When the 2007 International Council of Shopping Centers (ICSC) Spring Convention opens its doors to a throng of 50,000 retail real-estate executives this month, attendees will be presented not only with more leasing-mall exhibits than ever before, but also a lineup of projects that show innovation and progressive thinking.
The annual event, which will be held May 20-23, 2007, at the Las Vegas Convention Center in Las Vegas, is a retail tenant’s nirvana as shopping center developers unveil new projects and a plethora of attractive leasing opportunities. Covering them all would be an impossibility, so Chain Store Age has provided a preview of some of the highlighted projects on display in Las Vegas later this month.
Center at Innovation
Location: Manassas, Va.Size: 276,000 sq. ft.Developer: Edens & AvantMajor tenants: Super Target, T.J. Maxx, plus regional and local retailersStatus: Slated to open March 2008
Center at Innovation has found itself a great home. The 276,000-sq.-ft. Super Target-anchored center, developed by Columbia, S.C.-based Edens & Avant, resides in Manassas, Va.—specifically in Prince William County, one of the fastest-growing counties in the nation. Surrounding the Center at Innovation’s site is prolific residential and office development activity and, because it’s the only retail piece in the vicinity, the center is expected to be highly trafficked.
Location: Burlington, N.C.Size: 840,000 sq. ft.Developer: CBL & Associates PropertiesMajor tenants: Newly announced J.C. Penney will join Dillard’s and Belk department stores in anchoring the open-air shopping, dining and entertainment development; junior anchors include Barnes & Noble, a 16-screen Carousel West End Cinemas, as well as specialty retailers Ann Taylor Loft, Chico’s, The Children’s Place, Coldwater Creek, New York & Co., and Yankee Candle.Status: Opening is slated for August 2007.
Main Street USA is coming to Burlington, N.C., as the CBL-developed Alamance Crossing project nears completion. Architecture references small-town America, while also paying tribute to the area’s rich history in the textile and tobacco industries. Lifestyle amenities such as spacious walkways and curb-side parking lend convenience as well as enjoyment to the complex.
On display this month in Las Vegas, Alamance Crossing is one of 14 CBL projects currently under construction. Other projects include Pear-land Town Center in Houston (Pearland, Texas) and phase two of Gulf Coast Town Center in Fort Myers, Fla.
The Arboretum will draw plenty of attention at ICSC’s Spring Convention. The open-air lifestyle center in the northwest suburbs of Chicago has a premium location—at the intersection of Illinois Routes 59 and 72, along a corridor that is experiencing explosive growth. Just a mile away, in the mixed-use Prairie Stone Development, is Sears Holdings Corp.’s headquarters, the recently opened Sears Center event arena, a planned 450-room resort hotel, water park and Illinois’ first Cabela’s.
Location: South Barrington (Chicago), Ill.Size: 600,000 sq. ft.Developer: The Jaffe Cos.Major tenants: Tenant lineup will include an upscale mix of fashion-apparel brands, home-furnishings retailers, a luxury movie complex and restaurants.Status: The targeted opening date is summer 2008.
Developed by Northbrook, Ill.-based The Jaffe Cos., The Arboretum sits on the site of a former nursery and is envisioned by its developers as a true town center. “The Arboretum of South Barrington is meant to convey warmth and intimacy, but also timelessness and charm,” said Michael Jaffe, president. “It should feel as if it’s been there forever.”
Tudor-style architecture is intended to reference Market Square in Lake Forest, Ill., one of the country’s earliest integrated-use shopping centers. Fashion-apparel and home-furnishings stores will comprise about two-thirds of the retail mix, while the remaining third will be devoted to entertainment venues including a luxury cinema and destination restaurants.
City of North Las Vegas Town Center
A college scholarship will be awarded to whomever comes up with a name for the new mixed-use retail project in North Las Vegas. The even bigger winners are the community’s residents, who will have their own town center and gathering place.
The $300 million development will include a retail, dining and entertainment center, as well as a residential component consisting of about 800 units. “With its shops, dining, activities and enticing public spaces, it will be a place that will allow the community to gather in a festive atmosphere,” said Rick Kuhle, president of Phoenix-based Vestar.
