By Guest Columnist Paul G. W. Fetscher CCIM, SCLS
President Great American Brokerage, New York, USA
A restaurant is a food warehouse, storage, preparation, cooking, assembly, sales, consumption and disposal facility. Consider the complexity of fitting such a manufacturing plant into structures with another function.
Assume a 300 square meter restaurant as compared to a 300 square meter dress shop. The comparable sized restaurant will require 250% of the air conditioning, 10 times the electrical service 100 time the water consumption, plus gas service and black iron venting and exhaust. It will also require an internal 3-hour rated fire wall and a fire suppression system over any open flames.
These requirements make restaurants the most expensive per square meter investment in any retail or hospitality property. Such capital investment requires a concomitant long term lease to amortize such a large investment. Therefore it is extremely important to assure that the right concept is in the right place.
Some restaurants are destinations; and others are parasites. It’s important to have the right fit!
Drawing Radius
Destination restaurants will draw from the greatest drawing radius; have the highest check averages, but the lowest frequency of customer visit. Examples in Dubai would be the Aquara Restaurant, the Al Mahara Seafood Restaurant at Burj Al Arab or Benihana.
Impulse restaurants are usually found within an arm’s reach of desire. Dunkin’ Donuts, Sbarro’s and Starbucks are good examples. These have a high frequency of customer visit, low prices, and are very convenient to a patron’s existing traffic patterns. That might be a cup of coffee on the way to work, or a noon break not far from work or convenient to a shopping trip.
Casual theme restaurants are somewhere in-between. These are moderate priced restaurants such as TGI Friday’s or Chili’s. This is a convenient place to stop for a hamburger or a salad. Typical visits would be a couple of times a month.
A larger project needs a healthy mixture of these three general categories. In an enclosed regional mall, the destination restaurants would face the exterior and be accessible at later dining hours when the main mall would be slack in activity. The casual theme restaurants can be spread out throughout such a project. Shoppers would have the opportunity to stop during their shopping journey to have a meal and restore their energy.
A World Onto Itself
A Food Court can be a world onto itself. The vast majority of shoppers will visit a food court, and THEN decide which of the vendors will be their selection of the day. This is known as the “Restaurant Row” effect. Restaurant Rows became popular in California in the 1970’s. A large number of popular restaurants were aggregated together. Diners would typically go to the area and subsequently decide where to eat.
Modern Food Courts started in shopping centers such as Sherway Gardens and Bramalea Square around Toronto Canada in the mid 1970’s, then migrated to the United States. A number of successful examples now can be found in the Gulf States.
Food Courts benefit from certain economies of scale. While one unit may have strong breakfast traffic, another sandwich operation may peak at lunch while a third operation may be strongest at dinner. Each of these, with different peak hours of operation, will use the same common dining seats; but just use them at different hours. Such efficiencies accrue to the benefit of all the operators in a food court.
Hotels in the Gulf States have strong foodservice representation. The Las Vegas Hilton was once the largest hotel in the world. It boasted 3,500 rooms. That hotel needed a number of restaurants to serve the needs of the resident population. Those facilities range from a coffee bar to a steakhouse to a diner style operation to a Benihana to two showrooms for a total of 11 foodservice operations. The showrooms would serve from 1,000 - 2,500 patrons for dinner and a Broadway style show.
Cinderella's Slipper
The Dubai Marriott Hotel has but 10% as many rooms, a mere 350 keys. However that hotel also boasts 11 foodservice operations. It’s not Las Vegas, but it is a collection of foodservice operations, appropriate for the market, and serving not only the residents of the hotel, but the influx of patrons form other hotels or from the indigenous population.
Restaurant leasing comes down to finding Cinderella’s slipper. Know your market, and deliver what is appropriate for that customer and that retail or hospitality environment.
(Paul Fetscher, president of Great American Brokerage in New York, was the consultant in the restaurant merchandizing for Dubai Festival City. He has worked on projects from Thailand to Alaska and from London and Paris to Shanghai and Beijing. Needless to say, he has worked on projects throughout the United States.
He will be teaching a course in Restaurant Leasing for the Mid East Council of Shopping Centers on May 3rd in Dubai.)
Tuesday, April 12, 2011
Monday, February 21, 2011
How Some Retailers, Landlords, And Brokers Will Be Able To Profit Fom The Closing Of More Than 200 Borders Stores
This column, Strolling the Agora, will continue to be written as the mood hits, though Shopping Center Digest has ceased publication.
By Murray Shor
The latest shockwave to hit the shopping center/retail chain industry, Borders’s bankruptcy filing, was not a surprise to many experienced dealmakers, especially some of the more astute landlords who have multiple tenant deals with this major book chain. They’ve had the company on its watch list for years.
The retailer stopped paying publishers last December for books shipped for the past holiday season; some estimate that they may receive only 25% of the dollars owed. Dealmakers also pointed out that Borders had begun cutting back and eliminating stores for years, since its high point of 1,329 outlets in 2005.
Some say that the latest plan to vacate roughly 4.9 million sq. ft. of retail space would be an especially cruel blow to those centers anchored by the superstores, and that the vacancy rate for this sector could increase from 4.2% to 9.5%. This, of course, is unrealistic because it assumes that these locations will remain empty; however, expectations are that many would be re-leased, used for other purposes besides retail, and may never become empty space.
Admittedly, though, the filing is damaging to an industry that still has record vacancies and much work ahead to re-tenant shopping centers that have lost so much equity over the last two years.
The larger owner-developers, such as Simon Property Group, General Growth Properties, Westfield, Developers Diversified Realty, Federal Realty, etc., may feel no pain from the bankruptcy since Borders is responsible for less than 1% of the total revenue of these operators.
To Close 30%
In essence, the book retailer listed $1.29 billion in debt, $1.27 billion in assets, and will be closing about 30% of its 642 stores-- ranging from 12,895 sq. ft. up to 42,770 sq. ft.-- in malls, power centers, strips and the like; the largest number, 35, are in California, with another 15 in the Chicago market. In its Chapter 11 filing, it blamed the economy, cost structures, and viability of locations, among other factors.
These factors include, but are not limited to: growth of internet sales by such competitors as Amazon.com and ebay, and not starting its own e-commerce site until 2008, years behind Barnes & Noble’s; the deep discounting and competition from Walmart, Target and other retailers that caused its sales to fall; the introduction of digital books and being late in coming to market with its reader, such as Amazon did with Kindle and Barnes & Noble did with Nook; and that focusing its store expansion overseas had diverted away much its needed financial resources.
There is still a possibility that the initial 200+ underperforming outlets scheduled for closing could be expanded soon to 275.
Some $505 million in debtor-in-possession financing has already been arranged, said Borders. And, the chain stressed that it does not plan to close any of its more than 100 smaller units operating under the Waldenbooks name.
The bankruptcy or reorganization filing is the largest Chapter 11 filing since Circuit City’s in 2008, and though a severe setback to this shopping center/retail chain industry, is not expected to have as much adverse impact since the economy—though shaky—has been improving slightly. In fact, a substantial number of retailers, landlords, brokers and others are already taking action to benefit from Borders’s problems.
First In Line
Heading the list of dealmakers expected to do well from the bankruptcy is DJM Realty, which has been hired to dispose of the unproductive stores. It has already been approached by supermarkets, smaller chains and regional and local merchants, and users who are not retailers.
