Editors Note: This is a continuation in a series of articles focusing on the Lifestyle Center concept. Take careful note of what this writer is saying: Lifestyle Centers are designed to appeal to “highbrow customers who lack access–LACK ACCESS TO or don’t particularly enjoy traditional mall shopping.” And these Lifestyle Centers do well in a MID SIZE MARKET WHERE A REGIONAL MALL IS ABSENT.
Notice where Kenyon says the Lifestyle Center should be located: “IN THE MIDDLE OF GROWING HIGH INCOME SUBURBAN AREAS.”
On another note: I believe there is an Ordinance Committee Meeting to discuss the Senior Tax Freeze among other things, Tuesday in the Town Hall. It is not listed on the Cheshirect.org website so you will have to call the Town Clerk’s Office to verity.
By Kevin Kenyon
After a brief go-round in the late 1980s, the anchorless center is back, this time with a new name — lifestyle center — and, developers hope, a lot more success.
Combining the convenience of strip center shopping with the well-known specialty tenants found in regional malls, today’s lifestyle centers are designed to appeal to highbrow customers who lack access to or don’t particularly enjoy traditional mall shopping.
Usually located in the middle of growing, high income suburban areas, the concept also offers specialty tenants — many of whom are concerned about rising common area maintenance (CAM) charges in malls — lower occupancy costs and a new avenue for expansion.
“Many traditional mall tenants are finding that they can do the same amount of sales without the expensive mall rents and CAM charges, in either nonanchored specialty centers or village, downtown locations,” said Jeff Green, president of The Green Group, a Troy, Mich.-based shopping center consultant firm. “These centers also fit into the trend of customers wanting convenience — the stores are closer to their homes.”
In the late 1980s, several developers started building strip center projects without traditional supermarket, discount or department store anchors, on the theory that the tenant mix would be enough of a draw.
The theory didn’t work.
Although there were some exceptions (most notably, The Shops of Saddle Creek in Memphis, Tenn.) the majority of these centers failed miserably, and were largely acquired and turned into other uses.
Several developers have announced plans to go ahead with their own versions of the lifestyle concept, including Atlanta-based Cousin Properties; Poag & McEwen Lifestyle Centers, Memphis., Tenn.; as well as Simon DeBartolo Group, Indianapolis, and New York-based DLJ Real Estate Partners, which recently announced plans to form a joint venture with Cincinnati-based Madison Marquette to develop lifestyle/entertainment projects.
But this raises several questions: What makes these projects different from their anchorless predecessors? Did the first attempt fail because it was an innovative concept that was ahead of its time, or because it was flawed? And why are developers trying it again now?
The renewed popularity of the lifestyle concept is just part of the natural evolution of the shopping center industry, according to Herbert D. Weitzman, who has watched quite a few concepts come and go as president of The Weitzman Group, his Dallas-based real estate firm.
“Lifestyle centers are going to continue to be revived because I think we’ve pretty much matured the power center business, so now we’re moving that business into these types of centers,” he explained. “You also have all these specialty stores in regional malls that need to expand.”
The problems associated with some of the earlier anchorless centers, Mr. Weitzman explained, were the result of irresponsible lending, which brought too many inexperienced people into the industry.
“These guys relied on the architects to design the shopping centers, and they were designed by people who didn’t understand what the retailer needed. They were the wrong depths, the wrong sizes, they faced the wrong way, and the layout was out of whack,” he said, noting that relying on local retailers didn’t help either.
As the self-professed “godfathers” of the lifestyle concept, Dan Poag and Terry McEwen, principals of Memphis, Tenn.-based Poag & McEwen Lifestyle Centers (the original developers of Saddle Creek), believe it was a concept that was just ahead of its time.
“Two things slowed the growth of the concept initially: They were extremely difficult and expensive to finance, because they were anchorless, and they were unknown entities to retailers,” said Mr. McEwen, who added that retailers and lenders alike were reluctant for stores leave their “comfort zones” in more conventional locations.
Now, however, based on the success of centers like Saddle Creek, where Mr. McEwen says retailers are outperforming their mall stores across the board, the interest in these centers is heating up considerably.
“There’s certainly people who will talk to us now,” explained Mr. Poag, who added that his experience in strip center development (Poag Real Estate Co.) was a perfect complement to Mr. McEwen’s experience with regional malls (The Taubman Co.) in the forming of the lifestyle concept. “In the late ’80s, we couldn’t get anybody to talk to us who could grasp this concept, and now there are a number of retailers who are interested in this type of product.”
Besides Saddle Creek, examples of Poag & McEwen lifestyle centers include: One Pacific Place in Omaha, Neb., a 90,000-square-foot center which opened in 1989, and Town Center Plaza in Kansas City, a 700,000- square-foot center — described as the “power-ball version” of a lifestyle center — which opened in 1996.
