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Jeff Green Partners

A LEADER IN RETAIL REAL ESTATE FEASIBILITY

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Jeff Green

Malls’ fortunes flipped: How Westroads shot past Oak View, and what’s next for each

By Barbara Soderlin/Omaha World-Herald—Ellen Junge has been chasing mall traffic for 32 years, luring shoppers to her business, the Cookie Company, with the smell of fresh-baked cookies.

When a mall is doing well, cookie sales rise. But when stores close and foot traffic slows, Junge sees it at her cash register.

That’s why she closed her shop at Oak View Mall this spring, after operating there for 23 years. Her sales fell by more than 10 percent in 2014. When her husband took another job and she wanted to close one of her stores, she decided to keep her six-year-old store at Westroads Mall, where her business is growing and last year outpaced her Oak View sales.

Junge’s cookie shop sales are a small part of a big shift in the metro’s two major enclosed malls: Sales have surged over the past decade at Westroads but slumped at Oak View.

Retail Rap: Seeing and Being Seen at ICSC

I just got back from the International Council of Shopping Centers’ (ICSC) 2015 RECon Convention in Las Vegas, and I came away feeling as good as I have about the state of the industry in some time (and it wasn’t just the weather, which was delightfully on the cool side). Judging by the buzz on the floor at the convention center, the action was definitely heating up. My sense from talking to colleagues and clients is that developers left the conference with a decidedly positive outlook. I heard from more than a few folks that they were having great meetings—meaning that the retailers were serious about getting deals done, and that more than the usual number of handshake deals were completed—so for this week’s Retail Rap, I wanted to discuss my thoughts on this years ICSC.

While it’s not the first time I’ve used these words, it was clearer than ever before that the hot topic of the conference this year was mixed use. Large numbers of major retail developers are considering either being part of a larger mixed-use development or have taken substantive steps toward adding additional uses such as office, residential, hotel or medical to their own projects. I’m not entirely certain why we seem to have reached a tipping point where mixed-use has moved from the category of “daunting” to “appealing”, but I suspect that there are many causes. Another oddity I noticed at this year’s conference was that while Monday’s traffic at the event was outstanding, Tuesday’s was surprisingly light. While activity always tends to wane somewhat as the conference goes on, the drop-off seemed significantly more noticeable to me than in past years. I was also encouraged to see the beginnings of an infusion of youth into the business—and some small but encouraging signs of racial and ethnic diversity. The difference is small, but noticeable in an industry that has been so comprehensively dominated by an older generation of mostly white men for such a long time. It’s a welcome step in the right direction.

Overall, I left ICSC knowing that this was one of the more positive and productive events in quite some time. After reading my thoughts on ICSC in this week’s Retail Rap, I’d love to hear the thoughts and impressions from my fellow attendees. Were you in Vegas this year? If so, did you have some takeaways?

New liquor store chain targets Central Texas

Gary Dinges/Bloomberg Business – “It’s like Toys R Us for adults.”

That’s how David Trone describes Total Wine & More, the liquor store chain he co-owns. Founded in 1991, the Maryland-based company now has more than 100 locations coast to coast — including several in the Dallas-Fort Worth area and in San Antonio.

After years of eyeing Central Texas, Total Wine & More debuted its first store this week in Sunset Valley at 5601 Brodie Lane. Work is already underway on a second location at 11066 Pecan Park Blvd. in Northwest Austin, and the chain expects to open at least three more stores here. The Arboretum area, in particular, is appealing, Trone said.

“Austin’s the hottest city in America,” Trone said. “It’s got great growth, great education and a great food and wine culture.”

The Austin area also has the state’s highest per-capita alcohol sales, a recent American-Statesman analysis found. In 2013, average alcohol sales were $523 per person in Travis County — almost twice as high as the runner-up, Dallas County.

Total Wine & More would have been here sooner, Trone said, but a lack of available real estate slowed the company down. New figures from Savills Studley, a commercial real estate firm, showed Austin-area retail space was 93.5 percent occupied at the end of the first quarter. Big-box retail spaces, in particular, are hard to come by — and with stores that measure around 30,000 square feet, including classrooms and tasting stations, that’s exactly what Trone and his team are searching for when they look to enter new markets.

In Austin, the Total Wine & More stores, which carry more than $2 million in inventory apiece — 8,000 wines, 3,000 spirits and 2,500 beers — are going up against two well-entrenched competitors. Locally based Twin Liquors has almost 80 locations statewide, with most of them in the Austin area, while Houston-based Spec’s has about a dozen Central Texas stores.

