Could General Growth Be Sold?

As the credit crisis drags on, debt-ladened General Growth Properties, the nation’s second largest regional mall REIT, may have no other choice than to sell the company. That move, according to some observers, could even happen before the end of the year.

Last week, the Chicago-based firm announced it was exploring financial and strategic alternatives, including possible sale of the company, as it races to retire all of its 2008 loan maturities, which total $2.8 billion. Beyond that, as of Aug. 29, the company had a total long-term debt load of about $27 billion, according to Columbia Capital Services, Inc. Its long-term debt to capitalization ratio is at 72 percent, according to a report from Wachovia Capital Markets.
On Monday, Standard & Poor’s downgraded General Growth’s corporate credit rating to BB from BB+ and put the company on the watch list for further downgrades.

General Growth has already adopted several extraordinary measures as it tries to work with debtors and calm investors. On Sept. 2, it added seven of its properties to the collateral pool to repay $391 million in near term mortgage maturities. On Sept. 17, it increased the initial repayment guarantee to 50 percent of its outstanding $1.5 billion credit facility. On Sept. 20, two days after the company’s stock plummeted to a 52-week low of $19.50, General Growth was added to the short sell ban list by the Securities and Exchange Commission (SEC). It has also doubled its recourse levels with lenders to 50 percent. . . . more

REIT history bodes well for outlook in current volatile market

Prices said to dip and climb before those of commercial property

Even though commercial- property values are decreasing, equity real estate investment trust prices will likely rise if historical trading trends are an indication, some industry observers predict.

"There's a tendency for people to think that if property values are going down and they own REIT stocks, then that means their REIT stocks will go down — and that, historically speaking, is not the case, because REITs lead the rest of the market," said Brad Case, an economist and vice president of research at the National Association of Real Estate Investment Trusts in Washington. "Returns to REITs lead the returns to real properties."

Equity REIT share prices have tended to decline, trough and rebound a year or two ahead of commercial-property prices shown on the NCREIF Property Index, from the National Council of Real Estate Investment Fiduciaries in Chicago.

If this trend holds up during this cycle, equity REITs, which were up about 2% in the first eight months of 2008, should continue ticking up even though commercial-real-estate values will likely be falling, Mr. Case said. . . . more

Baltimore: Owner says Columbia Town Center project still on tap

Debt-laden mall owner General Growth Properties Inc. plans to follow through with its proposed Columbia Town Center redevelopment, despite recently announced plans to shore up its finances and refinance its debt by selling off some of its properties.

Greg Hamm, general manager of the Columbia project for General Growth, said the company hopes to submit documents to Howard County outlining its plans for the project.

“We have every intention of moving forward,” Hamm said. “It’s a wild world out there, but we’re very excited about the project.”

Bill Mackey, project manager for Howard County’s planning and zoning department, said General Growth has said it will provide the county with the plans next month. . . . more

Mohegan Sun's Expansion Put on Hold

UNCASVILLE, CT-The Mohegan Tribal Gaming Authority is planning to delay a large capital spending component in the Project Horizon expansion of Mohegan Sun. A statement cites the ongoing economic recession affects on regional gaming markets as the cause of the interruption.

The components that will be suspended are the Earth Expansion and the adjacent parking garage. The complex consists of Casino of the Earth, Casino of the Sky, Casino of the Wind, Sunrise Square, the Shops at Mohegan Sun, along with a 10,000-seat arena, a 350-seat cabaret theatre and 100,000 sf of meeting and convention space. There is also a 1,200-room Sky Hotel Tower. The Project Horizon project included costs spent on different parts of the complex with $17 million to Sunrise Square, $116 million for Casino of the Wind, $58 million for Property Infrastructure and $75 million has already been spent on Earth Expansion and $5 million on the parking garage. By halting the expansion now, the project will save $734 million. . . . more

Real estate investor shoring up purchase of former Yoken's site

PORTSMOUTH, NH — A local real estate investor is in the process of finalizing a purchase-and-sale agreement to buy the former site of Yoken's restaurant on Route 1 from Shaw's Supermarkets Inc.

Anthony DiLorenzo, owner of several commercial properties in Portsmouth, entered into an agreement with Shaw's on April 21, according to a published report in the Portsmouth Herald.

DiLorenzo is the owner of the former Meadowbrook Inn, which was recently demolished to make room for a large multipurpose development on the Route 1 Bypass. He is president of Portsmouth Chevrolet, as well as principal of Key Auto Group.. . . more

Developer hopes for hit at Fenway

Retail residential complex proposed for area between Park Drive, Yawkey Way

A developer is proposing his third retail and residential complex outside Fenway Park - a project that would be aided by a new street the city wants to build to spur fresh development in the neighborhood. The plan disclosed by Steve Samuels and city officials yesterday is the next step in transforming the gritty triangle between Park Drive and Yawkey Way, where residents and neighborhood planners have long sought to create an "urban village" in the shadows of the ballpark. Mayor Thomas M. Menino said plans for the new quarter-mile-long street, to run parallel to Yawkey Way, would ease traffic congestion and lay the groundwork for a shopping district where Fenway sausage vendors would intermingle with high-end boutiques.

"What we want to do is have a balance between residential, retail, and some office space," Menino said. "It will be a more walkable area, a more friendly area. Now all you see is auto repair shops and sub shops. That's not the future, that's the past." . . . more

Burlington: Forest sale is scratched

Scope of project too large for town

After much hoopla in town and beyond, Burlington officials are putting the brakes on an ambitious development proposal to turn a large swath of forest land into the state's largest life sciences complex, senior housing, and playing fields.

The Board of Selectmen has decided against selling the 247-acre landlocked parcel near Route 3, saying the community is not ready to let go of the property.

"The land is not for sale," said Sonia Rollins, chairwoman of the panel.

But Patriot Partners, the development group that holds an option to buy the land if the town does decide to sell, is not giving up on its vision for the site bounded by Route 3, Interstate 95, and the towns of Lexington and Bedford. . . . more

Merrimack NH outlet mall gets go-ahead

MERRIMACK – Before a packed room last night, the planning board approved a site plan with conditions for an estimated $100 million, 135-store outlet mall project that would generate a combined 1,400 full- and part-time jobs and more than $800,000 in property taxes.

The planning board voted 6-1 to approve the retail project, with Nelson Disco, Pete Gagnon, Alastair Millns, Stan Bonislawski, Tom Koenig and Tom Mahon in support. John Segedy served as the lone voice of opposition.

