PRINT THIS STORY:

CHANGE TEXT SIZE:

LIFESTYLE CENTER PIONEERS OPEN ASPEN GROVE

By Kathy Dube

Aspen Grove, Littleton, Colo., marks Poag & McEwen’s fifth lifestyle center.

Poag & McEwen, the company that coined the term “lifestyle center,” has opened its latest project: Aspen Grove, Littleton, Colo.

The mixed-use project is the Memphis, Tenn.-based company’s fifth lifestyle center and its first in Colorado. The project, containing 280,000 square feet of retail, opened in November. Plans call for an additional 300,000 square feet of offices or multifamily housing.

“A lot of retailers were telling us to look at southwest Denver,” said Terry McEwen, president, who heads the firm with CEO Dan Poag. “We found Littleton, which is very affluent.” Aspen Grove’s primary trade area has an average household income of $82,000 and is one of the top 10 growth markets in the country, he said.

Developed in partnership with Cleveland-based Developers Diversified Realty Corp., Aspen Grove has 54 specialty stores and restaurants. They include Ann Taylor, Banana Republic, Eddie Bauer, Gap, J. Crew, Pottery Barn, Pottery Barn Kids, Talbots, Victoria’s Secret and Williams-Sonoma. The center has full-service restaurants in, appropriately enough, a grove of aspens. It also has several in-line, quick-service restaurants, including Starbucks and Panera Bread Co. The restaurants have both indoor and outdoor seating.

Aspen Grove is the only true lifestyle center in Colorado, said Dean Insalaco, a Denver-based vice president at commercial real estate firm CB Richard Ellis.

“It’s unique,” he said. “They demalled the mall. They have brought it out to the street level.” Not only does the project look good, Insalaco said, “but the major selling point is that no one else has put together this caliber of tenants. It’s typical mall retailers [that] you don’t see outside of big-box malls.”

Insalaco said he believes that Aspen Grove will attract more destination shoppers because it is easy to drive up to — no huge parking lots to traverse — but added that it’s too early to predict its long-term economic performance. A potential negative, he said, is that the center is not located on a major thoroughfare. Though there is a connecting light-rail stop, it is unlikely to be used by the upscale shoppers who patronize the high-end retail stores.

Insalaco said he expects Aspen Grove’s greatest competition to come from two other Littleton malls: Park Meadows, the super-regional center in the southeast Denver metropolitan area that is owned by The Rouse Co. and was originally developed by TrizecHahn Corp.; and Southwest Plaza Mall, an older mall owned by General Growth Properties. Park Meadows is especially attractive, he noted, while Southwest Plaza recently underwent substantial renovations.

Aspen Grove’s developers have strived to make it attractive, too. Though previous developments were predominantly brick, this project is designed to reflect Colorado’s architectural preferences for wood, stone and trees, according to McEwen. “It looks very ‘outdoorsy’ and is in a parklike setting alongside a nice river, with the Colorado mountain range as a backdrop.”

Lifestyle centers are proving to be a popular destination for people who don’t want to navigate a major mall, developers say. Same-store sales at Poag & McEwen projects increased 6 percent in December over the previous December; meanwhile total sales that month at centers open more than a year were up 8.2 percent. The company says it is already seeing strong sales at Aspen Grove.

Lifestyle center development is mushrooming. A recent ICSC Research report identified about 30 projects open today, and many more are in the pipeline. Poag & McEwen helped launch the upscale fashion and open-air shopping center concept targeted at affluent shoppers in 1987, with The Shops at Saddle Creek in the Germantown area of Memphis. Poag & McEwen registered the term “lifestyle center” as a service mark, although the company has opted not to take legal action against others using the term.

“We risked a lot but were confident it would work,” said Poag. Originally a developer of neighborhood and community strip centers, Poag said he saw a future in blending the selection of specialty stores found in regional malls with the convenience of upscale strip centers.

“[Poag] didn’t like to shop in malls, but the types of stores he wanted to shop in weren’t in nonmall locations,” McEwen said.

Added Poag: “I had the idea, but not the ability to execute it. That’s why I brought in Terry.” McEwen brought to the partnership experience he had gained developing malls for Taubman Centers.

The Shops at Saddle Creek, Memphis, Tenn., was one of the first lifestyle centers.

As the pair began planning their first lifestyle center after joining forces in 1984, they envisioned a format without anchor stores and with smaller gross leasable areas and lower overhead. They adopted a marketing strategy aimed at affluent, growing populations they felt would be attracted to the smaller layout, closer parking, attractive architecture and tenants they identify as “lifestyle retailers” — specialty stores carrying a merchandise selection geared to the lifestyles of the target shoppers.

