Big demand for small centers
With the 2013 Open-Air Conference in full swing in New Orleans this week, two
decidedly ordinary subformats of the category – the unanchored strip center and
the grocery-anchored center – are currently in high favor among investors. Few
power centers, lifestyle developments or enclosed malls are opening in the U.S.
now, but plenty of smaller, less fancy centers are. “Obviously, you require a
lot more equity today, so those larger deals aren't getting done, and the strip
centers are,” said Arturo Sneider, SCLS, a founding partner and CEO of Los
Angeles-based Primestor Development, which builds and operates open-air centers
in urban markets in California, Arizona, Illinois and Nevada. These centers
sell the basic merchandise people need regardless of the state of the economy,
and they are not vulnerable to online competition, Arturo told SCT.
There are additional reasons that
investors favor these simple centers. “Strip center developments are cheaper to
build, easier to entitle and they take a lot less land,” John Schupp, a Jones
Lang LaSalle senior vice president of retail and project management, told SCT.
“Plus, neighborhoods are less likely to resist them.”
Real estate and financial
executives at the conference discussed the open-air investment landscape on
Thursday. They included Stephen H. Bittel, chairman and founder, Terranova
Corp., Miami; Terry S. Brown, CEO, Edens, Columbia, S.C., and an ICSC past
trustee; Daniel B. Hurwitz, CEO, DDR Corp., Beachwood, Ohio, and ICSC Central
Division vice president and a trustee; and Sheridan Schechner, managing
director, Barclays Capital, New York City.
Respondents to a survey conducted
by PwC were more positive about the investment and development prospects of
U.S. neighborhood and community centers than about any other retail format,
with 52.7 percent of them recommending a buy.
Retailer downsizing was a topic of
discussion at the meeting too, in a session whose landlord participants
included Thomas A. Caputo, president, Equity One Inc., New York City; Michael
V. Pappagallo, executive vice president and COO, Kimco Realty Corp., New Hyde
Park, N.Y.; and Brian Smith, president and COO, Regency Centers, Jacksonville,
Other issues at the conference, which concludes today, include leasing,
capital, grocery stores and technical advances.