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Jeff Green Partners

A LEADER IN RETAIL REAL ESTATE FEASIBILITY

jgreen@jeffgreenpartners.com

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Archives for February 2015

Retail Rap: Malling it Over

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If we wanted to show the struggles of the classic American mall, as discussed in this edition of Retail Rap, I don’t think we could come up with a better example than Northland Mall in Southfield, Michigan. When it opened in 1954, Northland was an instant hit: an icon not only for the region, but for the nation. One of the first and largest open air centers in the nation, Northland was enclosed in 1974 and today boasts space for 96 stores and nearly 1.5 million sq. ft. of retail.

Northland has been making headlines lately, as well. As the demographics on this socioeconomic boundary have shifted, occupancy numbers have steadily declined, falling below 50% in recent years. After more than six decades of operation, the mall looks to be in danger. Target has closed and the mall’s final anchor tenant, Macy’s recently closed. Today, Northland is in receivership.

What’s in store for Northland? What is the next chapter for this venerable American mall? Will it be razed and transformed into an industrial park like Randall Park Mall, repositioned into a different retail format altogether like with Christown Spectrum Mall in Phoenix, or will it end up in limbo, sitting empty like Summit Place Mall or Rolling Acres Mall in Akron, Ohio? Let’s discuss it in this edition of Retail Rap.

Crepe craze spreading through Valley

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Ryan Kneller / The Morning Call – It can be sweet. It can be savory. And now, it can be found close to your home. I’m talking about the popular French crepe.

In the past few months, four eateries serving the thin pancakes have opened in the Lehigh Valley, with one more set to open in the spring.

Those that have already made their tasty debut include 187 Rue Principale (Nov. 18), a 50-seat restaurant also serving other French fare such as duck breast and pan-fried rabbit at 187 Main St. in Emmaus; Crepe Soleil (Dec. 26) at the Promenade Shops at Saucon Valley; Cachette Bistro & Creperie (Feb. 4) at 504 Main St. in Bethlehem; and Vava’s Creperie Cafe (Feb. 6) at 2362 Catasauqua Road in Bethlehem.

Retail analyst Jeff Green, who recalled the creperie chain Magic Pan that was popular in the 1980s, predicts creperies will continue to expand significantly in coming years, but depending on how fast and broad, he also envisions “a flaming out by the end of this decade.”

“I think part of it is a tad trendy — almost equivalent to the cupcake business,” said Green, president of Jeff Green Partners in Phoenix, Ariz. “I worry about it because I don’t see it as long term, especially because the way we eat changes.”

If creperies are a trend, south Bethlehem’s Full of Crepe was at the forefront when it opened in 2012 at 333 S. New St.

The business, which introduced its Green Machine food truck for public and private events last summer, is planning to open its second 13-seat location at 21 S. Second St. in Easton by early April, owner K. Ashley Caldwell said.

Another KC area mall is about to bite the dust

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Rob Roberts / Kansas City Business Journal – The Great Mall of the Great Plains in Olathe will close sometime this fall, according to VanTrust Real Estate LLC, the asset manager for the property.

VanTrust is now working with the Olathe Chamber of Commerce and Olathe Economic Development Council to determine the best reuse of the property.

Opened in 1997, the 1 million-square-foot indoor mall is located on 110 acres at the intersection of 151st Street, Interstate 35 and U.S. Highway 169.

“The decision to close was difficult, but one that was guided by very compelling economic realities,” VanTrust said via a written statement on Monday. “The development began to face struggles soon after it opened and has been unable to recover in the intervening years due to a variety of factors, including the economic downturn and changes in customers’ shopping habits.”

Results from recent retail studies conducted by Jeff Green Partners indicate that the site can now support only a fraction of the mall’s existing retail square footage. Thus, “the structure, maintenance costs and layout do not support preservation of the current building,” the release stated.

Retail Rap: Hitting the Streets

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One of the interesting retail real estate trends I’ve been seeing pick up steam in the last couple of years is the willingness of many retailers to look beyond the traditional mall locations. Many are choosing locations on “hot streets,” bustling avenues within major communities that happen to be the retail hub, or in the […]

Will Staples, Office Depot Merger Cause More Brick and Mortar Closings?

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Keith Loria / Commercial Property Executive – Staples, Inc. has agreed to acquire box-store rival Office Depot for $6.3 billion, with the combined companies expected to better compete with e-commerce and other office supply competitors in the market.

Combined, the two companies represent $39 billion in annual sales from more than 4,000 stores. Staples was already the largest office-supply superstore, while Office Depot merged with OfficeMax Inc. in February 2013, the second- and third-largest at the time, to consolidate and save on costs.

“This deal just goes to show you how ‘inflated’ the office supply category is. First Office Depot purchases Office Max, and even before they can reposition that acquisition they are sold to Staples,” Jeff Green, president of Jeff Green Associates, told Commercial Property Executive. “That being said, Staples has always been the leader of the office supply category.”

Of course, the two companies tried a merge once before—back in 1997—but that deal was struck down by the FTC for being anticompetitive. Still, most analysts expect this transaction to go through.

“Closing conditions allow Staples an exit strategy should antitrust authorities require the divestiture of stores. Staples is focused on growth but may opt out and the deal may not transact,” Michael Lagazo, senior advisor, Retail, with commercial real estate advisor Sperry Van Ness, told CPE. “For Staples, it means benefits from cost savings, the ability to expand product offerings including growing their delivery business, and achieving monopolistic pricing power.”

Lagazo spoke with Kevin Reilly, Staples’ director of real estate in Costa Mesa, before the announcement and said it could take roughly nine months before any Staples or Office Depot stores hit the market for disposition.

Nordstrom could save Southgate Mall, but opening is unlikely

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Justine Griffin / Herald-Tribune – It’s a rumor that began as an offhand comment from one retail developer to another. But it took on a life of its own from there. The possibility of Nordstrom, the Seattle-based, high-end department store chain, coming to Sarasota County was too good to keep quiet for too long. But […]