Depending on the lease terms and specific details for each location, these units could be sold to the landlord, the landlord could be paid a settlement to let Borders out of the lease, or the location could be leased by Borders to another tenant. And the bankruptcy court could also chime in on these issues.
Next to benefit could be the landlords--though some, admittedly, could also be severely damaged by the closings. Those with viable projects may be able to lease the stores to other retailers at a higher rent, break down the larger units into smaller stores rented to other national or local tenants at substantially higher rents per sq. ft., and re-position the shopping center to better reflect the changing demographics within the specific trade area.
With lenders more agreeable now to providing financing, getting rid of a tenant that could be considered a poor anchor may enable strapped landlords to obtain necessary cash to revitalize certain projects. In addition to updating the center for retailing, some projects could be converted to medical facilities, commercial offices, municipal uses as libraries, motor vehicle offices, warehouse space, residential development, etc., many paying a better and more reliable return to landlords.
A Strong Positive
Then, there are competitors such as Barnes & Noble, Books-A-Million, Indigo—and, of course, discounters like Walmart and Target—who could pick up customers from Borders’s list of shoppers, or may be interested in one or more of the locations; retailers from various other categories—supermarkets, drug chains, large restaurants, electronic chains, office supplies, home improvement—are already considering many of these sites as viable for their own expansion plans.
And there are the brokers, eager, aggressive, knowledgeable about their specific markets with a substantial list of local and regional tenants, who have the expertise to put a deal together and earn a substantial commission from it.
A list of the locations targeted for closing has already been released. In addition, a list of 450 Borders and Waldenbooks locations in major shopping centers and malls is available from the Directory of Major Malls; visitors to its website may also download, for free, a partial list or sample of these stores.
So, yes, the first reaction to the announced bankruptcy is horror about the negative impact on the industry overall. However, as in all problems, those with the drive and viable solutions will be able to turn an initial negative into a strong positive.
More information on Directory of Major Malls, Directory On Computer, and other products related to the shopping center/retail chain industry may be obtained from the website www.shoppingcenters.com .
By Murray Shor
The latest shockwave to hit the shopping center/retail chain industry, Borders’s bankruptcy filing, was not a surprise to many experienced dealmakers, especially some of the more astute landlords who have multiple tenant deals with this major book chain. They’ve had the company on its watch list for years.
The retailer stopped paying publishers last December for books shipped for the past holiday season; some estimate that they may receive only 25% of the dollars owed. Dealmakers also pointed out that Borders had begun cutting back and eliminating stores for years, since its high point of 1,329 outlets in 2005.
Some say that the latest plan to vacate roughly 4.9 million sq. ft. of retail space would be an especially cruel blow to those centers anchored by the superstores, and that the vacancy rate for this sector could increase from 4.2% to 9.5%. This, of course, is unrealistic because it assumes that these locations will remain empty; however, expectations are that many would be re-leased, used for other purposes besides retail, and may never become empty space.
Admittedly, though, the filing is damaging to an industry that still has record vacancies and much work ahead to re-tenant shopping centers that have lost so much equity over the last two years.
The larger owner-developers, such as Simon Property Group, General Growth Properties, Westfield, Developers Diversified Realty, Federal Realty, etc., may feel no pain from the bankruptcy since Borders is responsible for less than 1% of the total revenue of these operators.
To Close 30%
In essence, the book retailer listed $1.29 billion in debt, $1.27 billion in assets, and will be closing about 30% of its 642 stores-- ranging from 12,895 sq. ft. up to 42,770 sq. ft.-- in malls, power centers, strips and the like; the largest number, 35, are in California, with another 15 in the Chicago market. In its Chapter 11 filing, it blamed the economy, cost structures, and viability of locations, among other factors.
These factors include, but are not limited to: growth of internet sales by such competitors as Amazon.com and ebay, and not starting its own e-commerce site until 2008, years behind Barnes & Noble’s; the deep discounting and competition from Walmart, Target and other retailers that caused its sales to fall; the introduction of digital books and being late in coming to market with its reader, such as Amazon did with Kindle and Barnes & Noble did with Nook; and that focusing its store expansion overseas had diverted away much its needed financial resources.
There is still a possibility that the initial 200+ underperforming outlets scheduled for closing could be expanded soon to 275.
Some $505 million in debtor-in-possession financing has already been arranged, said Borders. And, the chain stressed that it does not plan to close any of its more than 100 smaller units operating under the Waldenbooks name.
The bankruptcy or reorganization filing is the largest Chapter 11 filing since Circuit City’s in 2008, and though a severe setback to this shopping center/retail chain industry, is not expected to have as much adverse impact since the economy—though shaky—has been improving slightly. In fact, a substantial number of retailers, landlords, brokers and others are already taking action to benefit from Borders’s problems.
First In Line
Heading the list of dealmakers expected to do well from the bankruptcy is DJM Realty, which has been hired to dispose of the unproductive stores. It has already been approached by supermarkets, smaller chains and regional and local merchants, and users who are not retailers.
Depending on the lease terms and specific details for each location, these units could be sold to the landlord, the landlord could be paid a settlement to let Borders out of the lease, or the location could be leased by Borders to another tenant. And the bankruptcy court could also chime in on these issues.
Next to benefit could be the landlords--though some, admittedly, could also be severely damaged by the closings. Those with viable projects may be able to lease the stores to other retailers at a higher rent, break down the larger units into smaller stores rented to other national or local tenants at substantially higher rents per sq. ft., and re-position the shopping center to better reflect the changing demographics within the specific trade area.
With lenders more agreeable now to providing financing, getting rid of a tenant that could be considered a poor anchor may enable strapped landlords to obtain necessary cash to revitalize certain projects. In addition to updating the center for retailing, some projects could be converted to medical facilities, commercial offices, municipal uses as libraries, motor vehicle offices, warehouse space, residential development, etc., many paying a better and more reliable return to landlords.
A Strong Positive
Then, there are competitors such as Barnes & Noble, Books-A-Million, Indigo—and, of course, discounters like Walmart and Target—who could pick up customers from Borders’s list of shoppers, or may be interested in one or more of the locations; retailers from various other categories—supermarkets, drug chains, large restaurants, electronic chains, office supplies, home improvement—are already considering many of these sites as viable for their own expansion plans.
And there are the brokers, eager, aggressive, knowledgeable about their specific markets with a substantial list of local and regional tenants, who have the expertise to put a deal together and earn a substantial commission from it.
A list of the locations targeted for closing has already been released. In addition, a list of 450 Borders and Waldenbooks locations in major shopping centers and malls is available from the Directory of Major Malls; visitors to its website may also download, for free, a partial list or sample of these stores.
So, yes, the first reaction to the announced bankruptcy is horror about the negative impact on the industry overall. However, as in all problems, those with the drive and viable solutions will be able to turn an initial negative into a strong positive.
More information on Directory of Major Malls, Directory On Computer, and other products related to the shopping center/retail chain industry may be obtained from the website www.shoppingcenters.com .
Thursday, January 20, 2011
Reporting On Over 7,100 major Shopping Centers and Malls In the US and Canada
Announcement: Directory of Major Malls has just released its 2011 dataset and products focused on the over 7,100 major shopping centers and malls throughout the US and Canada. DMM products includes shopping center and mall locations, details, physical features, demographics, tenant lists, site/plans with contact details including name, addresses, emails and websites. Available online, in print, on CD and through licensed datasets.
