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MALLS EMBRACE EPICENTER, U.S. REITS FIND A GO-TO PARTNER IN EUROPE, AND ATTENDEES RECAP SPRING CONVENTION

Macy’s, GGP join Epicenter Collection team

Sheldon Gordon’s Epicenter Collection, a concept to provide Web-based retailers with physical selling space inside malls, is closer to becoming reality. Gordon has formed a partnership with Macy’s Group called Convergent Retail to operate Epicenter Collection. Convergent has secured the concept’s first location, a 181,000-square-foot unit in a former Lord & Taylor store at General Growth Properties’ Christiana Mall, in Newark, Del. Macy’s Group leased the store to Epicenter in exchange for a stake in Convergent. The unit is scheduled to open sometime in the middle of next year. Macy’s Group still owns about 10 vacant mall anchor stores that could be converted to Epicenter Collection units, sources say.

Within the Epicenter stores, about 60 merchants will operate their own branded retail sites, measuring between 400 and 5,000 square feet. No merchants have signed on yet, but Gordon says Convergent is in discussions with the likes of Esprit, Seven For All Mankind and Under Armour. “In a multichannel world, consumers expect merchants to have retail stores,” said Antony Lee, Convergent’s CEO. “We will be able to provide our merchant partners with a complete systems package to make their entry into retailing as effortless as possible.” It will also be a cheaper entry point into malls than currently exists. Epicenter Collection merchants will spend about $55 per square foot to build their boutiques, compared with the $300 or more that traditional mall stores cost, says Lee. And these tenants will sign shorter leases, three years on average, versus the 10-year standard for malls.

The first Epicenter will form part of a redevelopment of Christiana Mall. In 2011 a two-level Nordstrom will join current anchors Macy’s and JCPenney. General Growth is also building a 200,000-square-foot, open-air lifestyle component onto the mall. Gordon says mall owners are highly receptive, though further openings may depend on the success of that first unit. Glimcher Realty Trust was originally scheduled to open the first Epicenter Collection, in a former Kauffmann’s store at its Polaris Fashion Center, in Columbus, Ohio. But the landlord decided to add an open-air lifestyle component onto the mall instead.

CB’s green side

CB Richard Ellis Group is adding yet another item to its menu of real estate services: advice on how to go green.

The Los Angeles-based, full-service commercial real estate firm announced plans in June to help clients ramp up their energy efficiency at the 1.7 billion square feet of building space CBRE now manages. It also aims to “walk the talk” by making sure all of its own facilities — 300 international offices with 24,000 employees — are fully carbon-neutral by 2010, says spokesman Steven Iaco. “Our clients are driving for energy efficiency anyway,” he said. “So on the client side, this is about formalizing what we’re already doing in various geographies around the world and just aggregating it, developing best practices and implementing this across our portfolio.”

Experts at the Natural Resources Defense Council, a New York City-based environmental group, are helping CBRE develop strategies for making commercial real estate properties more energy-efficient. A client that intends to, say, renovate a regional mall and make it greener in the bargain will thus be able to turn to CBRE for help figuring out how to cut carbon emissions, save energy or implement green design principles at that property.

The firm’s global task force on the environment was formed this spring. The first step in making CBRE carbon-neutral is to analyze the overall energy use at its facilities, Iaco says. “We will seek to mitigate that through energy-efficiency programs, better space utilization … and renewable energy sources,” Iaco said. “Whatever we are not able to reduce through those measures, we will make up the difference through investments in carbon offsets.”

Chinese mall banks on books

Shenzen, China’s Book Experience Mall, at 800,000 square feet, is the world’s first and largest retail center dedicated exclusively to books, music and art. Located in the heart of a planned, 80 million-square-foot cultural district, the center is connected to the city hall, a convention center, a library and residential accommodations for 77,000 people. “Book Experience is part of Shenzhen’s transformation from a small border town to a world-class cultural metropolis,” said Yan Yang, principal and general manager of the China practice at Callison, the architecture firm commissioned to provide retail planning, architectural interior, lighting and environmental graphic services for the project. Once a small village of 10,000, Shenzhen was established in 1979 as China’s first special economic zone (SEZ) based on its close geographic and cultural proximity to Hong Kong.

