Going Global

Even in times of economic malaise, the public loves a reason to celebrate, and the opening of a new shopping center generates enthusiasm throughout a market. This was certainly the case with retail properties that debuted in 2008, energizing shoppers and, if only for a moment, the local economies in markets from London to Noblesville, Ind.

In fact, one of the more notable trends on the lists of new properties from the 2008 fastest-growing developers is that, with only one exception, each developer’s local reach extended to global footprints.

First-place developer Simon Property Group opened 4.4 million sq. ft. in markets from the suburbs of its hometown Indianapolis to Asia and Italy. Westfield, coming in at the No. 2 ranking with 4.2 million sq. ft., premiered a landmark property in the United Kingdom, and third-place General Growth Properties, at 2.9 million sq. ft., had two major openings in Brazil. The fifth fastest-growing developer, The Sembler Co., augmented its U.S. openings with a development in Puerto Rico.

Forest City Enterprises, which earned the fourth-place ranking on this year’s list with 2.4 million sq. ft., was the sole winner to open exclusively in the United States.

While 2008 development activity was on par with recent years, by the end of the year shovels were going in the closet. Projects in the pipeline have slowed, and many will likely push to 2010 and beyond. In this time of financial instability, one thing is certain: No one is going to dig out of the economic hole by breaking ground on new developments.

Even Simon Property Group, which has one of the more robust pipelines of product committed to construction, admitted that, with the exception of its Premium Outlet business, new development is not a viable growth strategy—at least not in the near term.

Underscoring the prevailing instability in the marketplace, two of the companies that have repeatedly placed among the top five fastest-growing developers, Kimco Realty and Developers Diversified Realty, declined to participate in the 2008 survey.

No. 1: Simon Property Group 

2008 was another productive year for Simon Property Group, which holds the top-seated fastest-growing developer position for a second consecutive year.

Highlights from last year’s grand openings include Pier Park in Panama City Beach, Fla., a beautiful open-air center that has created a mecca for spring-break students, year-round tourists and area residents in a market that was previously lacking in retail, restaurant and entertainment options.

Another notable project, Hamilton Town Center in Noblesville, Ind., introduced a compelling merchandising mix that featured the state’s first IMAX theater outside of Indianapolis.

Additionally, Simon continues to grow its Premium Outlet presence, opening outlet centers in New Jersey, Texas and Japan last year, with another slated to open in Cincinnati later this year. Indicative of the strength of the upscale outlet concept, Simon reported that as of Dec. 31, 2008, its Premium Outlets were 98.9% leased.

Redevelopment continues to play a vital role in Simon’s growth strategy, and several 2008 projects were spurred by Nordstrom’s desire to open stores in the Northeast. Les Morris, Simon spokesman, noted, “Ross Park Mall in Pittsburgh is a really good example—we built this mall in 1986 and until last year the anchors were J.C. Penney, Macy’s and Sears. In the fourth quarter, we opened a Nordstrom wing with upscale retailers including Tiffany, Lucky Jeans and one of the only Lands’ End stores. We are really pleased with how that property has performed.”

Simon has several projects opening this year and in 2010, including one in Tokyo, two in Italy and three centers anchored by Wal-Mart in China.

No. 2: Westfield 

A number of redevelopment projects across the western United States, Australia and New Zealand, coupled with the opening of Westfield London, a 1.6 million-sq.-ft retail destination in the United Kingdom, propelled Los Angeles-based Westfield to the No. 2 spot in this year’s ranking.

Despite the faltering economy in the month of October, when Westfield London opened, the center was 98% leased and has consistently performed to the company’s expectations.

True to Westfield’s commitment to continuously brand each property with its signature customer-centric focus, international flair and fresh appeal, redevelopment projects accounted for the majority of new growth in 2008.

“From a company perspective, these projects illustrate Westfield’s application of international experience and global best practices—investing not just in bricks and mortar but in new concepts, designed and tailored for each market,” stated Catharine C. Dickey, executive VP communications, Westfield.

“Redevelopment is a major element of Westfield’s long-term value creation activity,” she said, “and we continue to invest in the pre-development of high-quality opportunities in order to be in a position to commence these projects when conditions are appropriate.”

No. 3: General Growth Properties 

A perennial player in the annual fastest-growing rankings, Chicago-based General Growth Properties earned the No. 3 post on the 2008 list. Among the most notable projects completed in the last calendar year was an expansion to Ala Moana, General Growth’s flagship center in Hawaii; enhancements to Water Tower Place in Chicago; and the openings of the 575,000-sq.-ft. RiverCrossing in Macon, Ga.; The Shops at La Cantera in San Antonio; and two shopping centers in Brazil. GGP’s Boulevard expansion to the Mall of Louisiana, in Baton Rouge, added an open-air component and lifestyle retail to the mall complex.

No. 4: Forest City Enterprises 

Fourth-place fastest-growing developer Forest City Enterprises of Cleveland, Ohio, opened large shopping centers in three relatively resilient markets: Westminster, Colo.; Richmond, Va.; and Tampa, Fla.

In particular, The Shops at White Oak in Richmond and Tampa’s Shops at Wiregrass were extremely well positioned to satisfy demand in underserved portions of their respective markets. The Shops at White Oak, which was 85% leased on opening, is presently 93% leased. The Shops at Wiregrass, which began 80% leased, is now well into the 90th percentile leased.

A combination power and lifestyle center, White Oak Village successfully blends big-box retailers and restaurants with small-shop spaces. A Hyatt Park hotel is also part of the mix and helps attract visitors from the nearby airport.

Emerick Corsi, executive VP, Forest City Commercial Development, observed that development has definitely slowed, and the company’s two shopping centers currently under construction, in Vero Beach, Fla., and Westchester County, N.Y., will open in 2010.

“Until capital markets open up, retailers won’t restart expansion and retailers, especially department stores and mass merchants, are the ones that drive our business,” Corsi said. “Everyone is focused on making operating centers and operating portfolios better and, if it’s not under construction, no one is going to break ground and start a shopping center today.”

No. 5: The Sembler Co. 

While his company earned the No. 5 slot on this year’s fastest-growing developer list, Greg Sembler, CEO of St. Petersburg, Fla.-based The Sembler Co., admitted, “We are experiencing the same slowdown as everyone else in the industry. Although we have a number of things in our pipeline, the anchors we work with—the Targets, Kohl’s and Walgreens of the world, have slowed or stopped new development. We have three or four sites permitted and ready to go, but we’re working to get them slotted for time frames. About six months ago they got pushe