Sunday, April 09, 2006
An inside look at outdoor malls
Jenny Kincaid Boone
Jenny reports on the latest news on the Roanoke Valley retail industry.
Recent stories
The local shopping scene has been abuzz for the last several months and for good reason.
Aside from announcements of new retailers, such as Steve & Barry's University Sportswear slated for Tanglewood Mall, and news at other local shopping centers, all eyes are on the tenants that will vie for a spot at Valley View Mall's new outdoor retail center.
CBL & Associates Properties is the company to watch for this action.
It owns Valley View, and based on site plans filed in Roanoke City's planning office, CBL wants to build what the industry terms a "lifestyle center" adjacent to the Roanoke mall that sits off Interstate 581. The Chattanooga, Tenn.-based company hasn't announced its plans for the new center, nor has it named the retailers that will be a part of it.
But there are hints of what could be coming to Roanoke by looking at CBL and its retail centers in other parts of the country.
Growing a middle market
When CBL purchased Valley View from Faison Enterprises in 2003, the mall was positioned for growth and already was pulling in shoppers from throughout much of Southwest Virginia. The mall already had landed significant national retailers such as Gap and Ann Taylor Loft.
But CBL's strategy is to take malls in middle-tier, nonmetropolitan areas and revamp them, said CBL spokeswoman Deborah Gibb. That appears to be the case in Melbourne, Fla., where CBL is developing a retail center.
In 2004, the population of Melbourne was about 75,000, which is slightly less than the city of Roanoke's population at about 92,000 in 2004, according to the U.S. Census.
CBL is ranked as one of the top five owners of malls and retail centers in the country. As of Dec. 31, the publicly held real estate investment trust owned 109 malls, associated centers, which are built adjacent to regional malls, and office buildings across the country, with a large presence in the Southeast and Midwest.
CBL owns four malls in Virginia, including Valley View. The others are River Ridge Mall in Lynchburg, Southpark Mall in Colonial Heights and Greenbrier Mall in Chesapeake.
Last year, the company acquired six malls, and it added 14 big box retailers across its properties.
Millie Moore, a retail leasing agent in Roanoke, called CBL "a very strong company," because of its national ranking.
The company also is profitable. In 2005, it made $162 million, an increase from $121 million in 2004, according to its annual report.
CBL's revenues, which mostly come from tenants' rents and reimbursements, grew to $908 million in 2005, compared with $781 million in 2004. In 2005, its largest percentage of revenue, at 91 percent, came from malls. Associated centers were next at 3.8 percent of total revenue.
The company's best performing stores are those under the Limited Brands, which include Victoria's Secret, Express, The Limited, Bed, Bath & Beyond, White Barn Candle Co. and Henri Bendel, based on CBL's 2005 financial report.
Focus on lifestyle
Lifestyle center is a hot phrase in the retail industry. These kinds of outdoor shopping centers are taking some of the glory away from larger, enclosed malls.
Lifestyle center development is a growing focus for CBL, which is planning to open six this year. The company already has three planned to go up in 2007 and 2008, according to its Web site.
Depending on the developer that builds these kinds of retail centers, they generally take up at least 50,000 square feet with upscale specialty restaurants, apparel and gift shops or bookstores. Lifestyle centers resemble retail strip malls, but they have connecting walkways, benches for shoppers, decorative fountains and architectural aspects.
Poag & McEwen, a competitor of CBL's, only develops lifestyle centers. Some of this Memphis, Tenn.-based company's centers combine entertainment with retail, such as an ice-skating rink or a movie theater, said Josh Poag, the company's chief financial officer.
But part of the reason that lifestyle centers are so popular is because they are cheaper to build, compared to enclosed malls, said Michael Dillon, a senior director at Marcus & Millichap, a California real estate investment brokerage company. This makes the rent for retailers less expensive, he said.
Developers also increasingly are finding that shoppers think lifestyle centers are more convenient.
"Over the past 20 years, everybody is working more and more," Poag said. "We allow people to drive up in front of the store where they want to go to ... if it's going to Ann Taylor and getting a shirt for a 10-minute shopping trip, whereas if they have to go the mall, they walk halfway down the mall to Ann Taylor."
The kinds of tenants that make up these centers may be different. You'll see more restaurants, because of an effort to create an "entertainment theme," Dillon said. At all of Poag & McEwen's centers, there typically is a Starbucks, Poag said.
