 9th, 2011 at 12:06 am

@Pseudo3D, this was a fairly common WordPress bug that we’re pretty sure has since been remedied by an update… the “bad titles” will migrate out of the search index within a few days. It’s a bummer but it happens.

Chitika is an ad platform, like Google Adsense, and is part of how we support the travel that brings much of this content to Labelscar.

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Caldor Reply:
February 11th, 2011 at 5:54 pm

ugh, not fixed actually. we’re working on it anyway. At least the site itself works fine for users.

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Hi all!!!I’m conducting a personal research project in Belvidere Discount Mall in Waukegan, Lake County, Chicago. I’m a first year graduate student at UIC, majoring in Sociology, I come from Shanghai, China58彩票网 and this semester I’m enrolled in CAS (Chicago Area Study) class, and i myself chose Belvidere Discount Mall as my field to conduct some observation. I’m new here, so definitely I’m not very familiar with the process of suburbanization and the history of Hispanic immigrants. However, according to my own experience in Shanghai, especially my impression on the various shopping malls there, I feel quite interested in Belvidere: authentic Hispanic way of displaying commodities, catering to Hispanic taste of fashion and totally different from any shopping centers in downtown Chicago. I have to say that in Shanghai, you can see H&M in Huaihai Road (one of the most fancies roads in Shanghai), and then just cross several blocks, you’ll definitely hit some traditional shopping centers or groceries. During my research, I plan to talk with the store owners, shop assistants and clients there, especially Hispanic people.
Does someone wanna share with me their ideas/experience about Belvidere? Feel free to email me and I’d really appreciate your help.
My email address is jli73@uic.edu. Thanks a lot!!!

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I have submitted two new malls, with pics and everything 3 times now, and they have never been added.

Is this site ever updated?

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Has anyone heard anything about Chinese Mall of North America that was supposed to open in Northridge Mall? It is ever going to be completed?

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Mega-Chains in the Making: Smashburger, Elevation Burger, and Mooyah Burger

Tuesday, April 26, 2011, by Eater Staff

Across the country, new breeds of restaurant chains are popping up to fulfill Americans’ endless appetite for the hamburger. From mega-chains in the making to artisan burgers crafted by celebrity chefs, there’s a multitude of challengers taking on big players like McDonald’s and Burger King. Here now, part two in a five-part series profiling the “better burger” chains. Yesterday was In-N-Out vs Five Guys, today: Smashburger, Elevation Burger, and Mooyah Burger.

Elevation Burger (Arlington, VA-based), Mooyah Burger (thoroughly Texan), and Smashburger (sprawling out from Denver) have displayed the kind of innovation, aggressive expansion, and national footprint that make the most promising mega-chain contenders. These three new chains may not be in every town yet, but given the way they’ve weathered the economic storm and are still growing rapidly, they just might get close soon.

“The market is looking for something better and more modern than what is on offer,” said Smashburger founder and CEO Tom Ryan. “I think the major players have been shifting their focus to pursue other occasions and the burgers have been falling by the wayside.”

While the traditional standard-bearers of the fast-food burger have been dreaming up novelty sandwiches and trying to succeed at breakfast, the patties have grown arguably sub-par. As Americans demand more and better burgers, new chains are stepping up to satisfy our cravings with more options, better ingredients, and a new approach to fast food nation.

More about where you’re going to be getting your burgers.

Elevation Burger

Elevation Burger is staging itself as the eco-/waistline-friendliest new option on the block for your burger needs. With ground-on-premises grass-fed beef, olive oil-fried French fries, and environmentally friendly operating practices from renewable, non-pollutant building materials to oil for biofuel donation, few companies can compete with the measures this chain has instituted. Prioritizing LEED-certified locations, encouraging franchisees to purchase Clean Energy Offset Credits, and offering two vegetarian options — including one vegan? Now you’re just sucking up.

But they aren’t — and that commitment to better practices for both customer and environment is helping this new player stand out in the increasingly crowded meat-market. Hans Hess came up with the idea for Elevation Burger in 2002 based on a desire for a burger that not only tasted good but was sustainable. After planning, research, and development, Hess opened the first location in Arlington, VA, in 2005 and began franchising in 2008, promptly earning the title of “Green Business Visionary” from Washington Business Journal. With the help of Dan Rowe, a veteran from the fellow Arlington-based Five Guys, there are now 12 existing locations, 15 that are slated to open in 2011, and projections call for a total of 100 locations over the next three years. The company has also signed a multi-franchise deal to open six restaurants in Bahrain and Kuwait by 2013.

Elevation Burger’s franchisees are as eclectic as the menu, ranging in the New York area alone from former Metro New York, Inc. CEO Daniel Magnus to former Verizon Wireless employees Fabian Rosario and John Harris. The healthier approach to classic fast food staples brings a new option to the table for diners looking to have higher quality products at the affordable prices of a quick-service restaurant. As Rosario told industry publication Fast Casual, “New Yorkers are always looking to eat healthier, but it’s easier said than done. Elevation Burger offers an organic, better-for-you burger at a reasonable price.”

Mooyah Burger

Mooyah’s 17 locations across Texas may not sound imposing right off the bat, but with 20 more set to open in 2011, six multi-unit development deals signed to increase the total to 221, and strategic plans for 1600 percent growth in the next 10 years, we’re looking to cattle country for a new burger mega-chain.

While Five Guys may take top billing as the most popular alternative burger chain, Mooyah co-founder Todd Istre considers the fight for number two to be the biggest battleground for up and coming burger franchises across the country — and that’s a spot he considers wide open. “I think, if we focus on our systems, quality, and market, we can realistically end up in that spot in the next five years,” Istre said. “We have a great basic team in place and we’re focused on giving people the best full experience possible. Now, we’re focused on incorporating elements that differentiate Mooyah from all of the other chains out there that might fall by the wayside over the next few years.”

To that end, Mooyah has started to bake their own buns in-house — a rarity in the burger chain business. They have also developed a kids’ meal, further cultivating what the company perceives to be a heavily suburban target market. With a focus on the nation’s sprawling suburban communities and aggressive but educated franchising choices, Istre aims to see Mooyah grow concentrically from its Texan 58彩票平台 base. While one non-traditional location will open in Connecticut later this year, the 15-20 restaurants planned for 2011 will be closer to 58彩票平台, branching into Tennessee and Kansas, then pending Oklahoma, Louisiana, and Arkansas locations will follow.

Smashburger

“We are intent on being national,” declared founder and CEO Tom Ryan. “And we are confident that we will have achieved a near-national footprint by the end of next year.”

From a single restaurant in Denver, Smashburger (named for the authentic method of smashing a ball of ground beef into a patty on the grill) grew to ten locations by 2008, 43 by 2009, and 94 stores today. They are on track to double again this year and to control 400 to 500 locations in the next five years. With 400 restaurants committed to 30 groups that already control over $1 billion in other food brands, Smashburger stores are multiplying like rabbits — rabbits that make really tasty burgers.

In addition to franchising like crazy, the company follows a model of adding value in-house. According to Ryan, this means taking the best commodity items available, hand-forming meatballs to be smashed into patties on the griddle, breaking down produce in-store, and doing all battering and frying on-site. Smashburger also sells local and craft beers and customizes 10-15 percent of their menu to suit individual locations, a touch that the CEO feels “is engaging and adds substantial value to the standard options currently available.”

Smashburger’s financial structure draws strength from private equity firm Consumer Capital Partners, which also funds Ryan’s last venture: Quiznos. With the resources of a private equity firm, the budding burger chain has flexibility that would be enviable for any culinary venture, but has most notably given the company an edge in the market to grow amidst a recession.

Food writer and hamburger expert Josh Ozersky had lofty praise for the chain, and asserted it may just have the best shot to make it on a major national scale — and he can’t wait. He said, “Their approach, quality control, and willingness to give juicy and flavorful burgers are at the very least deserving of great success.”

What’s next for a chain that’s already mastering the challenge of rapid national expansion? Smashburger plans to go international. The company is already recruiting investors in Canada and is pursuing partnerships in South Korea and the Middle East. “We built a burger for every occasion, and we’re trying to put burgers back in the lives of people who haven’t had them in a while,” Ryan said. “Burgers are timeless — whether they’re recession-proof or not. How you supply them is where the recession-proof part matters. We have a lot of sources for those occasions.”

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Borders wants to pour its own coffee
Published: May 20, 2011 at 4:28 PM

ANN ARBOR, Mich., May 20 (UPI) — U.S. retailer Borders Group Inc. said it asked a bankruptcy court for permission to break away from a licensing agreement with Seattle’s Best Coffee LLC.

Seattle’s Best, a unit of Starbucks Corp., had licensing rights for 225 Borders’ bookstores that closed when the retailer filed for bankruptcy in February, The Detroit News reported Friday.

Borders now wants to operate its own coffee shops in hopes it will generate more income.

“This change will allow Borders to operate its own cafe program, enabling us to reduce the licensing fees we pay, generate significant cost savings and boost cafe profitability,” Mary Davis, a spokeswoman for the retailer, said in an e-mail.

“The change will also provide us with the opportunity to tailor menu items and the cafe experience based on our customers’ preferences,” she said.

Currently, Borders owes Seattle’s Best about $5 million, the News said.

Retail consultant Ken Dalto said the move would reduce costs for the store, but “may be a little too small and a little too late” to have a big impact on Borders’ chances for survival.

In the year ending Jan. 29, Borders lost $479.9 million, a financial report says.

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May 23rd, 2011 at 1:05 pm

@SEAN, I am baffled of how Borders closes stores and puts people out of work and buys a brand of coffee.It makes me wonder who screwa up the books in these stores.

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Reply:
May 23rd, 2011 at 1:30 pm

@rob, I just wonder what else is brewing there. When you close your only store in the Paramus area, something is absolutly wrong.

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Who’s been drinking the cool-aid!

The Brand, The Box And The Bulldozer
How retailers are rightsizing their footprints and redefining their brand.
Mark G. Cahill

According to economists, the recession officially ended in June 2009. While that may have been the case on Wall Street, on Main Street unemployment remains stubbornly high and housing sales are still languishing, leading consumers to keep a tight grip on their wallets. Retailers, on the other hand, have utilized this prolonged downturn to analyze their operations and their markets, and to take the time to evaluate changing customer patterns. As a result, many retailers have been making creative improvements to their brands, prototypes and business models in order to increase both competitiveness and market share as the economy improves.

The Brand

With multiple distribution channels available — from in-store to online to mobile integration — retailers are redefining their commercial strategies to better meet how customers interact with various touch points of their retail spectrum.

In some cases, retailers are reacting to technological changes being forced on them. The banking industry, for example, is grappling with the dawn of mobile banking while at the same time managing the fall-off of branch utilization due to online banking.

TD Bank is one example, as the company found building in the mid-Atlantic and Northeast states much more expensive than in Canada, where the company is based. That coupled with a roll-out pipeline targeting higher density urban locations challenged the bank to rethink its current footprint. Because the company markets itself as “America’s Most Convenient Bank,” TD Bank had to find a way to provide the same level of customer service, coupled with strong brand identity and dramatic interiors that the full line retail bank provided.

As a result, TD Bank has developed a 2,900-square-foot prototype, reducing its flagship prototype size by 30 percent, while maintaining all of the customer service program elements of the larger retail bank. Efficiencies achieved by an innovative vault concept, as well as support area and staff area reduction, allowed the retail platform size to remain virtually unchanged. In addition, customer service areas are designed with forward thinking flexibility, designed to incorporated new technologies as they are rolled out, as well as furniture systems that allow for future flexibility of customer service models.

The restaurant chain Denny’s provides another example of rethinking its brand. When the company wanted to grow its restaurant count, Denny’s analyzed the market and decided one of the best ways to expand was to take advantage of non-traditional real estate opportunities. The company quickly realized that an optimized footprint would be required and embarked on the creation of a new Denny’s Café prototype. This in-line or urban prototype is 30 percent smaller than the traditional pad site restaurants, and achieves efficiencies by redesigning the backbone of business-menu offerings and customer service model while retaining core equities.

Denny’s Fresh Express concept is even smaller and more flexible at 500-1,200 square feet, with a menu and trade dress specifically targeted toward college campuses.

“Denny’s Fresh Express program was initiated 2 years ago based on the desire to reach new demographics,” explains Mitch Riese, AIA, Denny’s corporate architect. “The more recent Café concept is, primarily, a real estate solution. We continually evolve and learn from this family of brands to better access and serve more potential customers.”

The Box

Retailers are experimenting with different format stores to take advantage of real estate opportunities presented as a result of the recession. Some retailers are downsizing as a result of competitive pressures or entitlement difficulties, and others are downsizing due to the difficulty in finding suitable size sites in denser urban markets.

All brick-and-mortar retailers — regardless of market share, product category, or price point — are rethinking the size of their box. There are strong motivators for retailers to scrutinize every square foot of space as they realize cost savings in real estate, construction and inventory while the size of their footprints shrink.

Walmart has been on the forefront of this trend since 1998, when the company rolled out its 42,000-square-foot Neighborhood Market. However, now the company is also evaluating possibilities for several smaller prototype pilot stores in urban areas where Walmart has had difficulty integrating larger footprint concepts.

Nike, feeling competitive pressure from UnderArmour and Lululemon, is no longer building its 50,000 square foot Niketown flagship stores. Instead, the company is focusing on the “Nike Brand Experience” stores, which are around 20,000 square feet. Nike is also rolling out single category stores, such as running stores, in the range of 2,000 to 6,000 square feet.

The biggest difference between the Nike Flagship stores and the smaller Experience stores is the amount of flexibility built into the latter’s design. The new format’s fixturing and layout allows for rapid conversions when new merchandise and displays are integrated into existing locations. Lessons learned from the smaller stores will generate the basis of conversions of the fixturing and merchandising in future Niketown renovations.

Another example of reevaluating concept in the face of market changes is the trend affecting electronics retailers, which after years of rapid growth fueled by flat panel televisions at ever lower price points, are now scrambling to stop the hemorrhaging of tighter margins as the result of a maturing market and production overcapacity.

Best Buy is overcoming TV sales declines through better inventory management. By stocking fewer than 100 TV models in its stores and offering three times as many models from its website, the company expects to maintain margins as competitive pressures continue to erode the category. In the long run the chain expects to benefit from better integration of its online and in-store retail distribution channels.

Also, in a preemptive strike to the wireless carriers, Best Buy has developed and is rolling out “Best Buy Mobile,” a single category, 1,400-square-foot concept designed to fit anywhere. This offering is set up to capitalize on the inevitable consolidation of wireless carrier competitors due to industry mergers and falling margins.

The Bulldozer

Retail has a long list of venerable names that succumbed to the ravages of the marketplace and/or the march of technological evolution, and each new retail category has killed off its predecessor. For example, the five-and-dime was killed by the mass market discounter, and the independent department store was killed by industry consolidation and supply-chain management efficiencies.

Each new technological innovation carries with it the potential of creative destruction. This is intensified during a recession, and this recent recession has been no different. Blockbuster has been crippled by movies downloaded over the Internet, and Borders was first hurt by Internet sales then further injured by the eBook.

And yet each retailer that succumbs creates new opportunities for retailers who have maintained focus during the downturn to reinvent their brands and business models.

Costco is now moving into dark mall anchors, following the trend that Target and Barnes & Noble set a decade earlier. This trend is accelerating as shopping center REITs are scrambling to fill empty space. As a result, malls are becoming democratized with a wider array of market categories and price points, which follows consumer cross shopping trends that sprang up as a direct result of the success of the mass-market discounters to begin with.

And just as Borders and Barnes & Noble are taking it on the chin from Internet sales and eBooks, niche retailers are taking advantage of customers’ desire to shop with temporary “Pop-Up” retail locations. To judge demand in certain cities, Phaidon Press has opened up temporary stores in New York, and it’s been successful with merchandise fixtures that were unitized and could be reassembled if the locations needed to change quickly.

The bottom line is that retailers who have not taken the time to study their customers, to look for operational efficiencies and seize real estate opportunities may be the next ones bulldozed in the perpetual retail cycle-of-life.

Mark Cahill is an architect who specializes in branding retail environments that enhance the consumer experience. He can be reached at Bergmann Associates, whose retail clients include Walmart, Wegmans, TD Bank and Sunoco. His email contact is mcahill@bergmannpc.com.

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I thought this place was in trouble before, but now it’s losing Borders….oh boy.

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Found a Citysearch site for Mariner Mall Superior WI

Dead Mall Walking
by aenmichigan at Citysearch

Being originally from Hayward, WI, I can recall when Mariner Mall first opened in the early 80’s. I do not recall it ever being fully rented. In the early days there was a J.C. Penney, Prange’s and Prange Way. The mall seemed to lease new stores and close others. After PrangeWay filed bankruptcy, this seemed to be the malls demise. JC Penney left shortly after and the last I knew this space was a car dealership. If there are any of the original tenants left they are few and far between. I am surprised they even call this a mall, it is a sad sight from its hayday.

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Matt from WI Reply:
September 25th, 2011 at 11:39 pm

@Chip, Mariner Mall never gained ground, mostly because residents have a city called Duluth right next door. It was more or less a secondary mall, meant more just for the local residents. Miller Hill (in Duluth) has always been ‘the’ mall for that region.

I doubt malls like these were ever fully leased, and if so, they emptied out pretty fast once the 1990s rolled in and those 10-15 year long-term leases came up for renewal.

The other thing that didn’t help is the location…as they say in retailing, “location, location, location.”. WHY is this mall located AWAY from the main retail drag of Superior (Tower Ave / State 35)? This is where a few strip malls, Target, K-mart, and Menards are all located, along with most of the chain fast-food offerings. No, instead it’s way off near to the south-east side of town on 28th St.

Last I saw a ton of pics online of this mall, it still looked like a 1980 time-warp. Younker’s is the sole remaining anchor.

[Reply]

Chip Reply:
September 27th, 2011 at 7:59 pm

@Matt from WI,

Not too surprised since Duluth is a healthier town than Superior. Miller Hill is a really nice mall and a regional draw from all over the Iron Range and Northern Wisconsin. Closest competitor may be in Eau Claire. Most other towns (Rice Lake, Virginia) have small malls from the local residents

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Here’s one from Roseville, MI: “Lawsuit Claims Macomb Mall Needs $42M To Avoid Closure”

If this is true it’s going to be a huge blow to the area. While the mall doesn’t have much to offer it’s both a social and economic hub and if it goes under… I don’t really want to think about it.

Plus, where’s the next closest dollar theater?

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Does anyone have anything for Rivercrest Mall, Crestwood Illinois. It had a Sears and Venture.

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Brandon Reply:
November 5th, 2011 at 7:26 am

@Chip,

Never heard of it, but I’d like to hear more if someone has some information. That Venture mentioned could’ve been either a TrunStyle or a Goldblatt’s.

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Bobby P. Reply:
November 5th, 2011 at 1:56 pm

@Brandon, It’s a strip mall. It opened in 1991.

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They as in *Liberty Plaza* The rest of the mall is pretty much fine though now the book store is gone which was my favorite spot but they still have Elephants Trunk toy story which is a very fun place for kids.

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Hey guys,

I LOVE Labelscar and have been following for a couple of years now.

I’m working on developing a piece on America’s decaying mall culture as a visually poignant statement about today’s economic austerity. It will be featured in an amazing vintage inspired site that will be launching in Feb and…I need your help!!