NYACK, New York (January 20, 2011) - The Directory of Major Malls has already started shipping and providing online access to its 2011 data and products. An aggressive research effort taken on by the research team at Directory of Major Malls over the past 12 months propelled the inventory of detailed listings to over 7,100 major shopping center and mall records and 290,000 store locations. The addition of over 1,190 listings is a 20% increase and coverage of 3.3 billion square feet of major shopping center and mall retail space in the US and Canada.
An important point to highlight in the Directory of Major Malls coverage is the effort toward continuous coverage of major future and proposed retail projects. Over 450 planned/future shopping center and mall locations are included in the comprehensive 2011 Directory of Major Malls dataset. Coverage of these proposed centers totals out to over 248 million square feet of future retail space with an emphasis on the retail shopping centers classified as Lifestyle/Specialty/ Mixed-Use.
In addition to efforts to expand the coverage of listings for major shopping centers and mall with approximately 200,000 sqft of gross leasable retail area, the DMM team has further increased the level of inclusion of site/leasing plans as additional insight into the physical configuration of the centers. Currently almost 50% of the listings include a site/leasing plan image of a level of the shopping center.
Additionally the 54 full-color metro area maps, a mainstay of the DMM products, have been further enhanced to show Urbanized Area imaging within the highlighted metro market areas and the locations of over 2,600 of the major centers pinpointed on the maps. The longitude/latitude coordinates used to determine the locations of the centers are manually verified for these locations as well as the complete dataset of all listings in the Directory of Major Malls products. These coordinates are available as an add-on dataset in the Directory of Major Malls semi-annual CD release as well as within custom licensed dataset used for integration in third-party GIS/mapping and analytics applications.
Another supplemental dataset for the Directory of Major Malls products is the Trend Demographic add-on dataset creating in partnership with Scan/US of Santa Monica, CA. This add-on component is available as both searchable and informative data fields portraying the four trend variables for 5, 10 and 20 mile radii around each of the US shopping centers in the DMM database. Access to this valuable component is available within the recently redesigned online subscription site at http://shoppingcenters.com, the Directory on Computer CD releases as well as custom dataset licensing.
"With over 30 years of active participation in the industry as a dependable source, the Directory of Major Malls products continue as the leading source of this specialized data to the shopping center, retail and financial industries." said Publisher Tama J. Shor. "Our research team has continued to maintain the highest level of accuracy with our existing inventory of listings as well as continually increasing our coverage."
"In these turbulent times for the retail industry," she continues, "it's even more urgent that a source such as DMM is available to provide retail real estate professionals and the financial industry with accurate, current information. With monthly updates to our online subscription site, Directory of Major Malls on the Web and the semi-annual releases of our licensed datasets and CD product, we're doing just that. Our daily mission is to identify and capture the ongoing ownership and personnel changes, store openings and closings, along with any new and redevelopment project activities."
Shor continues, "30+ years ago when the Directory was first developed, it was at a time when major enclosed mall development was in the early stages and the focus of many retail projects. All this time, we've maintained ringside seats and have watched shopping centers grow and transform several times over. The diversity in the types of retail complexes that now comprise this dominant part of the retail community is just amazing."
"Each listing of the 7,100 included in the Directory of Major Malls products is comprised of a variety of details with regard to location, demographics, physical features, a categorized tenants list and contact details in the areas of development, leasing, marketing and management. At this point in time, our brand name is a bit misleading in the sense that well over 50% of our listings are not enclosed malls as our name portrays but in reality the majority of our major shopping center listings are open-air in design and fall into a variety of classifications such as community, power and lifestyle/specialty and value-retail centers," Shor pointed out. "There's also an increasing number of projects that are planned mixed-use communities that have included a relevant amount of retail space mixed in with residential, office, entertainment and hotel space," said Shor.
"We're quite proud of the achievements of our research team and the longevity of Directory of Major Malls as a significant source to the industry for such an extended period of time. Our customer base covers any and all professionals involved in some aspect of the shopping center industry whether it be retail leasing teams, financial investors, development and management sector as well as firms involved in research, design, promotion, marketing and supplier end of the industry. We'll continue to be a dependable resource and look forward to expanding our coverage and expanding our partnerships to increase the exposure of the DMM dataset as an important element for retail analysis." Shor added.
--------------------------------------
Directory of Major Malls, Inc. is based in Nyack, NY. It continues to be the leading source of detailed information on the major enclosed malls, open-air shopping centers, and lifestyle/specialty centers for over 30 years. DMM is used by retail real estate professionals, development and management companies, brokers and financial investment firms, service and supply companies, and government and academic research institutes.
The 2011 products include over 7,100 major shopping center and mall listings, 290,000+ tenant location,3,300+ site/leasing plans, 54 full-color metro area maps and the portfolios of the Top 50 Owner/Developer and Management companies which control over 70% of the industry.
The Directory of Major Malls data is available in our suite of standard products including subscription based on-line and "pay per record" access, on a semi-annually released CD, a hard copy 2,300 page print directory and through individual dataset licensing and a network of resellers. Details of Directory of Major Malls may be found at www.shoppingcenters.com.
For further formation, contact : Tama J. Shor, Publisher at P.O. Box 837, Nyack, NY 10960, phone: (845) 348-7000, Ext. 200, or email: publisher@shoppingcenters.com
###
NYACK, New York (January 20, 2011) - The Directory of Major Malls has already started shipping and providing online access to its 2011 data and products. An aggressive research effort taken on by the research team at Directory of Major Malls over the past 12 months propelled the inventory of detailed listings to over 7,100 major shopping center and mall records and 290,000 store locations. The addition of over 1,190 listings is a 20% increase and coverage of 3.3 billion square feet of major shopping center and mall retail space in the US and Canada.
An important point to highlight in the Directory of Major Malls coverage is the effort toward continuous coverage of major future and proposed retail projects. Over 450 planned/future shopping center and mall locations are included in the comprehensive 2011 Directory of Major Malls dataset. Coverage of these proposed centers totals out to over 248 million square feet of future retail space with an emphasis on the retail shopping centers classified as Lifestyle/Specialty/ Mixed-Use.
In addition to efforts to expand the coverage of listings for major shopping centers and mall with approximately 200,000 sqft of gross leasable retail area, the DMM team has further increased the level of inclusion of site/leasing plans as additional insight into the physical configuration of the centers. Currently almost 50% of the listings include a site/leasing plan image of a level of the shopping center.
Additionally the 54 full-color metro area maps, a mainstay of the DMM products, have been further enhanced to show Urbanized Area imaging within the highlighted metro market areas and the locations of over 2,600 of the major centers pinpointed on the maps. The longitude/latitude coordinates used to determine the locations of the centers are manually verified for these locations as well as the complete dataset of all listings in the Directory of Major Malls products. These coordinates are available as an add-on dataset in the Directory of Major Malls semi-annual CD release as well as within custom licensed dataset used for integration in third-party GIS/mapping and analytics applications.
Another supplemental dataset for the Directory of Major Malls products is the Trend Demographic add-on dataset creating in partnership with Scan/US of Santa Monica, CA. This add-on component is available as both searchable and informative data fields portraying the four trend variables for 5, 10 and 20 mile radii around each of the US shopping centers in the DMM database. Access to this valuable component is available within the recently redesigned online subscription site at http://shoppingcenters.com, the Directory on Computer CD releases as well as custom dataset licensing.
"With over 30 years of active participation in the industry as a dependable source, the Directory of Major Malls products continue as the leading source of this specialized data to the shopping center, retail and financial industries." said Publisher Tama J. Shor. "Our research team has continued to maintain the highest level of accuracy with our existing inventory of listings as well as continually increasing our coverage."
