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SMALL N.J. LIFESTYLE CENTER PULLING ITS WEIGHT

By Kimberly Pfaff

In New Jersey, parts of which are home to giant SUVs, grand-scale homes and super-sized shopping centers, the prevailing wisdom seems to be that bigger is better. Which makes the success of MarketFair, a 240,000-square-foot enclosed lifestyle center in West Windsor, N.J., that much more intriguing

"We’re the little mall that could," affirmed Matthew Klutznick, general manager of the property, located just outside Princeton. But this modest-sized center has seen some big changes over the past few years. Built in 1987 by JMB/Federated Realty (now Urban Shopping Centers), the one-story mall, then called Princeton MarketFair, was originally positioned as a fashion center. Tenants included The Limited, Petite Sophisticate, Structure — many of the same stores located down the road at the much larger Quaker Bridge Mall.

With its cluttered, poorly conceived design, and without a focused leasing strategy or compelling identity to draw consumers in, the small center floundered. Despite its prime spot along the highly traveled Route 1 corridor between New York City and Philadelphia (83,000 cars pass by each day), it was underperforming by the early 1990s.

Enter Carpenter & Co., a Cambridge, Mass.-based developer with an eye for select, midscale centers. In 1996, the firm was hired by Dallas-based Sarofim Realty Advisors, the center’s owners, to take over as the mall’s managing agent; the firm also received a small equity position in the project. Sarofim’s clients were Fortune 500 companies that had invested their pension funds in the mall; with business failing, they looked to Carpenter & Co. to turn the center around.

"We saw it as a wonderful opportunity, but it had to have its own niche. This size property doesn’t work as a fashion center," related Klutznick. "We saw this as a lifestyle center, and thought it should be a reflection of the market. And what’s important to a lot of people in this market is, they have these big, beautiful homes that require a lot of furnishings. So we’ve taken the center in that direction." Carpenter & Co. has put $12 million into repositioning and updating MarketFair since 1996. But the results speak for themselves: Sales have increased 50%, or $20 million, to $61 million, since the management change. "We’re doing well over $300 a foot, and we were doing well under $300 a foot when we took over," Klutznick said. For the first year-and-a-half, the firm closed most of the existing fashion stores, many of whose leases were already up. One departure that required a little more maneuvering was that of anchor tenant Oshman’s Super Sports USA. "They had 15 to 20 years on their lease, they were paying $4 a foot to be here, and it was a problem," said Klutznick, who negotiated a buyout on the lease. "We’ve now tripled the sales coming out of the same square footage."

In place of the fashion tenants, Klutznick went after leading lifestyle retailers, from Restoration Hardware and Smith & Hawken, to larger-format concepts such as Pottery Barn Design Studio and Williams-Sonoma Grand Cuisine. Today, home furnishings accounts for 80% of the center’s mix.

Once a struggling fashion center, MarketFair, West Windsor, N.J., is now a successful lifestyle center with stores such as Williams-Sonoma Grand Cuisine.

To help attract those national names that wanted street-front retail, Carpenter & Co. added exterior storefronts. "Not every trip to a shopping center is a two-hour trip; some trips need to be 15 or 20 minutes," noted Klutznick. "If you can make that 15-minute trip as pleasant as possible, people will come back on the weekend and spend an hour-and-a-half or two hours."

Equally integral to MarketFair’s identity is its assortment of one-of-a-kind specialty shops, from Turkish Delights, with its imported rugs and gift items, to Pip, Squeak & Wilfred, an upscale children’s toy and furnishings store. "When you’re as small as we are, the challenge is, how can you be different?" Klutznick related. "Local merchants like these are terrific for us."

It doesn’t hurt that the Princeton area has become a shopping mecca. In addition to the nearby Quaker Bridge Mall, the Route 1 corridor features outlet shops at Princeton Forrestal Village, while Nassau Park offers a selection of big-box retailers like Bed, Bath & Beyond and Best Buy. And then there’s the Palmer Square area of downtown Princeton itself, a thriving, upscale shopping destination.

Equally important are the area’s stellar demographics. Home to affluent, educated consumers with an average household income of $120,000, the Princeton area is a developer’s dream. Said Klutznick, "It’s never about price here; it’s about ’Do you have what I want?’ And if you can supply them with what they want, it flies off the shelf."

Observers affirm that several factors contribute to MarketFair’s success. "Usually when malls are enclosed and less than 1 million square feet, they typically fail," noted Richard Brunelli, president, RJ Brunelli & Co., Old Bridge, N.J. "[MarketFair] is less than 500,000 square feet, so it’s remarkable that it hasn’t failed. It’s really a combination of factors — a focused regional shopping area, the upscale Princeton customer, and they’ve also worked really hard to focus on an upscale tenant mix. It works."

As for the design improvements, Klutznick termed them "addition by subtraction." He systematically stripped away elements that had cluttered up the center — green ceilings with metal cutouts of dancing animals, large metal structures and oversized trees that obstructed views in the middle of the mall and an oversized fountain in the center area. In turn, he painted everything white, kept the soaring skylights, and added lighting fixtures.

"We started taking away all that stuff that had been added and made sure that the focus was the storefronts," he said.

The main aisles now feature seating areas, small trees and planters, and $130,000 worth of specialty leasing kiosks. This year, MarketFair is donating one cart to HomeFront, an organization that works with homeless women. Noted Klutznick, "It’s not only allowing them to sell their product to raise money, but it’s also providing job training."

Carpenter & Co. also spent $2 million renovating the food court; the redesigned MarketFare, as it is called, opened in 1998. Originally located in the center of the property, the food court was tenant-owned, with standard national chains. After relocating it to the rear of the mall, the firm hired local Princeton residential architects Ron Berlin and Max Hayden. "We interviewed all the biggest architects in the country, and everyone showed us the same cafeteria-style food court," Klutznick related. "These two guys, who’ve never done a retail project before, came up with something amazing. We hired them on the spot."

Designed with a fresh, futuristic look, the food court features local, owner-operated concerns; Bassett’s Original Turkey, a regional franchise, is the closest thing to a chain. Other restaurants in the mall include Big Fish Seafood Bistro, an upscale restaurant and bar and T.G.I. Friday’s.

If there’s one frustration Klutznick still faces, it’s dealing with the center’s United Artists movie theater, which still has its original 1987 amenities. Fresh out of Chapter 11, the cineplex has assumed its current lease through 2007; Klutznick is negotiating a new long-term deal that would include updating the facility. MarketFair currently has leases out to several additional retailers. New stores set to open by Christmas include Pottery Barn Kids, Eddie Bauer Home, Villeroy & Boch and Starbucks.

"We’re very proud of our work here," said Klutznick. "The irony is, we were brought in for a quick fix. Five years later, we’re still here, because now it’s become a very attractive investment, and people want to keep their money here. We’ve made them comfortable enough that they really want to stay."

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