Segedy said he voted against the mall because he perceives it as unfair to the residents living near the retail project. He also said it would put a considerable burden on town staff and may be too much for them to handle.

Meanwhile, Koenig said he has put "a level of trust in Chelsea" Property Group despite some concerns he has about the plan. He added that there is no legal reason to deny the project, which could be justified in a court of law.

Millns said he's all for Chelsea coming in for the tax advantages related to the project, but reiterated his previous concerns on the traffic impact.

Gagnon described the project as "the most complex plan" he's ever seen, even more so than when Digital came to Merrimack years ago.

. . . more

Commercial construction costs continue to rise

Commercial building costs rose 1.77 percent in the third quarter over the second quarter and nearly 6.5 percent over the third quarter of last year, according to Turner Construction Co.'s Building Cost Index.

The index, which projects domestic commercial building construction costs, found that construction costs are rising faster than the Consumer Price Index.

The increase is due in large part to price hikes for steel, non-ferrous metals, petroleum-based products and energy.

. . . more

Mall developers facing excess space, too few tenants

Shopping-mall owners have struggled this year with a darkening economy, slowing consumer spending and store closings by retailers. But they face another problem that may persist long after the economy bounces back: a decade of overbuilding.

Developers have built one billion square feet of retail space in the 54 largest U.S. markets since the start of 2000, 25 percent more than what they built during the same period of the 1990s, according to Property & Portfolio Research Inc. of Boston. U.S. retail space now amounts to 38 square feet for every person in those 54 markets, up from 29 square feet in 1983, the firm says.

Consider a six-mile stretch of highway north of Dallas, where three developers are racing to finish four huge shopping centers with a combined three million square feet of space. Not only will they compete with each other, but there are three existing malls within a 10-mile radius.. . . more

District’s Golden Triangle sees golden opportunity

A landscaped median down Connecticut Avenue NW. Charming benches and quaintly designed vendor booths dotting the sidewalks. And yellow flowers everywhere.

That’s the vision business leaders in D.C.’s Golden Triangle district have laid out for a neighborhood they say is underrated as a retail opportunity.

“We’re trying to think more Fifth Avenue, not Times Square,” said Steven Gewirz, a principal with developer Potomac Investment Properties Inc., noting that Gallery Place and Chinatown are more akin to New York’s flashy and gritty 42nd Street. . . . more

Bound to go bust?

Retail construction booms, but economy raises doubts

Sparkling new shopping complexes have opened in recent months in Foxborough, Mansfield, Plymouth, and Wareham. Legacy Place, a 675,000-square-foot "lifestyle center," is slated to open next summer in Dedham. The South Shore Plaza in Braintree is expanding, and large retail projects are planned in Hingham, Sharon, Westwood, and Weymouth.

But this wave of suburban retail development is arriving on an uncertain landscape. The real estate market, which was sizzling when the projects were first drawn up, has cooled considerably, and consumers are pinching pennies. Across the country, businesses are struggling, and empty storefronts are becoming a more common sight.

"It's a very difficult retail market right now," said Robert F. Sheehan, vice president of research for KeyPoint Partners LLC, a Burlington-based commercial real estate firm. "This is just my opinion, but I think you're going to see significant vacancies if all of these projects get off the ground.

"It's not the greatest time."

Indeed, vacancy rates at US shopping centers are the highest they've been since the mid-1990s, and mall vacancy rates haven't been this bad since 2002, according to the New York-based real estate research firm Reis Inc.

A recent KeyPoint study found that the overall retail vacancy rate in Eastern Massachusetts (based on square footage) rose slightly to 7 percent in March 2008 from 6.9 percent in October 2006, but that big retailers seem to be weathering the downturn better than smaller businesses. The study showed that over 99 percent of big-box stores were occupied, but that the vacancy rates among smaller stores - under 2,500 square feet - climbed to 9.9 percent in 2008 from 8.4 percent in 2006.

"Within that segment, you have mom-and-pops, and you have national and regional chain stores closing," said Sheehan.

It seems that no sector is immune. The national chain Linens 'n Things Inc. announced in July that it would close three Massachusetts stores, including one in Taunton. Starbucks announced that it was closing coffee shops in Dartmouth, Sharon, and Stoughton.

Smaller independent businesses, meanwhile, can be hurt by the proliferation of giant shopping centers. Book Ends, a locally owned bookstore on North Main Street in Mansfield, is closing because it couldn't compete with online retailers and the Borders bookstore that opened at Mansfield Crossing, a new 383,000-square-foot shopping plaza on Route 140.

In Massachusetts, the amount of unoccupied retail space varies widely from community to community.

The KeyPoint report found the highest retail vacancy rates in Swansea (22.1 percent), Stoneham (17.5 percent), and Lawrence (15.8 percent). Retail vacancy rates for the Globe South region ranged from as low as 1.3 percent in Wareham to as high as 12.5 percent in Foxborough.

In Wareham, Chuck Gricus, the town's former director of planning, said the retail scene has been thriving, especially since the arrival of Wareham Crossing, a 675,000-square foot open-air shopping center that opened last fall.

The plaza, which Gricus described as "booming," is home to big-name tenants such as Best Buy, Target, Borders, and Old Navy. JC Penney will celebrate the grand opening of its store there next weekend.

"Wareham is a regional retail center; people come from all over, and off the Cape to shop here," said Gricus. "Wareham has its share of problems, but retail is not one of them."

On the other end of the spectrum, Stephen M. Costello, Norwood's planning and economic development director, chalks up the town's 12 percent vacancy rate to two large empty properties: the long-dormant Home Quarters Warehouse and the former Decathlon Sports Megastore.

"Those two are substantial vacancies on our Route 1 landscape," said Costello. "We're trying to actively fill them with tenants."

The Home Quarters Warehouse, known as HQ, was part of a national chain of home improvement stores that went under in 1999. The 115,000-square-foot warehouse has been empty ever since, according to Costello. The former 40,000-square-foot Decathlon store has been vacant since 2006.

"With HQ, it's a substantial space for a specific type of use. . . . We're working with the owner to make it permit-friendly and tax-friendly," Costello said.

"It's the larger spaces that seem to be nagging and chronic," he said. "We're in pretty good shape, except for those" two properties.

Costello said the situation in Norwood is still much better than during the 1990s, when several manufacturers left town, Raytheon closed, and hundreds of local jobs disappeared.