"In these turbulent times for the retail industry," she continues, "it's even more urgent that a source such as DMM is available to provide retail real estate professionals and the financial industry with accurate, current information. With monthly updates to our online subscription site, Directory of Major Malls on the Web and the semi-annual releases of our licensed datasets and CD product, we're doing just that. Our daily mission is to identify and capture the ongoing ownership and personnel changes, store openings and closings, along with any new and redevelopment project activities."
Shor continues, "30+ years ago when the Directory was first developed, it was at a time when major enclosed mall development was in the early stages and the focus of many retail projects. All this time, we've maintained ringside seats and have watched shopping centers grow and transform several times over. The diversity in the types of retail complexes that now comprise this dominant part of the retail community is just amazing."
"Each listing of the 7,100 included in the Directory of Major Malls products is comprised of a variety of details with regard to location, demographics, physical features, a categorized tenants list and contact details in the areas of development, leasing, marketing and management. At this point in time, our brand name is a bit misleading in the sense that well over 50% of our listings are not enclosed malls as our name portrays but in reality the majority of our major shopping center listings are open-air in design and fall into a variety of classifications such as community, power and lifestyle/specialty and value-retail centers," Shor pointed out. "There's also an increasing number of projects that are planned mixed-use communities that have included a relevant amount of retail space mixed in with residential, office, entertainment and hotel space," said Shor.
"We're quite proud of the achievements of our research team and the longevity of Directory of Major Malls as a significant source to the industry for such an extended period of time. Our customer base covers any and all professionals involved in some aspect of the shopping center industry whether it be retail leasing teams, financial investors, development and management sector as well as firms involved in research, design, promotion, marketing and supplier end of the industry. We'll continue to be a dependable resource and look forward to expanding our coverage and expanding our partnerships to increase the exposure of the DMM dataset as an important element for retail analysis." Shor added.
--------------------------------------
Directory of Major Malls, Inc. is based in Nyack, NY. It continues to be the leading source of detailed information on the major enclosed malls, open-air shopping centers, and lifestyle/specialty centers for over 30 years. DMM is used by retail real estate professionals, development and management companies, brokers and financial investment firms, service and supply companies, and government and academic research institutes.
The 2011 products include over 7,100 major shopping center and mall listings, 290,000+ tenant location,3,300+ site/leasing plans, 54 full-color metro area maps and the portfolios of the Top 50 Owner/Developer and Management companies which control over 70% of the industry.
The Directory of Major Malls data is available in our suite of standard products including subscription based on-line and "pay per record" access, on a semi-annually released CD, a hard copy 2,300 page print directory and through individual dataset licensing and a network of resellers. Details of Directory of Major Malls may be found at www.shoppingcenters.com.
For further formation, contact : Tama J. Shor, Publisher at P.O. Box 837, Nyack, NY 10960, phone: (845) 348-7000, Ext. 200, or email: publisher@shoppingcenters.com
###
Friday, December 17, 2010
Staying Ahead Of The Trends: Survival Of The Fittest
Since there are indications that the dealmaking is improving as retail sales increase--and experienced professionals in the industry require the best information to benefit from these positive signs, we are making available our blog to a Guest Columnist specializing in essential data.
By Tama Shor, Publisher of the Directory of Major Malls (guest columnist)
The Internet has completely changed the way we communicate, the way people do business, and the way the public is informed, while compelling businesses to listen to the demands of the consumer.
“Survival of the fittest” is a phrase that has far-reaching implications for most industries. Those that adapt and change their business models and marketing practices in line with changing trends and the effects of the Internet are those that by natural selection will survive. Those that don’t will die off.
The Changing Retail Real Estate Landscape
We now live in a consumer-driven business world where instant and easy access to information is not only what consumers want – but what they expect. The increased volume of e-commerce sites is a perfect example of how consumer-driven our society has become. A consumer-driven e-Commerce model poses a potential threat to brick-and-mortar shopping centers, but it is possible to mitigate the potential losses to physical stores by modifying marketing and business models to accommodate the effects of these technological changes.
François Ortalo-Magné, Director of Wisconsin School of Business Global Real Estate, cites an example of a brand that is revising its business policies in light of the increased e-commerce site usage. He says:
'There are those companies like SFR who are radically re-educating their store staff so that they have the same level of product knowledge as the clients who come to the shop having surfed the web to find about products. There are those companies who see their flagship stores as communication tools. And there are those companies who haven’t yet decided what to do,' he added. (http://www.propertyeu.info/index-newsletter/retail-sector-split-on-impact-of-e-commerce/)
In addition to the trends leading to more e-commerce sites, the recession has also caused a shift in the retail real estate landscape.
What Does This Mean For The Retail Real Estate Market?
Because business today is information-driven, it is important to be able to acquire, access, and manage data in order to make timely decisions, take advantage of opportunities and/or avert disasters.
How and Why Vertical Markets Need to Stay Informed
In order for the vertical markets within the retail real estate market to stay in the game, they will need to have as much current and accurate data at their disposal to be able to make the wisest business decisions.
Retail chains and up and coming retailers need data that can help them locate and analyze new locations, review existing markets, and hone in on their competition. Specialty and seasonal retailers will benefit greatly from having the necessary data to help them identify major centers with seasonal and temporary leasing programs.
Owners/developers and management companies who build and manage shopping centers and malls need tools to help them analyze the tenant mix of other centers in their area, other locations of stores, and to track what companies oversee other major retail locations.
Financial institutions and investment companies managing stocks owning shopping centers need to react quickly to changes in the industry such as store chain closings and openings, the sale of portfolios of shopping centers and malls, new developments as well as properties affected by natural disasters and regional economic shifts. These investment portfolios are affected on a daily basis by the afore-mentioned activities making it all the more important for the financial and investment companies to have access to the most current and reliable data.
Some examples are: When a major department store chain files bankruptcy or a retailer decides to close all the locations of one of their chains, which centers are affected? Who owns these properties? How much of their property portfolio is affected by closings? What effect will that have on the overall stock value for both the landlord and the retail chain?
Suppliers and service companies who are involved in businesses like the sale of security uniforms, recycling services, energy management, stroller rentals, and gift card programs need to be able to identify and contact new prospects and sales leads at the individual centers, and evaluate the size of a company-based upon the number of listings they oversee.
Marketing and promotional companies who help businesses through publicity campaigns and advertising need a resource for marketing analysis and marketing contacts.
Architectural and design firms of the malls or stores who want to promote their services need to have information about other properties and retail locations.
Construction companies involved in the building and renovation of shopping centers/malls, stores, and parking lots, need to know about proposed centers and those under development as well as those planning a renovation or expansion.
What happens to those companies that are not paying attention to their industry’s changing trends? They will eventually lose out to their competitors who ARE utilizing marketing tools and current, relevant data to make better informed business decisions.
Staying true to our brand promise of maintaining the most comprehensive reference of major shopping centers and malls available anywhere in order to provide you with the most current details possible, we are pleased to announce the release of the 2011, 32nd edition of the Directory of Major Malls®. With over 7,000 detailed shopping center listings and 295,000 store locations, you will have access to the most accurate shopping center data available in order to find the locations you need and make the contacts you want. Pre-order your 2011 Print and CD versions for January.
