Developers: New centers warrant new co-tenancy clauses
With department stores being replaced by gyms and office space, retail tenants who signed on for the traffic generated by traditional anchors are of the opinion that the co-tenancy clauses in their leases need restructuring. At a forum staged by Jones Lang LaSalle at its New York office yesterday, two noted mall developers agreed.
“We need to get together with all of our retailers and revisit co-tenancy. The way it stands now doesn’t make sense at all,” said Stephen Lebovitz, president and CEO of CBL Properties. “We will work with the retailers, but it all depends on how their sales go as new anchors establish themselves.”
Retail leasing managers worry that anchor back-fills like medical clinics and restaurants won’t bring shoppers to the mall like department stores did, but panelist Joseph Coradino, chairman and CEO of PREIT, begged to differ.
“I’m not sure I agree that restaurants don’t bring in shoppers. It’s early in the game,” he said, though he added that current co-tenancy clauses were "archaic.”
Coradino was sure of one thing: The move of malls toward more dining and entertainment options is an abiding reality. “Not too long ago all our centers were 50% apparel. Now it’s closer to 30 to 40%,” he said.
Lebovitz suggested that a different metric be created for the traffic-building contribution of non-department store anchors. “It’s hard to say that the Whole Foods shopper is not shopping the mall. What we see is the creation of customer shopping patterns of [grocery shoppers] coming to the mall and cross-shopping on other days,” he said.
Mall owners do have a responsibility to pick the restaurants that will deliver the most shoppers, Lebovitz said, noting that local, chef-driven restaurant concepts draw more rave reviews than customers.
“National chains like Olive Garden know what they’re doing in our environment and will do seven to eight million dollars in sales, whereas the local restaurant will only do two million,” he said.
Refinanced Boulder center opens with 90% occupancy
NewMark Merrill Mountain States this week issued a double-barreled press release: It closed on a $62 million refinancing of the Village at the Peaks and opened the Boulder-area center at close to 90% capacity.
The $100 million, 442,000-sq.-ft. had been under development for five years in a public/private partnership between NewMark Merrill and the city of Longmont. New financing was provided by Allianz Real Estate of America.
Tenants includes national brands like Whole Foods, Regal Cinemas, Gold’s Gym, Party City along with a complete roster of dining and necessity-based retailers like T-Mobile, Parry’s Pizzeria, Longmont Modern Dentistry, Jersey Mike’s Subs, and Brain Balance Achievement Centers.
”We are extremely proud of Village of the Peaks as a community center which we believe will provide extraordinary shopping, food, services and serve as a gathering place for a long time to come," said NewMark Merrill CEO Sandy Sigal.
Art Van rounds out Illinois Power Center
Art Van Furniture will take over a 34,000-sq.-ft. space vacated by H.H. Gregg at Gurnee Town Center in Illinois, according to owner Retail Properties of America, Inc. The electronics chain filed for Chapter 11 bankruptcy protection earlier this year.
Art Van will bring the center to 98% occupied, according to RPAI, joining DSW, Old Navy, Starbucks, Ross Dress for Less, Five Below, and Bath & Body Works at the center west of Waukegan.
One of the Midwest’s largest furniture retailers, Art Van operates more than 100 furniture showrooms and PureSleep stores in Michigan, Illinois, Ohio, Iowa, and Indiana.
Stacy Short, VP of leasing in RPAI’s western division, credited her company’s proactive leasing approach for being able to quickly fill the hole left by Hhgregg.
“We are thrilled to add the home furnishings category to this already great retail mix," Short said.