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Children's center developer has growth spurt

By John Dube

Neal Freeman, executive vice president of Atlanta-based Watkins Associated Developers, built it, and they came.

Kids, that is. In fact, so many came that Freeman is now planning a third shopping center in the Atlanta area to cater primarily to children.

Watkins Associated Developers plans to build a third shopping center for children south of Atlanta.

Watkins plans to open the Mt. Zion Kid's Village in Jonesboro, just south of Atlanta, in 2000. While grading for the project began only recently, the planned shopping center for kids already is 70% leased.

"Both of our [other] shopping centers for kids are 100% leased," said Freeman. "We've been very well received by the consumer, and our tenants are very happy. In fact, some of our tenants have told us that their store here is the best in their chain. Obviously, we're meeting a need out there. I'm very happy with how we're doing."

Watkins' first foray into developing a shopping center for kids was Abbotts Kids Village, a 41,270-square-foot center that opened in Alpharetta, Ga., in 1996. That was followed in 1998 by Watkins' Sugarloaf Crossings Kids Village, with approximately 50,000 square feet of retail, service and educational space for kids in Gwinnett County, Ga. Merchants from both locations say they draw from as far as 10 miles away, considerably more than the 3-mile radius associated with traditional neighborhood shopping centers.

The popularity of the kids' shopping center concept can be attested to by My Storyhouse, a chain of children's toys and bookstores that was an original tenant at Abbotts. Opening a store in Abbotts Kids Village was one of the best decisions he ever made, said Steve Ricks, president of My Storyhouse.

"I've been in business for 15 years, and I've tried various locations," said Ricks. "This one [Abbotts] by far has the most traffic. As of last year, this was the No. 1 store in the chain."

Being located adjacent to other kids' destinations definitely helps draw crowds to the toy store. But hitting on a good concept is not enough, according to Ricks. It's important to be located in the right area, one in which there are a lot of parents with plenty of disposable income, he said. The Atlanta area has it (the median household income is $83,000). And it definitely helps to appeal to a parent's inner child as well as to his or her actual offspring.

"In a specialty store it takes a lot of customers to make it," said Ricks. "You can't just depend on selling low-end items. You definitely need some people who are going to buy the Madame Alexander dolls and other high-end items, and we have that here. It's definitely a great concept, and they picked the right area for it."

The fast-growing Atlanta suburbs are a largely family-oriented market, with 90% of residents being young married couples. Nearly 20% of the market is under nine years old, according to Watkins.

With an empty parcel adjacent to a traditional shopping center, Freeman decided the time was right to launch his kids' shopping village concept.

"I have kids of my own, and I noticed there was no place around just for kids or to hold a kids' birthday party. I asked my wife what she thought of the idea, and she liked it," said Freeman.

Focused leasing strategies are becoming more common these days as developers respond to shifting demographics across the country -- such as centers that cater to working women and the Mackie's World mall for children in Grand Rapids, Mich. But when Freeman launched his concept in the Atlanta area in 1996, he explained that he could find no comparable models to help illuminate the path ahead.

While both projects so far have been successful, the retailers are learning some lessons as they move forward with their unique approach. Sugarloaf so far does not appear to be quite as profitable as Abbotts, although it is definitely profitable, Freeman said.

The difference could be the fact that Sugarloaf contains fewer kids' activity centers and services, explained Freeman. For example, Abbotts has a swim center, gymnastics and a pediatric facility; Sugarloaf does not. Both have day-care facilities.

"It's important to have destination, education-oriented tenants as part of the mix," said Freeman. "We have more entertainment for kids in the second one [Sugarloaf Crossings], and I think that's why the first one [Abbotts] has done a little better. But we're still trying to figure that out for certain."

Tenants at Abbotts include My Storyhouse, Clothes Horse, Kuts 4 Kids, Dunwoody Pediatrics, Gym Zone, Dynamo Swim Center and Childtime Daycare. Sugarloaf has Putt-Putt Golf & Games, The Toy Store, Pickle Patch Books, USA Tae Kwon Do, Master Portrait, Computercamp.com and other stores. Tenant turnover has been less than 2% so far.

Freeman already has decided to include more education-focused tenants in the new, 100,000-square-foot Mt. Zion Kid's Village. Commitments are in place for the new kids' center to include an ice skating facility, a toy store, an ice-cream shop, a children's hair salon, a computer training business, a kids' clothing store, a family photo shop and, of course, a swimming facility. Expected to open early next year, the center's plans call for a mix of 25% retail shops, 15% service, and 60% mixed educational and entertainment facilities.

All of the Watkins Retail Group centers for children are open-air venues sporting brightly colored awnings, sidewalks painted with hopscotch games and train tracks, and colorful signposts. Sugarloaf also has a few extra bells and whistles, such as a fountain and common area.

In the development business for 25 years in both Georgia and Florida, Freeman said a retail center focused on children may not be quite as profitable as a traditional shopping center -- sales at the two projects are averaging between $150 and $200 per square foot.

"For the first one, we definitely had to put on our salesman's shoes and get out there and sell it," said Freeman. "But with the second one, we had the advantage of being able to show them the first one, and it's sold itself. It's definitely going a lot faster now."

Regardless, it's something of a labor of love for Freeman. These centers are not just good business, they keep the kids happy, and that makes Freeman that much happier.