Expanding brands are learning the merits of middle markets
We are at a time when in-demand brands eager to expand into major markets find themselves forced into the role of the searcher in a game of real estate hide-and-seek. This is especially true if they are intent on Class A space, which is virtually nonexistent.
In order to achieve their expansion goals, top brands have extended their searches into secondary markets they’ve never served. Cafaro owns and runs several regional and super-regional malls in smaller markets, such as the 1.5 million-sq.-ft. Huntington Mall in Barboursville, W.V. and the 700,000-sq.-ft Kennedy Mall in Dubuque, Iowa, and we’ve had the opportunity to introduce several leading brands to advantages of dominant middle market shopping centers. Among them:
Secondary markets don’t mean secondary sales. Top-performing middle market centers are destinations unto themselves. Cafaro has cultivated its portfolio of over 30 million sq. ft. of super-regional malls to be the epicenters of retail commerce and activity for 20, 30 and at some centers nearly 40 miles.
In Fredericksburg, Va., we first built Spotsylvania Town Centre—an enclosed mall and open-air center at the interchange of I-95 and Route 3 anchored by Costco, Macy’s, Belk, and JCPenney. Later, we expanded the center and built The Village at Town Centre, an open-air lifestyle center with multifamily residential and food and beverage offerings that include Firebirds and Bravo. There is also a 75,000-sq. ft. theater and bowling center operated by EVO Entertainment.
Other developers arrived, saw our complex, and today you find more than 5 million sq. ft. of retail and restaurants at this interchange.
Less retail crime. Most of our sites have crime rates lower than one finds in major metros. Our malls and centers tend to be the most crowded venues in town, and local police forces pay close attention to us.
At some of our sites, we partner with Flock Safety license plate camera scanners that integrate with local police communications systems to alert every cruiser on the street within seconds of potential or actual criminal acts in progress. Having a strong relationship with local law enforcement--along with leveraging technology to combat crime and retail theft--deters would-be criminals and motivates them to look elsewhere to commit crimes.
Reinvestment is crucial. I can’t say that all middle markets are great opportunities for retailers. Many shuttered and deteriorated regional malls closed due to over-leveraged debt. They then were acquired by low-end players uninterested in reinvesting in the assets and whom nobody wants as their landlords.
The No. 1 thing we do at Cafaro is continually reinvest. Typically, we don’t just own the enclosed mall; we also own the majority of the surrounding outparcels and peripheral development, rarely selling. We are always prepared to reconfigure second-generation space to accommodate major brands.
At our Governor’s Square Mall in Clarksville, Tenn., we recently completed a multi-million-dollar renovation of a former Sears box in which we were able to place HomeGoods, Burlington, and Dave & Buster’s. At Millcreek Mall in Erie, Pa., where we had virtually no vacancy, we carved out a 17,000-sq.-ft. space for Sierra that has interior and exterior entrances.
I think we do a better job than most by paying attention to our customers. For example, all our malls offer convenience carts that make it easier to carry purchases through the mall (and shop more). We still have customer service centers at each of our centers.
While high-tech gadgetry gets a lot of attention these days, shoppers still like to be able to walk up to an actual person who will not only direct them to the store they’re seeking, but offer a smile. Those small but important touches make middle market properties like ours more attractive than ever.