“There’s wonderful competition throughout Texas, but we feel like Total Wine brings something new,” Trone said. “We’re here to help you find the right bottle at the right price for the right occasion.”

David and Margaret Jabour, whose family has led Twin Liquors for generations, said it’s not surprising companies such as Total Wine & More would want to locate in Central Texas.

“Our family has watched Sixth Street develop from a dirt road into the Live Music Capital of the World,” they said in a written statement. “Central Texas is a vibrant and growing community, and we understand why new businesses find it appealing.”

In Texas, most liquor stores are local or regional, like Twin Liquors and Spec’s, making Total Wine & More a bit of an oddity, retail consultant Jeff Green said. Still, he said the chain has managed to make a name for itself in a relatively short span of time and is growing rapidly. This year, the company will add more than a dozen locations nationwide.

“They are, to me, the very best in terms of merchandising for wine, beer and liquor,” said Green, president and CEO of Jeff Green Partners. “They’ll do just fine in Austin.”

A Change in the Retail Scene

Justine Griffin/Herald-Tribune –

I’ve watched Southwest Florida’s retail scene change quite a bit in just three short years.

In 2012, new brands like Trader Joe’s and Costco Wholesale made waves when they moved into Sarasota. But the supermarket chains were just the beginning.

Nordstrom Rack was the answer to the prayers of many Southwest Florida shoppers when the outlet division of the big department-store chain took over the 35,000-square-foot Circuit City space at University Parkway and Interstate 75 a year later.

P.F. Chang’s took us all by surprise when the Asian-inspired chain went against the grain and opened a freestanding restaurant on Osprey Avenue instead of a location in one of the region’s upscale malls.

The $315 million Mall at University Town Center’s grand opening in October — this mall was more than six years in the making — brought a slew of high-profile luxury brands to the market for the first time. The Apple Store and The Cheesecake Factory are still packed nearly every day more than five months after their debut. Sarasota’s two-level Saks Fifth Avenue is the first department store the brand has opened in years, and is only the second in the country to house its own in-house restaurant, Sophie’s. Meanwhile, loyal customers of Crate & Barrel, H&M and Anthropologie waited paitiently (some in long lines) for the stores to open at the Mall at UTC.

“Sarasota was the next on the list in terms of expansions into new markets for many of the tenants at the new mall,” said Jeff Green, a retail analyst with knowledge of the Southwest Florida market. “And Taubman Centers is known for building centers with co-tenancy that they like.”

The debut of so many national and well-known brands signals a renewed confidence in the local economy, and the beginning of a transformation when it comes to shopping in Sarasota and Bradenton.

A handful of key retail destinations are emerging, and will continue to be defined over the years.

“New retail is popping up all over in parts of town that some may have questioned its viability in previous years,” said Barry Seidel, the president of American Property Group in Sarasota. “Some of them are changing the whole retail landscape.”

Maybe it’s because the region continues to attract new tourists in droves and is known for its robust and affluent snowbird community. The more accolades the region collects, the more retailers take note of the commercial real estate market and shopper demographic here.

“Sarasota makes sense for a lot of brands because of the snowbird market,” said Britt Beemer, chairman and CEO of America’s Research Group Ltd. “They care most about disposable income.”

Retailers are expected to open an estimated 77,000 stores in the United States during the next 24 months, the highest rate seen in five years, according to data collected by the International Council of Shopping Centers.

That means more new names are on the way here, too.

Bass Pro Shops announced it will open a store at I-75 and Fruitville Road in 2016. Free People is opening a store in the Mall at UTC this month. A Microsoft Store is coming soon after that. Wawa, the coveted gas station and convenience store brand, has three stores slated for Sarasota County and two in Manatee.

Westfield Southgate Mall will welcome a Cobb Cinebistro in 2016.

I’ve compiled a list of what I think were some of most important retail brands that have stood up to the hype since their Southwest Florida openings:

Trader Joes’s (2012)

Trader Joe’s opened what was then only its second Florida store on Tamiami Trail in Sarasota during late summer 2012. The opening drew customers from as far as Fort Myers and Orlando.

“The store is still packed every day,” Seidel said, “especially in season.”

Costco Wholesale (2012)

Costco Wholesale opened its first store in Sarasota County during the summer of 2012 in the shell of a former Dillard’s department store at Westfield Sarasota Square Mall. The Sarasota opening was one of the most successful in the history of the Issaquah, Washington-based chain.