Some lifestyle centers house higher-end apparel shops and other retailers. At a lifestyle center that CBL is constructing in Fairview Heights, Ill., tenants include Barnes & Noble, Chico's and Coldwater Creek.
This center is adjacent to a mall that CBL owns there. Gibb said CBL often builds lifestyle centers near malls that it already owns.
"It really has a strong retailer lineup appealing to consumers and shoppers that complement our regional mall and also draws traffic from the mall," she said.
One of CBL's most well-known centers is Hamilton Corner, which is adjacent to the mall Hamilton Place that it owns in Chattanooga. The retailers there include Coldwater Creek, Ann Taylor Loft, Chico's, Liz Claiborne Shoes, J.Jill, a women's apparel retailer and Salsarita's, a Mexican fast food restaurant.
Some developers are getting away from using department stores as anchors for lifestyle centers. Increasingly, there will be discount anchors such as Target, in some lifestyle centers or similar retail developments, Dillon said.
"It's not uncommon to see a T.J. Maxx or a Marshalls in a lifestyle center," he said.
But in higher-end markets, discount retailers aren't always part of the mix.
Much of the reason for the trend away from using department stores is that there aren't many left. In recent years, more department store companies have been consolidating, such as with Federated's acquisition of May Department Store Co. last year, leaving fewer regional players, Dillon said.
And because lifestyle centers often do not have more than two or three anchors, they may not necessarily need department stores, he added.
"They [department stores] have been hurt by lifestyle centers and other big box retailers, like Target," which may be used as anchors, Dillon said.
But, despite the increased prevalence and popularity of lifestyle centers, Dillon said they'll never fully replace enclosed malls. Enclosed malls typically are located in more prominent areas of a community and situated on a large plot of land. Lifestyle centers, smaller in size, normally are built in suburban areas, he said.
"It's tough to get something that can compete with a large mall," Dillon said.
District at Valley View
CBL officials will neither comment on nor confirm plans for the company's new lifestyle center in Roanoke, though Valley View is listed on CBL's Web site as a spot slated for renovations this year. Those renovations are classified as a "lifestyle addition" on its Web site.
As reported, this new shopping area would include about 50,000 square feet of retail and restaurant space. The development's site plans show that the center would face Valley View Boulevard and stretch from one JC Penney entrance, through the parking area in front of the mall's food court entrance and end in the parking lot of Sears.
Two national chain restaurants already have confirmed that they are building locations at the new center.
Carrabba's Italian Grill and Abuelo's Mexican Food Embassy both will build locations at the new development, named the District at Valley View according to its site plans.
There have been hints of others that perhaps could be a part of this center. One clue can be traced back two years.
In 2004, Stephen Lebovitz, president of CBL, spoke at a conference of the International Council of Shopping Centers that was held in Roanoke. He said CBL was exploring the idea of building a lifestyle center at Valley View, and it already was talking with several tenants, including a bookstore, about coming there.
Books-A-Million, Barnes & Noble and Borders are all national chains that have been chosen for some of CBL's other lifestyle centers. Abbe Ruttenberg Serphos, a spokeswoman for Barnes & Noble, recently said the chain does not have a lease signed for a new store in the Roanoke Valley. There is a Barnes & Noble beside Tanglewood Mall in Roanoke County. There's also a Books-A-Million at Crossroads Mall on Hershberger Road in Roanoke. A spokesman for Books-A-Million did not return calls for comment about plans for a new store in the Roanoke Valley.
But answers from other retailers about their plans for a future location in Roanoke offered a glimpse of hope.
A spokesman for Chico's, a high-end women's apparel retailer based in Florida, said a Roanoke location is on the company's radar screen, though it has not yet signed a lease. He would not name the areas in the Roanoke Valley that the company is seeking.
"At some point, we would like to have a Roanoke store," said Michael Smith, spokesman for Chico's.
Another women's clothing retailer has similar thoughts about Roanoke.
David Gunter, a spokesman for Coldwater Creek based in Sandpoint, Idaho, said the company has no plans yet to open a store in Roanoke, but "a market as attractive as yours would definitely be on our radar screen," he said.
Coldwater Creek has an East Coast Operations Center in Mineral Wells, W.Va.
