SCT - Shopping Centers Today Online

September 2006

FEATURES
Getting a lot more from parking lots
Some mall landlords are concluding that the vast expanses of area surrounding their centers are far too valuable to be parking cars on.

Where to park
Some Aussie advice

Reinventing resorts
Venerable resorts such as Fort Lauderdale, Fla., are not just for vacationers anymore, but are increasingly catering to families and retirees with second homes. Retailers have taken note.
U.S. draws more foreign investors
The U.S. remains the land of opportunity for foreign investors. U.S. real estate accounts for more than a quarter of the $470 billion foreigners invest in property around the world each year.
Retail condo boom
In a few select markets, tenants and investors have been buying retail space at a blistering pace in the past two years.
Chicago’s big-box battle
Big retailers have had sharp words for Chicago’s new ordinance that requires them to pay above-minimum-wage rates. But will they follow Target’s and Lowe’s lead and shun the market?
Stores shrink to grow
As big retailers seek to expand, they are rolling out smaller formats that are more appropriate for densely developed locations and secondary markets.
To live and play in downtown L.A.
Downtown Los Angeles largely shuts down when its offices close, but increasingly it is attracting residents, who in turn are drawing the attention of retailers.

Third Street’s first class retail
Long used to shopping in malls, Los Angelenos get a fancy shopping street of upscale retailers to call their own.
Burbank Town Center’s makeover
Burbank, Calif., which calls itself the Media Capital of the World, is less renowned for its shopping. But a four-year, $17 million redevelopment of Burbank Town Center is designed to give the city some shops worthy of its fame.

Miracle remedy for Desert Passage
The new owners of Desert Passage hope to turn the long-flagging center on the Las Vegas Strip around with a new design, some new shops and a new name: Miracle Mile Shops.
China’s embrace of luxury
China is already the world’s third-largest consumer of luxury goods, and retailers are rushing to meet the demand.
Beijing builds a lifestyle center
Retail development in densely packed Beijing tends to be vertical. All the more eye-catching, then, will be Solana, the city’s first lifestyle center, because it will be spread across 32 acres.
Latin America’s crime-free malls
Latin American shopping centers provide famously safe havens from the region’s equally famous street crime rate.
How to succeed in Korea
It takes more than rock-bottom prices for retailers to be successful in Korea — just ask Wal-Mart and Carrefour.
Percentage rents go south
Latin America’s landlords are increasingly switching to the percentage rent lease structure.
Latin America catches mixed-use fever
Cencosud is about to give Chile its first skyscraper and South America its tallest building.
Shopping on Sunday
Sunday is one of the busiest days of the week for Latin America’s malls, thanks partly to more women working weekdays.
Going to church at the mall
Latin Americans don’t have to choose between going to church and going shopping — many malls provide chapels.
From trash to treasure
Developers plan to turn a long-dormant landfill into Los Angeles County’s biggest retail development site.
Dining doldrums
Casual dining chains such as The Cheesecake Factory and P.F. Chang’s see reduced traffic among lower-income customers.
Development in brief
An update on what developers and their tenants are up to

Shopping Centers Today -> September 2006

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Macy’s goes off the grid

Federated Department Stores is taking its New York City Macy’s stores off the city’s notoriously spotty power grid by hiring an energy contractor. In a $9.3 million, 10-year deal, Federated hired El Dorado Hills, Calif.-based BluePoint Energy to operate generators in the downtown Brooklyn Macy’s store. The generators will meet the store’s electrical and air-conditioning needs, with the city’s Consolidated Edison grid serving as backup, says BluePoint, which is also negotiating to install generators at the Macy’s on 34th Street and at other East Coast units. Besides receiving rebates from New York state for energy conservation, Macy’s will avoid the fate of the roughly 100,000 Queens residents who suffered a five-day blackout during July’s heat wave.

Chase and Kohl’s card Macy’s customers

Kohl’s is teaming with credit card issuer JPMorgan Chase on a direct-mail campaign to woo alienated Federated Department Stores customers, executives said. As Federated relabels some venerable regional department stores under the Macy’s nameplate next month, shoppers loyal to the old stores will be seeking new favorites, Kohl’s reckons. To convert those shoppers, Kohl’s will send promotional materials to candidates in JPMorgan Chase’s extensive credit card database, said Kohl’s CEO R. Lawrence Montgomery. “We will very specifically go after markets where we think consolidation might affect customers and we can gain market share,” he said. “We’re appealing to a much broader customer, and we’re pleasing her.” Kohl’s sold its own $1.5 billion credit card business to JPMorgan Chase in March.