These centers contain mall stores such as Ann Taylor, Williams Sonoma, Talbots, Banana Republic, Nicole Miller, Eddie Bauer, The Sharper Image, Pottery Barn, Liz Claiborne, The Gap, and Restoration Hardware.
With retailers like these, “anchorless” is a misnomer for these centers, says Mr. Poag.
“There’s no traditional anchor in the sense of a department store, discounter, or big grocery chain, but we consider the combination of these national retailers to be the anchor. You’re talking about very large national retailers, so we don’t consider them anchorless,” he said.
These centers work best, Mr. Poag explained, in two scenarios: a midsized market where they function as the area’s fashion center; and in a large market where they can fill a void in the absence of a regional mall.
Mr. McEwen, who said he has applied for a trademark to describe the company’s new name (originally Poag & McEwan Co.) and the type of center it develops, explained that his company conducted a study several years ago that showed that the average sales per square foot at lifestyle centers were double that of regional malls.
The study also revealed that the average amount spent per visit at lifestyle centers was $107, compared with $70 at malls, and that 45% of lifestyle shoppers “rarely shop at regional malls,” he said.
As for mistakes made back in the 1980s, Mr. McEwan said developers often tried to turn anchorless centers into small malls, with stores facing an inner courtyard and two or three main entrances, instead of playing off the convenience associated with strip center shopping. The company plans to develop up to four lifestyle centers per year, depending on how many retailers are willing to locate to them, Mr. Poag said. Most retailers have “bought into the concept,” he said.
“These retailers have found that they don’t need a department store to be successful,” he said. “They understand that that if they join together with other retailers similar to themselves, they can create an anchor-like impact.”
In the eyes of Joel T. Murphy, president of Atlanta-based Cousins Properties Inc., which is developing its own version of a lifestyle center, there is no comparison between the anchorless centers of the late ’80s and the ones that are being developed today.
“[The earlier centers] were not demand-driven, and they were put into locations that were questionable,” he said. “There was really no thought to tenant mix — it was always locals — and during a downturn the locals are going to be the ones who suffer first.”
In contrast, Cousins’ new “Avenue” concept, which places traditional mall tenants in upscale, open air centers, is extremely demand- and research-driven, according to Mr. Murphy.
Cousins is developing two Avenue projects: The Avenue at East Cobb, a 225,000-square-foot project in East Cobb, Atlanta, that is expected to open next spring, and the Avenue of the Peninsula, a 380,000-square-foot re-development project in Rolling Hills Estates, Calif., which will be converted into an Avenue-type project and open next fall.
“The difference between the ’80s was there were no fundamentals; developers would just throw these centers up and the leasing would come afterwards. For the Avenue at East Cobb, we’ve been leasing it for a year, have a number of commitments, and we haven’t even started construction,” Mr. Murphy explained.
The East Cobb project, which Cousins hopes to use as a model before any future expansion plans are finalized, is described as a “retail street” emphasizing strong pedestrian connections across its central parking areas, which encourage shoppers to circulate from tenant to tenant, similar to a regional mall.
Tenants include mall retailers such as Foot Locker, Bath & Body Works, The Gap, Pottery Barn, Borders Books & Music, Abercrombie & Fitch, Williams-Sonoma, Banana Republic, Eddie Bauer, Nine West, Talbots, Ann Taylor and Smith & Hawkin.
The Avenue of the Peninsula, meanwhile, is still in the early stages of development. Plans call for tearing off the roof of the old enclosed mall (known as The Shops at Palos Verdes), expanding existing stores, adding new ones, and making it more pedestrian, Mr. Murphy said.
Although the center is located among four of the top 150 wealthiest towns in the United States, the nearest regional mall is over an hour away, making it a good fit for a a concept that relies on upscale markets with limited access to quality shopping, he added.
Mr. Murphy, like Messrs. Poag and McEwan, said he believes the combined presence of national retailers in these centers will be enough of an anchor.
“The advertising and marketing efforts of these national retailers is significant, and that will draw people in, whereas before, in the ’80s, how much advertising did that local haircut place do? — none,” Mr. Murphy said.
In trying to lure national retailers to venture out from malls, Mr. Murphy said every effort is made to keep occupancy costs to a minimum.
“We are zealous about trying to strike the right balance between a well-maintained, attractive, clean and safe shopping environment with CAM charges, because from the retailers’ perspective it all goes to the bottom line.”
That said, Mr. Murphy noted that concepts such as the Avenue are complementary to malls, and not an indication that mall shopping is dead. However, he added he doesn’t enjoy shopping at malls.
“What we’re saying is there are enough people out there who don’t enjoy it, which creates an opportunity to put quality retail in those markets,” he said.
However, like any concept, there is potential for overbuilding down the line, Mr. Murphy admitted.
“The danger is that if people think ‘okay, lets go build 3,000 of these things’ — that would be a horrible mistake. My hope is that we as developers and the retailers are going to show enough restraint to do smart things, and make sure it’s demand-driven.”
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