Today it is considered the country’s most successful SEZ, with a population of nearly 11 million residents. The center is organized by distinct retail and entertainment zones centered around the main bookstore including a children’s zone, a fashion-forward youth zone, a music zone, public and private meeting rooms, concert areas and multiple food and beverage offerings, including a traditional tea house. Spaces for lectures, book signings, author readings and performances create interest and attract visitors to the related retail offerings. Recital and concert areas adjacent to instrument retailers in the music zone draw visitors and encourage them to stop, shop and explore.

Spring Convention 2007 offered something for everyone. Clockwise from left: Macy’s CEO Terry J. Lundgren roused the luncheon crowd with tales of integrating May and Federated department stores; the Green Pavilion put sustainability benchmarks on display; René Tremblay, CEO of Ivanhoe Cambridge, assumed the chairmanship of ICSC for the 2007-08 term; The Martin Group CEO Lee Wagman, General Growth Properties CEO John L. Bucksbaum, SCSM, and Forest City Enterprises Executive Vice President James Ratner dissected the market for mixed-use developments during a panel discussion; conventioneers played around at the Next Generation party; and Mário Quintanilha, commercial director of São Paulo, Brazil-based Aliansce Shopping Centers, conferred with Alexander L. Berman, head of General Growth Properties International, in the Leasing Mall.

2007 Spring Convention broke records

ICSC drew a record number of attendees to Spring Convention in Las Vegas for its 50th anniversary; about 51,000 people came to the event. But for all the extra bodies, this year’s convention proved to be less congested and easier to navigate than past ones because ICSC for the first time rented out the entire convention center, doubling the amount of exhibitor space. This year’s event was also more of a global melting pot than ever before, attracting first-time attendees from such far-flung locales as Abu Dhabi and Buenos Aires. About 1,200 people from 51 countries outside the U.S. and Canada attended, up from 700 international attendees last year. The biggest contingent came from Mexico, followed by Japan, Australia, the United Arab Emirates, the U.K. and Brazil. International members were part of the Chairman’s Gold Circle, a program that made its debut this year, providing more than 1,000 attendees with VIP service.

“The convention is seen as a get-together of the world’s whole industry,” said Carlos A. Lecueder, president of Estudio Luis E. Lecueder, a Montevideo, Uruguay-based development and consulting firm, who led a panel discussion on development in South America during the conference. “You can learn what is being done in the rest of the world to know where to go to see different kinds of shopping centers.” This marked Lecueder’s seventh Spring Convention. But it was the very first for Konstantin Sakharov, the associate executive director of retail services at Cushman & Wakefield Stiles & Riabokobylko, in Russia. Russians are still rare at the show, he says, though he thinks that will change. “Mostly, there will be developers trying to get U.S. retailers to Russia,” he said.

Municipalities had an even stronger presence than last year, with many mayors seeking to build tax revenue for their hometowns through retail development. “One of the most surprising things to us was the number of mayors going door-to-door promoting their cities,” said Thomas W. Nagy, vice president of marketing for DeBartolo Holdings.

Retailers from around the world were also on hand with ambitious rollout plans.Vegas Hilton. Nevertheless, landlords should not count their Spring Convention eggs before they hatch, says Scott Wolstein, Developers Diversified Realty’s CEO. Wolstein’s firm had about 1,300 appointments scheduled at the convention two weeks ago, and retailers were overwhelmingly positive about their store-opening plans for coming years. But “tenants express more interest at Spring Convention than they actually execute,” he said. “They come to the show needing to open, say, 50 stores, so they set up 150 deals and end up only executing one-third of them.”