When Klein's department store on Washington Street closed in the early 1990s, several other merchants followed. "That really caused a big ripple in downtown," said Costello. By 1998, the town center was left with 18 vacant storefronts and a vacancy rate of 22 percent.

Norwood's downtown has since been revived, said Costello, thanks partly to such initiatives as a sign and facade improvement program, which helped make the downtown area more attractive to restaurants and niche tenants. Costello said the former Klein's site is now occupied by Woodstuff, which sells unfinished wood furniture, and Byblos Restaurant, which is Zagat-rated and serves Middle Eastern cuisine.

The regional boom is evident in Braintree, where big changes are underway at South Shore Plaza. The mall, which opened in 1961, is undergoing renovations and creating a large addition that will include a 150,000-square-foot Nordstrom department store.

A recent visit to South Shore Plaza found more than a dozen empty storefronts. Most of them appeared to be in transition and were covered with "Coming Soon" signs. A mall spokeswoman said that several spaces are undergoing renovations, and that other tenants recently moved to bigger spaces within the mall.

Five new stores - Chipotle restaurant, Teavana tea shop, children's clothing retailer Janie & Jack, Zumiez skateboard and snowboard shop, and Zounds - opened in mall this summer, and two other restaurants - Shrimp Market and Quiznos - will be opening in the food court, according Judy Tullius, the mall manager.

All told, there are "essentially 22 different properties coming into the shopping mix," Tullius said in an e-mail. "And this is all before a new wing opens, featuring Nordstrom."

"Not only is the mall doing major upgrades and improvements," she said, "but the existing tenants are also taking the initiative to remodel and rebrand their stores, while new tenants are seeing what's coming with the mall's expansion and additions and want to be on board."

Nordstrom officials last month hosted a project preview for several minority- and women-owned building contracting firms, according to Nordstrom spokesman Michael Boyd. "Our store is still on track there at the South Shore Plaza, scheduled to open in spring 2010," said Boyd. "We don't have a specific opening date to share with you yet, but we are on track."

Retail development is also humming along in Hanover. On Route 53, the site of the former Decathlon sporting goods store at 1207 Washington St. is fenced off and surrounded by construction vehicles. Bulldozers have removed acres of trees behind the store to make way for a shopping center that will be anchored by Target. The Decathlon space could become a restaurant.

The La-Z-Boy furniture showroom at 1271 Washington St. is empty. But most retailers along Route 53 are open. The Hanover Mall is also fully occupied.

Tom Burke, president of the Hanover Chamber of Commerce, is optimistic.

"To me, it really feels like we're at the traditional occupancy level, given the current conditions," he said. "The impression I get is that we probably have the normal amount of vacancies. With all the development, when you look at what's going on . . . it's pretty promising."

Source: The Boston Globe

MA: Hanover draws Target to new retail center

Passing motorists see only boulders and tree trunks. But the town of Hanover envisions a retail hub for the site on Washington Street (Route 53) between Mill and Pond streets, and already has secured a prominent national retailer.

Target Corp. has agreed to set up shop in a 137,000-square-foot building that will serve as the anchor for the Washington Street Shopping Center complex. According to Town Planner Andy Port, the town hopes to have the store opened by late summer or early fall 2009.

The new Target will be the largest single retail store in Hanover, according to Port. While the Hanover Mall is larger in overall size, it houses dozens of individual retailers.

Though Target will serve as the centerpiece for the site, which is in its early excavation and grading stages, plenty of other construction is already planned.

The former Decathlon Sports building, which more recently housed a furniture retailer, will not be demolished. Instead, the existing structure is to be expanded and incorporated into the new complex.

"The building will be expanded by construction by 10,000 square feet," said Port. "This will house two large retail units, and will be about 50,000 square feet total."

Another new retail building will be constructed, and at 17,000 square feet, will house five smaller retail units.

To make the center more than just a shopping destination, two restaurants, at 6,000 to 7,000 square feet each, are also planned for the site. Tenants for the smaller retail units and restaurants have yet to be confirmed.

The Washington Street Shopping Center project was bolstered by the continuing road-widening project along Route 53. "The road-widening has been in the works for a while, but Target probably wouldn't have found the site as beneficial without it" and would have had to pay to widen the road in order to prevent backups, Port said.

Due to the anticipated increase in traffic from the shopping center, Target will be required by both Massachusetts and town law to install a lighted intersection and turning lanes to facilitate entering and exiting the complex, similar to those just up the road at the Hanover Mall.

Source: Boston Globe

Towns recycle abandoned stores

Wisconsin Rapids, one of Wisconsin's old paper-mill towns, had never fought to keep Wal-Marts and other big-box retailers out. Quite the opposite. The city was so welcoming that it got a state grant to meet Wal-Mart's parking needs in the 1980s.

By the late 1990s, however, Wal-Mart outgrew the space and moved to the outskirts of town. Downtown Wisconsin Rapids was left with a 120,000-square-foot shell and a giant parking lot. A neighboring shopping center suffered.

Today, the old Wal-Mart has new life as the Centralia Center for senior citizens. "Had we not (done so) … today it would still be sitting there blighted," says Mayor Mary Jo Carson.
America's big-box experience is entering a new phase.

Some towns continue to block megastores because they object to their economic impact on local merchants and the traffic congestion they can create. But thousands of other towns across the USA that welcomed them face a growing challenge: What to do with the cavernous spaces left behind by retailers such as Home Depot, Wal-Mart and Kmart when they downsize or expand elsewhere.

Big-box stores leave huge spaces behind — many carry deed restrictions that prevent other retailers from moving in — and filling the space can be difficult. So cities have become creative and some are turning these hubs of capitalism into centers of civic life.

A Kmart in Hastings, Neb., is a Head Start Early Childhood Center. Kmarts in Buffalo and Charlotte and a Wal-Mart in Laramie, Wyo., are charter schools. After Hurricane Katrina's devastation in Louisiana, the St. Bernard Health Center opened in government trailers in the parking lot of a closed Wal-Mart.

Among the most unusual uses: An old Kmart in Austin, Minn., is the site of Hormel Foods offices and a museum dedicated to Hormel's famed meat product, Spam; the Peddlers Mall in Nicholasville, Ky., is a flea market and antiques mall where a Wal-Mart once was.

