Centers
Bow to ‘Best of Breed’
PHILADELPHIA-In
a change in format, a panel of four area retail broker representatives at the
International Council of Shopping Centers' PA/NJ/DE Idea Exchange here at the
Whole Foods is among those on
top, “because a hot retailer is one that brings others into the mix,” said Andy
Kaplan of the Blue Bell, PA-based Goldenberg Group. “This is the kind of
retailer that is key to filling the rest of a center.” Kaplan also put Target,
Wal-Mart and a strong grocer on the list.
“We look for a ‘best of breed’ retailer that
can generate traffic, generate sales and bring something that can differentiate
our centers,” added Tim Rubin of locally based Pennsylvania Real Estate
Investment Trust. Both men agreed that hot retailers know they’re in demand.
“They drive a hard bargain,” Kaplan said. A key position and better
tenant improvements are in “a whole bag of goodies that can be negotiated. Yes,
there’s favoritism. But, gaining these retailers benefits the others in a
center.”
“The return on a deal with them
may look weak until you look at what else they can bring,” agreed Rubin,
likening them to a “loss leader.” He said that some popular restaurants can
negotiate percentage-only deals, “but that percentage can be very good. When we
give preferential treatment, we try to be open and honest about it with other
tenants and explain the reasoning.”
One reason why Whole Foods rises
to the top is that it’s also in a hot category: food in general and organic
food in particular. Food in many forms is popular for malls, according to
Rubin. That also includes fast-casual and upscale dining. “Fashion is still
hot, too,” he added, citing the newer brand extensions of proven retailers.
Among others in the “best of
breed” category, panelists agreed, are Bed Bath & Beyond, Ace Hardware, PetSmart, Staples and Old Navy, which Steve Gartner,
moderator and president of Conshohocken, PA-based Metro Commercial Real Estate
said, “is back in action. It’s been through trials and tribulations, but it’s a
great tenant with a loyal following, and it plans to add between 50 and 60
units this year.”
PetSmart’s new in-store pet hotels, “add a great new
concept, especially in suburban locations and around office environments,” said
Jeff Lagowitz of Metro. “They’re like day care
centers, and people who don’t like leaving pets alone all day can drop them off
on the way to work.”
Steve & Barry’s University
Sportswear, “has been very creative,” Rubin said. “There’s a different shopping
experience every time a customer enters the store. It’s a destination
retailer.” He also noted that, because of their size, up to 100,000 sf, “they can fill a dark anchor spot.”
The Christmas Tree Shops, an
affiliate of Bed Bath & Beyond, “has somewhat of a cult following,” Gartner
said. “They’re making a major push in the Northeast. They like ground leases on
which they build their own store,” which he said averages about 36,000 sf.
Of Ulta,
Kaplan said, “we love to have them bring in that upscale woman shopper.” This
retailer likes lifestyle wings and malls and power centers, and, according to
Rubin, also likes to be near a Dick’s Sporting Goods on the theory that while
the male is in Dick’s, his female counterpart spends time at Ulta.
Home Goods is another retailer
cited for “extreme customer loyalty” and merchandising that keeps customers
coming back. “There’s something new in the environment all the time,” Lagowitz said.
Among the popular and expanding
eateries, according to panelists, are Pei Wei, Famous Dave’s, Qdoba, and Panera Bread. “Restaurants represent another solution for outparcels,” Rubin said. “You can cluster two or three
fast-casual restaurants and gain a following of customers.”
