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RETAILERS VOICE THEIR PET PEEVES

Hey, developers, how about giving an address for that mall you want leased? And please open on time. These were just two of the gripes retailers expressed during a session at ICSC’s Florida Conference, in Kissimmee, in August. “When you send a leasing package, include a map,” said Linda Abrahamson, director of real estate at cosmetics chain Sephora. Abrahamson joined other retail professionals to complain that materials frequently tout a project’s street address without even bothering to mention the city or state. “I know a lot intersections, but not all of them,” she quipped. Retailers also lamented that developers often miss their opening dates. “Our possession date isn’t taken seriously, even when we have penalties,” Abrahamson said. Developers should bring all the relevant parties together in one room to get lease issues resolved and documents signed as quickly as possible, said Mike LaFerle, vice president of real estate at The Home Depot. “We waste a lot of time sending documents back and forth,” he said. Other retailers bemoaned having to make site decisions too quickly because of landlords’ loan covenants. “Get more time from your lenders,” suggested Ryan Waddell, real estate manager at supermarket chain Sweetbay, a unit of retail conglomerate Delhaize. “We need more time to make decisions at a big company,” he said. Exclusive-use clauses are yet another sticking point. “They are stopping our Florida expansion,” Abrahamson said. Common-area maintenance charges remain a point of contention too, even with new, fixed CAM clauses, retailers said. Abrahamson said CAM deals are often “not as fixed as they should be.”

MOMMY AND ME

An adult-supervision policy has reduced Fairlane Town Center’s troubles with teens. Just over two years ago, the Dearborn, Mich., mall began requiring anyone 18 and younger to be accompanied by an adult 21 or older when visiting after 5 p.m. Since then, shoplifting and expulsions are down and sales are up at the 1.5 million-square-foot mall, which is owned and managed by Taubman Centers. Within the first six months of the new policy, the number of rowdy teens kicked out of the mall fell by almost 500 percent, says Catherine O’Malley, the mall’s general manager. “Membership in our kids’ club has tripled, while membership in our walking club for seniors has doubled,” she said. “Our overall incidents have decreased 14 percent.” The key to the program’s success is its sensitivity, says O’Malley, who points out that, tighter measures notwithstanding, management has treated teens with patience and respect and worked with local groups to find safe alternatives for the youngsters. Fliers explaining the program were printed in Arabic, English and Spanish. “Even our young people say they like coming to the mall more now,” O’Malley said. About a third of U.S. malls have instituted similar policies.

MONEY IN THE MIDDLE

Luxury retailers’ march into Middle America continued in August as the city of Nashville, Tenn., welcomed its first Louis Vuitton and Tiffany stores. The units opened in a new, 80,000-square-foot wing at Davis Street Land Co.’s 735,000-square-foot Mall at Green Hills. There they join other new high-end stores, including Kiehl’s, L’Occitane and Sigrid Olsen. The mall’s immediate trade area comprises 63,000 people, and the average household income is $93,000 a year, according to the development firm. Louis Vuitton decided to move into Nashville after noticing a significant number of Nashville-area zip codes popping up in the database for its Atlanta store.

DRIVEN DEVELOPMENT

Car dealers have long clustered together to offer one-stop shopping, but the new Centerra development, in Loveland, Colo., has taken this a step further with a master-planned “auto mall” called Motorplex at Centerra. The lushly landscaped complex is located along a loop road used exclusively by Motorplex shoppers. Nine dealerships, including BMW, Chevrolet and Subaru, have already opened at the Motorplex, which has room for as many as 24. Staubach Autogroup consulted with master developer McWhinney Enterprises on the project. At completion, the 3,000-acre Centerra master-planned community will contain 5,700 homes, 5.6 million square feet of office space and a lifestyle center called The Promenade Shops at Centerra, a joint development with Poag & McEwen Lifestyle Centers.

EASY RIDERS

Security guards ride high on Segway personal transporters at some 50 malls, up 10-fold from a year ago. The transporters, which use a patented motion technology that allows them to balance and move on two wheels at up to 12.5 miles per hour, were introduced in 2001. Since then, about 150 police and security agencies worldwide have adopted them. Indianapolis-based Simon Property Group, third-party security contractor IPC International and The Streets of Tanasbourne, in Hillsboro, Ore., are among the clients. Segway says it hopes to sign up more users with a cheaper, easier-to-control model that retails for roughly $5,000.

FORD’S GREEN ACHIEVEMENT

A Detroit power center is the first multitenant retail project in the U.S. to receive gold-level LEED (Leadership in Energy and Environmental Design) certification from the U.S. Green Building Council. Fairlane Green, a 405,000-square-foot center that opened last fall, is part of a 243-acre former industrial dumping site owned by the Ford Motor Co. The project will ultimately contain a 43-acre park and some 600,000 additional square feet of retail space. Irving, Texas-based Archon Group, the real estate arm of Goldman Sachs Group, bought the power center from Ford after helping develop it. The center’s green mission was fully supported by its tenants, which include Bed Bath & Beyond, Old Navy and T.J. Maxx. The Target anchor store features some 250 skylights and a rooftop cistern for recycling rainwater.