Profting from abandoned spaces

Julia Christensen spent six years documenting the trend in Big Box Reuse, a book to be published in November. She details how 10 communities turned vacant big-box stores into schools, a courthouse, church, museum and other civic organizations. "We have a bunch of empty buildings all over the country," says Christensen, an artist who teaches at Oberlin College in Ohio.

Most cities don't know what other cities are doing with abandoned big-box spaces, she says.

"I hope this project will give us a platform so that we can make informed decisions," Christensen says. An exhibit of Christensen's photos that appear in the book opens this week at the Miller Gallery at Carnegie Mellon University in Pittsburgh. "Hopefully, we can raise awareness," she says.

Wal-Mart owns more than 3,400 stores among its Supercenter versions, Sam's Clubs and others, says Jennifer Evans-Cowley, a city and regional planning professor at Ohio State University who has written about how communities can prepare for the short life span of mammoth stores.

"Every year, Wal-Mart closes stores," she says. "There are 15 major retailers. Multiply that by 2,000 stores each with a 20- to 25-year life cycle. It's not unreasonable to expect that closure would happen during that time."

Cities adopt new standards

More communities are introducing policies that require big-box retailers to help redevelop the spaces they leave behind. Some require them to tear down the stores if they're empty more than a year. Others have introduced design standards that require landscaping and more than one main entrance so that the building can accommodate multiple tenants in the future.

A retailer the size of Wal-Mart can make or break a town like Wisconsin Rapids, which has about 18,000 residents. "It changed us," Wisconsin Rapids Mayor Carson says of Wal-Mart's decision to leave downtown and build a superstore on the edge of town. The move eventually helped, she says.

"We, as a city, now have a central location for our seniors that's better than having it on the outskirts of town," Carson says.

About 20,000 square feet of the old store were knocked down to make way for a community garden and benches. Inside, seniors now enjoy a library, meeting rooms, a walking track, pool tables and state-of-the-art kitchen and computer center. The center also holds aging and disability centers for two counties.

"Local officials today have to be problem-solvers to survive," Carson says. "It might help local public officials to think as far out of the box as they can."

Source: USA Today

NJ: 435,000-SF Mall Sets Opening

TINTON FALLS, NJ-The nearly $160-million project had languished for several years because of legal challenges that were tied to traffic patterns, overpass construction and storm water management. But Jersey Shore Premium Outlets finally had its official groundbreaking in late 2007, and above ground construction started earlier this year. Now, developer Chelsea Property Group has set a formal opening date of Nov. 13, 2008 for the center, and has simultaneously released the tenant roster for the first time.

“We will announce the stores’ names to coincide with a large job fair several months before the opening,” Michele Rothstein, SVP of the Roseland, NJ-based Chelsea told GlobeSt.com earlier this year. Altogether, the 435,000-sf outlet center is slated to have 120 stores, and Rothstein this week released a list of 100 retailers that have signed on at the project.

Burberry Ugg, Kate Spade and Juicy Couture head the list of stores that have signed leases. Others on the expansive list include Calvin Klein, Ecko Unlimited, Cole Haan, DKNY, Perry Ellis, Sony, Theory, Kenneth Cole, Le Creuset, Nike, Michael Kors, Adidas and Brooks Brothers, to name a few. The center will also have a food court with about a dozen eateries.

“Today’s savvy shoppers want high-quality designer and brand-name merchandise,” Rothstein says in a statement. “But they don’t want to pay a fortune. This is a market of sophisticated customers, making it perfect for the kind of upscale outlet centers that we develop.”

The surrounding market consists of central Monmouth County, with the 60-acre site specifically at the intersection of Route 66 and Essex Road, just off the Garden State Parkway. The single-level, village-style center is the third in New Jersey bearing the Premium Outlet brand for Chelsea, which is a division of the Indianapolis-based Simon Property Group. The company’s two other Premium Outlet properties are in Flemington and Jackson.

Source: GlobeSt.

Boston: Menino wants assurances from developers

Mayor seeks new rule after financial tie-ups

Boston Mayor Thomas M. Menino wants to require developers of large projects to obtain financing before they win permission to dig up the city.

His call follows financial problems for two high-profile developments that have already begun construction in Boston: the $650 million redevelopment of the Filene's building in Downtown Crossing and the $800 million Columbus Center complex over the Massachusetts Turnpike.

Menino is having city planners devise a regulation that would delay approvals for developers who cannot show adequate financial backing to proceed with construction. The regulation is an attempt to prevent city streets from being at the mercy of credit markets that can suddenly stall or upend projects.

"We already have two or three holes in our landscape; we don't want any more," said Menino. "We don't want to stifle development, but we don't want developers to take advantage of the city."

The mayor spoke yesterday after the Globe reported that the developers of the 38-story commercial and residential tower on the former Filene's property have been unable to raise financing because credit markets have severely tightened in the wake of the subprime mortgage debacle.

The project is the cornerstone of Menino's effort to remake Downtown Crossing into a destination shopping district in the heart of the city. Almost a year after receiving city permits, the developers have only begun to excavate a portion of the site for its new foundation.

Menino and officials at the Boston Redevelopment Authority said they have been working on the policy for several days and that they were not spurred to action solely by Filene's or any other development. A draft of the regulation indicates that $12 billion in projects are currently under development in the city, and points out that many neighborhoods might have to put up with abandoned or vacant construction sites if tight credit markets continue to delay construction.

An executive with a leading development group said the mayor's regulation is unworkable and would have a chilling effect on future projects.

"It will become a barrier to development. The market just doesn't work that way," said David Begelfer, Massachusetts director of the National Association of Industrial and Office Properties. "To react this way because of the current abnormality in the credit market, I don't think is very prudent."

Other individual developers, including those for the Filene's and Columbus Center projects, declined to comment.

Lenders have been wary of making commercial real estate loans since the subprime mortgage crisis erupted last summer and caused heavy losses at investment banks and other financing firms.

The team trying to build the Columbus Center halted construction on the giant mixed-used complex this year after developers lost some of their private financing as well as some state subsidies.

The draft of Menino's regulation indicates that developers would have to show proof of financing within 18 months of city approval in order to move forward with construction. If they fail to do so, they would have to ask the city for an extension of their permits.

The Filene's project received its city approval in August 2007, while the Columbus Center project was approved in July 2003.

To take effect, the regulation needs the BRA board's approval.

The mayor said the policy would also help the city control the practice of "flipping," in which developers get approval for a project, carry out demolition and other site work, and then sell it for a profit.

