Opening Up
Despite the fact that the nation is still in the throes of winter, albeit a mild one, open-air centers continue to draw shoppers and generate leasing interest among retailers.
In the early days of upscale lifestyle centers, and before enhanced strip centers and specialty formats, the longevity of some open-air centers came under question as developers, retailers and consumers alike challenged the shopability of the format outside the sunbelt regions.
Naysayers have been quieted. Open-air centers are real estate darlings and are showing no signs of losing favor.
“High-end tenants such as national specialty retailers, restaurants and entertainment are attracted to open-air venues as they see these formats as more befitting their brands,” said Joseph Coradino, president of PREIT Services, Philadelphia. “While some brands like Chico’s, Coldwater Creek, Talbots and Loft have always preferred open-air, uses such as restaurants are newer advocates of the format,” Coradino said.
Pennsylvania Real Estate Investment Trust (PREIT) isn’t shy about incorporating restaurants into its mall mixes. At Plymouth Meeting (Pa.) Mall, for example, the restaurant tenants are adding nearly $80 million in sales per year to the center, Coradino said. “And at Voorhees (N.J.) Town Center, our shoppers have shown a desire for more local restaurant concepts, and we’ve responded by opening Firecreek, Doghouse Burger and South Jersey’s own Catelli Restaurant Group opening Catelli Duo later this year,” he said.
Local restaurant concepts aren’t the only smaller players to find success in open-air venues. While local operators can find it difficult to carve out a niche in large, open-air properties, projects similar to Voorhees Town Center can offer a winning formula.
“At Voorhees, the local and regional retailer actually has a leg up, with smaller store spaces available and more of a local demand for their offerings,” Coradino said. “Small shops like Coffee Works Cafe, Spoon Me and It’s a Doggie Dog World are all local players in South Jersey.”
Open-air specialist DDR Corp. has local shops in its sights. The Beachwood, Ohio-based shopping center company in early February announced the launch of Set Up Shop, a program designed to promote entrepreneurship, incubate new concepts and support the expansion of locally owned businesses.
“The first few months of a new business venture are critical to long-term success. The Set Up Shop program reduces the entrepreneur’s start-up expenses and provides a platform for long-term viability,” said Paul Freddo, senior executive VP leasing and development for DDR.
According to DDR, Set Up Shop will launch initially in specific locations within 24 Atlanta-area shopping centers. Qualified entrepreneurs participating in Set Up Shop will receive flexible terms designed to limit some of the barriers associated with starting a business.
This is a particularly innovative and creative approach to small-shop leasing. And it will allow DDR to reduce asset-level expenses, increase recovery rates and turn non-income-producing space into a revenue-generating location, while at the same time establishing a platform for entrepreneurs to take a meaningful step toward small business success.
DDR has partnered with SCORE, a national nonprofit dedicated to educating entrepreneurs, to serve as a resource for Set Up Shop tenants. DDR will evaluate the success of the Atlanta initiative, with plans to expand Set Up Shop to other markets in 2012.