Smiles in the aisles

Employees of Sam’s Club, Target, Wal-Mart and similar mass merchants are friendlier than those of other types of retail stores, one survey says. That’s because they smile 98 percent of the time, says the survey of nearly 106,000 “mystery shoppers” — consumers who visit stores incognito and relay their experiences back to a chain’s home office — conducted jointly by the International Mystery Shopping Alliance and the National Shopping Service. The industry average for smiling was 88 percent. Supermarket employees were the least friendly, smiling 85 percent of the time, according to the survey.

READERS TALK BACK ...

John A. Henry III, chairman of JAH Realty in Dallas had this to say about our June 2006 cover story, “Retailer Bait”:

Congratulations to the growing chorus who are against the heretofore rising tide of so-called economic development in retail. Retail is a closed vessel — meaning, as we know, there is only so much sales in a community. For government to interfere in its “infinite wisdom” is just plain wrong and leads ultimately to corruption.

This is an insidious movement, and I urge your careful consideration to its implications to the free market. The end argument is always, “We agree it’s wrong, but everyone is doing it, so we must do it to compete.” What ever happened to honor, fortune and, yes, even lives that have been sacrificed for our sacred freedom, instead of influence peddling by the privileged few? I say, “Give it up, Bass Pro and Cabela’s.”

Saving Spencer

CBL & Associates Properties is cutting traffic-challenged tenant Spencer Gifts some slack, at least for the time being. Spencer operates 11 stores that occupy a total of 22,000 square feet in CBL malls. “Their business has fallen off and pushed their occupancy cost to 20 percent,” said Stephen D. Lebovitz, president. CBL set up short-term lease renewals for some of the stores so Spencer can keep operating while CBL seeks more-profitable tenants for those stores. “We’ve negotiated lower rate points on percentage rents,” Lebovitz said. “We hope their business will come back. They’re not in Chapter 11. We’re working on backup [tenants], but we’re hoping Spencer’s business will improve.”

Perfect pitch

Like so many sports figures before him, New York Yankees superstar pitcher Mariano Rivera is tossing his cap into the retail real estate game. Rivera hired New York City-based Branded Concept Development to serve as architect and project manager for Mo’s New York Grill, a 3,500-square-foot, upscale steakhouse that opened in New Rochelle, N.Y., in July. Rivera’s partners in the venture include Joe Fosina, the Yankees’ longtime uniform tailor, and Fosina’s son Gary, a professional chef. BCD has also worked with Chevys Fresh Mex, Cosi and Fleming’s Prime Steakhouse.

Fashionistas in training

General Growth Properties teamed up with trade group Cotton and Seventeen magazine to present a weeklong program called Cotton’s Fashion Camp at the 1.4 million-square-foot Galleria Dallas. In August the weeklong program allowed 50 high school students to attend seminars on such fashion-related disciplines as trend forecasting and fashion event marketing. The instructors included the fashion editor of the Dallas Morning News, who discussed fashion careers, and some representatives of Nordstrom, who described the retail aspects of fashion. There was a contest in which the blossoming fashionistas designed a cotton T-shirt (the winning design will be sold at the Galleria Dallas Nordstrom). The program wrapped up with a back-to-school fashion show coordinated by the participants.

Government services across from Gap

When Washington Post reporter Joel Garreau coined the term “edge city” in his 1991, he had McLean, Va., in mind. The fast-growing Washington, D.C., suburb, part of unincorporated Fairfax County, is home to over 25 million square feet of office space, plus top-performing retail destinations such as Tysons Corner Center, but lacks a traditional downtown and such attendant services as a courthouse and a government center. Using a former storage space and a little creativity, however, The Macerich Co. has helped bring government and community services right in the heart of town. This summer Macerich, which co-owns Tysons Corner Center, opened the Fairfax County Government Services Center on the mall’s second level. The 1,780-square-foot facility houses a police substation and a county-run kiosk directory of government agencies. “The public schools bring in high school students and teach them retailing,” said Charles R. Cope, SCSM, vice president of Macerich East Development. In addition to housing an English-as-a-second-language program, Fairfax County has used the center to offer free tax preparation for low-income residents and as a meeting place for community groups. “The county loves the center,” said Cope, “because it spreads out their services.”

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