Location: North Las Vegas, Nev.Size: Up to 1.3 million sq. ft. of retail, dining and entertainment, and a residential component, on 160 acresDeveloper: Vestar Development Co., with leasing services provided by Taubman Centers. The Athena Group is developing the residential and, in conjunction with Celebration Centers of America, serves as the master-plan developers of the mixed-use project.Major tenants: Lifestyle retailers, restaurants and at least one department store will be joined by an array of large-format retail offering everything from electronics to home goods.Status: Opening is slated for late 2008.
Town-center amenities such as outdoor fireplaces, pop-jet fountains, a video wall, a performance stage, shaded walkways, lush landscape and extensive pedestrian walkways will create a true lifestyle destination.
The Streets of Indian Lake
Another major retail project on display in Las Vegas will be The Streets of Indian Lake, a 405,000-sq.-ft. lifestyle center near Nashville that serves as the lifestyle retail component of a Halo Properties master plan that includes 1 million sq. ft. of office space, a retail power center and upscale multifamily housing. Columbus, Ohio-based Continental Retail Development (CRD) is the developer of the lifestyle portion. The first group of tenants, including Barnes & Noble and Regal Cinema, were announced earlier this year.
Location: Hendersonville (Nashville), Tenn.Size: 405,000 sq. ft.Developer: Continental Retail DevelopmentMajor tenants: Barnes & Noble, Regal Cinema, Lane Bryant, Jos. A. Bank, New York & Co., J. Jill, Talbots, Coldwater Creek, Bath & Body Works, Ann Taylor, Victoria’s Secret, Gymboree, Qdoba Mexican Grill, Marble Slab Creamery, The Children’s Place, Chico’s, Sunglass Hut, Francesca’s, Icing by Claire’s and Carlyle & Co. JewelersStatus: Slated to open March 2008
“We are thrilled to be bringing these great specialty retail and entertainment tenants to Hendersonville,” said David Kass, president of CRD. “This is just the first wave.”
Silver Spring Square
Although the Harrisburg, Pa., area presented a multitude of site options, Rochester, N.Y.-based Wegmans Food Markets selected Silver Spring Square as the location of its first store in the south-central Pennsylvania market.
“That’s quite significant,” said Mac Chandler, managing director, Northeast investments, for Jacksonville, Fla.-based Regency Centers, co-developer of the project. Just as significant is what it has taken to get the community center developed.
Location: Mechanicsville (Silver Spring/Harrisburg), Pa.Size: 486,812 sq. ft.Developers: Regency Centers and TCH DevelopmentMajor tenants: Target, Wegmans, ULTA, Bed Bath & Beyond, Best Buy, Ross Dress for Less, Lane Bryant, Maggie Moo’s, Hair Cuttery, Petco, Longhorn Steakhouse, Chili’s, Panera Bread, PNC Bank, Advance Auto PartsStatus: Opening in phases (Longhorn Steakhouse and Chili’s opened in February), with center to be mostly open by September 2007
“We had to overcome a variety of challenges in order to develop this project,” said Powell Arms, VP of investments. The developers obtained a $7 million-plus grant from the state of Pennsylvania for off-site improvements, which encompassed street widening, acquisition of right-of-ways, and, “We constructed the third-longest concrete suspension bridge in the state of Pennsylvania,” said Arms.
The bridge traverses a trout-filled stream that runs along the property. “We had to take extensive measures to preserve the quality of the storm water,” explained Chandler. “We worked with Trout Unlimited to create innovative ways to measure and protect the quality of the water that is being discharged into the stream so as not to harm the fish.”
Another innovation was using rock from an adjacent quarry as the source of all of the project’s aggregate.
Eight years—six years by TCH Development and another two invested by Regency—have gone into the development of Silver Spring Square, resulting in a premier property slated to be highlighted at the Las Vegas convention in May.
Weekly Retail Fix
THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT
BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions. —
“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.
THE FIX: Differentiation would better help Sam’s
Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.
Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.
That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.
Weekly Retail Fix
THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%
WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers. —
Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.
Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.
THE FIX: Improved shopper experience ups comps
Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.
Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.
Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.
Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”
He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.
“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”