We’re looking to shoot in an abandoned mall here in NYC and was wondering if anyone could give me some tips on where to find what I need.

A moody, creepy, decaying, and beautiful abandoned mall.

I have been doing a bit of research and have not yet found exactly what I’m looking for. Do any of you have any recommendations of a kick ass dead mall in NYC??

I would really appreciate the help and of course share our work with Labelscar once the piece comes out.

Looking forward to hearing from you!

Thanks!

Eduardo

[Reply]

From the NYT

Communities Learn the Good Life Can Be a Killer
By JANE E. BRODY

Developers in the last half-century called it progress when they built 58彩票平台s and shopping malls far from city centers throughout the country, sounding the death knell for many downtowns. But now an alarmed cadre of public health experts say these expanded metropolitan areas have had a far more serious impact on the people who live there by creating vehicle-dependent environments that foster obesity, poor health, social isolation, excessive stress and depression.

As a result, these experts say, our “built environment” — where we live, work, play and shop — has become a leading cause of disability and death in the 21st century. Physical activity has been disappearing from the lives of young and old, and many communities are virtual “food deserts,” serviced only by convenience stores that stock nutrient-poor prepared foods and drinks.

According to Dr. Richard J. Jackson, professor and chairman of environmental health sciences at the University of California, Los Angeles, unless changes are made soon in the way many of our neighborhoods are constructed, people in the current generation (born since 1980) will be the first in America to live shorter lives than their parents do.

Although a decade ago urban planning was all but missing from public health concerns, a sea change has occurred. At a meeting of the American Public Health Association in October, Dr. Jackson said, there were about 300 presentations on how the built environment inhibits or fosters the ability to be physically active and get healthy food.

In a healthy environment, he said, “people who are young, elderly, sick or poor can meet their life needs without getting in a car,” which means creating places where it is safe and enjoyable to walk, bike, take in nature and socialize.

“People who walk more weigh less and live longer,” Dr. Jackson said. “People who are fit live longer. People who have friends and remain socially active live longer. We don’t need to prove all of this,” despite the plethora of research reports demonstrating the ill effects of current community structures.

The Price of Progress

“We’ve become the victims of our own success,” Dr. Jackson said of the public health mission that cleared cities of congested slums. “By living far from where we work, we reduced crowding and improved the quality of our air and water, which drove down rates of infectious disease.” But as people have moved farther and farther from where they work, shop and socialize, the rates of chronic diseases have soared.

Public transportation has not kept pace with the expansion of suburbs and exurbs. Nor are there enough sidewalks, nearby parks and safe places to walk, cycle or play outdoors in many, if not most, towns. Parents spend hours in cars getting to and from work; children are bused or driven to and from school; and those who can’t drive must depend on others to take them everywhere or risk becoming socially isolated.

In 1974, 66 percent of all children walked or biked to school By 2000, that number had dropped to 13 percent.

“Children who grow up in suburbia can’t meet their life needs without getting a ride somewhere,” Dr. Jackson said. “The average teen in suburbia says it’s boring.”

His new book, “Designing Healthy Communities,” a companion piece to a coming public television series, says: “When there is nearly nothing within walking distance to interest a young person and it is near-lethal to bicycle, he or she must relinquish autonomy — a capacity every creature must develop just as much as strength and endurance.” The book was written with Stacy Sinclair, director of education at the Media Policy Center in Santa Monica, Calif.

“We’ve engineered physical activity out of children’s lives,” Dr. Jackson said in an interview. “Only a quarter of the children in California can pass a basic fitness test, and two in seven volunteers for the military can’t get in because they’re not in good enough physical condition.”

The health consequences, he said, are terrifying. Not only are Americans of all ages fatter than ever, but also growing numbers of children are developing diseases once seen only in adults: Type 2 diabetes, heart disease and fatty livers.

Can Our Suburbs Be Saved?

The four-part series that Dr. Jackson developed with the documentary producers Dale Bell and Harry Wiland, to be broadcast in the spring, highlights changes being made in forward-thinking communities — changes that foster better physical and mental health by redesigning the built environment.

“Health happens in neighborhoods, not doctors’ offices,” Dr. Jackson states in one of the programs.

Metropolitan Atlanta, which is 8,000 square miles and growing and where workers drive an average of 66 miles a day, has suffered the ill effects of high ozone levels, few sidewalks and bike lanes, and crosswalks as much as a mile apart. In what may be the crown jewel in environmental restructuring for better health, the city plans to create an urban paradise from an abandoned railroad corridor over the next two decades, with light rail and 22 miles of walking and biking trails.

In Lakewood, Colo., an abandoned shopping mall (a blight now rampant in suburbia) was converted into housing, businesses and play areas.

Syracuse is converting an old saltworks district into a mixed-income, energy-smart housing and business area, giving residents easy access to work and recreation. The local supermarket, Nojaim’s, offers health and nutrition classes and weekly health checks, and a mobile farmers’ market serves an area that lacks grocery stores.

Another jewel in environmental restructuring is Elgin, Ill., where an island park was created in the middle of the rejuvenated Fox River and a former Superfund site known as auto dealers’ row is now Festival Park, giving families a place to gather for water play, picnics and musical performances. A Bikeway Master Plan will eventually connect all the neighborhoods, and easy access to the river has spurred investment.

“For every dollar the city has spent, we have leveraged that into two or three dollars of private investment through new kinds of buildings, row houses and businesses that have opened because the river has a magnetic quality,” said a former mayor of Elgin, Ed Schock. He might have added another economic benefit: the prospect of lower health care costs.

Further information on healthier communities can be found at designinghealthycommunities.org.

[ Reply:
February 1st, 2012 at 8:45 am

@SEAN, WELL, SEAN ITS FINALLY GETTING GOING AT NANUET MALL. BANCHETTO FEAST AND THE BARBER SHOP ARE MOVING OVER TO WHERE DIAMOND JIMS IS. I LOOKED ON LINE AT SOME OF THE PRICES AT JCPENNEY WEB SOME ARE NOT BAD SOME YOU HAVE TO KNOW YOUR PRICES. I SEE THEY DISCONTINUED JOCKEY AND GOLD TOE BECAUSE THEY ARE NATIONAL BRANDS THAT MACYS BELK LORD AND TAYLOR ETC SELL AS WELL. THEY CANNOT BE PERMANANTLY REDUCED.I SAW JCP ROOSEVELT FIELD ON LINE NOT BAD AS LONG IT DOES NOT LOOK LIKE TARGET.

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Good news from Nashville… Simon Property Group Announces Grand ReOpening of Opry Mills
The largest outlet and value retail shopping destination in Tennessee now open for business with more to come NASHVILLE, Tenn., March 29, 2012 /PRNewswire/ —

Simon Property Group, Inc. (NYSE: SPG), the world’s leading retail real estate company, today announced the Grand Re-Opening of Opry Mills, the largest outlet and value retail, shopping, dining and entertainment destination in Tennessee.

“We are thrilled to reopen Opry Mills, creating thousands of new jobs, generating tax revenues and attracting even more visitors to the Nashville area,” said Gregg Goodman, president of The Mills, a Simon company. “With a great selection of outlet and value retail stores, paired with family dining and entertainment options, Opry Mills will once again be the favorite shopping destination for locals and visitors alike.”

Opry Mills is 58彩票平台 to some of America’s most popular retailers, many of which are reopening their Opry Mills locations including Michael Kors, Polo Ralph Lauren Factory Store, Vera Bradley, Coach Factory Store, Crazy 8, Jones New York Outlet, P.S. from Aeropostale, Aeropostale, The Children’s Place Outlet, The Finish Line, Fossil, Gap Outlet, Gymboree Outlet, Haggar, HANESbrands, J. Crew Factory, Journeys, Levi’s Outlet, Nautica Factory Store, Old Navy Outlet, Papaya, RCC Western Wear, rue21, Skechers USA Outlet and Wilson’s Leather Outlet.

Opry Mills’ unique brand of shopping includes a variety of family dining and entertainment options. Aquarium Restaurant, Claim Jumper, Rainforest Cafe, Romano’s Macaroni Grill and Dave & Buster’s, plus a food court provide lunch and dinner options. Shoppers can also watch feature movies in a state-of-the-art environment and enjoy the IMAX experience at Regal Cinemas Opry Mills Stadium 20 & IMAX.

Opry Mills’ Grand Re-Opening events will continue during April through May 5. The grand finale event will be a free outdoor concert with Country Superstar Josh Turner.

The Grand Re-Opening of Opry Mills comes nearly two years after the historic flood in May 2010 ravaged Nashville and Opry Mills, one of Tennessee’s top tourist attractions.

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Hello I love your site, I grew up at Summit Place mall in Waterford MI as well as Oakland Mall in Troy MI. One I don’t see on you site is a mall called Marshall Mall in Marshall TX. Cool old mall bearly hanging on, it was in the movie Skateland 2008.

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Golden Triangle Mall in Denton, TX might be a place to look at

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Lifestyle Centers Launch a Comeback
May 17, 2012 11:58 AM, By Elaine Misonzhnik, Senior Associate Editor

One of the most maligned retail formats of the past decade might be coming back in vogue, as investors begin considering acquisitions of lifestyle centers.

Lifestyle centers, a concept whose development exploded in the early and mid-2000s, bore much of the brunt of the recession, as many were built in developing areas, featured no anchors and relied on elaborate co-tenancy agreements that brought vacancies sky high when retail chains started closing down in 2008 and 2009.

Just as other property types have been picking up steam, though, the better positioned lifestyle centers are catching investors’ fancy, with Poag & McEwen, one of the pioneers of the concept, buying its first lifestyle center since the recession on May 10.

The Memphis, Tenn.-based firm, in partnership with New York-based DRA Advisors LLC, just paid $55 million for The Avenue at Collierville, a 720,000-sq.-ft. lifestyle center in Collierville, Tenn. Cousins Properties developed The Avenue in Collierville in 2002-2003. At its peak, the center’s sales averaged somewhere around $325 per sq. ft., according to Steve Yenser, executive vice president with Jones Lang LaSalle Retail, who worked for Cousins while The Avenue was being built.

Poag & McEwen has changed the name of the center to Carriage Crossing and plans to potentially expand the property by up to 60,000 sq. ft. DRA Advisors is currently shopping for a loan to put on the asset. The partners were attracted to the center because it’s located in a high-income, high-growth area, and because the project remained stable throughout the downturn, according to Josh Poag, Poag & McEwen’s president and CEO.

“One a macro level, the retailers are doing better, and so we feel sales are increasing at a lot of projects that maybe struggled through the downturn,” he says. “On a micro level, this is an area of Memphis that is growing, and there is a major development happening two or three miles east of us, in Piperton Hills, that should bring 20,000 jobs to Memphis in the next 10 years.”

More on the way

In the coming months, Poag & McEwen executives plan to explore further lifestyle center acquisitions, as the investment sales market has finally bridged the bid/ask gap, Poag notes. And the firm is not alone. Last year, regional mall REIT Macerich Co. bought Atlas Park in Queens, N.Y. out of foreclosure. Phoenix-based Vestar is currently looking at purchasing lifestyle centers, among other retail properties. Los Angeles-based Champion Real Estate Co. is also scouting the market for lifestyle centers, since many of these assets are located on good sites and feature superior architectural design, according to Bob Champion, president of Champion Real Estate.

“We believe that these centers will change their focus,” says Champion. “They will continue to attract a higher income discretionary spending customer for some portion of their square footage, but will fill vacancies with neighborhood daily needs, service and quasi-office tenants, which were often ignored in these projects. Many of these projects had second-phase development land, which cities may consider for residential development, as they begin to understand the lack of fundamentals required to develop more retail.”

In fact, one of the main attractions of Carriage Crossing has to do with the fact that its substantial size, tenant mix and two traditional anchors (Macy’s and Dillard’s) make it more like an open-air regional mall alternative than a lifestyle center in its purest form, according to Yenser. Many of the lifestyle centers that suffered the worst through the recession were only a few hundred thousand square feet in size and featured no anchor tenants to drive shopper traffic.

So while investors are expressing more interest in the format, “the trend mirrors the recovery in general,” says Yenser.

“What it comes down to is the quality of fundamental real estate. The better quality class-A and class-A-plus centers have really charged back, there is a lot of demand for them. And a lifestyle center could be in that category if it’s fundamentally good real estate. But I don’t know if [the interest] has as much to do with whether it’s a lifestyle center or a mall.”

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As many malls have Starbucks stores, the following article maybe of interest to some readers.

Starbucks to buy La Boulange bakery for $100M
The company will also hire La Boulange founder and French baker Pascal Rigo in an attempt to expand its food platform
June 4, 2012 | By Lisa Jennings

Starbucks will also hire La Boulange founder, baker Pascal Rigo Starbucks on Monday announced an agreement to acquire the San Francisco-based Bay Bread LLC and its La Boulange bakery brand for $100 million in cash.

With the acquisition, the Seattle-based coffeehouse chain plans to beef up its food offerings in Starbucks stores with La Boulange-branded French pastries, croissants, breads and muffins, which company officials hope will drive traffic and build the chain’s food attachment rate.

Long term, however, Starbucks officials also plan to build La Boulange into a national brand with its own retail outlets across the country, as well as moving into grocery and other channels with branded consumer packaged goods, or CPG, products.

Howard Schultz, Starbucks’ chair, president and chief executive, said the company plans to bring the artistry of the French bakery to the marketplace in the same way it brought the “romance” of the Italian espresso bar to virtually every corner of America.

“This is an investment in our core business. After more than 40 years, we will be able to say that we are bakers too,” said Schultz.

Under the agreement, Starbucks will hire La Boulange founder Pascal Rigo, who will serve as senior vice president and general manager of the La Boulange brand for Starbucks. La Boulange currently operates 19 locations around the San Francisco Bay area. The bakery chain was founded in 1999 by Rigo, who began baking at age 7 in Paillet, France.

The San Francisco bakery chain is known for its use of high-quality ingredients, including European-style butter, specialty grain and locally sourced produce, Rigo said in a statement. “We weigh, mix, divide, roll, cut, bake and care about every croissant, cookie, pastry, loaf and bread that goes into our pastry case, and we are looking forward to sharing our passion with Starbucks’ loyal and discerning customers,” he said.

Starbucks also plans to continue offering Bay Breads wholesale products to restaurants, hotels and specialty grocery stores and may expand that aspect of the business over time, the company said.

The French bakery is being sold by Next World Group, a team of management and investors that has worked with Rigo to build the brand over the past six years.

Sébastien Lépinard, Next World Group’s founder and majority investor, said Starbucks shares the bakery chain’s values and vision for bringing premium products to customers in a socially responsible way. “We trust that Starbucks is the best partner to take La Boulange to the next level while staying true to the brand and bringing the romance of an authentic French bakery to life,” he said.

Food now accounts for about $1.5 billion in revenues at Starbucks —about 20 percent of overall sales — Schultz said. “La Boulange gives us a significant catalyst to growth that even further.”

Only about one-third of Starbucks transactions have food attachments, he noted. And, though the coffeehouse chain has made efforts to build its food sales in recent years with Bento box lunches, mini desserts such as cake pops and more healthful breakfast sandwiches, the opportunity remains to invest in that core aspect of the business.

“Starbucks is the healthiest it has been in decades,” he said. “Now is the time to enhance the experience and create differentiation in the marketplace between us and everyone else.”

However, food sales grew by 14 percent in each of the first two quarters of fiscal 2012, Schultz said.

Starbucks locations in the San Francisco area will be the first to see La Boulange products in stores by 2013, Schultz said. The products will be added to Starbucks locations across the country and made using existing production facilities and outside facilities.

While plans for eventual CPG products are “baked in,” Schultz said that won’t happen until La Boulange has been built into a national brand. Starbucks also will open “flagship” stores of La Boulange around the country, which would further bolster the strength of the brand and offer “icing on the cake,” said Schultz.

“The unit economics are attractive and we could add something to it. It’s also an opportunity to showcase Starbucks coffee,” he said.

La Boulange marks the second large acquisition aimed at helping to build Starbucks’ retail business. Last year, the company bought the Evolution Fresh juice brand for $30 million, bringing the bottled juice products into coffeehouse locations as well as launching a new juice bar concept the company plans to grow.

Contact Lisa Jennings at lisa.jennings@penton.com.

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June 8th, 2012 at 8:48 am

@SEAN, Continuing the Starbucks theme, Seattle’s Best inks kiosk deal with Coinstar
The coffee chain will debut automated coffee kiosks in grocery and retail stores around the country
June 6, 2012 | By Lisa Jennings

Seattle’s Best and Coinstar expect to open about 500 of the automated coffee machines by the end of 2012. Seattle’s Best Coffee has signed an exclusive agreement with Coinstar Inc. to roll out new automated coffee kiosk machines in thousands of grocery and other retail stores across the country, bringing premium coffee to places it was never served before.

Under the five-year agreement, the companies will begin rolling out the unmanned machines — dubbed Rubi — this summer, with plans to install them at about 500 locations by the end of the year.

The Rubi kiosks grind whole coffee beans and brew each cup to order. Specialty drinks are also available, such as mochas or vanilla lattes, with prices starting at $1.

“This relationship is a logical next step in our strategy to bring great coffee to new and unexpected locations where it’s traditionally been hard to find great coffee,” said Jim McDermet, Seattle’s Best Coffee’s senior vice president and general manager, in a statement. “Our Seattle’s Best Coffee fans will be delighted to find their favorite coffee now available around-the-clock at places they visit regularly each day.”

Seattle’s Best Coffee, a Seattle-based secondary brand owned by Starbucks Corp., has been aggressively growing its distribution presence in recent months with an expanded packaged line in grocery stores.

The brand is served by a growing number of national restaurant chains, including Taco Bell, Burger King and Subway, and Seattle’s Best has also been moving into convenience stores at Chevron ExtraMile locations.

Last year, Seattle’s Best lost almost 475 retail outlets in Borders Bookstores when that retail chain was liquidated. The coffeehouse brand continues to grow through franchising in nontraditional locations, and earlier this year said it was testing a new drive-thru unit.

Coinstar operates the Redbox self-service DVD rental machines, as well as the namesake automated coin-counting kiosks. The company has about 36,800 Redbox outlets and 20,200 Coinstar machines in supermarkets, drug stores, mass retailers, convenience stores and restaurants.

Paul Davis, Coinstar’s chief executive, said the Rubi machines will “reimagine” the coffee experience for customers, delivering “the kind of quality, convenience and value that we know coffee drinkers on the go will appreciate.”

Rubi machines will initially be installed in grocery and drug stores, and other high-traffic locations in the Northeast and West Coast.

Seattle’s Best Coffee has about 100 units in the U.S. and Canada.

Contact Lisa Jennings at lisa.jennings@penton.com.

Follow her on Twitter: @livetodineout

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Big -Box Space Remains Hard to Fill

By KRIS HUDSON The Wall Street Journal.

Close to a year after Borders Group Inc. collapsed, suburban shopping centers still are struggling to fill the vacated big-box space—and to cope with changes in the way Americans shop.

Many shopping centers that lost Borders after the chain announced its liquidation are suffering high vacancies, falling rents and even debt defaults. Values have been falling in particular for the suburban shopping centers that rely heavily on big-box stores and have been bearing the brunt of the impact from online retail competition.