Access 2011 data online today! The Directory's on-line access site is located at http://shoppingcenters.com. This interactive web site is efficient, easy-to-use, and updated monthly. A subscription to the site allows you to search and view our data (including live links to web addresses and emails) and view and print our site/leasing plans and metro area maps.
Customized reports, mailing lists and VIP contact files are available for downloading for an additional fee for both subscribers and guest accounts. Log on to http://shoppingcenters.com to create a Guest account and run a FREE query today.
By Tama Shor, Publisher of the Directory of Major Malls (guest columnist)
The Internet has completely changed the way we communicate, the way people do business, and the way the public is informed, while compelling businesses to listen to the demands of the consumer.
“Survival of the fittest” is a phrase that has far-reaching implications for most industries. Those that adapt and change their business models and marketing practices in line with changing trends and the effects of the Internet are those that by natural selection will survive. Those that don’t will die off.
The Changing Retail Real Estate Landscape
We now live in a consumer-driven business world where instant and easy access to information is not only what consumers want – but what they expect. The increased volume of e-commerce sites is a perfect example of how consumer-driven our society has become. A consumer-driven e-Commerce model poses a potential threat to brick-and-mortar shopping centers, but it is possible to mitigate the potential losses to physical stores by modifying marketing and business models to accommodate the effects of these technological changes.
François Ortalo-Magné, Director of Wisconsin School of Business Global Real Estate, cites an example of a brand that is revising its business policies in light of the increased e-commerce site usage. He says:
'There are those companies like SFR who are radically re-educating their store staff so that they have the same level of product knowledge as the clients who come to the shop having surfed the web to find about products. There are those companies who see their flagship stores as communication tools. And there are those companies who haven’t yet decided what to do,' he added. (http://www.propertyeu.info/index-newsletter/retail-sector-split-on-impact-of-e-commerce/)
In addition to the trends leading to more e-commerce sites, the recession has also caused a shift in the retail real estate landscape.
What Does This Mean For The Retail Real Estate Market?
Because business today is information-driven, it is important to be able to acquire, access, and manage data in order to make timely decisions, take advantage of opportunities and/or avert disasters.
How and Why Vertical Markets Need to Stay Informed
In order for the vertical markets within the retail real estate market to stay in the game, they will need to have as much current and accurate data at their disposal to be able to make the wisest business decisions.
Retail chains and up and coming retailers need data that can help them locate and analyze new locations, review existing markets, and hone in on their competition. Specialty and seasonal retailers will benefit greatly from having the necessary data to help them identify major centers with seasonal and temporary leasing programs.
Owners/developers and management companies who build and manage shopping centers and malls need tools to help them analyze the tenant mix of other centers in their area, other locations of stores, and to track what companies oversee other major retail locations.
Financial institutions and investment companies managing stocks owning shopping centers need to react quickly to changes in the industry such as store chain closings and openings, the sale of portfolios of shopping centers and malls, new developments as well as properties affected by natural disasters and regional economic shifts. These investment portfolios are affected on a daily basis by the afore-mentioned activities making it all the more important for the financial and investment companies to have access to the most current and reliable data.
Some examples are: When a major department store chain files bankruptcy or a retailer decides to close all the locations of one of their chains, which centers are affected? Who owns these properties? How much of their property portfolio is affected by closings? What effect will that have on the overall stock value for both the landlord and the retail chain?
Suppliers and service companies who are involved in businesses like the sale of security uniforms, recycling services, energy management, stroller rentals, and gift card programs need to be able to identify and contact new prospects and sales leads at the individual centers, and evaluate the size of a company-based upon the number of listings they oversee.
Marketing and promotional companies who help businesses through publicity campaigns and advertising need a resource for marketing analysis and marketing contacts.
Architectural and design firms of the malls or stores who want to promote their services need to have information about other properties and retail locations.
Construction companies involved in the building and renovation of shopping centers/malls, stores, and parking lots, need to know about proposed centers and those under development as well as those planning a renovation or expansion.
What happens to those companies that are not paying attention to their industry’s changing trends? They will eventually lose out to their competitors who ARE utilizing marketing tools and current, relevant data to make better informed business decisions.
Staying true to our brand promise of maintaining the most comprehensive reference of major shopping centers and malls available anywhere in order to provide you with the most current details possible, we are pleased to announce the release of the 2011, 32nd edition of the Directory of Major Malls®. With over 7,000 detailed shopping center listings and 295,000 store locations, you will have access to the most accurate shopping center data available in order to find the locations you need and make the contacts you want. Pre-order your 2011 Print and CD versions for January.
Access 2011 data online today! The Directory's on-line access site is located at http://shoppingcenters.com. This interactive web site is efficient, easy-to-use, and updated monthly. A subscription to the site allows you to search and view our data (including live links to web addresses and emails) and view and print our site/leasing plans and metro area maps.
Customized reports, mailing lists and VIP contact files are available for downloading for an additional fee for both subscribers and guest accounts. Log on to http://shoppingcenters.com to create a Guest account and run a FREE query today.
Wednesday, November 24, 2010
Growth In Internet Sales May Impact On Leasing And Development, But Others See It As Another Challenge To Be Overcome
This column, Strolling the Agora, will continue to be written as the mood hits, even though Shopping Center Digest has ceased publication
By Murray Shor
At first glance, the fact that internet sales are booming should have a crushing impact on future dealmaking, already staggered by record-setting vacancies and lackluster leasing and development. This is despite the fact that many soothsayers are seeing signs on the horizon of improvement across-the-board-- and they expect positive holidays sales due in part to the early start of door-busters and deep discounting right after Thanksgiving Day celebrations.
First the hard facts. E-commerce spending is expected to jump 13.7% this quarter up to $51.4 billion. Certainly for many consumers and for many types of merchandise, there are distinct advantages over buying at the store.
The shift from brick-and-mortar to the internet by shoppers, according to some analysts, is to avoid the hassles of crowded malls, long waits, lines at the checkouts, and battling others for very popular “hot items,” the early AM or late-night hours for “special deals,” and the increased stress of limited “deep discount” merchandise in high-demand.
And, they point out, many of these deals are available only on the internet, top retailers are offering free shipping to home or convenient store locations, and free shipping for returned merchandise.
Though many retailers are predicting record sales at the stores beginning late Thanksgiving Day, as many consumers are opting out of battling Black Friday frenzy in favor of hitting their keypads and picking up the deals without stirring out of their homes.
And then, others point to the latest technology being used to drive customers to the stores. “Top retailers like Target, Toys ‘R’ Us, for example, are using new apps on Iphones that enable savvy shoppers to download coupons and sales flyers that are redeemed in the stores,” said one consultant. “It’s all about using every vehicle available to sell merchandise”
To some dealmakers in the industry, the opposing effort to enable customers to shop from home and avoid the stores, could hamper future leasing efforts by reducing the need for brick-and-mortar outlets.
Different Approach
However, one seasoned veteran takes a different approach. “We are so deep into the fecal quagmire which is our current and ongoing economy that it’s impossible to isolate any one factor as an impacting reason for a hit on sales.”
He pointed out that he is currently leasing “a well-located strip center adjoining a new Walmart Supercenter…and a forecast of growing e-commerce will not change my leasing efforts.”
Another leasing executive stressed that “we are constantly improving our language in the lease terms. We had a problem involving overages, for example,” she explained, “where some retailers were deducting from store sales merchandise bought over the internet that were returned to a local store. So we’re defining and refining this area.”