"Too many times developers come in, get approvals, sit on it and make all the money off the city," Menino said. "It's an issue we have to get a hold of."

Source: Boston Globe

Back to work in Towson

Nod your head if you have heard this one before: Baltimore County leaders and local developers want to pump millions of dollars into new projects in Towson, with the hope of turning the county seat into a more pedestrian-friendly locale.

It's an effort Towsonians are all too familiar with. Over the past four decades, slews of studies have recommended ways to turn Towson into a more thriving hub of commercial activity.

The latest version calls for more than $700 million to be spent by developers and investors in everything from the expansion of Towson Towson Center to the redevelopment of Towson Commons. Baltimore County is even kicking in about $8 million to put toward new open space and parking projects.

Still nodding? This time, county development officials say the outcome will be different.

"The extent and scope of the development, and the creative way that developers are looking at the physical space, distinguishes this redevelopment plan. They're approaching it with an urban sensibility," said Fronda Cohen, spokeswoman for the Baltimore County Department of Economic Development.

But even as builders move dirt and lay concrete, the viability of this development is clouded by an uncertain economy and perceptions that Towson has long tried to shake. The current downturn and subsequent financing challenges pose the biggest question marks to projects proposed and in development. At least one developer has put the brakes on his project as the housing market continues to suffer.

Other obstacles -- real or perceived -- include Towson's current pedestrian-unfriendly layout, insufficient parking, and a debate over whether the town should cater to the large number of Towson University and Goucher College students. More than 151,000 people live in Towson -- about 4,000 of which are college students living on campus.

"Towson suffers from its image of a college town. As a result, adults and children are not as inclined to come there," said Jennifer Weeks, a local planner and member of the Urban Design Assistance Team (UDAT), a national group hired in 2006 by Baltimore County's Office of Community Conservation to consult on Towson's future.

The projects

The latest redevelopment of Towson consists largely of three commercial projects and four residential ones. Among them are:

• Towson Circle III: Baltimore's Cordish Co. and Heritage Property Inc. are working together again on another Towson Circle project. About four years after developing Towson Circle II, the developers plan to create a "Main Street-style" project with 60,000 square feet of retail space, 60,000 square feet of office space and a 62,000-square-foot cinema atop a 4-story, 700-space garage.

Construction on the $75 million project -- bound by Joppa Road and Virginia, Pennsylvania and Delaware avenues -- is slated to begin in March.

• The expansion of Towson Town Center: Chicago-based General Growth Properties Inc. wants to add about 113,500 square feet to the 1.2 million-square-foot mall on Dulaney Valley Road. The project includes several new restaurants and retailers, including the Cheesecake Factory, P.F. Chang's China Bistro and the Pottery Barn.

Work could be done by October.

• Redevelopment of Towson Commons: The scarcely occupied retail and office complex has been something of a boondoggle for Towson in recent years. Retailers and restaurants have come and gone, including Borders Books & Music and Pizzeria Uno, leaving many storefronts empty.

Three years after buying the property, Washington, D.C.-based Western Development Corp. has yet to fill the 95,000-square-foot retail pad and company officials are mum on their plans. Ben Miller, Western Development's president, declined to comment on the project's status.

Baltimore County economic development leaders said the slow pace of redevelopment at Towson Commons is not linked to the sagging economy. Cohen said it is "not a reflection on the retail or restaurant market."

But little else is known of the progress at Towson Commons, other than leases for existing retailers and the AMC movie theater there will not be renewed because Western plans to reconfigure the space.

• The Palisades: As part of Towson's effort to boost its residential offerings, Southern Management is building a 357-unit apartment complex at Towson Boulevard and Susquehanna Avenue. The nearly $100 million project could be done by spring 2010, assuming construction begins as scheduled this fall.
• The Quarters: As many as 160 Goucher College students could live in the 900-unit condominium and apartment complex under construction at Dulaney Valley Road and Fairmount Avenue. The project is being developed by New Jersey-based Lane Co. and is expected to cost about $190 million.

But the final look and cost of the Quarters is uncertain. It is among the latest victims of the sour economy.

Lane Co. has delayed the second phase of the project for at least 12 months -- from mid-2008 to mid-2009 -- while the housing market remains weak. Jeff Price, a regional partner for the developer, said sales of the 430 residential units expected to open this fall have been slow.

The third phase of the Quarters project, consisting of 135 units, "will commence as the market permits," Price said.

Student-weary residents

Assuming developers do complete proposed residential projects, some community constituents voice concerns over students occupying much of that new space.

"Once you start loading up new apartment buildings with college students, you're going to drive out other tenants, like empty nesters," said Ed Kilcullen, president of the Greater Towson Council of Community Associations (GTCCA). Having an overwhelming student presence in the new housing units will have a negative trickle-down effect on the local economy, by discouraging high-end retailers from moving into the area, Kilcullen said.

Although the Greater Towson Council recently fended off development of a Towson University student housing project in downtown Towson, that won't keep area college students out of new residential projects. Southern Management Corp. predicts college students will comprise the majority of occupants at the Palisades. And Goucher students are expected to occupy part of the Quarters.

During a week-long planning session in 2006, UDAT panelists, community groups, area institutions, and county officials agreed on the need to increase the town's residential core. UDAT also suggested several ways to make Towson more appealing to residents and visitors. Topping the list was greater walkability.

"Every successful city is pedestrian-oriented," said Andrea Van Ragsdale, director of Baltimore County's Revitalization program.

The County is finding ways to increase foot traffic. They include aggressive signage to encourage motorists to circumvent York Road as a thoroughfare, granting the Towson Chamber of Commerce nearly $100,000 for downtown landscaping and maintenance, and narrowing of the Towson Circle, which slows traffic and makes it safer for pedestrians to cross.

Source: Baltimore Business Journal

NJ: 14-Screen Theater Starts Construction

SECAUCUS, NJ-Construction has started for a 14-screen, stadium-style theater operated by Kerasotes ShowPlace Theatres within Hartz Mountain Industries’ Harmon Meadow mixed-use community here. The new location was reported by GlobeSt.com in May, and with the start of construction the Chicago-based Kerasotes is projecting a fall 2009 opening.

The 2,752-seat venue also marks Kerasotes’ initial foray into the New Jersey market, notes COO Dean Kerasotes. The cost of the project hasn’t been released.