Take the case of the Regency Park Shopping Center, outside of Kansas City, Kan. The former Borders store there stayed shuttered for months, and when its landlord—Dallas-based real-estate investor Henry S. Miller Cos.—finally filled it with a Natural Grocers, the rent was “significantly lower,” said Greg Miller, a senior vice president.

By then Regency Park had defaulted on its $25 million mortgage. The center has a vacancy of 30%, and its value had declined to $9.3 million in December, from $32.8 million in 2006, according to loan data provided by Trepp LLC, a debt-analysis firm.

“It’s been a two-steps-forward, one-step-back deal,” Mr. Miller said.

A new survey of 205 closed Borders stores shows that one-third are still vacant, according to brokerage Colliers International. Those stores that filled the former Borders space are leasing at rates roughly 30% lower on average than what Borders paid, Colliers said.

“Some landlords have been reluctant to, in effect, take the lower rents that retailers are offering [to pay],” said Mark Keschl, Colliers’s national director of retail brokerage. “Now that they’re going on sitting vacant for roughly a year, we think landlords will be a little more practical.”

Some popular malls and downtown shopping areas have been able to replace Borders without cutting rents thanks to their locations and appeal to residents and tourists.

But many big-box centers that depended on stalwarts like Borders, Best Buy Co. and Office Max have suffered higher vacancy, weaker cash flows and other problems as these retailers have closed or shrunken stores.

After the Oaks Square Shopping Center, in Gainesville, Fla., lost its Borders, other tenants demanded rent decreases to make up for the fact that their big-name neighbor had gone dark, according to Trepp. The landlord, Retail Property Group, replaced Borders early this year with shoe seller DSW Inc., but the servicer overseeing the center’s $14.6 million mortgage started foreclosure proceedings last February. Retail Property, which has sued the servicer in an effort to pay off its loan at a reduced amount, declined to comment.

Among those still looking to fill a Borders vacancy is the Watters Creek shopping center in the Dallas suburb of Allen, Texas. “We have a [tenant] looking at taking the entire thing, but we haven’t made a deal yet,” said Terry Montesi, chief executive of Watters Creek’s owner, Trademark Property Co.

Some industry watchers believe that big-box centers are facing problems that go beyond a weak economy. Rather, they suggest that these shopping centers are going to suffer long-term declines because Internet shopping offers more choice and greater ease.

“When [the big-box format] originated, it was about wide selection in a certain category,” said Suzanne Mulvee, retail strategist at CoStar Group, a real-estate-research company. “They had the biggest selection, and that’s why you’d go there. Now the biggest selection is online. So I am concerned about this sector long-term.”

Many shopping centers that lost Borders after the chain announced its liquidation are suffering high vacancies, falling rents and even debt defaults. Overall, national vacancy statistics on big-box centers don’t appear too grim, and new construction is scant. With some retailers expanding, like DSW and Ross Stores Inc., the vacancy rate has declined to 6.6% after hitting a multiyear high of 7.9% in 2009, according to CoStar. Even so, rents are near the lowest level they have hit since 2006, and the vacancy rate is rising again and will likely hit 6.8% by the end of the year because of more closings, CoStar reports.

Some large landlords are better positioned to keep their big-box centers filled because they have more clout with retailers and better properties. DDR Corp., which counts many big-box centers among its 469 properties, posted average occupancy of 93.7% in the first quarter, up from 92.6% a year earlier.

“We’ve replaced Linens and Circuit with Bed Bath & Beyond, Marshalls, Ross, Wal-Mart, said Paul Freddo, DDR’s senior executive vice president of leasing and development, referring to the closed Linens ‘n Things Inc. and Circuit City Stores Inc. “We sit here three years later a much better company because of it.”

But California developer Peter Pau also is giving up on the big-box concept in the Bay Area suburb of Newark, where this year he bulldozed most of his Mowry Crossings shopping center. The 200,000-square-foot center had only one viable tenant—a BJ’s Restaurant—after losing its Mervyns, Circuit City, Petsmart and Babies “R” Us. Mr. Pau still owns the project because he had paid its mortgage, but he now intends to rebuild it as a retail format other than big-box.

“It is no longer a power-center,” Mr. Pau said. “We aren’t banking on big-box tenants.”

Write to Kris Hudson at kris.hudson@wsj.com

Thaughts…

I understand the point of this WSJ piece, but wasn’t this just a little over the top? After all the big box retailers wanted ever larger stores & now that things are changing, they cant dump them fast enough. Also with population shifts to dencer & less car dependent communities, these box stores will have a tougher go at it compared to just a few years ago.

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As far as Border’s, many of them are being redeveloped here in San Antonio. For instance the Border’s at Huebner Oaks is going to become an REI and the one at the Quarry Market is turning into a Nordstrom Rack. I did major in merchandising management in college and worked for May 58彩票平台, Federated and Macy’s Inc for several years. I see many opportunities wasted in different markets.

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Reply:
June 14th, 2012 at 7:19 pm

@Michael, Tell me more. What was done right & what was done wrong. This could be quite instructive as many large cities & there suburbs are more reflective of your 58彩票平台town of San Antonio than New York, Boston or Chicago. Places like Phoenix, Las Vegas, Atlanta & Orlando come to mind, but the auto dependent suburbs can also be found in transit rich areas such as Paramus NJ or King of Prussia PA near NYC & Philadelphia respectively.

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June 15th, 2012 at 9:42 am

@Michael, Year Into Borders Liquidation, Space Absorption Progresses as Expected
Jun 14, 2012 1:44 PM, By Elaine Misonzhnik, Senior Associate Editor

A recent story in The Wall Street Journal bemoans the fact that big box vacancies remain hard to fill and that shopping center owners are defaulting on their mortgages because of it. But a brief survey of retail real estate insiders reveals that the story paints a misleading picture.

For example, it is true that today, approximately one-third of former Borders spaces remain vacant, according to research completed by brokerage firm Colliers International. But given that the real estate sector only recently came out of one of the worst downturns on record and that less than a year has passed since Borders filed for liquidation in July 2011, the fact that two-thirds of its stores have already been re-leased speaks to a healthy amount of demand in the big-box sector, according to Andy Graiser, co-president of AG Realty Partners, a Melville, N.Y.-based retail real estate investment firm.

In fact, because there has been virtually no new construction in the power center space in the past few years, expanding retail chains such as discounters TJ Maxx and DSW and upscale grocers such as Whole Foods, have no choice but to strike deals for second-generation big boxes, notes Mark Keschl, national director of retail services with Colliers.

Today, vacancies in the junior anchor space average 4.2 percent, according to Bill Rose, director of the national retail group with Marcus & Millichap Real Estate Investment 58彩票网. That’s only 80 basis points above the 3.4 percent national vacancy rate in 2007 and far below the peak vacancy of 5.5 percent in 2009. And while average rents are down from their high water mark of $11.62 per sq. ft., achieved in early 2009, at $8.77 per sq. ft. they are above 2007’s levels, when junior anchor rents averaged $8.36 per sq. ft., Rose says.

“If you just look at the metrics, vacancy is improving across the country in big-box lease-up,” he notes. But if one looks at mid-market centers alone, “that could easily paint the picture of it being a very difficult environment.”

The properties that are lingering on the market likely belong to one of two categories, according to Keschl—either the landlords own very high-quality real estate and are waiting to secure the same kinds of rents that Borders was paying, or they happen to be in secondary or tertiary markets with generally high levels of vacancies, so there is not enough demand to take care of all the supply.

It is unlikely, however, that a Borders’ exit would, on its own, push a shopping center into default, Keschl says. That might happen with a freestanding store, but at a multi-tenant property, the retailer was just not large enough to cause that kind of damage.

“Typically, at 25,000 sq. ft. or so, if that’s the only problem a shopping center had, it’s not enough to throw the center into default,” he says.

The bell curve

That’s not to say that big-box vacancies haven’t caused any problems for retail property owners, just that the centers most likely to experience delinquency or default issues tied to those vacancies are likely to carry some other burdens as well.

For example, if a property already had one anchor vacancy when Borders announced its liquidation the additional cash flow loss might have been the final straw needed to put it into default, according to Frank A. Innaurato, managing director of CMBS analytical services with Morningstar Credit Ratings LLC, Morningstar Inc.’s structured credit research and ratings subsidiary. There may also have been some centers where the exit of a big-box anchor triggered co-tenancy provisions lowering inline tenants’ rents.

“Where leasing of inline space was directly tied to the performance of the [big-box retailer], obviously a large problem can become a bigger problem,” Innaurato says. “If you have a recovering market, the [big-box] vacancy can be somewhat short-term. On the other hand, in some of these tertiary markets, or non-major markets per se, finding someone to take big-box space is easier said than done.”

Currently, 6.24 percent of all U.S. properties that featured Borders as a tenant and were financed with CMBS loans are in some stage of delinquency, representing 24 loans valued at $309 million, according to Manus Clancy, senior managing director with Trepp LLC, a New York City-based credit research firm. That’s lower than the national retail CMBS delinquency rate of 8.07 percent.

What’s more, 10 of the delinquent loans tied to Borders are secured by freestanding properties, as opposed to multi-tenant centers. The average size of the delinquent loans is approximately $13 million, compared to the $45 million average for all properties that housed the retailer.

When Trepp, Morningstar and its peers were evaluating the potential impact from the Borders’ liquidation last year, that’s largely what they expected to happen, and the fact that some of the spaces have remained vacant doesn’t surprise anyone.

“It’s been a difficult three or four years, punctuated by a host of retailer closings. When you look at Circuit City, Linens ‘n Things, Steve & Barry, Borders and then add Sears and Macy’s closings, it’s an awful lot of space that’s been opened,” says Clancy. “Some guys have successfully refilled these spaces, but it’s not easy.”

Thaughts…

If you noticed, there’s an obvious contrast between this Retail Traffic article & the one I posted a few days ago from the WSJ. The truth lies someplace between them & I wanted to make sure I gave a ballenced perspective.

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From Retail Traffic

Industry Doubts Best Buy Will Find a Buyer
Jun 28, 2012 11:41 AM, By Elaine Misonzhnik, Senior Associate Editor

Word on the street is Best Buy’s founder Richard Schulze would like to find a buyer willing to help turn around the struggling chain. But retail industry insiders question whether anyone would want to invest billions of dollars in the electronics retailer in its current state.

Schulze left his position as Best Buy’s chairman earlier this month and has reportedly hired the Credit Suisse Group to help him explore buyout options for the retailer. Schulze still owns a stake in the company valued at approximately $1.4 billion, but in order to present a viable buyout plan he would have to find a partner willing to put in anywhere from $6 billion to $9 billion of additional equity into the deal.

Given Best Buy’s lack of a clear turnaround strategy and its oversize store fleet, however, private equity players are likely to forgo such a transaction, according to Bob Phibbs, The Retail Doctor, a retail consultant based in Coxsackie, N.Y.

“It’s damaged goods,” Phibbs says of Best Buy. “The forces against them are huge. This is not a building brand and I don’t think it’s for lack of trying. It’s going to be a lot of money and how is [Schulze] going to find a guy willing to come in and do something different than what he’s been doing?”

Value proposition?

Private equity players have been investing in retail chains of late, including recent acquisitions of BJ’s Wholesale Club, kitchenware seller Sur La Table and apparel retailer Talbots. But they generally need to see some form of value proposition in the company, either through expansion potential or an attractive property portfolio.

At the moment, Best Buy offers neither. While it’s possible to envision a scenario where the chain reinvents itself as an experiential retailer in the vein of Apple, it’s still struggling to come up with the right strategy to turn itself around, says Doug Stephens, president of Retail Prophet, a retail consulting firm. In the first quarter, ended May 5, same-store sales declined 3.7 percent domestically and 10.5 percent internationally. Revenue per sq. ft. at U.S. stores stayed flat with revenue reported during the same period last year, at $854.

In April, the most recent month for which data is available, mall-based electronics retailers as a group averaged $1,937 per sq. ft. in sales, an increase of 27.6 percent over April 2011, according to ICSC.

“I think there is room in the world for Best Buy, but they have to chart a different strategy and make it a reality before venture companies say that this is a viable investment,” Stephens says. “It’s a lot of money and I think there’s more pain [ahead] for them before anyone starts looking at them as a potential buyout target.”

No flipping

Best Buy’s real estate portfolio doesn’t carry much appeal either. The company currently operates 1,105 big-box stores in the U.S., totaling 42.4 million sq. ft. It’s been trying to shed unprofitable locations, including plans to close 50 stores in calendar year 2012, but its big-box fleet remains bloated, according to Jeff Green, president of Jeff Green Partners, a Phoenix-based retail real estate consulting firm.

“It will be difficult for a buyer to reposition Best Buy because they have too much bricks-and-mortar square footage [and] much of this space is tied to long-term leases,” he says. “Best Buy is attempting to downsize most of these stores, but it has proven to be a long and difficult task for them.”

Meanwhile, there is hardly a shortage of big-box space on the market, making the possibility of Best Buy capitalizing on its closed stores less than likely.

“At the end of the day, U.S. retail is overbuilt by 20 or 30 percent,” says Phibbs. “It’s never going to go back to the go-go 80s. I don’t think real estate has proven to be a great strategy to buy a [retail] brand

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The Rise, Fall, and Rise of Sbarro
Sbarro will use new pizza recipe and fast-casual rebranding to fight back from bankruptcy.

One hundred days. That’s how long Jim Greco gave himself to right the sinking ship that was Sbarro when he took over as president and CEO in February.

The company filed for Chapter 11 bankruptcy in April 2011 and emerged from it in November, having shed $200 million in debt and 25 underperforming sites. But jiggering liabilities on a balance sheet had not addressed the limitations—which ranged from a subpar pizza recipe to an overreliance on mall traffic—that had caused Sbarro to drown.

“I recognize that Sbarro had, over the last several years, lost its lead in the space it operates,” Greco says. “Sbarro is an iconic brand with name recognition. And that is something that’s really hard to create and is very valuable. So I thought that it was a great place to start to build something back.”

On February 1, Greco stepped into Sbarro headquarters to recast the brand as a fast-casual contender. He concocted a formula called the 100 Day Plan, detailing how the Italian quick serve would leverage people, place, product, and positioning to enact its resurrection.

The changes debuted in June, when Sbarro rolled out 10 test units showcasing an updated pizza recipe, open-flame ovens, and a made-to-order pasta station, all rolled into the brand’s new motto, “Hands On Italian.” Team members now undergo cultural hospitality training, and an outside firm holds the blueprints for a next-generation design to be unveiled in November.

Five months into his reign as CEO, Greco says everything is going according to plan.

“We wanted to settle on a vision, we wanted to design a strategy to realize that vision, and we wanted to create the 100 Day Plan that called for a number of initiatives to be accomplished,” Greco says. “And everything that we sought to accomplish in the 100 Day Plan has, in fact, been accomplished.”

Sbarro’s Downfall

In 1967, seven years before the first successful mall food court was built, Sbarro engineered a mall location in Kings Plaza Shopping Center in Brooklyn, New York. The idea was simple: cook fresh, Italian food in an open kitchen and serve it quickly. Consumers ate it up, and the modern Sbarro concept was born. The brand became a staple as food courts boomed throughout the ’80s and ’90s.

But the quick serve that once offered “tastes to fit every palate” fell into troubled waters in the ’00s as rivals rose to challenge Sbarro’s offerings. Pizza Hut began peddling calzones in 2003 and pasta in 2008, and Domino’s stepped up to bat with a flashy new pizza recipe in 2011.

Consumers, meanwhile, were slowly slinking away from Sbarro in favor of a rising restaurant sector: fast casual.

“Fast casual was getting a really good grip on the consumer,” says Anthony Missano, president of business development for Sbarro. “It had done a great job of educating the consumer about quality and what to expect for a reasonable price, so the value equation was very strong, and I think at Sbarro we just were not consistent with that trend.”

Part of the trouble was the brand relied heavily on locations in malls, and as the recession hit around 2008, consumer confidence dropped and once-vibrant malls became ghost towns.

Greco concocted a formula called the 100 Day Plan, detailing how the Italian quick serve would leverage people, place, product, and positioning to enact its resurrection.“If you look at what real estate costs were and construction costs in that 2005–2008 time period, they were extremely inflated,” says Dave Bagley. Bagley is a principal at MorrisAnderson, an operational and financial turnaround firm that has led bankruptcy recoveries for Sonic and Popeyes, among others.

“These malls that Sbarro was placed in were in geographic areas where there was a lot of continued growth during that period of time,” he says. “They were based on continued growth, and as we know now, some of those things didn’t come to fruition.”

Coupled with real estate costs were rising commodity costs. While corn and protein prices skyrocketed, inflation drove up price tags on cheese and flour. Gas prices grew faster than sales of the Apple iPad, and suddenly every input entering the store was costing exponentially more.

Coming in, Greco says, he noticed Sbarro was purchasing costly ingredients but charging low prices.

“I saw a company that was using costly ingredients to produce food that’s much better for you than typical fast food,” he says. “And, as a result, to cover the cost of materials we need to charge prices that are above fast food. But we weren’t delivering the whole fast-casual experience that we could.”

The Turning Point

In 2007, private equity firm MidOcean Partners bought Sbarro for $417 million. In 2010, it installed a new management team and appointed one of its managing partners, Nicholas McGrane, as CEO.

The changes were not enough. By 2011, Sbarro had accumulated more than $350 million in debt.

Was the food just louzy & nothing else?

[Reply]

Rich Reply:
July 3rd, 2012 at 8:44 pm

@SEAN, The food’s always been lousy and the idea that they were paying too much for ingredients that’s “better for you” is just ludicrous. the guys just sounds like a typical vulture capitalist.

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Reply:
July 4th, 2012 at 11:54 am

@Rich, Yeah I know, but do you realize just how many chains are in the hands of these so called vultures? Now you can add one more.

Centerbridge Partners to complete $1B purchase of P.F. Chang’s
July 2, 2012 | By Ron Ruggless
.Centerbridge Partners L.P., the New York-based private equity firm, said it planned to complete its $1.1 billion going-private purchase of P.F. Chang’s China58彩票网 Bistro Inc. on Monday.

Centerbridge and its subsidiary, Wok Parent LLC, and Wok Acquisition Corp. had successfully completed a $51.50-per-share offer for outstanding shares of Scottsdale, Ariz.-based P.F. Chang’s. About 17.8 million, or about 83.7 percent, of outstanding shares were tendered, Centerbridge said.

A spokesman for Centerbridge said that P.F. Chang’s intent, revealed in February, to speed up the purchase of a majority position in the five-unit True Food Kitchen, created by Fox Restaurant Concepts of Scottsdale, had reverted back to the terms of the original 2009 $10 million credit facility. P.F. Chang’s retains the option to convert that to a majority equity interest after True Food opens its sixth restaurant, the spokesman said.

“Centerbridge intends to promptly move forward with a ‘short-form’ merger under Delaware law after exercising its top-up option under the merger agreement, and P.F. Chang’s will become an indirect, wholly-owned subsidiary of Wok Parent,” Centerbridge said in a statement. P.F. Chang’s shares would cease trading on the Nasdaq exchange.

Centerbridge already owns the Rock Bottom Restaurants and Gordon Biersch Brewery Restaurant Group, which it bought in November 2010.

P.F. Chang’s owns and operates 204 casual-dining P.F. Chang’s Bistros and the 170-unit Pei Wei Asian Diner and Asian Market.

Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless

Will this do anything to maintain or improve the quality of the food?

[Reply]

Rich Reply:
July 5th, 2012 at 4:10 pm

@SEAN, probably not. Gordon Biersch and Rock Bottom have fairly mediocre reps. PF Chang’s actually is pretty good for what it is–much better than average Chinese for people who’ve never had the real thing.

In general, the vultures have helped do-in or cripplecountless retail and related operations going back to the 80s. the usual strategy is to consolidate and eliminate middle management, gut the in-store personnel and maybe improve the logistics stream. Stores get closed–usually the most expensive real estate not necessarily the weakest. It usually means that the merchandiser are further from/less in synch with customers, investment in stores lags, and in-store service deteriorates. But the buyers get a big fee when they sell and the firm gets stuck with a lot of debt that the weakened “new business model” can’t generate enough volume to retire.

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Reply:
July 5th, 2012 at 7:25 pm

@Rich,Have you ever sene the film Barbarians at the Gate? It’s about 1980s leverage buyouts the precurcer of todays hedgefunds in the way they suck a business dry. You also see this in the classic film Wall Street, but that’s small potatos compared to what’s going on right now.

Just look at the venerable retail names that have gone away in just the past20-years & those that are in serious jeopardy right now. Ward’s, Circuit City, Sears, Penney’s, Linnons & Things. I could go on, but you get the point. How many of these businesses are way over leveraged as a result of being trapped by “the vampire squid” AKA Goldman Sachs & firms like them.

Now restaurants are next on there plate as it were.

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Reply:
July 5th, 2012 at 7:50 pm

@Rich, Check this out.

.

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RT

Abercrombie Faces Roadblocks to Store Growth
Jul 12, 2012 11:23 AM, By Elaine Misonzhnik, Senior Associate Editor

As opportunities for store growth in the U.S. have dwindled, many retailers have set their sights overseas. But the latest headlines featuring teen apparel retailer Abercrombie & Fitch prove that in today’s precarious environment, even that strategy is no guarantee of success.

Hit hard during the recession, Abercrombie & Fitch made plans to close 15 percent of its U.S. stores and decided to concentrate on Europe as its next expansion stage. When the retailer opened its first European store in 2007, the flagship on Savile Row in London, it targeted sales of $2,500 per sq. ft., more than six times the sales generated in its U.S. stores.

Since then, the company added more than 75 stores in Europe in countries ranging from Germany to Italy to Sweden. In April, it opened its 16th store in Germany, a 23,680-sq.-ft. flagship in Hamburg. It also had plans to open new locations in Munich, Dublin and Amsterdam in fiscal 2012.

While Abercrombie runs a handful of stores in Asia (in China58彩票网, Japan, Hong Kong and Singapore) as well as 19 stores in Canada, Western Europe made the most strategic sense from an expansion point of view because of the chain’s hefty price tags, aimed at well-to-do consumers, says Jaime M. Katz, an analyst who covers the retailer for Chicago-based research firm Morningstar. In 2011, European stores accounted for approximately 16 percent of Abercrombie’s total sales and 22 percent of its operating income, according to Morningstar.

But the deepening sovereign debt crisis in the Eurozone has led to a fall-off in sales in the region. In the first quarter, ended May 16, the company reported that total same-store sales declined 5 percent, mostly due to troubles in the international division—in the U.S., same-store sales posted an increase. And that was while the situation in Europe was relatively stable.

In fact, the falloff in sales came as a shock even to some analysts.

“We had recently returned from a trip in mid-April during which we visited the London, Milan and Paris flagships,” wrote UBS analysts Roxanne Meyer and Janice Ong in a May 16 note. “We came away thinking that trends had not deteriorated, and in fact improved versus 4Q sequentially, which was not the case in reality. We also came away believing that Hollister was still likely comping positive in the U.K., also not the case.”

During the company’s first quarter earnings call, back in May, CEO Michael S. Jeffries expressed confidence in the European expansion: “While we continue to review trends closely and be very disciplined in how we approach new store openings, we believe the current economics of our business in Europe strong affirm our long-term strategy.”

Given the rapidly changing headwinds, however, Abercrombie & Fitch might have to curtail its store openings in Europe, according to published reports. The company’s European stores tend to be larger than their U.S. counterparts, and can be more expensive to operate. “You can’t sell high-ticket items when austerity measures are in place,” says Katz.

What now?

With limited opportunities to open stores in its two main markets (U.S. and Europe), industry insiders now expect Abercrombie to expand its share buyback program to allocate capital. Currently, the company’s board has authorization to purchase up to 12.9 million shares of the company’s stock, but that figure is expected to increase significantly.

The timing is fortuitous, as Abercrombie’s stock is currently trading at about half its fair value estimate of approximately $60, according to UBS, and far below its 52-week high of $78.25 per share. As of Thursday morning, Abercrombie shares were trading at $32.62 apiece.

In the coming weeks and months, the stock price “is likely to be choppy—it will likely react to macro headlines as well as to other company reports that have European exposure,” write Meyer and Ong.

“I have no idea about what’s going on with the share buybacks, but maybe returning cash to shareholders [is] more fortuitous than opening stores that are going to struggle for some time,” says Katz. “When you are opening very big flagship stores, those stores need to work. If the productivity isn’t there, it just becomes a problem. [And] it could be that buying share at $30 makes more sense than buying them back at $60.”

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Interesting article on the grocery store, reflects what’s on this site.

Grocery-Anchored Shopping Centers No Longer the Safest Bet in Retail
Aug 2, 2012 10:30 AM, By Elaine Misonzhnik, Senior Associate Editor

“Everybody’s got to eat”: This bit of wisdom had become much quoted in the years since the recession as risk-averse real estate investors fled to the relative safety of grocery-anchored properties. It turns out that even when it comes to necessities, today’s consumers can afford to be picky about where they shop.

As multiple retail operators, from general merchandising chains including Wal-Mart and Target to dollar stores to warehouse clubs to drugstores, have begun adding grocery products to their shelves, traditional supermarket chains found themselves squeezed in their own market segment. At the same time, the ever-widening pool of upscale and organic supermarkets gave more choices to well-to-do shoppers not swayed by Wal-Mart’s rock bottom prices.

“Everywhere you look, people are selling consumables, so if you don’t have a good reason for people to choose your store, you’ve got a problem,” says John Rand, senior grocery analyst with Kantar Retail, a Columbus, Ohio-based retail consulting firm.

The evidence is everywhere: In 2010, A&P, once the largest supermarket chain in the country, filed for bankruptcy; in late 2011, Winn-Dixie, a regional grocer with a focus on Southeastern U.S., was sold to BI-LO; Supervalu Inc., which operates more than 2,500 stores around the country, is on “death watch,” according to David J. Livingston, head of supermarket consulting firm DJL Research.

Then there are the store closings: Earlier this year, Delhaize announced that it would close 113 underperforming Food Lion stores and Safeway sold off or closed stores in its Northeast-based Genuardi’s division. Plus, Supervalu will likely close more stores as it attempts a turnaround.

In fact, traditional mid-market grocers as a group have all but stopped growing, notes Ryan McCullough, real estate economist with the research firm the CoStar Group. According to an index McCullough put together, since 2007, the amount of new leasing traditional supermarkets have done by square footage has declined approximately 60 percent. During the same period, high-end grocers expanded their square footage by 72 percent. Earlier this week, Whole Foods executives talked about growing to as many as 1,000 stores in the U.S., including in smaller markets.

The anemic growth among mid-market supermarket chains has been reflected in the vacancy rates for neighborhood shopping centers. In the second quarter of 2012, the vacancy rate at neighborhood shopping centers nationwide averaged 11.3 percent, according to CoStar statistics. The figure reflected the highest vacancy rate for any property type in the retail universe and was also just 20 basis points below the vacancy peak reached in mid-2001 at 11.5 percent.

“It really hasn’t come down significantly since the recession,” says McCullough.

“One reason is the anchors and their [troubles with] profitability. Another important aspect is what’s happening with the in-line tenants. They are equally beleaguered because they don’t have access to financing. It’s a generalization, of course, but a grocery-anchored center is not the safe investment it was five years ago.”

Adjusting for risk

Investors certainly factor property occupancy levels into their pricing models—there is currently a $45 spread in price per square foot between neighborhood shopping centers with occupancy of 90 percent or greater and those with occupancy below 90 percent, McCullough’s research shows. But it’s unclear how much of a role the identity of the anchor tenant plays in pricing.

It’s an important issue because as time goes by the mid-market supermarket sector will likely see more bankruptcies and liquidations, as well as further consolidation, according to both Rand and Livingston. In McCullough’s view, those chains that will attempt to beat competitors on price alone will have difficulty turning themselves around since Wal-Mart, Target and warehouse clubs like Costco have more experience with that strategy.

“Let’s face it, Wal-Mart’s got better pricing power and better logistics,” he says.

Mid-market operators that are in the process of adding on high-end and organic products or more ethnic food offerings have better chances of surviving, McCullough’s notes. The challenge for real estate investors is figuring out which grocers have a future and which don’t. That often requires the consideration of multiple factors and a fine balancing act, according to John Bessey, an officer of the Phillips Edison Co., the sponsor of Phillips Edison—ARC Shopping Center REIT. Last year, Phillips Edison-ARC formed a joint venture with CBRE Investors to acquire up to $200 million in grocery-anchored and community shopping centers throughout the country.

Bessey notes that the performance of stores within the same company can vary by brand and by market. For example, while Supervalu as a firm is struggling, its Jewell-Osco division remains the dominant grocer in its 58彩票平台 market of Illinois. Phillips-Edison-ARC’s acquisition criteria require that the anchors at the grocery-anchored centers it purchases serve as either the number one or the number two grocers in their respective markets.

A supermarket chain doesn’t get to those market-leading positions unless its “personalizing its stores to its three-mile population,” Bessey says.

“The biggest thing these stores are able to deliver is quality of perishables and loyalty to the store will be based on the consistent quality of those perishables,” he adds. “Because people will go out of their way to get the best quality perishables, but they can get a can of peas somewhere else because a can of peas is a can of peas.”

Another thing real estate investors should consider is how much of a debt load the supermarket’s parent company carries and whether the chain owns its real estate or rents its stores, according to Livingston. He brings up the example of Weis Markets Inc., a Pennsylvania-based chain that operates 160 stores in the Northeast.

“Their stores don’t perform very well, but they don’t have any debt,” Livingston says.

Excluding fuel sales and adjusting for an extra week in 2011, Weis’ same-store sales went up 3.5 percent last year, compared to 2010. Total sales increased 3.3 percent. In the first quarter of 2012, same-store sales were up 0.3 percent on a year-over-year basis, while total sales rose 0.2 percent.

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I thought I’d share with you about another old mall (circa 1963) that’s still hanging on by its fingernails, Lincoln Square in Urbana, IL.

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This mall seems to be very important to retail history. The bellevue Center opened in the early 90s and thrived back then.This mall has space for over 90 tenants, and four anchors (only three were ever built).
The mall property is 80 acres. restraunts the two fist anchors that opened with the mall were Dillards and Kaster-nott.the mall was at full capacity back in those days.There was a food court with around 10. In the late 90s mall traffic started to decline, so a Sears was brought in to one of the achors(Kaster-nott was now Hetch’s). hetch’s converted to Macy’s in 2006. The occupancy rates on the second floor fell dramatically in the2000s. The mall lost Dillard’s in 2007. After this the mall officals closed the following may leaving macy’s,and sears. Macy’s closed in 2009 due to a bad holiday season leaving sears as the only operating anchor. The mall now has fallen into disrepair , but makes it a epic place to photograph. I sugest you check it out, its located in nashville TN . I believe this mall closed due to competition with Opry Mills ( a supermall ) and Greeen hills mall.

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Foreign firms seek retail therapy in Australia
Jane Wardell

4:48 PM EST, December 16, 2012

SYDNEY (Reuters) – The Americans are coming. And the Japanese and Europeans.

Australia is being invaded by a swathe of foreign retailers, piling pressure on a local industry already battered by weak consumer spending and ruthless internet competition.

U.S. retail giant Williams-Sonoma Inc opens its first owner-operated stores outside of North America in Sydney early next year.

Japan’s Uniqlo and U.S. youth label Hollister are also scheduled to debut here in 2013, while womenswear store Zara , Britain’s youth label Topshop and U.S. lingerie chain Victoria’s Secret plan to expand after recent flagship launches. Sweden’s fast fashion chain H&M and makeup brand Sephora, owned by France’s LVMH , are also casting an eye Down Under.

The timing appears incongruous as Australians fret over the tail-off in a decade-long resources boom that made the country’s growth a standout among its OECD peers in the wake of the global financial crisis.

Spending has stalled in the A$260 billion retail sector, which accounts for around 18 percent of Australia’s economic output, and retailers are jittery about the Christmas season.

But the overseas entrants have their eyes on a longer-term prize in a country that has a relatively high per capita income and 58彩票平台 ownership rate, and a love of shopping.

“There’s a plethora of retailers looking at Australia at the moment. They see the opportunity, they see that in the future there are great gains to be made and that’s why they’re setting themselves up now,” said Russell Zimmerman, executive director of the Australian Retailers’ Association.

Australia is the only developed country that did not fall into recession during the global financial crisis. Australian growth is expected to slow to 3 percent next year from a forecast 3.5 percent this year. That still puts the country ahead of its rich world peers – U.S. growth was pegged at 2 percent and euro-zone growth at just 0.3 percent.

That relative economic strength, along with the high Australian dollar, has spurred demand at foreign retailers’ online stores. Saks Inc , Macy’s Inc and Bloomingdales have all opened internet shops targeting Australia in time for Christmas.

But a number of foreign retailers are now focused on the next step – building up a physical presence in a nation where 85 percent of purchasing is still done in shopping malls.

THE ROAD TO OZ

Next up is Williams-Sonoma, the owner of furniture chain Pottery Barn, a brand that Australians recognize through namechecks on TV shows like “Friends.”

The company has signed a lease for 2040 square meters of retail space in Sydney to house all four of its brands – Williams-Sonoma, Pottery barn, Pottery Barn Kids and West Elm – the first time the quartet will sit side by side.

While Zimmerman bemoaned the lack of people laden with shopping bags just weeks out from Christmas in Sydney’s main retail strip, Pitt Street Mall, Williams-Sonoma isn’t concerned.

“We definitely look at it as a long term play,” Craig Nomura, senior vice-president of Williams-Sonoma, told Reuters in a telephone interview from San Francisco.

“The performance by country is all relative, so when you compare Australia against the U.K., it’s still doing well in the retail world.”

Williams-Sonoma was enticed to Australian shores after opening up e-commerce sites in 85 countries just over a year ago. To the company’s surprise, it was Australia, with its population of just 23 million, that was the standout revenue generator, beating out larger countries including Britain.

Nomura declined to divulge detailed figures but said the website provided key information on the demand for goods and seasonality factors.

“It’s given us a real good insight in terms of product categories that work well for us,” he said, explaining that Williams-Sonoma will adapt to seasonality by delaying the delivery of U.S. product for six months.

CLICKS TO MORTAR

Other recent entrants, including Topshop and Zara, owned by Spain’s Inditex, followed the same path.

“Foreign entrants now are able to do business in countries like Australia without putting a brick on the floor and when they gather that data and they know the market, they’re ready to grow,” Brian Walker, managing director of consulting firm The Retail Doctor Group, said.

“They have a much better understanding of us than perhaps our local retailers do.”

Topshop’s first Australian store, in Melbourne, became the brand’s best-ever franchise opening after it used data from its international online shop to pinpoint local demand.

“We did a lot of research, we understood what the market is,” Hilton Seskin, chairman of Topshop Australia, told Reuters in an interview in the company’s flagship store in central Sydney, as shoppers flocked round the pink denim hotpants and sequined shirts.

Seskin said he is planning to open 10 to 15 stores in Australia in the next few years, with two more already confirmed for Melbourne next year.

NO MORE KNOCK-OFFS

The entry of foreign competitors, along with their speed bringing products to market and price competitiveness from economies of scale, is an enormous challenge for the local market.

One of the toughest sectors is women’s fashion and evidence of the seismic shift is apparent in a large airy warehouse in Sydney’s east. Summer sun floods the space from high windows as a team of designers work on the autumn 2013 collection for Specialty Fashion Group’s Autograph label.

The company, which encompasses seven brands, was among the few to quickly grasp that having Zara and Topshop next door, rather than half a world away, was a game-changer.

“These were the retailers who we would go to in Oxford Street in London, or in LA, literally copy their product, go via China58彩票网, knock it off, come back and bring it to market months later,” Specialty Fashion CEO Gary Perlstein told Reuters.

“One, that’s illegal; two, if everyone’s copying a Zara shirt, there’s no point of difference and everyone’s just competing on price.”

Specialty Fashion now employs nine in-house designers and has an office in Shanghai where the clothes are manufactured. While that’s a long way off the 150-plus designers employed by Topshop in London, the changes are pleasing analysts.

Specialty Fashion Group is also the best performer, based on analyst revisions among 67 companies in Australia’s consumer discretionary sector tracked by at least three analysts, data from Thomson Reuters StarMine shows.

That contrasts with retail stalwarts Myer Holdings Ltd and David Jones Ltd , whose belated play for consumers by signing exclusive access deals with overseas brands is being undermined by their direct entry.

Retail Doctor’s Walker said the only way forward for Australian retailers was to embrace the revolution.

“They can’t have an island mentality. They have to be as prepared to do business in Alaska as they are in Arkansas or Adelaide.”

(Reporting By Jane Wardell; Editing by Emily Kaiser)

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Another dead mall in the making.

Westbury’s Source mall auction fails
August 28, 2012 by MAURA MCDERMOTT / maura.mcdermott@newsday.com

Lenders took ownership of the Mall at the Source, in Westbury, after a foreclosure auction Tuesday found no buyers willing to pay $148 million to pay off its debts.

Scott Tross, the attorney representing the mall’s bondholders, said they will probably not hold on to the mall, and will eventually sell it. Tross declined to give a timetable.

The bondholders are represented by a trust known as CMAT 1999-C1 Old Country Road Llc.

The mall, a hit with shoppers when it opened in 1997, has struggled in recent years after the departure of former anchor tenant Fortunoff, which filed for bankruptcy in 2009, and other major retailers. It is likely to be 75 percent vacant by next month, according to local brokers.

The sale will not interrupt business at the mall, said Bud Perrone, a spokesman for Miami Beach-based LNR Partners, which is the servicer for the loan.

The new owner is likely to bring in new stores within six to nine months, to prepare it for an eventual sale, said Jeremy Isaacs, a broker with Ripco Real Estate in Jericho. “Right now there is someone in charge, someone who will focus on it and try to turn it around,” he said. “So it’s all good.”

The auction took place at 11:30 a.m. at Nassau County Supreme Court in Mineola. It lasted slightly more than a minute.

Tross gave the “upset price” — or minimum price needed to win the auction — as $148 million, eliciting whistles of amazement from the crowd of a few dozen people, many of them attending other residential or commercial auctions. That price represents $142 million in outstanding debt and $6 million in accrued interest, Tross said after the auction. The minimum initial bid was $10.2 million.

A man who gave his name as Michael bid $11 million, and Tross countered with $11.1 million.