One leading broker in the Mid-Atlantic region said he’s already seen an increase in retail deals over the last month or so. “Granted,” he said, “we’re talking of a small number, but when there had been almost zero deals before, even a little uptick in the last quarter—and compared with last year—is a sign for joy.”
One landlord expanded on the problems of definition in a lease clause when it comes to defining and apportioning online sales. “If we grant any tenant the right to terminate a lease because of tenant’s inability to exceed a particular sales threshold, we require that the definition of ‘sales’ includes online revenue derived from zipcodes.”
Optimistic Future
“Yep, we’ve been going through the toughest period I’ve ever seen in some 40 years,” said one West Coast leasing rep. “But I’ve also been hitting a few dealmaking events around the country and there is a growing optimism for the future of this industry.
“You can’t deny there is an impact from online retailing. But even the strongest proponents of e-commerce admit that there’s no replacement for getting the customer into a store, having the opportunity to take advantage of impulse buying, of the advantages of touching the merchandise, trying it on, instant gratification. You’re never going to get this same impact from a computer and 2-dimensional pictures.”
A New York-based owner with close to 100 neighborhood centers around the country, who has recently acquired several properties, was extremely upbeat on mainstream shopping. “We’re constantly in a state of flux. One period we were all rushing to the suburbs, now there’s a trend to in-fill closer to main population centers, and even into the CBDs of cities. I look at the demographics and the projections showing steep growth, and I can’t see but a strong demand for more stores and centers—once we get out of the economic slump and the high unemployment. Internet sales, just another challenge that we can and will cope with.”
By Murray Shor
At first glance, the fact that internet sales are booming should have a crushing impact on future dealmaking, already staggered by record-setting vacancies and lackluster leasing and development. This is despite the fact that many soothsayers are seeing signs on the horizon of improvement across-the-board-- and they expect positive holidays sales due in part to the early start of door-busters and deep discounting right after Thanksgiving Day celebrations.
First the hard facts. E-commerce spending is expected to jump 13.7% this quarter up to $51.4 billion. Certainly for many consumers and for many types of merchandise, there are distinct advantages over buying at the store.
The shift from brick-and-mortar to the internet by shoppers, according to some analysts, is to avoid the hassles of crowded malls, long waits, lines at the checkouts, and battling others for very popular “hot items,” the early AM or late-night hours for “special deals,” and the increased stress of limited “deep discount” merchandise in high-demand.
And, they point out, many of these deals are available only on the internet, top retailers are offering free shipping to home or convenient store locations, and free shipping for returned merchandise.
Though many retailers are predicting record sales at the stores beginning late Thanksgiving Day, as many consumers are opting out of battling Black Friday frenzy in favor of hitting their keypads and picking up the deals without stirring out of their homes.
And then, others point to the latest technology being used to drive customers to the stores. “Top retailers like Target, Toys ‘R’ Us, for example, are using new apps on Iphones that enable savvy shoppers to download coupons and sales flyers that are redeemed in the stores,” said one consultant. “It’s all about using every vehicle available to sell merchandise”
To some dealmakers in the industry, the opposing effort to enable customers to shop from home and avoid the stores, could hamper future leasing efforts by reducing the need for brick-and-mortar outlets.
Different Approach
However, one seasoned veteran takes a different approach. “We are so deep into the fecal quagmire which is our current and ongoing economy that it’s impossible to isolate any one factor as an impacting reason for a hit on sales.”
He pointed out that he is currently leasing “a well-located strip center adjoining a new Walmart Supercenter…and a forecast of growing e-commerce will not change my leasing efforts.”
Another leasing executive stressed that “we are constantly improving our language in the lease terms. We had a problem involving overages, for example,” she explained, “where some retailers were deducting from store sales merchandise bought over the internet that were returned to a local store. So we’re defining and refining this area.”
One leading broker in the Mid-Atlantic region said he’s already seen an increase in retail deals over the last month or so. “Granted,” he said, “we’re talking of a small number, but when there had been almost zero deals before, even a little uptick in the last quarter—and compared with last year—is a sign for joy.”
One landlord expanded on the problems of definition in a lease clause when it comes to defining and apportioning online sales. “If we grant any tenant the right to terminate a lease because of tenant’s inability to exceed a particular sales threshold, we require that the definition of ‘sales’ includes online revenue derived from zipcodes.”
Optimistic Future
“Yep, we’ve been going through the toughest period I’ve ever seen in some 40 years,” said one West Coast leasing rep. “But I’ve also been hitting a few dealmaking events around the country and there is a growing optimism for the future of this industry.
“You can’t deny there is an impact from online retailing. But even the strongest proponents of e-commerce admit that there’s no replacement for getting the customer into a store, having the opportunity to take advantage of impulse buying, of the advantages of touching the merchandise, trying it on, instant gratification. You’re never going to get this same impact from a computer and 2-dimensional pictures.”
A New York-based owner with close to 100 neighborhood centers around the country, who has recently acquired several properties, was extremely upbeat on mainstream shopping. “We’re constantly in a state of flux. One period we were all rushing to the suburbs, now there’s a trend to in-fill closer to main population centers, and even into the CBDs of cities. I look at the demographics and the projections showing steep growth, and I can’t see but a strong demand for more stores and centers—once we get out of the economic slump and the high unemployment. Internet sales, just another challenge that we can and will cope with.”
Monday, October 25, 2010
To Reach New Customers, Discount, Outlet And Off-Price Retailers May Soon Be Expanding Their Criteria To Make Deals
This column, Strolling the Agora, will continue to be written as the mood hits, even though Shopping Center Digest has ceased publication
By Murray Shor
Just two months ago we highlighted the trend of more luxury retailers seeking cost-conscious shoppers by looking for stores in areas and locations they once avoided, the outlet shopping centers, and secondary and tertiary markets.
And we stressed that this relatively minor niche of less than 220 projects, by some estimates, is dwarfed by the number of over 100,000 mainstream malls and centers that encompass the shopping center/retail chain world of the US and Canada. To make an impact in this market, retailers must deal with the two main landlords responsible for the bulk of these centers: Simon Property Group with its Chelsea division and Tanger Factory Outlets.
Yet a new approach being taken by one of the poshiest of merchandisers, Neiman Marcus, has the potential to bring this type of retailer into almost every local market available. It could expand opportunities even to every deal-hungry broker in the field.
First, what Neiman Marcus is doing. It is starting a new spinoff of outlet stores to be called Last Call Studio with lower-priced merchandise that never was being sold in its Last Call outlet stores. This outlet merchandise may still be too expensive for many customers. So, the Studio stores will carry clearance goods from its mainstream stores, namebrand apparel, and lower-end merchandise ordered from vendors specifically for these units.
The first protoype store—about half the size of a more traditional unit-- opened recently in Dallas, with others in Rockville, MD, and Paramus, NJ.
Possible Locations
Targeted as possible locations for this division will be suburban areas and strip centers, storefronts, possibly even vacant downtown locations that could never attract luxury retailers because the numbers never added up. However, with high-end shoppers heading for the outlets and discounters—which may still carry too high a ticket for many moderate households—and the reduced clearance merchandise and inventory available from many liquidators and vendors who have cut back on manufacturing, there is pressure to find customers willing to spend limited income for quality merchandise with a high-end label.
As one highly-regarded consultant stressed: “From a modest out-of-sight, out-of-mind liquidation tool, it has now really morphed into a strategic and financial necessity for these companies.”
Another maven pointed to the recession and the insistence by shoppers for even more value-oriented merchandise.