Wawa (2014)

Wawa opened its first gas station south of St. Pete in Bradenton during December. The Pennsylvania-based chain has a cultish following similar to the superfans behind Trader Joe’s and Costco, and is known for its cheap gas and restaurant-quality sandwich bar. People showed up in droves for the Bradenton opening. Several more Wawas are slated for Sarasota and Manatee counties.

Apple Store (2014)

The Apple Store is easily one of the most sought-after brands in the country, and Southwest Florida Mac users were drooling for one. Rumors made the rounds that Southgate Mall was courting the iPhone and iPad maker years ago, but when the Apple Store announced it was coming to the Mall at University Town Center, it really put the 880,000-square-foot shopping center on the map.

Nordstrom (2013)

Southwest Florida residents hoped Nordstrom would return to the lineup of tenants for the Mall at University Town Center UTC, despite having abandoned plans to open here during the onslaught of the recession. While no Nordstrom department store is on the books just yet, an outlet store opened in late 2013 and continues to be a popular shopping destination.

“There was a time where Nordstrom would never open a rack store in a market where they didn’t have a department store,” said Green, the Phoenix-based analyst. “But that’s no longer the case.”

Crate & Barrel (2014)

This home furnishings chain is among the brands with the most cachet to open in the Mall at University Town Center. The company opened a two-story store in the new mall, ending many long trips for Southwest Florida residents who braved the drive to Tampa’s International Plaza for the store’s well known products.

“A lot of dollars were leaking out of the market when shoppers were headed to Tampa for some of these stores. Now they’re staying in Sarasota,” Green said.

Kate Spade (2014)

Designer Kate Spade’s handbags have quickly risen to be just as popular as other brands, like Michael Kors and Coach The bright and colorful store in the Mall at University Town Center has been a welcome addition to an outlet store in the Ellenton Premium Outlets.

P.F. Chang (2013)

Most of us have dined in a PF Changs attached to a mall, like at the Mall at Millenia in Orlando or Westshore Plaza in Tampa. Sarasota’s PF Changs is unique in that it is close to downtown in a freestanding building, not far from the bayfront and the affluent residents of the region’s islands and tourists.

Anthropologie (2014)

Anthropologie drew the same kind of response as the Apple Store and Crate & Barrel when fans found out the lifestyle brand was opening its first store in Southwest Florida at the Mall at University Town Center.

H&M (2014>

H&M, the Swedish apparel retailer known for its cheap prices for clothes, threw an opening party unlike any other inside the Mall at University Town Center UTC weeks after the retail center officially opened to the public. The two-story store attracts patrons of all ages. The chain has been expanding in Florida aggressively in recent years.

Tesla Motors (2014)

The Silicon Valley-based electric car company opened a showroom inside the Mall at University Town Center in October. The luxury vehicle maker has several cars on display and some available for a test drive in the mall parking lot.

Retail Rap: Sears Goes on a Selling Spree

It’s fascinating to me that, as of April 1, Sears went from being run like a REIT to being run as a REIT — at least partly. The Hoffman Estates, Illinois-based company formed a new REIT, Seritage Growth Properties, with the stated intention of raising a cool $2.5 billion by selling and leasing back 254 stores. Sears promptly began moving forward with those plans, and has since announced three separate deals to do just that with Macerich Co. (nine properties); General Growth Properties (12 properties) and Simon Property Group (10 properties). Deals like the ones that have been announced so far are certainly proving that Sears can make money by selling its assets, but the question is, why and to what end? In this week’s Retail Rap, I examine the strategic moves that Sears has already made and what this could mean for the future of the company.

On one hand, these deals have all been done quickly and announced almost simultaneously, which speaks to some level of strategic planning. On the other hand, we have yet to see any public sign that Sears understands and is attempting to address its liabilities as a retailer. What is the long range plan? It seems to me that the missing piece of the puzzle is any sort of statement of a new direction or big-picture strategy designed to turn around the retail portion of the business.

Now to be clear, Sears is still a very viable company in terms of its real estate holdings. That being said, I’d love to hear your thoughts on this installment of Retail Rap because it’s not entirely clear to me whether the decision to sell now isn’t part of a broader real estate strategy, or is at least in part due to the fact that Sears might feel like the time is right. I don’t know about you, but I’ll be watching with interest to see what Sears does next. Is this just the first step in a turnaround effort for this floundering retailer? How are they going to use the money? Is there a surprise in store? It will be interesting to watch and see what unfolds in the months and years ahead.