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Observations & Conversations
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Observations & Conversations Landing a trophy tenant that turns your
project to In the past few weeks, I’ve been spending a lot of time researching proposed retail projects. It’s amazing the number of shopping centers scheduled to open in 2008 to 2009. Yes, there’s a lot of 50,000 sq.ft.-and-under centers proposed, and I’m sure a good deal of them will actually break ground and get leased. But, the number of mixed-use projects proposed is astounding. Most of the centers are aiming for an upscale lifestyle tenant mix. My research was preempted by a call from a developer with a community center in one of the most affluent markets in the northeast. His center is the most established in the market, but its location in the heart of the town makes it impossible to create a regional draw and stifles his ability to tenant the space with national chains. So he wanted to get some ideas on how to add pizazz to the project. His center is already anchored by a high-end supermarket and a drug store. Of course, landing a trophy tenant that turns your project to gold is what all of us are striving for and that’s why we “make the big bucks” (ha, ha, ha). So, I‘ve been looking at chains that provide a lifestyle component, but that didn’t need a regional draw to prosper. I came across a five-store chain in New York, NY called Garden of Eden Gourmet Markets. The specialty supermarket chain plans to enter the NJ market and anchor a site that will include 80 luxury condos. On the soft goods side - Urban Chic, a high-end ladies apparel concept, is opening its third store with 3,000 sq.ft. across from Whole Foods in Baltimore, MD next year and will co-tenant with an art theater and a 48,000 sq.ft. fitness center. The company launched its first store in 2004 and is backed by the Buscher family, which sold its military software firm in 2003 for $170 million, so I suspect they are well capitalized for growth. The stores carry accessories with handbags, such as Botkiers in the $500 range and designer clothing such as L.A.M.B. and Catherine Malandrino, labels commonly found in Neimans or Nordstrom, with a strong focus on denim. While on the topic of Neimans, the chain is opening its first unit in the Pacific Northwest at a planned project in downtown Bellevue, WA. The 125,000 sq.ft. store is slated to open in 2009 and utilize three levels. The retail component will connect two office buildings, 500 condos and a 3,200 car garage. Another lifestyle chain I recently came across is Palladio Gourmet Market. The company operates around 150 stores throughout Italy and it recently opened its second store in the states with locations operating in Boca Raton and Miami Beach, FL markets. The stores use about 13,000 sq.ft. A third store in downtown Miami is being planned. Its first location is at the 181,000 sq.ft. Glades Plaza in Boca Raton. The project was built in the 80s and the gourmet market coanchors with Brewzzi’s, a micro brewery. Another chain bringing an international cuisine to the states is Hotland, Corp., a Japanese based concern with 350 take-out stores operating as Gindaco in Asia. The company plans to open its first locations in the states next year and anticipates operating 20 units in California by 2010. The concept specializes in Japanese “street food’ such as octopus dumplings. Adding to the new craze of at-home meal preparation stores is Mr. Food no-fuss Meals, a franchise concept with its initial corporate location in Coral Springs, FL. The company is expanding in Florida and exploring opportunities in select markets of the Northeast and Midwest. The concept was launched by Art Ginsburg, a television cooking show host and author of numerous cookbooks. Estimates show there are roughly 700 “meal assembly stores” operating and sales are expected to hit the $1 billion mark by 2010 for this new retail category. The industry has a trade group too, called Easy Meal Prep Association. Other chains focused on the at-home meal preparation concept include Dinner by Design, a 26-unit chain, Dinner My Way with 13 locations, Dinners Ready with 30 stores, Dream Dinners has 128 locations, Meal Makers operates 20 units and Super Suppers has 137 locations. In addition, Designed Dinners is a seven-unit chain with locations in AZ and WA. The company is growing by franchising and expansion will most likely take place in WA, OR, ID, CA, CO, NV, MT, UT and AZ. I expect the “meal assembly” concept will continue to grow as long as we have two-income families as the norm. Another food concept that fits the lifestyle trend is KnowFat Lifestyle Grille. The concept is a quick-serve restaurant specializing in a low fat, health-conscience menu with a small retail area that sells products such as nutrition bars and energy drinks. The company operates seven locations and has raised about $16 million in venture capital. Commitments are in place for 60 franchised locations to open by 2010 and projections are for 600 units by 2010. Investors behind the concept include executives from Bain Capital and the concept’s CEO, George Naddaff, who launched Boston Market into the national franchising arena. Growth will most likely take place in IA, TX, FL, MN, CA and MA. I’m not a golfer, but I understand from my friends who are fanatics that it is a lifestyle, so I thought bringing up Golf Galaxy’s expansion plans would be apropos. The 61-unit chain did about $200 million in sales for its last fiscal year and plans to grown by up to 16 units annually with projections of being a 250-unit chain before hitting saturation. The stores occupy 13,000 sq.ft. to 18,000 sq.ft. and exclusively sell golf merchandise. The company’s existing area of operations covers CO, DE, IA, IL, IN, KS, KY, MI, MN, MO, NE, NV, NJ, NY, NC, OH, OK, OR, PA, TN, TX, UT, VA and WI. Another concept for the fit set is lucy, a 32-unit chain of ladies active wear stores with locations in AZ, CA, CO, DC, IL, OR, TX, VA and WA. The privately-held company is backed by investors from Chico’s FAS and several venture capital firms. The company recently opened a store in Dallas, TX and cotenants with Banana Republic, Gap and Ralph Lauren. Most of its locations are about 2,000 sq.ft. and the company has doubled its store count since last year, so expect more growth on the horizon. Well, I’ve just about ran out of my allotted space, so the rundown on interesting lifestyle tenants has to come to an end. We’ll be at the ICSC New England States Dealmaking this month in Boston and in August at the Florida Dealmaking in Kissimmee, so if you’re at the shows too stop by our booth and say ‘’hello.”
Until next month, Ann O’Neal, Publisher |