Other luxury retailers, such as Nordstrom, Saks 5th Ave, Lord & Taylor, Bloomingdale’s, and the like, have been operating outlet stores for years, or have recently entered this market.
Great Potential
“Looking at the decision by Neiman Marcus to follow the consumer to where she lives—rather than wait for her to drive an hour or so and make a day of outlet shopping,” one leading broker pointed out, “opens up a great potential for dealmaking. Many brokers have specialized in finding tenants for Moms and Pops, for local operators within a limited market to fill vacancies in very local strip centers. They may never have made a call on a luxury retailer.
“Now, suddenly,” he continued, “it’s a whole new ballgame. If other leading retailers decide to give it a try, the potential number of tenants that can be approached increases exponentially.”
No question, the number of vacancies have been increasing across the board due to the closings of many stores by stressed retailers, and the cutback on expansion by many others as a reaction to the high unemployment and pessimism of consumers. Though it may not be a deluge by healthy apparel chains seeking locations, there is the potential.
“And isn’t this,” said one senior real estate officer, “what drives many dealmakers? The potential.”
Other Interesting Activity
Joe’s Jeans, based in Commerce, CA, says it wants to expand its outlets division, now with 14 stores, in addition to its full-price stores. Contact CEO Marc Crossman.
_________________________________
General Growth Properties has appointed hedge fund manager William Ackman to become its chairman when it emerges from bankruptcy next month. It is being split into two units; GGP will retain about 185 malls, the Howard Hughes Corp will consist of the master-planned communities and other non-income-producing properties.
__________________________________
Walmart says it plans to grow its total square footage by between 3 and 4% during the fiscal year, adding up to about 35 million sq. ft. of new stores. It expects its sales growth in 2012 to grow 4-6%.
By Murray Shor
Just two months ago we highlighted the trend of more luxury retailers seeking cost-conscious shoppers by looking for stores in areas and locations they once avoided, the outlet shopping centers, and secondary and tertiary markets.
And we stressed that this relatively minor niche of less than 220 projects, by some estimates, is dwarfed by the number of over 100,000 mainstream malls and centers that encompass the shopping center/retail chain world of the US and Canada. To make an impact in this market, retailers must deal with the two main landlords responsible for the bulk of these centers: Simon Property Group with its Chelsea division and Tanger Factory Outlets.
Yet a new approach being taken by one of the poshiest of merchandisers, Neiman Marcus, has the potential to bring this type of retailer into almost every local market available. It could expand opportunities even to every deal-hungry broker in the field.
First, what Neiman Marcus is doing. It is starting a new spinoff of outlet stores to be called Last Call Studio with lower-priced merchandise that never was being sold in its Last Call outlet stores. This outlet merchandise may still be too expensive for many customers. So, the Studio stores will carry clearance goods from its mainstream stores, namebrand apparel, and lower-end merchandise ordered from vendors specifically for these units.
The first protoype store—about half the size of a more traditional unit-- opened recently in Dallas, with others in Rockville, MD, and Paramus, NJ.
Possible Locations
Targeted as possible locations for this division will be suburban areas and strip centers, storefronts, possibly even vacant downtown locations that could never attract luxury retailers because the numbers never added up. However, with high-end shoppers heading for the outlets and discounters—which may still carry too high a ticket for many moderate households—and the reduced clearance merchandise and inventory available from many liquidators and vendors who have cut back on manufacturing, there is pressure to find customers willing to spend limited income for quality merchandise with a high-end label.
As one highly-regarded consultant stressed: “From a modest out-of-sight, out-of-mind liquidation tool, it has now really morphed into a strategic and financial necessity for these companies.”
Another maven pointed to the recession and the insistence by shoppers for even more value-oriented merchandise.
Other luxury retailers, such as Nordstrom, Saks 5th Ave, Lord & Taylor, Bloomingdale’s, and the like, have been operating outlet stores for years, or have recently entered this market.
Great Potential
“Looking at the decision by Neiman Marcus to follow the consumer to where she lives—rather than wait for her to drive an hour or so and make a day of outlet shopping,” one leading broker pointed out, “opens up a great potential for dealmaking. Many brokers have specialized in finding tenants for Moms and Pops, for local operators within a limited market to fill vacancies in very local strip centers. They may never have made a call on a luxury retailer.
“Now, suddenly,” he continued, “it’s a whole new ballgame. If other leading retailers decide to give it a try, the potential number of tenants that can be approached increases exponentially.”
No question, the number of vacancies have been increasing across the board due to the closings of many stores by stressed retailers, and the cutback on expansion by many others as a reaction to the high unemployment and pessimism of consumers. Though it may not be a deluge by healthy apparel chains seeking locations, there is the potential.
“And isn’t this,” said one senior real estate officer, “what drives many dealmakers? The potential.”
Other Interesting Activity
Joe’s Jeans, based in Commerce, CA, says it wants to expand its outlets division, now with 14 stores, in addition to its full-price stores. Contact CEO Marc Crossman.
_________________________________
General Growth Properties has appointed hedge fund manager William Ackman to become its chairman when it emerges from bankruptcy next month. It is being split into two units; GGP will retain about 185 malls, the Howard Hughes Corp will consist of the master-planned communities and other non-income-producing properties.
__________________________________
Walmart says it plans to grow its total square footage by between 3 and 4% during the fiscal year, adding up to about 35 million sq. ft. of new stores. It expects its sales growth in 2012 to grow 4-6%.
Thursday, October 14, 2010
Higher Vacancies May Be Hurting The Landlords, But It Is Also A Great Dealmaking Opportunity For Discounters And Off-Pricers
This column, Strolling the Agora, will continue to be written as the mood hits, even though Shopping Center Digest has ceased publication.
By Murray Shor
Considering the stubborn, low level of consumer confidence caused by the continuing high unemployment rate, it is no surprise that vacancies have been increasing all around the country, and that some retailers are focusing on Canada where there is a more positive emergence from the recession.
However, selective dealmaking is picking up here in the US in disparate locations as a result of the depressing numbers. Especially for brokers in prime metro areas, the opportunities are there.
First the bad news: According to the market research company Reis Inc, which tracks these data, the vacancy rate at shopping centers in the last quarter rose to 10.9%, the highest level since ’91, and closing in on the record 11.1% set the year before. The rent asked by landlords dropped almost 20 cents per sq. ft. to $19.07, but the effective rents are even lower, $16.58.
For the larger malls, where average rents are hovering around $38, vacancies rose only .2% to 8.6%, down from 9% the previous quarter.
Now The Good News
O.K., now the good news. With the cutbacks from high-end and full-price retailers—who are the foundation of fashion-oriented malls and the CBDs of major cities—there is an accelerated push from the discounters and off-price retailers: TJMaxx, Target, Nordstrom Rack, Syms and its recently acquired Filene’s Basement (now called fbSY), H&M, Century 21. According to one dealmaker “They consider this a great opportunity for discount deals in prime locations they could never afford before, and to reach affluent consumers who shunned them in the past.”
A prime example, of course, is Wal-Mart Stores, which will be opening dozens of smaller units of 30-60,000 sq. ft. in cities around the country, eventually rolling out the concept of focusing on food and consumer basics to hundreds of these units. And then, who knows?