“I should just jump to the end, right?” the man said.

“We could go all the way up to 148,” Tross replied.

“Our final bid is $25 million,” the man said.

Tross again outbid him by $100,000. There were no more bids.

After the auction, the man named Michael who bid on the mall said he was a broker from the tri-state region but declined to identify himself further.

A spokesman for Simon Property Group, formerly minority owner of the mall, declined to comment. It was unclear from public records who owned the remaining stake in the property.

The retail center’s value was appraised at $51 million in May, according to Trepp, a company that tracks information on commercial loans. The vacant Fortunoff store has a separate, $46.2-million loan that is also in default, according to Trepp.

Thhaughts…

Cant believe I missed this article when it was published, but this is hardly a shock since I saw it coming after Fortunoff went out of business.

[Reply]

SEAN Reply:
January 15th, 2013 at 8:33 pm

@SEAN, Here’s a complete tour of The Mall at the Source from last September.

[youtube

Take note that Nordstrom Rack has moved to the Gallery at Westbury Plaza.

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mallguy Reply:
January 15th, 2013 at 11:49 pm

@SEAN, That’s depressing. I went in there once years ago and was surprised to see it co-exist being so close to Roosevelt Field.

On another LI related topic: any movement with the Shops at Oyster Bay?

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SEAN Reply:
January 16th, 2013 at 10:02 am

@mallguy, Yeah that mall was depressing wasn’t it? Who would think that a dead mall would be on one of the tri-state areas busyest retail streets.

I haven’t herd much recently regarding the Mall in Oyster Bay. What I do know is that Neiman Marcus pulled out & is opening at Roosevelt Field in 2015. Also Lord & Taylor is Taking Neiman’s spot, but Nordstrom is still onboard. The project has been alterd numerous times since inseption & has also been miered in litigation & I think it still is at this point. I guess Taubman or some really connected politicos really want this mall built.

Speaking of really well connected politicos, did you read the article on American Dream above? This project has been punted more times than the NY Jets special teams could ever achieve.

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rob Reply:
January 16th, 2013 at 8:50 pm

@SEAN, WOW ALOT OF RETAIL HOOPLA ON LONG ISLAND AS WELL AS PARAMUS. A WOMAN FROM WESTWOOD NJ IS TRYING TO GET 10000 VOTES TO GET THE BLUE LAWS REPEALED. There are many angry residents in paramus.

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mallguy Reply:
January 16th, 2013 at 11:36 pm

@SEAN, NJ malls are still preparing for American Dream opening, as each one has expanded or renovated within the past 10 year – one twice, namely Garden State Plaza.

Has the construction on the Roosevelt Field expansion started yet? I don’t get out to the Island very often and haven’t been in a while, but when I do, I do tend to stop at Roosevelt Field to check things out, as it’s on the way to where I’m heading.

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SEAN Reply:
January 17th, 2013 at 7:55 pm

@mallguy, The funny thing is that GSP & other malls have been preparing, but for what exactly? American Dream has changed so many times, I cant recall everything that has happened. Now get this, not only will the existing structure be altered inside & out, but it’s being expanded for more entertainment & retail.

Construction on Roosevelt Field hasn’t started yet, but it should begin in the near future.

I visited The gallery at Westbury Plaza today & Old Navy is opening soon. It semes although obvious, but this two sectioned strip center finished off what remained of The Mall at the Source with a better retail configguration. There’s also The Container Store, Trader Joe’s & of course Starbucks all be it a nice one at that. You can find the center at 900 Old Country Road at the corner of Eastgate Boulevard, just off the Medowbrook Parkway exit M1 East.

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SEAN Reply:
January 17th, 2013 at 8:43 pm

@mallguy, I should add for transit users, that TGAWP is served by NICE routes N22 & N24 with stops on Eastgate Boulevard at Old Country Road. These routes also serve key transfer points at…

165th Street bus Terminal (numerous bus connections)
169th Street Jamaica Queens (F Train)
179th Street Jamaica (F train& busses on Hillside Avenue)
Minneola Intermodle Center (4 connecting routes & LIRR Trains)
Roosevelt Field (several routes at 7 bus platforms)
Hicksville LIRR station (several routes at 6 bus stops at or near the main entrance to the station building)

Also note although both N22 & N24 busses travel to & from Hicksville, only the N24 serves Old Country Road.

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Back on January 31, I started a new retail history blog similar to this site, though it will focus only on southeastern Michigan. Right now, I have a detailed history (and many photos) of my local mall for most of my life, Southland Center in Taylor, Michigan, near Detroit, on there.

If you want to read it, just click on my name or if you skipped past it, here:

I was wondering if you can link to my new site, plus I need to know how to add links to other sites on mine, just like The Curator from the Mall Hall of fame site (see near the beginning of the comments on this page) was trying to do when he started his site. Thanks.

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This has nothing to do with malls, but this is histericle.

Enjoy!

[youtube

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An Open Mind For Open-Air Centers

Trademark redeveloped the entrance to its La Palmera in Corpus Christi, Texas, into an open-air environment as part of its overall renovation. The center’s sales are up 50 percent since the remodel.Creating a successful open-air environment is tricky, especially in an uncertain economic climate. Categories of open-air centers, such as neighborhood and community centers, remain top investment choices, while lifestyle, power and mixed-use centers tend to consistently draw the most shoppers.

To explore the universe of open-air centers, Shopping Center Business interviewed a wide scope of visionary developers, owners, investors and architects who are pioneering many types of centers. From investment to design to retaining tenants, we found that location, leasing and demographics are the key ingredients for a successful property.

Investment
Among open-air centers, grocery-anchored neighborhood and community shopping centers top the list for institutional investors who buy retail properties.

“The hottest centers are grocery-anchored centers,” says Whitney Knoll, principal, capital markets, of Newmark Grubb Knight Frank. “Everyone buys groceries. Therefore, you get daily traffic that helps you keep your smaller tenants. This becomes important in times like the downturn of the past few years. Across the board, location, demographics and population density are the driving forces after your grocery anchor.”

Vying for good quality neighborhood and community centers is a tough business today. Low interest rates have fueled a buying frenzy among investors who can afford the low cap rate premiums that top centers bring.
“The feeling is there is a lack of core properties for sale,” says Knoll. “Although cap rates for these properties are strong, some [current] owners are wondering where they will reinvest their money if they sell. No one has been building grocery-anchored centers for the past four years. The lack of supply to be sold makes a big difference in the market.”

Lifestyle and mixed-use centers, while in demand among some buyers, are leasing intensive and rely on discretionary income more than needs-based shopping trips.

“In a needs-based shopping center environment, such as a grocery-anchored or power center, the rents you charge to your tenant are based on the cost of your project,” says Yaromir Steiner, CEO of Steiner + Associates, which has developed some of the top open-air leisure-oriented centers in the nation. “In a discretionary spending environment, like Easton Town Center [Columbus, Ohio], the rents of the developer are not based on cost; they are based on the sales of merchants.”

That differentiation is what separates these two major categories of open-air centers: power centers, neighborhood and community centers fall into the needs-based category, while lifestyle, most mixed-use and entertainment centers fall into the want-based category, says Steiner.
For investors who acquire open-air centers, the easy access of property and tenant information and data has made owning shopping centers a nationwide business, even for private investors based in one area of the country and buying elsewhere.

“The transparency of information that flows via e-mail and the Internet in today’s real estate business compared to 15 years ago has made it easy for everyone to take advantage of the market,” says Joe Dykstra, executive vice president of Los Angeles-based Westwood Financial, which owns centers across the country. “With more capital looking for a safe place to invest, you are seeing [cap rates on] deals drop lower and lower.”
That, he adds, forces buyers to look out of their 58彩票平台 markets and into markets where they are more comfortable owning assets.

For some investors in open-air centers, the best sign of a good center is the potential for upside or net operating income improvements. Atlanta-based RCG Ventures acquires centers in secondary and tertiary markets where it sees potential for turnaround investments. The company looks for centers in markets that are missing retailers or for properties that have financial or operational difficulties. RCG’s game plan is to improve the asset through leasing and improving operational efficiencies. After repositioning the center, RCG will either refinance the asset or sell to private or institutional investors, depending on the quality of tenants and market size.

“Our acquisition strategy for a center is based on what retailers are willing to pay in order to locate in that specific market,” says Mike McMillen, CEO of RCG Ventures. “We can be offered a center at an above-market cap rate or low price per foot, but if no retailer wants to be there, we wouldn’t have interest in buying it. Most of our buying decisions are made based on our cost basis and where we believe we can stabilize the net operating income. We are not looking to acquire the most attractive center in town, but we are looking to buy assets that have the potential for significant improvement.”

Placemaking
Many companies in the open-air center sector have become experts at making great places where people want to spend time. Thinking creatively, many developers have transformed former regional malls in good locations to open-air environments that see marked sales improvements. Lifestyle and leisure center developers have reset the idea of what a shopping center can be to some consumers. Centers like Caruso Affiliated’s The Americana at Brand and The Grove in the Los Angeles area have set a high bar for other developers. Projects like Steiner + Associates’ Easton Town Center also continue to set the stage for open-air lifestyle retail as they continue to evolve after years of successful operation. Creating a great open-air center takes more than just a developer and an architect sitting around a table.

Listening to the community helps form the basis for a well performing center, says Terry Montesi, CEO of Fort Worth, Texas-based Trademark Properties. Rather than having a developer place its vision on the community, receiving input from the community helps create a great open-air center.

“Really great open-air centers spend a lot of time with, and are committed to meeting the needs of, their communities,” says Montesi. “If you listen to the community, find out what it needs, and give residents a center that exceeds their expectations, it customizes the center to the individual community.”

Trademark has added lifestyle elements like public spaces to community centers as well as its lifestyle and power center projects. This, says Montesi, creates environments where people want to spend a little bit more time. Eventually, that translates to repeat visits and dollars for owners. In larger centers, listening to what the community wants pays off in creating a new project.

To redevelop Padre Staples Mall into a center called La Palmera in Corpus Christi, Texas, Trademark held several focus groups with members of the community. Those resulted in the idea to de-mall the main entrance of the center and create an open-air lifestyle court with water features and seating.

“We wanted La Palmera to be an indoor/outdoor environment,” says Montesi. “The results have met or exceeded the community’s needs. The center’s sales are up approximately 50 percent in the past four years since we did the major renovation.”

Trademark purchased a 200,000-square-foot shopping center across from LaPalmera that had not been renovated in the past 30 years. The company is doing a complete transformation of the center. So far, the company has landed Dick’s Sporting Goods and a number of lifestyle tenants. Trademark is also renovating and evolving Saddle Creek Village in Memphis, Tenn., widely known as the first lifestyle center in the country, for Heitman, who owns the center.

“We believe that retail has to constantly evolve,” says Montesi. “With Saddle Creek, you are seeing a smart owner who wants to keep its center relevant.”

Even community and neighborhood centers can have amazing market draw that leads to high sales, if they are well located in areas of strong demographics and have the tenants shoppers want. Such is the case with the community shopping center portfolio of Federal Realty Investment Trust, which boasts the highest median household income for its trade area of any community center REIT. Federal Realty’s assets are predominantly in mature markets that have high barriers to entry, with highly educated and affluent consumers.

“Because of the demographics, our centers have the ability to be a lot more than just a neighborhood grocery-anchored shopping center,” says Chris Weilminster, senior vice president of leasing for Federal Realty.
Congressional Plaza in Rockville, Md., which Federal Realty has owned for decades, found a niche in the market by serving mothers with young children. Federal took features it learned from its on-street retail program and incorporated them into the community center environment at Congressional Plaza. These included seating areas and a strong landscaping program.

“That added an extra level of ambiance that created an environment of a town center for the community,” says Weilminster.

With a new center, Pike & Rose, just down Rockville Pike from Congressional Plaza, Federal Realty is creating another experience for the community. The first anchor to be announced at the project was iPic, a theater and dining entertainment experience. Federal is seeking to attract a sophisticated audience for the center, one that will stay for a few hours versus short daily trips [for more on Pike & Rose, see page 50].

Federal is also developing The Point, an extension of its Plaza El Segundo at the high traffic corner of Rosecrans and Sepulveda Boulevards in Manhattan Beach, Calif.

“We are planning to add something that is very complementary to an already successful shopping center,” says Weilminster. “That makes the entire district stronger; [Plaza El Segundo] is the place people think about shopping if they live or work within that community.”

For lifestyle and large open-air mixed-use centers, keeping the customer coming back is the key to getting them to spend their discretionary income.

“Aspirational environments have to go one step beyond,” says Yaromir Steiner. “People come because they want to go, so we have to offer them things that they aspire for. The environment is about place-making and leisure time uses.”

The New Method of Development
For many developers, getting a project of significant size off the ground over the past few years has been Shea Properties, CenterCal and Oak Tree Capital are developing The Collection at Riverpark in Ventura County, Calif. The center began opening last summer and will see a number of retailers open in 2013. Pictured is the Century Theatres cinema at the center.impossible. For some, it just means changing the way development is done. Rather than build a center all at once, some developers have staged development, even going so far as to build centers store by store.

Southpoint, a project south of Atlanta along Interstate 75, was developed in phases by Jim Baker, president of Atlanta-based Baker & Lassiter, starting with two stores in 2007. The strong numbers during the recession from those two stores, JC Penney and Kohl’s, had significant bearing on other retailers’ decisions to move ahead with their locations at Southpoint, says Ralph Conti, principal of RA Co Advisors, who is leasing the center. Later phases, developed from 2009 to present, have included Toys R Us, Haverty’s, Hobby Lobby and Movie Tavern.
“We had negotiated leases with many tenants before the recession,” says Conti. “Hobby Lobby emerged first after 2008 and became our third tenant.”

Hobby Lobby moved ahead with its original position at the center, which caused it to be in a location that had no co-tenancy at first. When the store opened in late 2009, it performed strongly. In 2010, other retailers began to express interest in the center. Academy Sports + Outdoors, Toys R Us/Babies R Us and TJ Maxx were the next anchors to open. Junior anchors Five Below, Ulta and Party City were constructed next to Kohl’s in 2011.

“Shopping centers are like jigsaw puzzles,” says Conti. “Southpoint is a classic example that you have to come out of the gate knowing what the jigsaw puzzle is going to look like, but you may not build the puzzle right away.”
For Southpoint and other centers in development, the market was in place and demand indicators, such as sales leakage to other markets, were significant before the projects were started.

“Market fundamentals have to be there; you have to have good access and good visibility,” says Conti. “They have to be in place in order for a project like Southpoint to continue to have success year after year, and it will for a long time. You can’t replicate the center in that market; the fundamentals do not exist elsewhere.”

In California, Shea Properties is developing The Collection at Riverpark in Ventura County, Calif. Delivering to an environmentally conscious community was a strong theme for the project, says Andres Friedman, vice president of development and acquisitions for Shea Properties. The project was originally conceived as a regional mall when the master developer envisioned the plan for Riverpark, a 700-acre planned community in Oxnard, Calif. The project sits on 80 acres along the 101 Freeway, which was acquired by Shea Properties in 2007. Anchors for the project are Whole Foods Market, Target, Century Theatres and REI. The center called for strong sustainable and architectural features, as well as a lot of art work, elaborate landscaping and other features that tied it to the community.

While construction started in 2007, the project halted in 2009 as the economy suffered. Despite the fact that all the anchors remained with the project, Shea couldn’t move forward until the economy improved.
“We had to rethink how we were going to face this project and open it,” says Friedman. “We knew we did not want to compromise the quality of the center.”

Shea created some flexibility for tenants who had signed on to the project, since they were all rethinking the way they did business as well. It subdivided some of the buildings that were already under construction and looked at ways it could merchandise the center more efficiently. In January 2011, the project restarted with no plans to stop. Target opened in summer 2011 as the first retailer at the project. Soon after, the center’s other 10 anchors were ready to move forward with opening, so the second phase began construction in January 2012. In October 2012, Century Theatres opened along with six other tenants. In March, REI will open, followed by Whole Foods Market in June. This summer, Friedman expects the center will be at 60 percent occupancy. He hopes to have the entire center fully leased and built by the summer of 2014. A few months ago, Shea Properties partnered with CenterCal Properties and Oak Tree Capital on the center.

Like many successful open-air centers, The Collection at Riverpark has found a hole in the doughnut in its market. The center provides an attractive environment for needs-based shoppers and entertainment seekers. With tenants like Whole Foods and Target, it serves daily needs, while others, like Century Theatres and restaurants, serve entertainment and nighttime traffic.

“We think the merchandising we have fills the center throughout the week,” says Friedman. “All the retailers and restaurants that have opened so far have suggested a strong center. That has helped us go to a lot of tenants we are negotiating with and prove to them that the location and the type of project we are developing is a successful one.”

At Menin Development’s Magnolia Park development in Greenville, S.C., location tops the list of why the center is successful. The 550,000-square-foot center is situated at the intersection of Interstates 385 and 85 and Woodruff Road — the busiest intersection in the state. Add to that Greenville’s sophisticated demographics — the city is 58彩票平台 to BMW’s U.S. manufacturing facilities, Michelin’s U.S. headquarters, a regional headquarters campus for TD Bank, and those of a host of other companies in various industries — and you have the recipe for a successful center. Menin envisioned bringing a number of new national and regional tenants to Greenville when it came across the former regional mall that was on the site.

“We only look at centers that have excellent land and location,” says Marc Yavinsky, executive vice president of Palm Beach, Florida-based Menin Development. “Our philosophy is if you have good real estate, there will always be a tenant to fill that space.”

Like Southpoint and other large centers developed in recent times, Magnolia Park took time. Over the past six years, Menin has been creating an open-air center, retaining anchors from the mall — Sears and Regal Cinemas — and attracting a host of top anchors to the market. Regal Cinemas, which opened at the former center in 1997, remains the top-grossing theater in the Carolinas. One of the first tenants to open at Magnolia Park was Costco, which Yavinsky says is the warehouse club’s top performing unit in the state. Old Navy, Bed Bath & Beyond and Rooms-To-Go also have their top stores in the state at Magnolia Park, according to Yavinsky.

“For us, it is about bringing tenants who are unique and different than other centers,” says Yavinsky. “It is about keeping customers visiting the center on-site for longer periods of time throughout the day. From a design standpoint, we like to allow tenants to create their own personality through their facades that are unique to their business.”

To accomplish that, Menin has a lineup of tenants that accomplish everything from goods and services — like Sears and Costco — to entertainment, with Cabela’s, Dave & Buster’s and Toby Keith’s I Love This Bar and Grill. Menin has signed a number of tenants to Magnolia Park that will have their first location in the state. To create a dinner-and-movie atmosphere, the company is also adding a strong restaurant lineup to Magnolia Park that will be second-to-none in the state, says Yavinsky. Charlotte-based Firebirds and Texas-based Cheddar’s are among the restaurants opening their first South Carolina locations at Magnolia Park.

“We are close to announcing four or five other tenants where this will be their first location in the region or state,” says Yavinsky.

Cabela’s alone is expected to be one of the largest tourism draws in the Upstate area of South Carolina. It is expected that the retailer will have a draw radius of several hours, and that visitors will spend the weekend in Greenville with their visit centered around their trip to Cabela’s. In future phases, Menin plans to add up to another 520,000 square feet of retail to Magnolia Park.

