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Shopping Centers Today -> August 2001
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MILLS BREAKS THE MOLD WITH MADRID PROJECT
By Edmund Mander
Construction has begun outside Madrid on The Mills Corp.’s first overseas project, but don’t expect it to resemble the developer’s familiar value megamalls in the United States.
First of all, it won’t be a value megamall, because the 1.2 million-square-foot center will not contain any factory outlet stores. And neither will the word “Mills” be incorporated into the project’s name, as has been the custom with the company’s other mall projects.
Instead, Arlington, Va.-based Mills is planning a large retail-entertainment complex the likes of which Spain and the rest of Europe have never seen, according to executives involved in the project. Besides several so-far-unannounced retailers new to the Continent, Madrid Xanadu will include a 180,000-square-foot “Snowdome” enclosing an indoor ski and snowboard slope and a skating rink. Furthermore, in deference to mainland European tradition, it will contain a hypermarket — something else that won’t be found at your average Mills.
“This will be a magical project,” said Laurence C. Siegel, Mills’ chairman and CEO, explaining the company’s choice of name for the project — Xanadu means an exotic or idyllic place.
The exact location of Madrid Xanadu will be in Arroyomolinos, about 14 miles from the center of Madrid, an area that is seeing rapid residential development, according to Chris Warren, a partner at Healey & Baker, the international real estate services firm. Healey & Baker, which is owned by Cushman & Wakefield, is leasing the project and providing consulting services.
“Obviously there’s a huge tourist market in Madrid,” Warren said, on top of a domestic market of about 6 million residents. When local residential construction is completed there will be 500,000 people living within 10 minutes of the project, and 4 million within 20 minutes, he added.
The two-level Madrid Xanadu will be anchored by El Corte Ingles, the only major department store chain operating in Spain, and its hypermarket subsidiary, Hipercor. H&M also has signed up, but at press time no one would identify any of the other 200 or so tenants.
However, Siegel said he envisions Madrid Xanadu serving as a bridge for American retailers wishing to enter Europe, and for European chains eyeing the United States.
“We actually got a pretty positive response from some American retailers at ICSC’s [Spring] Convention,” Siegel said. “There are another literally 20 or 25 great [European] retailers that have looked at opening in the U.S.”
Although Mills is better known for its megamalls, this is not the only full-price retail-entertainment location the company is planning. In April it won the rights to develop 19 acres of San Francisco Bay waterfront, where it will create a combination of recreational facilities, retail and offices — and no discount stores.
As for the Madrid location, it would not lend itself to discount retailing, Warren said, and there is not the mass of Spanish retailers to supply cut-price stores.
The combination of Mills experience, the prestige of El Corte Ingles and a site just outside Madrid is a recipe for success, opined Eduardo Bermúdez, manager of the Asociación Española de Centros Comerciales, in Madrid. “These people are very well placed.”
The hypermarket will provide locals their daily grocery needs, the department store their fashion, and the Snowdome will attract fun seekers from further afield. The center also will have Mills’ trademark racetrack design.
“That sort of layout doesn’t exist in Europe at the moment,” Warren said. “We’re very excited about the effect that Mills will have here.”
The El Corte Ingles store, which will occupy two floors above the ground-floor hypermarket, will comprise nearly 400,000 square feet. There will be 18 other secondary anchors, each of which will be about 20,000-40,000 square feet.
The Snowdome will cover more than 170,000 square feet and, according to Siegel, will cause a sensation.
The project will also include an 80,000-square-foot health club.
Mills will be announcing additional projects across Europe in the near future, but executives are not saying where.
Mills’ joint venture partner on Madrid Xanadu is Porcelatoria Gonzalo Chacon, which owns the site, and it is being designed by London-based international architectural firm, Chapman Taylor. Phase 1 of the $300 million project is scheduled to open in 2003, with another 800,000 square feet of outparcel development to follow.
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