The construction start comes as the locally based Hartz takes the wraps off a renovated Plaza Courtyard within Harmon Meadow. The pedestrian walkway surrounded by stores, restaurants, hotels and offices has been redeveloped with a replica of the Chartre Labyrinth, copied from the Notre Dame de Chartres Cathedral outside of Paris.

"Labyrinths have their origin in prehistoric times and offer an opportunity for reflection and recreation, which is what our plaza does for office tenants and visitors," says Emanuel Stern, Hartz’s president and COO.

Harmon Meadow has several other retail openings on the immediate horizon. A Toys ‘R’ Us and Babies ‘R’ Us combo superstore and TJ Maxx are both slated to open in the fall, and a Sports Authority is under construction and on target for a spring 2009 opening. All three are Harmon Meadow’s Mill Creek site.

Source: GlobeSt.

Bulfinch Triangle project OK'd

The Boston Redevelopment Authority has approved a $160 million hotel, office and retail project in Boston’s Bulfinch Triangle neighborhood.

Construction work is slated to begin during the first quarter of 2009 and is expected to take two years to complete. The project will also bring approximately 240 construction jobs and about 275 permanent jobs.

Dubbed The Merano, the project will include two moderately-priced hotels — a 153-room short-term hotel and an 121-room extended-stay hotel, as well as 206,000 square feet of office, 10,000 square feet of retail space and 13,000 square feet of restaurant space. The hotels will be operated by the Marriott Hotels.

Located across from the TD Banknorth Garden and in close proximity to the Rose Kennedy Greenway, the hotels at The Merano will accommodate tourists and fans attending events at the Garden, according to a BRA press release.

The demolition of the elevated I-93 highway helped make the 54,900 square-foot property available for development. It consists of three parcels owned by the Massachusetts Turnpike Authority.

The development team includes: Boston Development Group; architecture firm CBT Inc; permitting consultant Epsilon Associates Inc.; Engineering firm Howard/Stein-Hudson Associates Inc. acting as transportation consultants; and the law firm Goulston & Storrs LLP as legal counsel. The project includes public benefit such as: $50,000 to support a comprehensive traffic study of the Bulfinch Triangle neighborhood in coordination with the Boston Transportation Department; $75,000 to support neighborhood improvements; $300,000 for the city’s Crossroads Initiative; $12,000 for the Bulfinch Triangle Streetscape Improvements Initiative and the generation of substantial annual property and hotel taxes.

Source: Boston Business Journal

Is It Time For A Massive Mall Meltdown?

It's the icky Darwinian side of every economic downturn--watching the weaker brands perish just yards away from the watering hole, while vultures and buzzards fill the air.

But observers say it's probably a little too soon to declare a meltdown in the retail sector, despite the recent Chapter 11 filing of Mervyns, the Hayward, Calif.-based chain. Other recent casualties include Steve & Barry's, Linens 'n Things Inc., and the Sharper Image Corp., as well as widespread store closings, such as those announced recently by Starbucks.

Yes, there will be more to come: In its most recent report, the International Council of Shopping Centers predicts that close to 144,000 stores--or about 36,000 per quarter--will bite the dust in 2008. That's a 7% jump from 2007, and the largest increase in 14 years. But the trade group points out that those numbers mask the many stores that will open. For instance, it says, in 2006, 139,000 stores failed--but 123,000 new ones sprung up. Clothing stores, it says, continue to be the most vulnerable, with such chains as Wilson's Leather, Geoffrey Beane-outlet stores, Goody's Family Clothing, Ann Taylor and Talbots among the many retailers that shuttered stores in the first half.

But the retail deathwatch is enough to set tongues wagging about even the strongest brands. Macy's recently had to respond to concerns about its financial health, with the CEO filing a letter with the Securities & Exchange Commission to defend its finances: "Our same-store sales trends are better than J.C. Penney, Kohl's, Dillard's, Nordstrom, Bon-Ton, The Gap and Limited Brands, to name a few," he wrote.

Some experts believe the worst of the shakeout will be restricted to smaller, weaker chains.

"Retailers that have a reputation for offering good value, those that have diverse geographic portfolios--both in the U.S. and around the world, and those that offer a broader selection of merchandise are in a better position," says Tony Gao, Ph.D., marketing professor and retail expert at Northeastern University's College of Business Administration in Boston, who points out that Mervyns and several of the other more troubled chains had a strong presence in California, which has been particularly hard-hit by the housing downturn. "And specialty stores tend to file for bankruptcy first."

Among higher-end stores, he says, those with the broadest global presence, as well as access to wealthy U.S. urbanites and international tourists, also have an edge.

Source: Media Post

Retail Construction Hits a Red Light

Consumers are checking discretionary spending and, seemingly everyday, new retailers come out with announcements that they are filing for bankruptcy, shuttering stores and constraining expansion plans. As a result, construction is coming to a screeching halt at projects across the country as developers reevaluate proposed centers' economic viability.

Most recently, site work of the planned 215-acre open-air center, Bridges at Mint Hill in Charlotte, N.C., came to a halt. Chicago-based General Growth Properties and local partner Childress Klein Properties originally announced plans for the center in June 2005. It was slated to open in 2007. A series of delays pushed projected completion back to 2009. As for now, no new timeline has been announced.

Elsewhere, Memphis, Tenn.-based Poag & McEwen Lifestyle Centers scrapped plans to build Boise, Idaho's first lifestyle center, a 200,000-square-foot, $50 million project. The developer initially had planned to open the center in 2009. Now the project no longer appears on the company's list of new developments on its Web site. Poag & McEwen did not return calls seeking comment.

CBRE/Torto Wheaton Research, a Boston-based research firm that tracks completions of neighborhood and community shopping centers, estimates that developers delivered 6.3 million square feet of space in those sectors during the second quarter--two-thirds of the planned 9.7 million square feet of space that was supposed to come online. “That, to me, signals that some of the projects are being either taken away or delayed,” says Abigail Marks, economist at CBRE/Torto Wheaton.

However, Marks forecasts the full impact of the current downturn won’t be realized until next year, when only 14.7 million square feet of new neighborhood and community center space is projected to come on-line. In the first half of this year, developers in the U.S. began construction on 71 million square feet of retail space, according to CoStar Group, Inc., a Bethesda, Md.-based commercial real estate information provider. That figure represents a 24.5 percent decrease compared to the first half of 2007, when construction was started on 94 million square feet of new projects.