Menin had success with this formula at its Downtown at the Gardens project in Palm Beach Gardens, Fla., where it brought the first Whole Foods and Yard House to the area, among other retailers.
“Greenville has been discovered by a lot of the hot tenants,” says Yavinsky. “Every [national] retailer who has gone there has been successful.”

Trademark is also constructing a new phase of its Alliance Town Center in Texas. The 800,000-square-foot center is anchored by Kroger, Belk and JC Penney and has many lifestyle and power center tenants, as well as a significant offering of restaurants.

“Some call this center a ‘power village,’ but it has really become the replacement for the regional mall,” says Montesi. “You can do lots of fashion shopping, but you can also do your daily needs shopping. That’s where retail is going: people will build centers to meet the needs of the area. They are not building just a power center or a community center; they are building a retail center that meets the diverse needs of a specific community.”

Trademark Properties developed Alliance Town Center in Texas. The open-air center is a hybrid lifestyle, neighborhood and power center that CEO Terry Montesi says has taken the place of the regional mall.Tenant Focus
Watching — and aiding — tenant sales is at the heart of open-air center ownership. Regardless of the type, a center is only as good as its tenants and location. Many owners have learned to watch, assist and foster tenant performance to ensure a healthy and growing center. Doing so means knowing the geographic market, the competition and the tenant’s business.

“In our case, we tend to follow the grocery business pretty closely,” says Howard Paster, president of St. Paul, Minn.-based Paster Enterprises, whose company has owned and operated community shopping centers in the Twin Cities market for decades. “We can walk into a grocery store and tell you what works and what doesn’t work. Not to say that we would know how to run a successful grocery store; but we know from a consumer’s perspective what entices and compels them.”

Good leasing starts with good lease planning, and that starts in the design — or redesign — phase of a center.
“We are very conscious about what constitutes good planning for creating good space to lease,” says Kevin Zak, principal of architecture firm Dorsky + Yue International. “We are always thinking about the last space leased at a shopping center. A center starts with great planning so there isn’t ‘bad’ lease space.”

Creating that space involves vision and imagination on the part of the architect and the developer.
“We put ourselves in the project we’ve designed and make sure it is a comfortable space that has the right scale and amenities,” says Zak. “There is a lot of detailed thought that goes into tailoring each of these projects to make sure that they maximize the customer’s experience.”

Finding the right tenants who will add to the center’s draw and conduct high sales volumes is a challenge that many shopping center leasing executives view as highly rewarding.

“A strong center exists because it has good fundamentals that are in place: it is well located, has good access and the market has strong demographics,” says Conti. “In leasing, you have to look at who is going to do business there. You can have the best piece of real estate in the world. That doesn’t matter if the tenants don’t like it. If you build a power center, you want to have the best in class power center tenants.”
Retailers who create an emotional connection with shoppers are finding success in today’s market. While this may resonate with apparel and other softgoods, tenants like Apple, Anthropologie, Babies R Us and Whole Foods Market create this appeal for different reasons.

“We look at whether a tenant connects emotionally with a customer, as opposed to just providing commodities,” says Trademark’s Montesi. “If you look at a tenant like Whole Foods, many of their customers view the retailer as a part of their lifestyle. Those consumers feel that Whole Foods is serving them and has the same goals for their lifestyle in mind. Whole Foods has an emotional connection that a conventional food purveyor doesn’t have.”
Many shoppers now stay connected with retailers via e-mail and social media. It’s important that the physical store reflects shoppers expectations for the brand and its merchandise.

“We look for tenants who will draw folks more often and who will have a much deeper connection with consumers,” says Montesi. “These tenants are much less likely to lose their customer because some other store opened half a block closer to their location.”

This factor also extends to how willing developers are today to let retailers stand out from the crowd in their centers. Gone are the plain boxes; retailers today are differentiating their stores with design features and elements that go beyond widened storefronts and additional windows.

RDL Architects is working on a building for Arhaus Furniture at North American Properties’ Avalon open-air project in Alpharetta, Ga.

“With tenants like Arhaus, we try to give them their own identity within a center,” says David Parrish, director of business development for RDL Architects. “They want to fit in, but they also want to stand out.”

RDL also works with Pinstripes, an entertainment anchor, that finds it necessary to make its units stand out from the crowd to exhibit a fun atmosphere to consumers.

In some cases, this differentiation is extending to the center itself. At Shea Properties’ The Collection at Riverpark, the sustainable features Shea Properties was hoping to implement have come to life: the project uses LED lighting throughout, has a system to collect and reuse rainwater, and the company is reusing many materials throughout the center. Shea hopes to achieve LEED certification at the center.

“Our company culture is to be sustainable and responsible,” says Friedman. “We also believe that the community is embracing a sustainable environment and we want to be supportive of that. Also, our tenants are embracing sustainability and our sustainability helps them know where this project is going. At the end of the day, sustainability saves money by saving water and electricity.”

As well, the center’s public art program has added to its attraction in the community.

“The center isn’t just a collection of retailers, but it is a collection of experiences,” says Friedman. “Of course, the merchandising is the key element of any retail project, but the architecture and the art at The Collection at Riverpark adds a sense of discovery to the center. When people walk the center, they always discover something new; there are 17 different pieces by five different artists here.”

Some owners are also looking at how they can differentiate their properties through leasing. While many institutional neighborhood center owners raise an eyebrow when it comes to non-credit small shop tenants, Westwood Financial has embraced them.

“There are a lot of small businesses out there who want to be in the best properties,” says Westwood’s Dykstra. “If you have vacancies, you will find in most neighborhood retail in major MSAs, many tenants are gravitating toward the better properties. They have determined that is the place to be if you want to continue to benefit from foot traffic and give your business the highest probability of succeeding. Mom-and-pop tenants are becoming more sophisticated and smart landlords are wisely looking to add that kind of user to the rent rolls.”

Time can never stand still at existing shopping centers, warn developers. Letting a center go stale is the kiss of death; you never know when a developer down the road could be getting ready to redevelop and take your tenants. Staying strong is the key to staying healthy.

“When sales are not productive with your retail base, you have to shore that up,” says Paster. “Bringing new tenants in is usually the precursor to spending a lot of capital dollars on a center. You are not going to spend capital with the hope that you are going to land a tenant. Just like a new development, you have to have that anchor tenant in tow before you can deploy a redevelopment strategy.”

Federal Realty’s Weilminster says that landlords shouldn’t be afraid of turnover if they are seeking to constantly keep their customers coming back. At Federal Realty’s Santana Row, a mixed-use town center in San Jose, Calif., Federal constantly reviews the tenant mix to stay ahead of what the market wants. The center has recently introduced Kate Spade, C-Wonder and Madewell.

“We brought new faces to a center that is already established,” says Weilminster. “We like our [tenant] turnover; it is not anything at all that we are fearful of. As a developer and landlord, you need to embrace the fact that there is going to be transition and use that to your benefit to enhance and improve your assets.”

Making projects stand the test of time is a challenge for designers. One Dorsky + Yue-designed open-air project, Legacy Village in Cleveland, Ohio, is celebrating its 10-year anniversary this year. Zak says that one of the reasons that the center is successful is that its owner, First Interstate Properties, has been open to retailers who want to break out of the box.

“They have tenants who want space, but they want to do certain things that maybe the center didn’t do before,” says Zak. “We are always encouraging creativity and allowing the center to evolve. If the tenant wants to do something that the design of the building did not support before, how can we accommodate that? What other ideas are there that will accommodate an idea? For us, it’s trying to be creative and open-minded through every step of the process. Retail evolves year to year, and tenants come and go. It is a matter of being open and trying to help the center be successful.”

[Reply]

Hello,
I was wondering if you all would be interested in me digging up some info on some failing malls and shopping centers I am familiar with. The malls are all in Missouri: Jamestown Mall in Florissant, Capital Mall in Jefferson City, and Columbia Mall in Columbia. These all rate to be on death watch at least I believe. Also, when I lived in North Carolina an outdoor shopping center called the New River Shopping Center was just down the street from us. It is in trouble as well. If you all are interested I’d be glad to research these.

[Reply]

Entertainment Tenants Can’t Save All the Struggling Retail Centers
Elaine Misonzhnik
Thu, 2013-04-25 13:18

In the age of showrooming and multiple struggling big-box chains, retail landlords and managers have been increasingly looking at entertainment and restaurant tenants to take up spaces left over by large-format traditional retailers. The logic goes that while a Best Buy or a Barnes & Noble store may be taken out by Amazon, movie theaters and restaurants are more immune to online competition because they offer an experience that can’t be duplicated online.

Speaking about the future of power centers, for example, R.J. Hottovy, a retail analyst with Chicago-based research firm Morningstar, notes that “there will be a lot more non-traditional tenants—restaurants, lifestyle brands, entertainment concepts. [Tenants] that don’t necessarily have pressure from online retailers: you are looking for somebody who has that natural protection.”

Brokers at firms ranging from Jones Lang LaSalle to Cushman & Wakefield to SRS Real Estate Partners point to concepts like Studio Movie Grill, a dine-in movie theater that takes up approximately 45,000 sq. ft. of space, as a viable replacement for many large-format tenants. There is also LOOK Cinemas, out of Dallas, which opened its first location at Prestonwood Creek in Texas in March. LOOK Cinemas combines an 11-screen movie theater with a restaurant and a wine bar.

The Alamo Drafthouse, a similar venue, now operates at least six locations in Texas, while AMC has eight dine-in theaters around the country offering a premium theater-restaurant experience. Offering that kind of premium experience can help serve as an added draw to get people to see movies on the big screen instead of at 58彩票平台.

The movie theater sector has experienced some competitions from online players like Netflix and iTunes, but the impact has been more limited in comparison to the fallout for retail chains in categories like books, office supplies and electronics. Last year, the U.S. box office totaled more than $10.9 billion, according to Box Office Mojo, representing an increase from $10.1 billion in 2011. And while ticket sales plunged to a 16-year low in 2011, at 1.29 billion, they rose 5.6 percent in 2012, to approximately 1.36 billion.

But landlords shouldn’t count on miracles—today, movie theaters are not expanding rapidly enough to fill holes in every struggling center and they are not likely to go into centers that are on a death spiral either. At best, they can make a mediocre property stronger and a good property great.

“I think there continues to be expansion in the category, but it’s not as much as it was,” says Greg Silvers, COO of EPR Properties, a Kansas City, Mo.-based specialty REIT that invests in and develops megaplex theaters and entertainment retail centers. “We really are not seeing as much screen growth—we are seeing older theaters [torn] down and newer theaters come in. We think there is annual growth in new product, but that becomes kind of a net number.”

In 2012, EPR built 12 new movie theaters. In 2013, the REIT plans to start construction on eight to 10 new theaters.

As of 2011, the most recent year for which data is available, there were 38,974 indoor movie screens in the U.S., and 5,331 indoor cinema sites, according to the National Association of Theatre Owners. The number of indoor cinema sites has been gradually decreasing since 1999, when there were 7,031 of those sites in the U.S., in part due to the emergence of multi-screen movie theaters. In 1999, there were 36,448 indoor movie screens nationwide.

Good tenants are hard to get

It’s easy to understand why retail landlords might want to bring more movie theaters to their centers. The theaters don’t just have the ability to take large chunks of space—they serve as true traffic drivers, according to Larry Rose, a consultant with DJM Realty, a Gordon Brothers Group company offering consulting and advisory services.

“The movies are recession-proof. It’s a relatively inexpensive form of entertainment and the other nice thing for landlords is that more often than not, you are not just going to the movies you are going to the restaurant before or after,” Rose says. “So it allows the landlord to increase the customers’ stay at their location.”

Plus, movie theater operators might not be as averse to opening locations in smaller markets as some retail chains, Rose adds. Depending on the operator, they may be looking to open new theaters in secondary and tertiary markets where theirs would be the only theater in town.

That being said, movie theaters also come with very specific site requirements that may be difficult for a landlord to satisfy, according to Silvers. In suburban areas, they normally require a three-mile “film free” zone—meaning that they can’t open within a three-mile radius of another theater in an effort to avoid competition. Their parking requirements are based on the number of theater seats and are therefore much greater than the parking needs of a regular retailer. And it’s often too much of a challenge for a movie theater operator to refurbish a vacant big-box space because the ceilings tend to be too low, the columns too many and the bathrooms too few. While movie theater operators remain open to replacing traditional tenants, they normally prefer to build from the ground up or renovate an existing theater space, Silvers says.

Ultimately, the decision comes down to demographics. If the retail center is in the right trade area, offers good access and plenty of parking and already has restaurants on site, helping drive customer traffic, multiple movie theater operators might be interested in moving in, according to Silvers.

If the center is struggling and desperately needs a movie theater to fill an empty space, it might be a challenge and the landlord would have to offer plentiful discounts to make the deal work.

[Reply]

I’m not so sure the Mall in Columbia qualifies. It draws widely, but the some of the stores are small (the LL bean is a fraction of the size of the one at Tysons and the anchor tenants are smaller than some of their other branches), and it doesn’t have the kind of one of a kind stores that you’d find at Tysons.

The trend toward urban flagships has been a round for quite awhile. The REI near downtown Seattle opened about 10 years ago, and the one in Denver followed soon after. Specialty chains like Patagonia have sought out urban locations for decades as their primary stores in large metros. Although Michigan Avenue in Chicago has hosted upscale shopping since the 20s, it’s really built up as a “flagship” strip since the 80s.

Healthy downtowns and other urban shopping districts like Georgetown have been drawing flagships for ages. Moderately to very upscale super-regionals also have been elbowing out their weaker competition for years. there’s no new “trend” here, just a recitation of what’s been happening for years.

[Reply]

SEAN Reply:
May 1st, 2013 at 7:26 pm

@Rich, Yes – not a new trend, but rather a revival of an old one. That was the point of that piece.

When comparing Columbia to Tysons Corner, no doubt that Tysons is king although Columbia has it’s own ability to draw.

[Reply]

rob Reply:
May 3rd, 2013 at 2:03 pm

@SEAN, Hi Sean look at palisades mall web they are doing a whole new makeover inside and out. They finally heard customers and need to stay in competition with nanuet coming. Its going to look like GSP.

[Reply]

SEAN Reply:
May 5th, 2013 at 4:08 pm

@rob, Saw the Patch article on the remoddle of Palisades this morning with all the nut cases & their obnoctious comments.

I also went to Pyramid’s site & let me tell you I’ve never read such garbage on retail in my life. On the portfolio page, you will find links to all of there properties. When you click to a property, you get such info as population, average household income & a list of anchors & larger tennents. Now that’s all well & good, but despite the fact Palisades HHI is over $90K per year & Crossgates HHI is over $65k, they have nearly the same anchors & box stores. The only conclusion you can draw is… the higher income shoppers are doing there shopping elsewhere as the store roster & restaurant lineup reflects a more mid-tier customer bass outside of perhaps Cheesecake Factory, RestorationHardware & Apple. This trend semes to playout company wide.

[Reply]

rob Reply:
May 6th, 2013 at 3:20 pm

@SEAN, the people here in rockland are such whinners about this mall for 15 years and still think that palisades hurt nanuet which was the fault of simon.I am truly glad palisades is doing it because nanuet will be outdoors and now at least palisades will be a decent looking mall for this area something like GSP OR BTC

[Reply]

SEAN Reply:
May 6th, 2013 at 6:23 pm

@rob, We’ve been posting about that fact since the Nanuet thread went live in 2008 & nothing has changed. Although the Patch article neglects to mention the mall in the Medowlands, that’s another reason why Palisades needs to renovate as it will open at some point & GSP is also in renovation mode as well.

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rob Reply:
May 7th, 2013 at 3:39 pm

@SEAN, Sean a few places have been announced for shop at Nanuet Bonefish Grill Zinburger whIch just recentky opened in GSP MICHAEL KORS VERA BRADLEY 15,OO FOR A BURGER AT ZINBURGER AND PEOPLE THINK 11,00 IN FIVE GUYS IS HIGH. PEOPLE HERE DONT EVEN WANT TO PAY THE PRICES IN MCDONALDS.

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GGP Performance Solid, But Growth Opportunities for 2013 are Limited
May 9, 2013 Elaine Misonzhnik

This week proved a busy one for General Growth Properties (GGP)—the mall REIT secured a $1.5 billion term loan from U.S. Bank and RBC Capital Markets to refinance 16 of its assets and the Blackstone Group, one of its shareholders, revealed plans to sell its 2.5 percent stake in GGP through a secondary offering.

Yet in spite of the activity surrounding it, GGP remains largely in the same place it’s been in for the past year—delivering solid returns to its shareholders, but not outperforming its peers in the mall REIT sector. The reason is that the firm still carries a relatively high debt load, limiting the possibility of new acquisitions and development projects, according to RBC Capital Markets analyst Rich Moore.

“There are many things that are positive on the operation front—the capital allocation track record has improved nicely. But the balance sheet philosophy is one of higher than average leverage and I don’t see it changing going forward,” says Cedrik Lachance, managing director with Green Street Advisors, a Newport Beach, Calif.-based consulting firm. “It’s a company that’s comfortable operating with more leverage than many of its peers and that [causes] caution on the part of investors.”

In fact, a large portion of GGP’s shares continues to be owned by institutional investors, a legacy of the bankruptcy and reorganization the firm went through in 2009/2010. Less than a year ago, one of the REIT’s largest shareholders, Pershing Square Capital Management, tried to orchestrate a sale of GGP to Simon Property Group, although it dropped the issue after selling warrants for 18,432,855 of the REIT’s shares to Brookfield Asset Management, another major stakeholder. In the past few months, global investment manager Cohen & Steers upped its stake in GGP by 1,826,214 shares, to 37.39 percent.

Solid fundamentals

For the first quarter ended March 31, GGP reported a 5.3 percent year-over-year growth in net operating income (NOI) for its portfolio, to $531 million. Tenant sales went up 6.3 percent, to $558 per sq. ft., while rents for leases beginning in 2013 rose 11.1 percent, to $64.44 per sq. ft., compared to rents on expiring leases.

In addition, the firm reports that 95.8 percent of its portfolio is now leased, an improvement of 210 basis points over last year’s level.

At the same time, however, GGP’s management has been eager to take advantage of today’s low interest rates and availability of capital, resulting in a relatively large debt load, Lachance points out. Year-to-date in 2013, the company closed on $1.5 billion in property level loans, in addition to the $1.5 billion term loan. RBC’s Rich Moore estimates that at the end of the first quarter GGP had a debt-to-total capitalization ratio of 48 percent. The figure marked a 400 basis points improvement from first quarter of 2012, but was still much higher than the 35 percent debt-to-total capitalization ratio of closest peer Simon Property Group.

Given the high quality of GGP’s malls, this has not caused typical over-leverage concerns, but the REIT’s limited equity does put constraints on acquisition and development possibilities, Moore notes. GGP’s planned development portfolio currently totals only $898.5 million, according to Barclays Capital. It is one of the few mall REITs that has not tried to dabble in the outlet center space. And its ability to buy new malls is also curtailed by its focus on class-A product, which has been scarce in this market.

“We’ll be aggressive for high-quality retail properties that are in line with our business strategy, “ GGP CEO Sandeep Mathrani told analysts during an earnings call on Apr. 30. “We truly believe that over the long-term, good things happen to good assets.”

Meanwhile, with the company completing most of its leasing (roughly 85 percent) for this year and up to 30 percent of its leasing goals for 2014, that part of the business will not be a source of great growth in the near term either.

