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Expanding North


DLC Management Corp.’s grocery-anchored shopping centers can be found in places such as Dallas; Milwaukee; Columbus, Ohio; and Birmingham, Ala.; but the company has a special stake in the Northeast. In October, DLC closed the biggest deal in its history, acquiring a passel of 16 centers, all but one of them in New York state. Chain Store Age Real Estate Editor Al Urbanski talked with DLC CEO Adam Ifshin and asked him what retailers need to know about the Northeast market. While Ifshin qualified that Boston was as different from Buffalo as Philadelphia was from New York, he had several valuable insights to share about the nation’s most densely populated region.

First, the big news. Tell us about your 16-center acquisition.

We partnered with DRA Advisors on this acquisition to build a core-plus portfolio. The acquisition represents about 17% growth for us. The seller wanted to exit its New York state holdings, and we took a long time looking at the assets. We had to get comfortable with the markets. We’ll be doing lots of common area upgrades.

It’s a long-term play?

We don’t buy value-added properties and babysit them. We come to them with a business plan. We ask ourselves, “How do we add value?”

Define “core-plus” properties for us.

Core real estate is, for example, an H-E-B center in Dallas that’s 90% occupied and is bought and sold by life insurance companies and pension funds. Core-plus is a stable center, but is maybe anchored by the No. 2 grocer in the market. It’s 85% occupied and in Lexington, Ky., or Birmingham, Ala.

Or Cheektowaga, N.Y.?

Or a very strong asset in Cheektowaga, yes.

So is there any difference in your tenant formula in the Northeast?

In large areas of the Northeast, there has not been a lot of new construction for a long time, and adept redevelopers are well-positioned to assist retailers grow with their chain’s needs. If you leave the major metros, the focus is on two kinds of retailers: The ones that are highly e-commerce resistant and the ones that are value-oriented. It’s the bread-and-butter, value-oriented retail that women with kids need to access on a regular basis.

What about dining and entertainment brands?

We’re seeing intense QSR demand, particularly when you’re close to a college town. We see the old-line players being out-competed by the Chipotles and the Starbucks of the world. We’ve picked up five Paneras and we’re looking to add more in this space.

What about mixed-use centers in the Northeast, where you often see a lot of new food concepts getting a shot?

It’s the place where mixed-use started. If you go to Newton, Mass., or Princeton, N.J., you have apartments over stores. There has been some ground-up construction in that area, too. Blue Back Square in West Hartford, Conn., comes to mind. Also you have a lot of college towns. A lot of success stories for smaller retail outside of city centers in New England and upstate New York revolve around education.

What’s the region been like for traditional malls?

Basically, with malls in the Northeast, it’s the haves and the have-nots. Every enclosed mall in the state of Vermont is in trouble, but the open-air retail’s fine. But the malls that are the best — Short Hills, Roosevelt Field, The Westchester — are doing better than ever.

What’s your advice for new-concept retailers and dining chains looking to succeed in the Northeast?

We are concerned by concepts that are very faddish and aren’t adding a value proposition for the consumer. Some are trying to extend the Chipotle model to Korean and Thai and it will be interesting to see who’s got the money and the expertise and the discipline to get it done. A lot of successful restaurants try to franchise too soon. What happens if you start expanding really fast and you lack the infrastructure and the financing to do it? People forget McDonald’s gave Chipotle the structure that enabled them to roll out.

What new retail categories do you see making inroads in centers in the Northeast?

We had a big center in Chicago, a de-malled mall. It was a great location, both local and commuter traffic. We’re adding a daycare center and its going to be very popular. Retailers love it because moms were in there every day. In Vernon, outside of Hartford, we had an empty box next to a Price Chopper and a Staples. We added a 30,000-sq.-ft. satellite of Hartford Hospital.

You’ve been successful in this business for going on three decades. What’s DLC’s core value?

We look at people first, property second. We want to maximize sales and profitability for everybody involved—for our retailers and for DLC. We have teammates here, not employees, and a win/win for us is maximizing value for the retailers and the physical real estate.

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