These promotional tenants have greater access than ever before to luxury- and designer-branded merchandise because vendors have excess inventory and limited outlets for distribution. One estimate is that the number of top designers now selling to TJX Companies has jumped 25%. The off-pricers and discounters, therefore, are buying this top-quality merchandise, and using it to draw in customers in new stores along New York’s Fifth Avenue—and even Harlem—Chicago’s Miracle Mile, Beverly Hills, and maybe even Rodeo Drive. Certainly in the plushier malls in Las Vegas, they’ve been operating for some time now.
Educating The Affluent
These merchandisers are educating their new, fashion- and trend-oriented customers that they can continue to buy quality and at a cheaper price, and strengthen customer loyalty for the future, when the economy—hopefully—returns to what we consider normal. In the meantime, they have locked-in prime real estate at discounted prices—though they may be paying some of the highest rents they have ever paid before--and helped tear down the old barriers blocked them from locating in the A and A+ plus malls, or fashionable locations in some of the most prime urban centers. Though they much prefer long-term deals, in some instances they are willing to settle for six months, with options and some built-in increases.
These stores could be considered “pop ups”, which are becoming a more common trend.
As we’ve pointed out several times in the past, these locations are becoming more common, and the type of deal that appeals to both landlord and tenant. For the landlord, it provides a rent-paying tenant in a vacant store, that can be converted to a long-term tenant, either this retailer or another, perhaps even a competing merchant, at the expiration of the short-term lease. For the tenant, an inexpensive way to test a new concept, polish and refine the presentation, and react to feedback from customers before rolling it out in a mass expansion. Or kill the concept before it does too much damage.
And, of course, they are ideal for retailers that can exploit special events or holidays: Halloween, Back To School, Presidents Day, etc.
Other Interesting Activity
Dollar Tree says it will buy Canadian retailer Dollar Giant for about C$52 million, adding 85 units to its 3,961 stores in 48 states. VP of leasing is Todd B. Littler, (757) 321-5283, tlittler@dollartree.com .
____________________________________________________
GNC Acquisition Holdings is planning an IPO to raise some $350 million to add about 4,800 company-owned and franchised vitamin and herbal supplement shops; future plans are to expand to China. The Pittsburgh-based chain’s website is www.gnc.com , 1-800-766-7099.
_____________________________________________________
Loblaw Companies is launching The Mobile Shop in more than 500 of its supermarkets across Canada in a bid to become a major retailer of mobile phones. Contact Maria Forlini, VP-Telecom, (905) 459-2500, www.loblaw.ca .
_____________________________________________________
Gymboree Corp, which operates some 650 children’s apparel stores, has accepted a bid to be acquired by Bain Capital for $65.40 per share, or about $1.8 billion. Director of real estate is Kathleen Hinkley, (415) 278-7993, Email: Kathy Hinkley@gymboree.com .
______________________________________________________
Investors are being drawn to a number of real estate investment trusts that are outperforming most stock market offerings, especially those involved in shopping malls, office building and apartment buildings. In our industry, the top performer is Taubman Centers Inc, which during the third quarter returned 18.5%.
By Murray Shor
Considering the stubborn, low level of consumer confidence caused by the continuing high unemployment rate, it is no surprise that vacancies have been increasing all around the country, and that some retailers are focusing on Canada where there is a more positive emergence from the recession.
However, selective dealmaking is picking up here in the US in disparate locations as a result of the depressing numbers. Especially for brokers in prime metro areas, the opportunities are there.
First the bad news: According to the market research company Reis Inc, which tracks these data, the vacancy rate at shopping centers in the last quarter rose to 10.9%, the highest level since ’91, and closing in on the record 11.1% set the year before. The rent asked by landlords dropped almost 20 cents per sq. ft. to $19.07, but the effective rents are even lower, $16.58.
For the larger malls, where average rents are hovering around $38, vacancies rose only .2% to 8.6%, down from 9% the previous quarter.
Now The Good News
O.K., now the good news. With the cutbacks from high-end and full-price retailers—who are the foundation of fashion-oriented malls and the CBDs of major cities—there is an accelerated push from the discounters and off-price retailers: TJMaxx, Target, Nordstrom Rack, Syms and its recently acquired Filene’s Basement (now called fbSY), H&M, Century 21. According to one dealmaker “They consider this a great opportunity for discount deals in prime locations they could never afford before, and to reach affluent consumers who shunned them in the past.”
A prime example, of course, is Wal-Mart Stores, which will be opening dozens of smaller units of 30-60,000 sq. ft. in cities around the country, eventually rolling out the concept of focusing on food and consumer basics to hundreds of these units. And then, who knows?
These promotional tenants have greater access than ever before to luxury- and designer-branded merchandise because vendors have excess inventory and limited outlets for distribution. One estimate is that the number of top designers now selling to TJX Companies has jumped 25%. The off-pricers and discounters, therefore, are buying this top-quality merchandise, and using it to draw in customers in new stores along New York’s Fifth Avenue—and even Harlem—Chicago’s Miracle Mile, Beverly Hills, and maybe even Rodeo Drive. Certainly in the plushier malls in Las Vegas, they’ve been operating for some time now.
Educating The Affluent
These merchandisers are educating their new, fashion- and trend-oriented customers that they can continue to buy quality and at a cheaper price, and strengthen customer loyalty for the future, when the economy—hopefully—returns to what we consider normal. In the meantime, they have locked-in prime real estate at discounted prices—though they may be paying some of the highest rents they have ever paid before--and helped tear down the old barriers blocked them from locating in the A and A+ plus malls, or fashionable locations in some of the most prime urban centers. Though they much prefer long-term deals, in some instances they are willing to settle for six months, with options and some built-in increases.
These stores could be considered “pop ups”, which are becoming a more common trend.
As we’ve pointed out several times in the past, these locations are becoming more common, and the type of deal that appeals to both landlord and tenant. For the landlord, it provides a rent-paying tenant in a vacant store, that can be converted to a long-term tenant, either this retailer or another, perhaps even a competing merchant, at the expiration of the short-term lease. For the tenant, an inexpensive way to test a new concept, polish and refine the presentation, and react to feedback from customers before rolling it out in a mass expansion. Or kill the concept before it does too much damage.
And, of course, they are ideal for retailers that can exploit special events or holidays: Halloween, Back To School, Presidents Day, etc.
Other Interesting Activity
Dollar Tree says it will buy Canadian retailer Dollar Giant for about C$52 million, adding 85 units to its 3,961 stores in 48 states. VP of leasing is Todd B. Littler, (757) 321-5283, tlittler@dollartree.com .
____________________________________________________
GNC Acquisition Holdings is planning an IPO to raise some $350 million to add about 4,800 company-owned and franchised vitamin and herbal supplement shops; future plans are to expand to China. The Pittsburgh-based chain’s website is www.gnc.com , 1-800-766-7099.
_____________________________________________________
Loblaw Companies is launching The Mobile Shop in more than 500 of its supermarkets across Canada in a bid to become a major retailer of mobile phones. Contact Maria Forlini, VP-Telecom, (905) 459-2500, www.loblaw.ca .
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Gymboree Corp, which operates some 650 children’s apparel stores, has accepted a bid to be acquired by Bain Capital for $65.40 per share, or about $1.8 billion. Director of real estate is Kathleen Hinkley, (415) 278-7993, Email: Kathy Hinkley@gymboree.com .
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Investors are being drawn to a number of real estate investment trusts that are outperforming most stock market offerings, especially those involved in shopping malls, office building and apartment buildings. In our industry, the top performer is Taubman Centers Inc, which during the third quarter returned 18.5%.
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