And, according to Moore: “When the valuation frenzy begins to cool, the strongest outperformers in the sector will be those companies with the most significant growth platforms.”

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I just found this site a few days ago I really enjoy it. I go on frequent road trips for pleasure but also for my business, mainly in the western two thirds of Pennsylvania but also often to Ohio and West Virginia. I am really into touring these starving shopping centers, can’t believe (but am really grateful) to find others into it too. I was on a “mission” yesterday and my route took me past the Schuylkill Mall in Central Pennsylvania. I stopped in and got a few pics including a great scar of an original Spencer sign. This mall has to be costing the owners money to run every day, because *no one* was there, I was there over my lunch around 12:30 and the word desolate doesn’t even quite get it. Couldn’t stay as long as i wanted due to time constraints but would be glad to share the pics and some more details about my visit.

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NYT DealBook

June 24, 2013, 4:14 pm
Owner of Hudson’s Bay Explores a Deal to Buy Saks
By PETER LATTMAN
Will the owner of two of the oldest department store chains in North America be adding a third to his collection?

Richard A. Baker, a shopping mall developer who emerged as a major player in the department store business with his purchases of Lord & Taylor and Hudson’s Bay, is now exploring a bid for Saks, according to a person briefed on the matter.

Saks, a 90-year-old department store chain, hired Goldman Sachs last month to explore a possible sale. Its shares soared to a five-year high after news broke that the company was in play.

Among the potential buyers that have explored purchasing or making an investment in the company are the private equity giant Kohlberg Kravis Roberts & 58彩票平台 and the sovereign wealth fund Qatar Investment Authority, this person said. K.K.R. had also floated an audacious deal that would have merged Saks and Neiman Marcus, which is also on the block, but that outcome is highly unlikely.

On Monday, the private equity owners of Neiman Marcus — TPG, Warburg Pincus and Leonard Green — filed for an initial public offering. They have owned Neiman Marcus since 2005.

For Mr. Baker, chief executive of Hudson’s Bay, the parent of The Bay stores in Canada and Lord & Taylor in the United States, an acquisition of Saks would cap an extraordinary run of deal-making. In 2006, at the market peak, he acquired Lord & Taylor for $1.2 billion. He later acquired Hudson’s Bay and combine the two into one company, which posted about $4.1 billion in revenue during its 2012 fiscal year.

Last November, Mr. Baker orchestrated an initial public offering of Hudson’s Bay, listing the company on the Toronto Stock Exchange.

Adding Saks to his portfolio holds great appeal to Mr. Baker, 47, who lives in Greenwich, Conn., and is based in New York. In the United States, there are significant synergies between the Saks and Lord & Taylor, whose flagship stores are 11 blocks from one another on Fifth Avenue. And there is also growth potential in Canada for both Saks Fifth Avenue department stores and and its discount arm, Off 5th.

Should Mr. Baker make a bid for Saks, there would also, presumably, be a real estate angle. After acquiring Hudson’s, Mr. Baker struck a complex deal to sell the rights to leases on an under-performing division Hudson’s Bay to Target for about $1.8 billion. The deal enabled him to pay down a large amount of debt.

Mr. Baker’s interest in Saks was first reported on Monday by Women’s Wear Daily. Shares of Saks were flat at $13.49 in trading on the New York Stock Exchange.

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Check out the Desoto Square Mall in Bradenton, FL, which is in its final death throws. Having lost 2 major anchors in the last 5 years, the mall was sold over 7 months ago to a NY rehabilitation company that has yet to do anything at all as far as I can tell other than open a dollar movie theater — a true sign of the end. Two out of every 3 storefronts are empty, the anchors haven’t been updated in decades and are sad examples of retail blight.

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Starbucks Plans Massive U.S. Expansion. Can Its Growth Plan Succeed?

Retail Traffic

Elaine Misonzhnik, Senior Associate Editor

It’s certainly a bold move. Just four years after over-expansion forced Starbucks to shutter hundreds of locations, the coffee chain is stepping up new store openings in the U.S. more aggressively than anyone expected. During an investor conference held on Dec. 5, Starbucks executives announced the company plans to open at least 1,500 new units stateside over the next five years.

Yet while retail real estate consultants wonder whether this is ultimately the right move, they concede that Starbucks can make the expansion work—if it’s handled better than its previous growth push.

The reason the seemingly ubiquitous chain feels the need to grow likely has to do with maintaining market share—downscale rival McDonald’s has been investing a lot of time and money into promoting its coffee line, according to Jeff Green, president of Jeff Green Partners, a Phoenix-based retail real estate consulting firm. The good news for Starbucks is that it continues to experience strong sales in spite of McDonald’s’ lower price point, notes Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York City-based retail consulting and investment banking firm. Increasing its food offerings and investing in better customer service has served the chain well, he says.

Now Starbucks will have to both continue on its improvement and innovation path and ensure that it’s not opening locations haphazardly, across the street from each other, the way it happened in the early and mid 2000s.

“When they collapsed before, it wasn’t just [because of the] bad economy,” Davidowitz says. “There were a lot of strategic real estate mistakes.”

RJ Hottovy, an analyst who covers Starbucks for Chicago-based research firm Morningstar, expresses a similar view.

“I think [the new expansion plan] is a little aggressive, but what gives me confidence in that goal is the unit economic numbers we’ve seen in the past two years, which have been some of the strongest in the history of the chain,” he says. “The way they characterized their last expansion phase was ‘undisciplined’ and now they are really prioritizing the customer experience. I do think there is substantial opportunity, especially in an environment where we have excess real estate capacity.”

Where to go?
Finding the right formula to take advantage of that opportunity will be no easy feat, however. While Starbucks was all but made for urban markets in Davidowitz’ view, Jeff Green points out that the chain has long ago saturated most of the major urban and suburban areas in the United States. What’s more, Starbucks risks losing its brand appeal if it can be found anywhere and everywhere, according to Doug Stephens, president of Retail Prophet, a consulting firm.

“As it is now, I think Starbucks is really walking a fine line between healthy growth and losing their brand magic,” he says. “The thinner they spread the brand the more ‘average’ and ‘ordinary’ they become.”

The fact that a substantial portion of the chain’s new stores will come as a result of licensed partnerships with retailers like Safeway and Target shows solid strategic thinking, in RJ Hottovy’s view. He notes that the store-within-a-store model allows Starbucks to encourage consumers to buy not only its ready-made coffee and snacks, but also its branded consumer products from its partners’ shelves. Hottovy anticipates that approximately two thirds of the new stores will come from licensed partnerships.

When it comes to stand-alone locations, Green notes that there are still some areas where Starbucks can grow without cannibalizing its own sales, including locations on national highways connecting major cities and in smaller towns where the chain hasn’t yet occupied every corner.

“Certainly there are a handful [of stores] in each major market they can still do, but I don’t see that as a major growth push,” he says. “They need to make sure that they definitely do a better job of assessing cannibalization than they did when they were opening stores several years ago.”

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I am a FL resident who started two blogs- one about affordable fashion and one about malls.
I have covered 14 so far, one if which is already on labelscar (Orange Park). I went to 7 malls in 4 days recently to collect data and I write reviews so people know what to expect. Mine are all live malls (mostly) But I may cover a few dead ones in the future. Also I will do another tour for outlet malls
and another for town centers. All FL, eventually I’m hoping to add GA or if I go out of state again. Plus mine will be getting updated periodically with renovations or closures.
Does any of this interest Labelscar?

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Check out my (in progress) case study for Jacksonville, FL.

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Funeral and casket outlets are heading to the mall

LOS ANGELES — We eat there, buy our clothes there and some people suspect teenagers may actually live there. So perhaps it was just a matter of time until funeral 58彩票平台s began moving into the local shopping mall.

Over the past two years, Forest Lawn has been quietly putting movable kiosks in several of the malls that dot Southern California’s suburbs. Malls with the kiosks include the Glendale Galleria. Previously: Forest Lawn mortuary takes its marketing to local malls

The move, by one of the funeral industry’s best known operators, expands on a marketing innovation that appears to have begun at the dawn of the decade when a company called Til We Meet Again began opening casket stores around the country.

“We try to reach our audience where they are at and the mall is a great way to do that,” said Ben Sussman, spokesman for Forest Lawn, whose cemeteries count among their permanent residents such notables as Walt Disney, Elizabeth Taylor and Michael Jackson.

“And it’s also, perhaps, a way to reach people who might be a little leery about coming directly into one of our parks,” Sussman said.

As to why folks would be leery about that, industry officials acknowledge the answer is obvious: Who really wants to enter a funeral 58彩票平台 even one day before they have to?

“Funeral planning is something everybody knows they must do, but at the same time it’s something nobody wants to do,” said Robert Fells, executive director of the International Cemetery, Cremation and Funeral Association.

“Nobody gets up on a Saturday morning and says, ‘Gee, it’s a nice day. I wonder if I can go out and get myself a burial plot,’” Fells said.

But if they’re strolling past a funeral outlet at the mall, where they’re surrounded by happy, lively people and maybe clutching a bag of Mrs. Field’s cookies, the thought is that they’ll feel differently.

“When they’re going to the mall, people are not going out of need,” said Nathan Smith, co-founder and CEO of Til We Meet Again, which has outlets in malls in Arizona, Louisiana, Kansas, Indiana and Texas.

So if they do happen to see a place peddling coffins or urns while they’re pricing T-shirts and hoodies, Smith said, it will look far less intimidating.

Forest Lawn’s effort began modestly, with just one kiosk (one of those movable things that usually sell stuff like calendars or ties) in a mall in the Los Angeles suburb of Eagle Rock.

When no one was creeped out, the program expanded to about a half-dozen malls. Now Forest Lawn periodically shuffles them from one mall to another to reach the largest audience.

Unlike the people at other such stations, who can seem like carnival barkers as they walk right up to you and hawk discount calling plans or free yogurt samples, Forest Lawn’s operators are more discreet.

At the entrance to a Macy’s department in the L.A. suburb of Arcadia last year, operators were quick to smile and hand out brochures when approached. But they kept their distance until people came to them.

It was the same at a mall in Glendale last week, where people stopped to examine cremation urns ranging from one with a subdued design of leaves to another that brightly featured the logo for the Los Angeles Dodgers baseball team.

Also on display was a recruiting poster for potential future Forest Lawn employees, complete with a picture of the great Dodgers pitcher Fernando Valenzuela, who urged them to consider “joining a winning team.”

Still, not everyone is thrilled with the idea. “You’re in a shopping mall and you’re walking along and there’s a funeral place?” retired high-school teacher Stan Slome said incredulously. “That sounds too deadly.”

After thinking it over, however, he acknowledged it’s something that could catch on.

At age 86, Slome said, he gets his share of mail from funeral operators inviting him to seminars at local restaurants, where he can have a meal on them while he hears a pitch on why he should use their services when he exits this mortal coil.

He doesn’t care for that either, he said, but he figures somebody is attending those seminars.

If the mall effort catches on, said Jessica Koth of the National Funeral Directors Association, credit the aging Baby Boom generation at least in part. Historically, people have not wanted to talk, or even think, about their demise.

But Baby Boomers, the oldest of whom are pushing 70, are different. Many are beginning to press for so-called green funerals that don’t require the use of coffins or burial vaults, Koth said. Others want custom-made coffins or urns that say something about who they were.

That often means something that represents a favorite car or sports team, said Smith of Til We Meet Again. He pointed out he even got a request once for a coffin built to resemble a portable toilet — from a guy whose company made portable toilets.

With that mindset, could going to the mall and planning the whole deal just steps away from the Merry-Go-Round really be that unusual?

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Attracting The Right Shoppers

In a time when every good can be bought on the Internet, creating an experience is what continues to draw shoppers to retail centers. Over the past five years, retail centers have had to up their games to lure consumers away from screens and to their centers. Since the experience of interacting with a retailer’s web site and visiting its store is intended to be seamless, it’s left up to the shopping center to make up a large part of the experience that draws a shopper out of her or his 58彩票平台. Amenities and design work to create an atmosphere that’s inviting and attractive to consumers, while the retail — and restaurant — mix provides the experience they crave.

From revitalized lifestyle centers to regional malls to outlet centers to grocery-anchored centers, open-air shopping centers are the preferred method of redevelopment or development today. SCB spoke with a number of executives active with open-air centers to see where the sector is headed and what is driving activity.

What’s New in Ground-Up Development

Creating new large-format centers has been challenging over the past few years. Not only do developers have to fight community opposition and a challenging financing market, but they have to create environments for shoppers that don’t already exist in the market.

Dorsky + Yue is working on the next phase of Easton Town Center for Georgetown and Steiner + Associates called Easton Gateway. Nearly 15 years after the original center opened, Easton Gateway will introduce a grocery- and power-anchored component. The 600,000-square-foot project adds more amenities and retail to the iconic development in Columbus, Ohio. The project is anchored by Costco, REI, Dick’s Sporting Goods, Saks Off 5th and Whole Foods Market. Steiner and Georgetown made the effort to give Easton Gateway a cohesive look with Easton Town Center, despite the fact its uses are different.

“While Easton Gateway is spatially distinctive and organized for convenience and accessibility, the project reflects many of the same thoughtful architectural details and innovative design elements that give Easton Town Center its familiar brick-and-mortar appeal,” says Anne Mastin, senior executive vice president of real estate for Steiner + Associates.

“We walk each center in our mind in the planning stages to make sure they work and that visitors have places to hang out,” adds Kevin Zak with Dorsky + Yue International, who worked on the center’s design. “We have to have an understanding of how the spaces are going to go together so that, ultimately, when the center is built, it is not just pieces that are thrown into the soup; it has been orchestrated in a way that makes sense and extends the stay, making it memorable. In addition to the great tenants that are there, that’s what makes a successful center.”

Dorsky + Yue also designed the new Palm Beach Outlets for New England Development and Eastern Real Estate, which opened in February in Florida. The company is also working on a new outlet center for Tanger Outlets in Grand Rapids, Mich.

“We are bringing to the outlet centers a lot of the town center-like walkability and amenities,” says Zak.

In addition to walkability, other successful open-air centers are making strategic tenanting moves. Petrie Ross Ventures built Woodmore Towne Centre in Landover, Md., a few years ago. The center was a model of how a community and a developer can both learn from each other. Prince George’s County had been historically under-retailed; many developers and retailers missed the demographics of the predominately African-American population. Petrie-Ross saw the affluence in the market, and set out to make retailers understand it as well. The results show in the 245-acre mixed-use project that it built and opened in 2010, the retail portion of which is anchored by Wegman’s, Costco, JC Penney, Best Buy and Petco.

“We tried to bring in the bell cows — the tenants that would really generate the traffic — and then fill in the shop space to feed off that,” says Walt Petrie, chairman of Petrie-Ross Ventures, which is based in Annapolis, Md. Sales of the anchor stores, he reports, are phenomenal.

At Woodmore Towne Centre, Petrie-Ross separated the mixed-use components of the project since it was developed during the recession. Now, the company is working on tying the project together.

“It is hard to make all those components work together unless you are in an urban market,” says Walt Petrie. “At one point in time, retail is going to be hot and office is not; or office will be hot and multifamily will not. It is hard to hit all that at one time.”

Petrie-Ross also added restaurants with outdoor seating to Woodmore Towne Centre.

“We spent a lot of time creating pedestrian-friendly walkways, lighting and all the amenities; that has turned out extremely well,” says Petrie.

Not all profitable centers can rely on the latest trends. For some developers, classic design can be a solid bet on success for years to come.

Weingarten is a developer who has continually built and redeveloped centers over the past few years. The Houston-based company was formed in 1948 and has been building, buying and redeveloping shopping centers for more than 65 years.

“While a tremendous amount has changed during those 65 years, a tremendous amount has stayed the same,” says Drew Alexander, president and CEO of Weingarten. “A good location with good anchors, layout and adjacencies is essential so that you are giving the customer something that is exciting, convenient and fills their needs. That is as important today as it has been during the entirety of the time we have been in existence.”

Architecture is one of the ways that Weingarten makes sure that its centers are always up-to-date. The company opts for traditional centers with long-lasting looks.

“Architecture should be pleasing and interesting, but should stand the test of time and be reasonable in maintenance costs, not something that is trendy that will go out of style quickly,” he says.

Lighting is another area where developers have paid more attention, says Alexander.

“As dual income households need to get more shopping done in the early evening, keeping the centers well-lit has become more important,” he says.

As developers strive to incorporate features that were once only found in malls and lifestyle centers to convenience and grocery centers, architects say that doesn’t mean that they have to break the bank to make a project look good.

“We are very careful about the way we spend money on a project,” says Zak. “We are very much about how to get the most bang for the buck. It has to plan well from a retailing standpoint and it has to get the most out of every dollar that we spend as a designer. That is what our clients are expecting and, moreover, they are coming to us with per square foot budgets.”

Redevelopments

Redevelopment has been the main focus of open-air center projects over the past few years. Owners often redevelop centers when they feel the market may be slipping slightly, or they need to increase the amount of GLA at a property.

Levin Management assisted a client with the redevelopment of Hamilton Plaza in Hamilton Township, Levin Management redeveloped Hamilton Plaza in Hamilton Township, N.J., recently. The company created a smaller store for anchor ShopRite while remodeling the store. The older center was completely remodeled at the time. The resulting 175,000-square-foot redevelopment improved traffic flow at the center. New signage and new facades also refreshed the look of the center. The property was the secondary center in the market before its redevelopment, now it is the top center.

At Post Road Plaza in Pelham Manor, N.Y., Levin took a former Kmart space and subdivided it. The company brought in Dave & Buster’s — a tenant that will bring in multiple uses during different times of the day — and has a lease out for the other part of the space. The center is anchored by Fairway Market, another area draw.

“When the demographics of a property and the tenant mix call for it, bumping up the amenities will help,” says Harding. “But malls and lifestyle centers have a different set of tenants and a different purpose than a typical grocery-anchored shopping center. In many places, a fountain will not apply to sales. Grocery-anchored centers are generally a focused shopping trip based on convenience.”

Levin Management often redevelops centers for its clients, from overseeing design to land use to construction.

“In a redevelopment, we want to make sure that we are maximizing the ability to make the project function as best as possible for the tenants,” says Harding. “We also take the opportunity to add in amenities that can create life and activity in a center, such as pad sites, restaurants or an active use.”

Building shopping centers that won’t require extensive renovation cycles seems to be a focus for many developers today, who are tired of sponsoring redevelopment every 10, 15 or 20 years.

“Most of our clients are focused on more permanent places,” says Zak. “They want places that are going to stand the test of time, both from a materials standpoint and a design standpoint.”

Legacy Village near Cleveland is one such example that Zak points to. The project opened in October 2003 and, 10 years later, “it still looks fresh,” he says. “Because it was designed with the intent to feel permanent and handmade. You have to have a sustainable approach so the center looks to be a part of the landscape.”

“Look and design is more important than it used to be,” adds Harding. “Retailers definitely focus on that more. It also helps set your property apart more from the crowd.”

Leasing

Tenants remain the largest draw of centers, and developers know they must push the familiar names to shoppers to get them to the centers. But they also must keep them interested once they’ve gone to the stores that were the reason for the initial visit.