With the conditions in the retail sector deteriorating precipitously, real estate developers are abandoning projects that appeared to be sure bets a year or two ago. As retailers pull back, many developers have opted to forgo construction of centers that have gone so far as breaking ground. That trend is expected to escalate as the retail market continues to deteriorate, says Gary E. Mozer, managing director/principal with George Smith Partners, a Los Angeles-based real estate investment banking firm. Speculative projects in secondary and tertiary markets especially face a risk of being delayed or scrapped, Mozer says.

The credit crunch is in part responsible for the increase in construction halts and delays. The market's capacity to finance new projects has diminished with CMBS issuance year-to-date down to $12.1 billion from $158.9 billion during the same period in 2007, according to Commercial Mortgage Alert.

To help address the void, Continental Retail Development, in Columbus, Ohio, has formed the Continental Opportunity Fund, a $200 million fund, to provide equity and mezzanine financing for retail developments that have a first mortgage, but require additional funds to begin construction. It will contribute as much as $40 million towards a project.

One reason there hasn't been an even steeper decline in completions this year, says Continental's CEO David Kass, is that most of the financing for retail projects scheduled for delivery this year was completed years ago. Retail centers scheduled to come online after 2008 will be hit harder, he says. Completions in 2009 could be off by as much as 70 percent, Kass estimates.

For example, unable to shore up financing for its $3 billion project, the Grand, in downtown Los Angeles, Related Co. sought and received approval by city officials to delay the groundbreaking of its 3.6 million square foot mixed-use center by eight months, until Feb. 15, 2009. If Related does not begin construction by that date, the city of Los Angeles has the option to impose a $250,000-a-month penalty for up to 24 months. The Grand's groundbreaking has already been delayed three times. Related says it was due to design considerations and not because of financing. Read more here.

A spokesperson for Related says the firm is in the process of putting together the necessary construction documents, which is why it still hasn’t secured a construction loan. As the debt markets have tightened over the past year, lenders won’t negotiate with a developer until all the paperwork is complete, she added.

Mozer says banks would rather lend on a cash-flowing asset than a construction project because you don’t have as much lease-up risk. For Continental to provide financing, a project must have committed anchors and at lease 50 percent of its leases signed.

The ebb in retailers’ expansion is a big issue, according to Bernie Haddigan, national director of the retail group with Encino, Calif.-based Marcus & Millichap Real Estate Investment Services. “I don’t see retailers getting more aggressive at this point,” he says. “I see them getting more cautious.”

Source: Retail Traffic

U.S. Office, Retail Building to Drop Through 2009, Study Says

July 16 (Bloomberg) -- Construction of U.S. office and retail buildings is poised to fall for the rest of this year and through 2009 on lower demand from tenants, stricter lending standards and rising building costs, the American Institute of Architects said.

Office-building construction likely will drop 3.7 percent this year and 12.3 percent in 2009, the Washington-based group said today in its semi-annual Consensus Construction Forecast. Construction of shopping centers and other retail buildings is forecast to fall 8.3 percent this year and 9.9 percent next year.

"The more pessimistic forecasts this round stem from the lack of growth in the overall economy, the ripple effect from the faltering housing market and the anxiety in the credit markets leading to a restriction in lending for all types of construction projects," Kermit Baker, the institute's chief economist, said in a statement.

The slowing U.S. economy is cutting demand for space from retail and office tenants, and the cost of construction materials has increased 37 percent since 2004, more than double the rise in the cost of consumer products and services, the American Institute of Architects said. Petroleum-based materials and commodities such as steel and concrete "have experienced sharp price increases in recent years," Baker said.

Hotel construction probably will increase 6.6 percent this year before dropping 9.9 percent in 2009, the institute said. Construction of warehouses and other industrial properties is forecast to rise 4.6 percent this year and decline 5.5 percent next year.

Health Care, Education

Construction of the two largest institutional categories, health-care facilities and educational buildings, likely will rise 0.2 percent and 2.7 percent respectively, this year. Health-care construction likely will rise 1.1 percent in 2009, and construction of educational facilities will probably fall 1.1 percent, the institute said.

The institute twice a year issues its forecast using projections from Global Insight Inc., the Portland Cement Association and management consulting firm FMI Corp. The institute has been producing the forecast for 10 years.

Source: Bloomberg.com

Target, Best Buy Debut at $400M Center

Stafford Park

STAFFORD TWP., NJ-Two major tenants at the $400 million Stafford Park here are scheduled to open their doors by the end of the month. Target will debut a 137,000-sf space and Best Buy will operate out of 30,162 sf. It is the first store in the Stafford Township market for both retailers.

The two stores join Costco, which opened last month. Costco and Target will anchor the 650,000-sf retail portion of the mixed-use development, which will consist of retail, residential and office space. Fellow retail tenants include Dick’s and PetSmart. According to Ed Walters, founder and partner of the Walters Group--the company developing the site--leases are also being negotiated with Vitamin Shoppe, Longhorn Steakhouse and T-Mobile.

Source: GlobeSt.

Construction of the Target building began in September 2007, and ground was broken on the 100,000 sf building that will house Best Buy, Dick’s and PetSmart in January of this year. Construction was preceded by a $31 million cleanup of the 370-acre site, where two landfills once stood.

"What we’re doing here is we’re bringing Target, Costco, Dick’s and Petsmart to o

High-rise proposed at Downtown Crossing

A New York developer is proposing to build a $200 million retail and housing development in Downtown Crossing, a milestone in Boston Mayor Thomas M. Menino's effort to revitalize the city's central shopping district.

Midwood Management Corp. wants permission to raze several buildings at the northern corner of Bromfield and Washington streets, and replace them with a 28-story building that will include 260 units of luxury apartment units, three floors of retail space, and three floors of underground parking, according to city officials.

The existing buildings are currently home to a number of stores, including Payless ShoeSource, Wendy's, CitySports, and the Bromfield Pen Shop.

The location is on a diagonal from the Filene's block, where a development team led by John B. Hynes III has received city approval to build a massive retail, hotel, and office complex above the historic department store.

Midwood is expected to file formal plans with the Boston Redevelopment Authority later this week and hopes to begin construc tion in 2010.

"We believe rental housing has a role in downtown Boston's continuing growth," said Paul Davis, a Midwood senior vice president. "We looked at condos, but we think rental housing is more appropriate for us."

Menino disclosed the Midwood project at the start of a five-hour tour of Downtown Crossing and other city commercial districts that he led to interest real estate developers and retailers in Boston. Midwood, he said, is the latest in a stream of development projects planned for Boston - some 60 altogether worth about $4 billion in new investment.

