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Shopping Centers Today -> May 2004
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POWER OF CONVENIENCE BRED SHER’S NEW FORMAT
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| Merritt Sher |
Merritt Sher in 1986 opened what many consider to be the first power center: 280 Metro Center, in Colma, Calif.
In a career that has spanned 35 years in real estate development, Sher recalls that gaps in his background shaped his initial approach to developing shopping centers.
“When I was new in this business, I didn’t have contacts with supermarkets,” he said. Supermarkets were the usual anchors for neighborhood strip centers.
Sher, who had worked for Arby’s as an attorney putting together real estate deals, did have an affinity for specialty stores but not many of those had grown into national chains. Still, he could help them grow, he reasoned, by combining them in strip centers devoid of the usual supermarket or discount department store anchors. “I built a business getting to know specialty stores and working with them to become national chains,” he said.
Sher founded Terranomics Corp. in 1970 to develop centers. At first, between 1971 and 1984, he called them promotional centers and signed leases with the likes of Bed Bath & Beyond, Big Five, Cost Plus Imports, Good Guys, Piccadilly, Toys ‘R’ Us and Wall Paper to Go. “Most are gone now,” Sher said.
He thinks of the specialty chains as departments pulled out of department stores. As the chains grew from regional to national status, Sher would put three or four of them into a center to provide the critical mass to extend their draw beyond the trade area that a supermarket could attain.
Terranomics added one or so centers a year, eventually assembling a portfolio of about 30. Sher says the company’s success came from staying focused on cultivating the right retailers while others only courted trouble with “blurred” conglomerations of outlets and off-pricers.
“There are a lot of nuances,” he said, referring to act of combining the right stores. “Working with the retailer is everything.”
As such power retailers as Barnes & Noble, Office Depot and Home Depot began renting space in strip centers, the very nature of these centers changed, to such a degree that they warranted the new name. The new centers were a hit with shoppers who had little time to browse and wanted the convenience of parking and walking directly into a store.
Some nevertheless doubted that the power of convenience alone could keep a center afloat. According to the lore that grew up around power centers, they could prosper only with a regional mall across the street. Other naysayers also voiced concern as power centers evolved, Sher says. Municipal planning officials didn’t like them, accustomed as they were to conventional malls. “But customers did,” Sher said.
The financial community, more comfortable with conventional shopping centers, was wary too. But for Sher, the story of the power center comes down to this: “Should the life insurance companies of the world tell us [through their investments] what we should build? They like malls. My orientation has always been otherwise, and a lot of consumers are that way too.”
— EM
 | Current Issue November 2008 |