Every year, in December, Chain Store Age examines the northeastern region — New York, Pennsylvania, New Jersey, Maine, Massachusetts, Connecticut, New Hampshire, Vermont and Rhode Island — and, in 2011, there appears to be some positive momentum.
Retail real estate executives will tell you that we’re not completely out of the woods yet, but the industry is certainly inching in the right direction.
For this Northeastern Market Profile, geared toward the International Council of Shopping Centers’ annual New York Deal-Making Conference, at the New York Hilton and Sheraton on Dec. 5 and 6, we talked with a lineup of shopping center owners about their northeastern activities, and what lies ahead for 2012.
Growing by leaps and buys: Southeastern-based shopping center developer EDENS has grown its northeastern presence to 29 centers and 3.9 million sq. ft. — spread over Massachusetts, Connecticut, Rhode Island and New York. The Columbia, S.C.-based company opened a New York City office earlier in 2011, adding to existing offices in Boston and Washington, D.C., to build out regional platforms capable of acquiring, developing and managing area assets.
“The northeast region now makes up about 30% of our portfolio,” said Sam Judd, VP investments for EDENS. “Besides the existing properties, we currently have six undergoing major redevelopment and another three in the 2012 pipeline.”
One such redevelopment project is Middlesex Commons, located in Burlington, Mass. The 244,000-sq.-ft. center lost three major tenants in 2009, totaling 150,000 sq. ft., which served as impetus for a complete overhaul.
“We started by relocating and expanding the Market Basket anchor from 30,000 sq. ft. to 104,000 sq. ft.,” Judd said. EDENS found a high-end wine merchant to locate adjacent to the grocer and brought in Nordstrom Rack and DSW to complement the existing fashion tenants. “Finally, we signed Burtons Grill and The Chateau restaurants, two regional favorites that are well loved in the community,” he said.
Physical improvements include new and modern facades and storefronts, wider sidewalks and outdoor dining areas, new lighting and landscaping, and new signage. “We are now 100% leased with a great tenant lineup and have reconnected the shopping center to the community,” Judd said.
Across-the-board strength: Adam Ifshin, president and CEO of Tarrytown, N.Y.-based DLC Management Corp., is quick to point out that DLC doesn’t have a big show-stopping project in the Northeast but, rather, “properties that are, across-the-board, generally healthy and anchored by high-performance supermarkets.”
Price Chopper and Stop & Shop are DLC’s largest supermarket tenants, and the pair — along with DLC’s other grocery anchors — has added super strength to a lineup of northeastern properties that includes 22 centers and 2.9 million sq. ft. in Maine, New York, New Hampshire, Massachusetts, Connecticut, Rhode Island and New Jersey.
Alpine Commons, in Wappinger, N.Y., is an example of a DLC center that is anchored by a high-performing, newly updated Super Stop & Shop, along with a BJ’s Wholesale Club. “Two years ago, we would have been hard-pressed to get traction on Alpine Commons,” Ifshin said, “and today we are seeing strong potential for the center.”
Redeveloping and re-merchandising projects such as Alpine Commons are DLC’s main thrust. “We buy assets that we believe we can improve both from a physical and a bottom-line standpoint,” Ifshin said. “That’s the business we’re in.” The fact that DLC started in the Northeast, and continues with a solid presence in the region, allows it to watch for opportunities, and then capitalize.
A big deal in the Big Apple: Forest City Enterprises’ commitment to the Northeast became crystal clear when the Cleveland-based shopping center owner launched a major new mixed-use project in the heart of affluent Westchester County, N.Y.
Westchester’s Ridge Hill, a 1.3 million-sq.-ft. destination located in Yonkers off the New York State Thruway and developed by Forest City’s New York-based subsidiary Forest City Ratner Cos., is nearing completion. Retail highlights include Whole Foods Market and a 60,000-sq.-ft. LA Fitness, and destination tenants such as Lord & Taylor (opening March 2012), L.L. Bean, The Cheesecake Factory, REI and Dick’s Sporting Goods, to name just the tip of the retail iceberg.
“What we’re finding, especially as the market thaws, is that retailers still want and need to be in the greater New York market,” said Andrew Silberfein, executive VP retail and finance, Forest City Ratner Cos. “That said, they want the ‘A’ location, the fortress property that will drive high-quality traffic throughout the day and evening, on weekdays as well as weekends.”
That is precisely what Westchester’s Ridge Hill is designed to be. With its lineup of dining and shopping options, entertainment offerings, and office and residential components, the project caters to the third-most affluent county in the United States. > “The area’s demographics are some of the best in the country and, at the same time, the market is under-retailed by 5 million sq. ft.,” Silberfein said.
Home court advantage: Pennsylvania Real Estate Investment Trust (PREIT) leverages its Philadelphia headquarters and intimate knowledge of the northeastern market and customer to keep its assets relevant and its regional foothold solid.
The company owns eight of the major malls in the Philadelphia region, which means, from a shopping center perspective, PREIT controls about 40% of the fourth-largest market in the country. “With that degree of ownership in mind, and with our home court advantage, we have a real sense of the market conditions as a whole,” said Joseph Coradino, president of PREIT Services and PREIT-Rubin.
And the sense, Coradino said, is that the region is continuing to see a slow and steady improvement. PREIT’s Cherry Hill (N.J.) Mall is thriving. Willow Grove Park — in Willow Grove, Pa. — recently announced that J.C. Penney, Nordstrom Rack, Forever 21 and Brio Tuscan Grille will fill a dark Strawbridge building that had sat vacant since 2006. “When you see transactions come together all at once in a mall that is already performing well at over $400 per square foot, it is a good indicator that the market is continuing to convalesce,” Coradino said.
Another good indicator of retail recovery is the leasing traction that two other PREIT properties are gaining. The Gallery, in downtown Philadelphia, will announce a major office tenant to anchor the east end of the property. And Moorestown Mall, just four miles from PREIT’s Cherry Hill property, just won a liquor referendum that will make it the only building in Moorestown to serve liquor. “That will allow us to recycle the mall into a dining and entertainment destination,” said Coradino.
“Moorestown, with the inclusion of liquor, and redevelopment of the Gallery, suggest that the recovery is starting to take hold, in Philadelphia and in the Northeast as a whole,” Coradino noted.