Holiday 2006 might be a bit less jolly

Christmas sales are likely to moderate in the U.S. this season, according to research firm Retail Forward. The firm expects a 5.5 percent increase in sales for holiday 2006, down from 7.2 percent last year. “The holiday won’t feel the worst effects from the lagging impact of higher interest rates, a slowing housing market and high fuel prices,” said Frank Badillo, the firm’s senior economist. “One of the most notable dimensions of the 2006 holiday period will be the transition of the home-goods channels from sales leaders to sales laggards,” he said, predicting that discounters and warehouse clubs will lead sales growth with department stores and soft-goods retailers will bring up the rear. “During the upcoming holiday season, retailers should focus on creative ways to upsell,” said Pat Conroy, vice chairman and national managing principal of Deloitte’s consumer business practice. “These might include bundling items, combining products with services, or including a gift card with the purchase to encourage the customer to return to the store. All of these strategies can have a positive impact on sales as well as margins.” Having a top-notch Web presence couldn’t hurt, either. Retail Forward predicts that online sales will surge about 23 percent.

Macy’s gets wired again

Federated Department Stores, which quit selling consumer electronics over 10 years ago, says it plans to offer a limited selection of “tech gifts,” including DVD players and stereos, in all its stores starting with the 2006 holiday season. Such technology gifts are part of the best practices Federated is adopting from May Co., which it acquired last year. Federated, which nixed its full-blown electronics departments after losing sales to big-box chains such as Best Buy and Circuit City, says electronics will only occupy a small portion of each store’s home department. In May the chain began installing vending machines in 180 of its stores that stock Apple iPods and accessories. San Francisco-based Zoom Systems, which owns the machines and their inventory, leases space from Federated and could eventually stock cell phones and other portable electronics, Federated Chairman Terry J. Lundgren told investors in June. While big-screen televisions are not on the agenda, Lundgren said, the move is a step toward “bringing most-wanted, upscale consumer electronics back into our stores.”

The veto heard around the nation

The death of Chicago’s proposed “living wage” ordinance will discourage other U.S. cities from pursuing similar restraints on big-box retailers, says Alan Rifkin, an equity analyst for Lehman Brothers.

“Other cities in the U.S. will also be inclined to not require large retailers to pay higher wages and benefits,” he wrote in a research report. Mayor Richard Daley vetoed the City Council-approved measure, which would have required retailers with stores 90,000 square feet and larger and annual revenues of $1 billion or more to pay employees a minimum of $9.25 an hour and $1.50 in benefits. It was the first time a Chicago mayor has exercised his veto power in 17 years. Big-box retailers and the developers who hoped to have them anchor their projects applauded the decision. “His action encourages desperately-needed business investment and development in the city,” said Michael Lewis, senior vice president of store operations for Wal-Mart, “with job opportunities and savings for those who need it most.”

Fashion forward

What better place to reach potential luxury tenants than at New York City’s annual Olympus Fashion Week, where the international fashion press flocked to view American designers’ spring 2007 collections? That was the logic behind DMB Associates’ sponsorship deal with IMG Fashion, which produces Fashion Week, to promote its $1.5 billion One Scottsdale (Ariz.) development.

DMB set up an upscale, desert-themed lounge amid the Bryant Park tents where the fashion shows were held. The Scottsdale, Ariz.--based development firm also held a star-studded launch party at the posh Four Seasons restaurant. The 120-acre development, which opens in the fall of 2009, will include 600,000 square feet of retail, about 15 high-end restaurants, class-A office space, 1,100 residential units, including houses, and 400 hotel rooms. DMB is the first real estate developer to sponsor Fashion Week.

Target’s turn

After years of circling the island, Target finally signed a lease for a store in Manhattan. After outbidding warehouse chain Costco for the space, Target will open a 130,000-square-foot store at Forest City’s East River Plaza development in 2008. Sources close to the deal say the discounter’s store will sit on top of a 110,000-square-foot Home Depot store. The development, which was announced in 1998 but has failed to make significant progress in the ensuing years, is located along the East River in Harlem. Target already operates six stores in other New York City boroughs, but had until now failed to find a suitable space in the coveted Manhattan market. Nordstrom and Wal-Mart are also said to be seeking space on the island.

Coke targets Starbucks

In a bid to win the dollars of coffee and tea drinkers, Coca-Cola launched a new “café-in-a-box” concept to go into malls, movie theaters, restaurants and stores. The “cafés” require only one barista and feature proprietary, prepackaged technology that can, with the push of one button, brew any coffee or tea concoction in 30 seconds for under $3. Called Far Coast, the concept was launched last month in a small store on Bloor Street in Toronto, where Coca-Cola hopes to build buzz for the brand as consumers sample its wide range of freshly brewed espressos, chai teas, cappuccinos and lattes. Two other Far Coast concept stores opened, in Oslo, Norway; and Singapore. Coke also plans to roll out a smaller, kiosk-size version of the concept called Chaqwa.

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