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August 05 , 2005

Size matters for new retail lifestyle centers

August 5th, 2005 - Scale of developments important in attracting wide variety of stores David Giddens Staff Writer The hugely successful retail lifestyle center movement has something in common with the regional mall culture that is being increasingly left behind -- the notion that size matters. At least that appears to be the case in North Texas, where several lifestyle center projects of about a million square feet are either under construction or will be shortly. Those include Arlington Highlands along Interstate 20, Garland's Firewheel project, the Shops at Circle T in Westlake and Hillwood's Alliance Town Center in Fort Worth's northern I-35W corridor. The sheer size of those developments is an important element in attracting a wide range of stores, according to Terry Syler, executive vice president and a partner in The Retail Connection. Replicating the mix Syler says the traditional mix of mall tenants is being replicated in the new lifestyle projects, albeit in a different way. "Firewheel is the best example, with Dillard's and Foley's, two retailers that came out of the enclosed mall environment and are now anchoring these lifestyle centers along with junior boxes like Circuit City and Linens N' Things," he said. "The traditional mall-based retailer now has the ability to come to the storefront environment that customers are demanding." The customer is driving the developments, he said. "They want the ability to drive to the storefront, and the developer has seen that providing a user-friendly environment will keep customers on the property." Les Morris, a spokesperson for Simon Property Group, one of the nation's largest mall developers, said the company still believes in the mall concept and continues to acquire mall properties as part of its overall portfolio. But Simon's 785,000-square-foot Firewheel open-air retail center, scheduled to open in Garland this fall, is illustrative of the developer's response to market demand, he said. "There aren't many areas in the country where a retail developer will entertain building a mall with three or four department-store anchors -- there's just not a need for that now," Morris said. "Clearly, all of the concepts we're building are open air, although we're obviously a regional mall company." At the end of the first quarter, Simon had 172 regional enclosed malls in addition to 71 community lifestyle centers. Those lifestyle centers, he said, are nearly all upscale projects ranging in size from less than 100,000 square feet to about 600,000 square feet, and by and large are outdoors. Regional malls, he said, are still unparalleled distribution outlets for goods and services, while community lifestyle platforms such as Firewheel aim for a wide variety of uses in addition to retail, including office, residential, hotel and entertainment venues. "Another interesting trend is that because of the popularity of outdoor centers, a lot of developers are beginning to look at regional malls to see where it makes sense to add an outdoor component," Morris said. "That may include a streetside retail project that doesn't have a lot of square footage, but is a collection of upscale shops attractive to shoppers." Retailers, however, aren't looking to leave malls, he said. Malls 'here to stay' Patrice Duker, a spokesperson for the International Council of Shopping Centers, the nation's largest trade association dedicated to retail development, agrees. "From our perspective, the mall is here to stay," she said, while acknowledging that mall construction generally is down. "Each decade has had a retail development of choice," Duker said. "In the 1970s, '80s and early '90s it was malls, while power centers and lifestyle centers started becoming more mainstream about 1997." On average, there have been between 15 and 20 open-air lifestyle centers built across the country every year since the late 1990s, she said, but only five are larger than 500,000 square feet, while the rest are between 35,000 square feet and 325,000 square feet. "Must-have" lifestyle center tenants include at least one theme restaurant, a scattering of high-end retail and other lifestyle-enhancers such as Pottery Barn, Williams Sonoma, a large-scale bookstore and sit-down cafes all within a streetscape/village concept, Duker said. But the key word is "upscale" when comparing the mall and lifestyle center environments, because the latter's core customers are high-end shoppers. "Lifestyle centers resonate with three different groups: shoppers, who like going from store to store in an outdoor environment and who like the amenities; retailers, who like the model because of the upscale shoppers it delivers, more so than the typical malls; and municipalities, which enjoy the new urbanism aspect and sense of place, not to mention the sales tax receipts," Duker said.
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