McEwen recalls the initial difficulty the partners had convincing retailers that lifestyle centers could be successful.

“They had a comfort level with department stores in malls,” he said. Only later did they realize that the synergy created by a larger group of retailers in a lifestyle center serves as an anchor in itself. “Now they do higher volumes of sales in lifestyle centers at lower costs to them.”

Customers have been won over by the concept. While shoppers have cut down on the number and length of their shopping trips over the past decade, the number of trips resulting in a purchase have increased, especially in the case of the affluent lifestyle center customer, the developers say. Poag & McEwen have annual sales volumes of $400 to $500 a square foot, compared with average sales in malls of $336 per square foot, McEwen said. Even after the Sept. 11 terrorist attacks, Poag & McEwen lifestyle center sales volumes increased 1 percent for September and 3 percent for October versus the same months the previous year.

McEwen said lifestyle centers have lower rent and expense levels compared with malls, in large part because smaller common areas reduce maintenance and upkeep costs. Yet up-front costs to construct lifestyle centers are higher because architectural detail is so important.

Commonly found at Poag & McEwen lifestyle centers are such specialty retailers as Ann Taylor, Banana Republic, Barnes & Noble, Bath & Body Works, Coldwater Creek, Eddie Bauer, Gap, Gymboree, Harry and David, Liz Claiborne, Nicole Miller, Restoration Hardware, Talbots and Williams-Sonoma.

Dick O’Connell, senior vice president of legal and real estate for Talbots, terms Saddle Creek “the real icebreaker” for the development of lifestyle centers.

“Traditionally, Talbots is different,” he said. “We have been a nonmall-based specialty retailer.” Thus the Hingham, Mass.-based retailer found Poag & McEwen lifestyle centers a good fit; Talbots customers tend to be affluent. He called Poag & McEwen “the top rung” of lifestyle center developments, adding, “the sales we generate in lifestyle centers are very, very strong.”

The success of the firm’s lifestyle centers can be attributed to its having “the right concept at the right time and the right location,” said Poag. Shoppers can see the front door of the retailer from their car and don’t have to walk past 40 stores to get there. It’s a feeling of control that gives a sense of safety.” He added that the centers often become part of the identity of the suburban communities in which they are located.

When Saddle Creek’s first phase opened in 1987, “it was 100 percent leased and immediately successful,” McEwen said. The second phase opened in 1989 and the third in 1995. Saddle Creek now totals approximately 143,000 square feet. The second Poag & McEwen lifestyle center, One Pacific Place, Omaha, Neb., was actually started by another developer who was trying to replicate the success of Saddle Creek; before construction got under way, he turned his center over to Poag & McEwen. The 90,000-square-foot complex opened in 1989 in the affluent Regency section of Omaha. Poag & McEwen sold the Omaha project in 1996.

Poag & McEwen continued to scout the country for midsize markets that were underserved by upscale retailers, but plans for further developments were put on hold during the economic difficulties of the early 1990s. The next project to open was Town Center Plaza, Leawood, Kan., Poag & McEwen’s largest lifestyle center, at 700,000 square feet. The development, which opened in 1996 in a suburb of Kansas City, has anchors, but McEwen said they are not essential to the success of the development. In October 2000 the firm opened Deer Park (Ill.) Town Center in the northern Chicago suburb. As the Aspen Grove project was being completed, retailers steered Poag & McEwen toward Colorado Springs, where they will open their next lifestyle center, Briargate, in the spring of 2003.

Poag & McEwen lifestyle centers are all profitable, but McEwen said it took experience to find the best formula for success. The pair have concluded that 250,000 to 300,000 square feet is the ideal size. Too large makes them less convenient to destination shoppers and too small can lower a project’s collective draw.

Layout is also important, McEwen said, to make things convenient for the customer and to provide plenty of parking in front of the stores. Poag & McEwen also has a better feel now for the types of stores that are successful, the price points that work, the ratio between impulse and destination shopping and how much food to include in the mix, he added.

The firm has identified 14 markets across the country it says are underserved by upscale specialty retailers and are thus potential lifestyle center development sites. The goal is to open one new lifestyle center a year in the immediate future, expanding to two a year in the near future.

© 2010 ICSC. All rights reserved. | Terms and Conditions | Privacy Policy | Contact ICSC | ICSC Home |