“At the end of the day, the reason that someone is going to a shopping center is a tenant or a collection of tenants,” says Harding. “We focus on the core mix of tenants and try to bring in tenants that are draws. We mix in types of tenants who bring in shoppers at different types of the day. Today, that includes gyms, restaurants, coffee shops and other retail venues where people ‘hang out’ before they cross-shop at other tenants.”

Most notably, restaurants are drawing larger crowds to centers in recent years. At the very least, many supermarkets now have cafes inside that supply the restaurant offering at smaller centers. It’s a trend that’s growing in the supermarket industry, with many becoming known for their specialty subs, fried chicken or other offerings.

“The vast majority of our supermarkets have cafes,” says Weingarten. “58彩票官方网站 meal replacement has become a huge item; most people don’t know what they are having for dinner on a given evening at 4 p.m. Having a great, convenient place that they are naturally drawn to with easy access, helps aid that. As we’ve been involved in larger centers with larger supermarkets, the access and traffic flow are super important today when you have a 140,000-square-foot supermarket.”

Tenants have boosted their presence in the shopping center. In addition to using traditional methods like advertising and marketing, many are now participating in social media campaigns and social coupon campaigns that drive visits, and customers, to the center.

“Omni-channel retailing is clearly where it’s at,” says Alexander. “You still see supermarkets promoting and driving traffic by doubling or tripling the value of a coupon. Some online retailers have gone as far as to give away grocery delivery, which could be a $25 or $30 expense. Buy online and pick up in-store is also effective for retailers. It offers the opportunity for a salesperson to find other products the consumer wants. It drives the [retail] experience.”

Weingarten has shifted its focus to maximizing adjacencies for supermarket tenants to increase sales for its centers. Weingarten is the retail developer for the redevelopment of the Walter Reed Army Hospital facility in Washington, D.C. The company expects to develop approximately 250,000 square feet of retail space as part of the 3 million-square-foot mixed-use project that is anticipated to also have residential, office and hotel uses.

Tenants have also used technology to help sales at stores. Accessing locational data of consumer cell phone activity while consumers are at the centers helps this cause, as does social media interaction with shoppers via mobile device. Connected consumers are now able to receive offers via mobile phone while shopping the store. While this was pioneered by apparel retailers, grocery and other needs-based retailers are now using this technology to increase sales.

“While the Internet certainly has a place in retail, even surveys of the Millennials show that they like the physical shopping experience for all the reasons the generations before have,” says Alexander.

Other centers have looked to design and amenities as attractions to shoppers.

“We see curb appeal as very important,” says Harding. “We want the property to stand out not only to customers, but to tenants as well. We look at different amenities to make the shopping center more attractive to customers.”

WiFi has become an amenity at many centers. More urban centers use it to create a sense of place; free Internet service attracts people to spend time in the strip center environment just as much as in malls.

“You want to create an environment where people are happy to stay for long periods of time,” says Alexander.

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Very surprised to not see any mention of Fiesta Mall in Mesa, AZ. This mall has been struggling for a few years now. It may be even worse off than Metro Center. There is a lot of dead/languishing retail space around it, and the mall has been bleeding tenants for quite a while. The Dillard’s downgraded to a clearance center a few years ago. Victoria’s Secret, Disney Store, Radio Shack, Hallmark, Forever 21, American Eagle, and Macy’s have all left in the last three years. There is the usual mix of urban and mom-and-pop stores frequently seen in similarly struggling malls. The last remodel of any kind was maybe 10-15 years ago. The mall isn’t in an incredibly unsafe area, but has somewhat of a “ghetto” reputation. It was once a centerpiece of the East Valley, but the surrounding area has not been maintained to keep viable mainstream retail. Worth checking out and documenting.

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I brought this up last year,
And I’d like to mention it again.
I am still actively building a blog with detailed reviews
and case study type research on malls
in Central and North Florida.

Here is the link:

Check out Malltopia! you have very little about Florida on Labelscar, and I think mine would be a nice addition.

[ Reply:
July 17th, 2014 at 1:13 pm

@lovelylotus, I just checked out your Malltopia page. It’s very cool. Nothing new has been posted here on Labelscar in a year. I wonder why? I hope you keep your Malltopia page updated.

[ Reply:
July 17th, 2014 at 1:32 pm

@John East,

Thank you good sir!
I am about to post a feature about an abandoned mall in Lakeland FL that was turned into a church.
Then an idea that a church here in St. Augustine should buy out and save the tiny dead mall that it already occupies the theater in.
I’ll also be updating St. Johns Town Center in a couple of months when it gets its new Nordstrom.

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[youtube

One of “Weird Al’s” newest songs from his album “Manditory Fun.” It’s in the style of Crosby, Stills & Nash.

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Ah. The research I’ve been doing online has this FL mall pegged as “the only one”. Funny.
But since I’m a FL girl and I’m trying to put (a lot more of) the Sunshine state on the mall enthusiast/retail history map, I will be going down to Sarasota in December to do a tour and write a review.
The reviews are supposed to be constructive criticism and personal testimony to why someone may or may not want to shop there. I try to add history too where I can, about the older ones.

The mall that might interest you guys on Labelscar would probably be Regency Square Mall, which is in Arlington district of Jacksonville. I already have a bit about it and its history with some old ads I dug up in the library archives and I have a review about it present day. Pretty sad, it is dying.
I’m about to write about it again because it went under new ownership and the results are rather bizarre.

Just go into that Malltopia blog and look at last fall for Regency Square Mall
and also Jacksonville’s Case Study
(because there are several lost malls in that city)

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Retail centers are still top shopping destinations: Report

Publish Date: October 14, 2014

Category: SCT Newswire Articles
Topics: icsc, mall

Shopping centers are performing well even as they undergo a profound evolution, according to a report by ICSC Research. “The shopping center industry is currently vibrant and healthy,” writes Michael P. Kercheval, ICSC’s president and CEO, in the introduction to Shopping Centers: America’s First and Foremost Marketplace. “We believe [the industry] is poised for unprecedented success going forward — not in spite of e-commerce, but because of it.”

The 18-page report, available at ICSC.org, blends statistical data with big-picture analysis by a host of observers. And the big picture is quite encouraging, they note. With new supply in America’s developed markets growing at its slowest pace in some 40 years in 2013, the relative lack of shopping center construction is restoring the supply-demand balance and helping to shore up occupancy rates. New tenants are likely to lease even more space in the U.S. over the next two years as retailers open an estimated 77,000 stores — a five-year high. Other positive trends include rising demand driven by population growth; the opportunity to tailor tenant mix to meet the needs of increasingly important demographic groups such as Hispanics and Millennials; growing interest in brick-and-mortar space among formerly online-only retailers such as Athleta, Bonobos, Boston Proper and Warby Parker; and the successful efforts of landlords to broaden the appeal of their shopping centers, in part by means of a creative tenant mix.

Given the ubiquitous story line that e-commerce is killing brick-and-mortar retail, the assertion that online sales could actually help the industry might seem counterintuitive. But precisely because online retail offers such an easy and convenient way to buy commoditized goods, its popularity has forced developers to think harder about how to create high-energy experiences at their properties, according to Mark Toro, a partner at North American Properties who heads the firm’s Atlanta office. The effect of all this is a paradigm shift that will strengthen the industry, Toro says. “Back in the day when shopping centers were being built in every suburb, all you had to do was line up the retailers and provide convenient and easy access, and people would come shop,” Toro said. “We have turned that on its head now: Instead of providing the most convenient, quickest way to shop, we’re providing guests with a place to be, which extends dwell times.”

Owners of the larger regional centers will continue to focus on the experiential dimension by adding restaurants, entertainment features, lively outdoor space and the like, the report says, while neighborhood centers, by contrast, are likely to keep leveraging convenience factors.

In-store conversion rates continue to be four times higher than online-only conversion rates, the report authors point out. “Consumers still prefer in-store shopping. Ninety-four percent of total retail spending happens within the four walls of a physical store,” the report says. (In 2013 online retail sales came to some $263 billion, which accounts for only 6 percent of total retail sales, according to the U.S. Commerce Department. In-store sales, meanwhile, accounted for the rest, totaling some $4.3 trillion.)

Meanwhile, investors show confidence. Retail REITs, in particular, have maintained strong property performance amid the challenges of the Internet age, thanks largely to savvy management, observers say. “The REIT industry as a whole has produced returns averaging nearly 11 percent per year for more than 20 years, and yet retail REITs have produced returns averaging 11.82 percent per year — even better than an industry that has done very well overall,” said Brad Case, senior vice president of research and industry information at NAREIT. Annual returns for institutionally owned (i.e., non-REIT) retail properties on an unlevered basis, he says, have averaged 8.65 percent.

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In $1.89 billion deal, Macerich trades Canadian pension fund stake in 5 malls for stake in company

Publish Date: November 18, 2014

A Canadian pension fund is cashing out of its stake in five Macerich-owned malls in exchange for a chunk in the Santa Monica, Calif.–based landlord itself. The Ontario Teachers’ Pension Plan Board sold its 49 percent stake in the five super-regional malls to its partner Macerich for $1.89 billion, including the assumption of $673 million of property-level debt. Macerich paid for the malls by giving the pension fund a 10.9 percent ownership stake in the company.

“In a sector in which quality acquisition opportunities rarely present themselves, the opportunity to consolidate our ownership in these highly productive, market dominant centers through a stock for asset exchange represents a real opportunity to increase our overall portfolio quality and growth prospects,” said Macerich chairman and CEO Art Coppola, in a press release.

The malls concerned are Queens Center, in Elmhurst, N.Y.; Washington Square, in Portland, Ore.; Los Cerritos (Calif.) Center; Stonewood Center, in Downey, Calif.; and Lakewood (Calif.) Center. “On a sales per-square-foot basis, Queens Center and Washington Square are currently our two most productive assets, both generating sales of over $1,000 per square foot while Los Cerritos Center, which is currently generating nearly $700 per square foot in sales and undergoing a $45 million expansion, represents the linchpin of our dominant South L.A. market position along with Stonewood and Lakewood,” Coppola said.

The real estate portfolio of Ontario Teachers’ is managed by its subsidiary, Cadillac Fairview Corp. Macerich will add John Sullivan, CEO of Cadillac Fairview, to its board of directors. “We are thrilled to be continuing our partnership with Macerich, and have the highest respect for Art and his team,” said John Sullivan, in a press release. “It is exciting to be a part of the development and implementation of their vision for one of the highest-quality mall portfolios in the U.S.”

Thaughts…

It should also be noted that Simon is also increasing their stake in Macerich as well, but they are asking the DOJ for a special wavor since the OTRS stake is about 10% wich is greater than what current US laws allow.

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SEAN Reply:
November 22nd, 2014 at 12:16 pm

From ICSC

Simon may seek to up its 3.6% stake in Macerich

Publish Date: November 19, 2014

Simon Property Group announced it has accumulated a 3.6 percent ownership stake in Macerich Co., and wants the Santa Monica, Calif.–based REIT to let it buy even more. Macerich currently has an excess share provision that prevents any one firm from owning more than 5 percent of its outstanding shares. But Macerich recently waived that provision to allow for its recently announced deal to sell a 10.9 percent stake to Ontario Teachers’ Pension Plan Board. And Simon says it may ask for a similar waiver, setting the stage for potential further consolidation in the U.S. mall sector. Simon owns or has an interest in 228 retail real estate properties comprising 189 million square feet in North America, Europe and Asia. Simon also owns a 28.9 percent ownership interest in Klépierre, a Paris-based landlord with retail centers in 13 European countries. Macerich, meanwhile, owns 56 million square feet of real estate consisting primarily of interests in 52 U.S. regional shopping centers. The two firms’ portfolios overlap in a few major markets including New York City, where Macerich owns Elmhurst, N.Y.’s Queens Center and Simon owns Garden City, N.Y.’s Roosevelt Field.

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SEAN Reply:
November 24th, 2014 at 9:20 pm

Simon May Be Looking to Buy Macerich, Recent Transactions Indicate

Nov 20, 2014 Elaine Misonzhnik

The country’s biggest mall REIT, Simon Property Group, may be angling to buy smaller competitor Macerich, industry insiders say. The move would allow Simon to grow at a time when opportunities for new mall development remain few and far between.

On Nov. 19, Simon revealed that over the course of the previous 11 months it had bought 5.71 million common shares of Macerich, equal to a 3.6 percent stake in the company. Simon executives are also considering asking Macerich to waive its excess share provision, which caps share ownership at 5 percent, the company disclosed. Macerich has previously approved the acquisition of 10.9 percent of its shares by another investor.

At the end of the day Wednesday, Macerich shares were trading at $76.91, near the company’s 52-week high of $79.43 per share.

“It certainly appears that Simon could be interested in acquiring Macerich and it’s a way to strike up that dialogue,” says Jason Lail, senior research analyst with SNL Financial, a Charlottesville, Va.-based research firm. “The portfolios are certainly complementary—Macerich focuses on class-A malls in some of the same markets as Simon, giving Simon a lot of additional exposure” in cities such as Phoenix.

Speculation that Simon may be looking to buy a rival mall owner is not entirely unexpected, given that the market currently offers limited opportunities for regional mall REITs to grow. With its portfolio occupancy already in the high 90 percent range and low same-store sales growth, Simon doesn’t have much leeway for a drastic improvement in property fundamentals. Growth through property-level acquisitions remains challenging, as few class-A malls are being put on the market. Simon does have several new outlet centers in the works, but regional mall development, its bread-and-butter, is expected to be almost non-existent for the foreseeable future.

“Net new mall supply will likely be negative for the next several years as more malls will close rather than open,” according to an Oct. 22 note from Green Street Advisors, a Newport Beach, Calif.-based research firm.

“The bottom line comes down to ‘they are just not building,’” says Todd Sullivan, general partner with Westborough, Mass.-based Rand Strategic Partners and author of the blog Value Plays. “And for Simon, it makes more sense to buy one of these smaller players than go out and build one or two malls from scratch.”

The right fit?

After Simon spun off its smaller malls and shopping centers into Washington Prime Group earlier this year, drastically reducing its size, Sullivan doesn’t anticipate any objections from the Federal Trade Commission to a potential merger with Macerich.

A more pressing concern may be that the Macerich mall portfolio is somewhat of a mixed bag, compared to Simon’s properties, which tend to be some of the best performing malls in the country. For the third quarter, ended Sept. 30, Simon reported occupancy of 96.9 percent and sales of $613 per sq. ft. for its mall and premium outlets portfolio. Simon currently owns 112 regional malls, 68 premium outlets, 13 Mills properties and 15 other shopping centers in the United States and Puerto Rico.

During the same quarter, Macerich, which owns 52 malls, reported occupancy of 95.6 percent and sales per sq. ft. of $571.

Recently, however, Macerich has been diligently improving its portfolio. The REIT’s initiative to dispose of lower quality malls has been largely completed, according to a Nov. 2 note by RBC Capital Markets analyst Rich Moore. (The company may yet decide to sell another 12 properties it considers non-core, Moore adds). NOI growth on its top 40 assets has reached 4.1 percent year-to-date and will likely average between 3 percent and 4 percent in the next few years. Macerich boasts a sizeable development and redevelopment pipeline, with $1 billion in projects underway and another $230 million scheduled for the future.

In addition, on Nov. 17, the company revealed it bought out its joint venture partner in five high-profile superregional malls, including Queens Center in New York City, Washington Square in Portland, Los Cerritos Center in Cerritos, Calif., Stonewood Center in Downey, Calif., and Lakewood Center in Lakewood, Calif.

“Macerich’s much improved portfolio appears very well positioned for sustained NOI growth,” Moore writes. “At the same time, the company’s external growth pipeline already includes a number of large developments and redevelopments, along with additional projects announced on a regular basis.”

It’s also worth noting that Macerich boasts a much cleaner balance sheet than most REITs in the regional mall sector, with a debt to overall market cap ratio of 33 percent, compared to the sector average of 43 percent, adds Lail. “I think their performance is indicative of a strong, well-managed portfolio,” he says.

In Sullivan’s view, at least half of Macerich’s existing assets should fit seamlessly with the Simon portfolio, while Simon may choose to either spin off or dispose of the lower-quality centers.

“Absent construction of new properties, the only way to grow is to acquire,” he notes. “So then it’s a question of ‘How do we maximize our portfolio and do it in a way that’s financially prudent?’ Even if Simon did purchase the rest of Macerich, I am certain they would immediately divest the lower quality malls and move on to the next potential seller. This is really the only way to go.”

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SEAN Reply:
December 10th, 2014 at 8:08 pm

ICSC

Physical retail still king, Trump, industry leaders tell NY National conference

Publish Date: December 08, 2014

SCT Newswire

Physical retailers are thriving, as are the shopping centers they inhabit, and both will be around for a long time to come, said leading real estate executives Monday, at ICSC’s New York National Deal Making.

“The fundamentals of the business are incredibly sound,” said Daniel B. Hurwitz, CEO of DDR, noting that occupancy, sales and rents are high and rising. Hurwitz was joined in a panel discussion by Kenneth F. Bernstein, president and CEO of Acadia Realty Trust; David E. Simon, chairman and CEO of Simon; and Don Wood, president and CEO of Federal Realty Investment Trust.

Investors are also upbeat on the industry, noted Bernstein. “There’s a lot of capital out there for the right deals.”

But for all that, the news media is giving the industry a bad rap, Simon and others complained. “The mall business is good and strong,” said Simon, accusing media outlets of distorting the picture by habitually presenting shopping centers as a dying industry. “The media is just crazy.”

Executives also took the news media to task for making too much of the Black Friday weekend sales, which according to some trackers declined this year. Historically key days in the holiday season have lost their importance as the buying season has extended at both ends, Hurwitz said. “Who cares how good Black Friday was,” he said. “The holiday shopping seasons probably goes until January 15.”

As further evidence that the mall format remains relevant and robust, centers are proliferating around the world, and retailers are populating them, Simon noted. Moreover, e-tailers are increasingly depending on physical stores to grab the attention of consumers, he and others noted. “They need the physical environment,” Simon said.

Shopping centers offer not just merchandise, but a social environment and entertainment, elements that online shopping can never offer, noted Wood. Landlords are rising to the challenge posed by online retail and are making centers even more entertaining by bringing in top quality restaurants and other service tenants, he and others said. “We have a plethora of new concepts that have been created,” Hurwitz said.

“We have upped our game,” agreed Wood.

Bernstein and Hurwitz also warned against making too much of the supposed trend for smaller stores, driven by the online revolution. When flat-screen TVs were flying out the door at Best Buy, no one was talking about a need for smaller stores, Hurwitz observed. But when 3D TVs proved a hard sell, everyone said Best Buy needed to shrink. But for all the talk, the retailer hasn’t reduced its store sizes in DDR’s portfolio, he said. “It’s not about the box,” he said, “it’s about what’s in the box.”

Donald Trump, in a separate keynote address, noted that retail is a keystone of his residential and office projects around the U.S. “I also like to build parking garages with retail,” he said, noting that it not only generates sizable rental income, but makes properties attractive to non-retail tenants. “So I just have a warm part of my heart for retail, for shopping centers and for retail people.”

Trump also noted his preference for physical retail over Internet shopping. “I want to touch it and feel it,” he said. “I love real estate and I love shopping centers.”

More than 9,000 executives are attending the three-day New York National Deal Making, which for the first time this year is being held at the Javits Center.

Oy vey – Trump speaks again.

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