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WESTCHESTER MALL STILL GOING STRONG AFTER 20 YEARS

By John Dube

Shoppers spend an average of $74 per visit at the Galleria at White Plains.

The Galleria at White Plains, an 885,000-square-foot enclosed mall in White Plains, N.Y., has witnessed enormous changes over the past two decades, including the recent loss of one of its anchors, J.C. Penney, and the opening of a major new competitor nearby.

But, refusing to be battered or beaten, tough challenges like these have left the center stronger, say its managers and tenants, who recently celebrated The Galleria’s 20th anniversary.

“The Galleria has been a very productive property from the beginning, and it’s trended upward over the years,” said Winette Peltz, CSM, general manager for the center. “The Galleria continues to play the role of centerpiece for this area in terms of strong retail sales and commercial activities; it’s always been a major retail destination for this market.”

Anchored by Macy’s and, until last June, J.C. Penney, the shopping center straddles two city blocks and is home to 140 retail stores and restaurants. It has a 93% occupancy rate. Mall management says it does not disclose sales-per-square-foot, but claims the Galleria ranks among the top 1% in sales per square foot among U.S. malls. Annual sales total close to $200 million, and the mall reports that the 700-square-foot atrium food court consistently performs above $900 per square foot.

“On this anniversary, the Galleria at White Plains is in the strongest position it has been in its long history,” said Robert Michaels, president and COO of General Growth Properties (GGP), following a recent anniversary celebration at the mall. “The reception the center receives from its consumers and from the retailers has never been greater. Its sales and occupancy growth over the last three years has been outstanding and is a real tribute to the strong management team in place.”

Galleria is owned by Toronto-based Cadillac Fairview, and has been managed since 1996 by GGP, the nation’s second-largest owner, manager and developer of regional malls.

When the Galleria opened for business in 1980, the City of White Plains, about 15 miles north of New York City, was undergoing an urban renewal. Since that time, the community has undergone further development, much of which includes retail. Generating more than $63 million in real estate taxes over 20 years, the mall has been a catalyst for much of this growth, according to center management officials.

But part of the heavy retail growth in the area included the development in the early 1990s of the upscale The Westchester, an 830,000-square-foot shopping center about one mile from the Galleria. Owned by Simon Property Group, the Westchester has proven to be a major competitor, particularly for the high-end customer, with its Nordstrom and Neiman Marcus anchors.

Tom Walsh, owner of Jean’s Hallmark, a tenant of the Galleria since it opened, has seen the effect of The Westchester firsthand. While his store has maintained growing retail sales, that trend is slowly decreasing, and the type of merchandise he’s selling has changed somewhat.

“We used to sell more high-end items, but now we sell more moderate-price gifts,” said Walsh. “We also do more daytime business than we used to and less nighttime; Sunday business is not as much as it used to be.”

But if business has changed for the Galleria during the past 20 years, it is simply different, not worse, according to mall management. Peltz said the two shopping centers capture different niches and both are very successful. The Galleria, for example, attracts 13 million visitors a year, with shoppers spending an average of $74 per visit.

There have been changes along the way to help the Galleria adapt and thrive in its changing market. “Our approach has evolved in the last 10 years,” said Peltz. “We’ve sought to expand the appeal of our tenant mix by having a very broad-based, strong mix of tenants.”

Striving for a diverse tenant mix is exactly what many regional malls should be doing in light of the trend away from department store sales, according to Anthony Buono, managing director of the retail services division of CB Richard Ellis, the international real estate services firm.

“It’s important for owners of shopping centers to realize they need to integrate different types of tenants in their malls,” said Buono. “They need to understand the demographics before they decide on a direction, but there clearly is a demand for more discount promotional retailers.”

Some regional malls have reacted to the trends by creating new entertainment experiences in their malls. This is a good approach for a center catering to couples without children and singles interested in dining out and other kinds of entertainment, said Buono. But centers catering to families with children should concentrate on their tenant mix and satisfy the demand for discount retailers. For the most part, the Galleria has not strayed far down the entertainment road. Instead, it has concentrated on its tenant mix and in creating the right kind of shopping environment. A $15 million renovation in 1993 and 1994 transformed the building into a more contemporary, light-filled space.

“The renovation here helped a lot,” said Walsh. “General Growth has done a very good job. When tenants leave, they fill the space. When something needs fixing, they fix it. They don’t let anything slide — that will kill you in a hurry. That’s why I’m still here. This is a very tough, competitive business right now. You’ve got to stay on top of things, and they do.”

While J.C. Penney is slated to leave the Galleria in June as part of a national program of store closures, the Galleria is buoyant about the opening of a new 23,000-square-foot H&M store on its second floor. Mall management does not yet have a new tenant lined up for the J.C. Penney space but said there is strong interest in it.

The renovation also included an expansion of the Galleria’s food court — a very successful segment of the mall — to 20 food retailers. Strong food court sales are reflective of the fact that the Galleria is a magnet for the growing population of office workers in the area looking for lunchtime variety.

The Galleria’s principal trade radius extends to three miles, an area with a median household income of $88,000. Its extended marketing area is a seven-mile radius, but it pulls customers from as far as 14 miles away in the northern Bronx.

Drawing on a significant family clientele in this trade area, the Galleria’s most significant foray into the realm of entertainment is its Kids2Kids Club. With 1,000 families registered, the club helps draw families into the shopping center for special events such as a children’s literacy program, a Halloween parade and a Mad Hatter Tea Party. Registered families get direct-mail invitations to the events, a newsletter and discounts at certain stores.

“The kids’ club has been great,” said Paula Kelliher, the Galleria’s marketing director. “It works out well for everyone. We track key merchants’ sales on the days of these special events, and we’ve seen as high as 30% increases in sales in the stores that are tracked.”

Having studied sales across the mall for more than 20 years, mall management says it is clear some things have changed, including the mix of stores and the tastes of shoppers. But it is confident it can keep up with the changes.

“Our strength lies in the strength of our tenants — Old Navy, Hot Topic, Yankee Candle, H&M,” said Peltz. “We positioned the Galleria as the shopping destination for 2000 and beyond. I think that one of the things that will keep us going strong through this new millennium is that we have a very broad appeal to a variety of different customers.”

 

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