"Despite the national economic [slowdown], Boston's economy is strong," Menino said. The tour was timed to coincide with a regional trade show for retailers, developers, and real estate brokers being held in the Boston Convention & Exhibition Center today and tomorrow.

The Midwood development is the latest in a buzz of development to hit Downtown Crossing. The city estimated there are 2,900 residential units in the neighborhood, with 1,350 more under construction, including college dorms. Indeed, Menino kicked off his walking tour of Downtown Crossing at the Hayward Place parking lot on Washington Street, where a $200 million, 14-story residential and retail building is planned. Closer to Millwood's location is 45 Province Street, an ultra-luxe condominium tower now under construction and slated to open in 2009. Hynes is currently lining up funding and tenants for the office, hotel, and retail complex across the street at Washington and Franklin streets. Down Washington Street, Emerson College is embarking on an $80 million renovation and addition to the Paramount Theater that will include a 262-bed dormitory, black box theater, and class-related facilities.

"I think Downtown Crossing is on the verge of greatness," said Lisa Campoli, executive vice president for commercial real estate brokerage Colliers Meredith & Grew in Boston. But Campoli said it's unclear how many of the proposals will become reality because tightening credit markets have made it difficult for some developers to finance construction.

"It's a question of capital," she said. "I think if half the projects went through, it would be in great shape. There is so much potential there."

The city has announced a number of initiatives to help spruce up the neighborhood, including lighting, sidewalk repair, and solar-powered trash cans.

Midwood is generally a low-profile firm with a long history. It owns 100 properties spanning more than 3.5 million square feet nationwide, including in New York and Philadelphia. This would be its only development in the Boston area.

Based on New York's Park Avenue, Midwood owns or operates properties in at least six states, ranging from upscale apartments to suburban shopping centers with tenants such as Stop & Shop, TGI Friday's, Home Depot, and Walgreens.

The company was founded roughly 80 years ago by Samuel Lemberg, an important early donor to Brandeis University in Waltham. An academic building on campus is named for him. Current Midwood president John Usdan, Lemberg's grandson, is a Brandeis trustee.

Davis, the company executive, said Midwood normally keeps properties it develops, rather than selling them to investors, and plans to do the same with the Downtown Crossing development.

In addition, Davis said Midwood hopes to work with several existing tenants, including CitySports and the Bromfield Pen Shop, to accommodate them in the new building. The new building will have 60,000 square feet of retail space.

"There will be new tenants, and there will be relocation of tenants," Davis said.

The city said it will try to assist any stores that are forced to move.

Mike Kennedy, cofounder and chief executive of CitySports, said he wasn't surprised by the announcement, because he knew Midwood had acquired the buildings. He said CitySports has been in Downtown Crossing for about 15 years and plans to remain there for the long term - either in the new building or nearby.

"There's plenty of time to work it all out. If it doesn't work out for us" to stay, Kennedy said, "we'll find something else."

Other businesses located there could not be reached for comment.

Source: Boston Globe

New Downtown Crossing development proposed

A New York developer plans to build a $200 million housing-retail development in Downtown Crossing, a key milestone in the city’s effort to revitalize the central shopping district, Mayor Thomas M. Menino said today.

Midwood Management Corp. said it plans to build 200 luxury apartments, in addition to three floors of retail space at the corner of Bromfield and Washington streets, where it has acquired several buildings.

The development would replace buildings that are currently home to several stores, including Payless ShoeSource and City Sports.

The company, which is expected to file formal plans for the 28-story building with the Boston Redevelopment Authority this week, said it hopes to begin construction in 2010.

"We believe rental housing has a role in downtown Boston's continuing growth," said Paul Davis, a senior vice president of privately owned Midwood Management. "We looked at condos, but we think rental housing is more appropriate for us."

Menino used the news to highlight the stream of development projects underway in Boston. He said that there are $4 billion in projects under way.

"Despite the national economic (slowdown), Boston's economy is strong," Menino said.

Midwood Management, which generally keeps a low profile, owns 100 properties with more than 3.5 million square feet nationwide, but the development would be the firm's first for the Boston area.

Midwood Management normally retains properties that it develops, rather than selling them to other investors, and it plans to do the same with the project proposed for Downtown Crossing.

Davis, the Midwood Management executive, said that the firm hopes to work with several tenants, including City Sports and the Bromfield Pen Shop, to accommodate them in the new building, which is expected to have 60,000 square feet allocated to retail space.

"We will try to accommodate tenants if we can," Davis said. "There will be new tenants and there will be relocation of tenants."

Source: The Boston Globe

Baltimore City Community College seeking development proposals for campus

Baltimore City Community College asked for bids Monday for a developer to revamp the school's downtown Baltimore campus.

BCCC's wish list for the redevelopment of its main building downtown at Lombard Street and Market Place could include retail shops, office space and housing, while preserving much of its classroom space. The school plans to continue to offer classes at the site.

"This project presents our college with an exciting opportunity to contribute to the city's booming downtown development while advancing the unique mission of the college providing affordable, accessible higher education alternatives to Baltimore City residents," said BCCC President Carolane Williams in a statement released Monday.

The school also has space in the ground floor of the Harbor Park garage across Market Place from the Bard building.

The project could include nearly 1 million square feet of space, according to the statement.

The school is looking to use the redeveloped site to generate more revenue for its downtown campus. About 12,000 of BCCC's 20,000 credit and non-credit students take classes at the downtown campus.

BCCC hired Jones Lang LaSalle as a consultant on the project.

At least one local developer has already tossed his name in the hat. Officials with Cordish Co. said in an e-mail to the Baltimore Business Journal in June that they have expressed in interest in working on the project. Cordish has already redeveloped property surrounding the school's downtown campus.

The school plans to hold a tour of the site for developers July 31. BCCC could select a developer this fall.

Source: Baltimore Business Journal

$35M TIF Furthers $260 MXD Project

WASHINGTON, DC-DC developer Roadside Developer has closed on a financing package with the District that will launch a one-million-sf adaptive reuse project in the Shaw community. The city is giving Roadside $35 million in tax incremental financing. That money will allow the company to break ground on the $260 million project a year from September, Susan Linsky, project manager, tells GlobeSt.com. The TIF, she says, "means CityMarket at O will actually happen now. Getting this financing was always crucial to our plan." There is $44 million of public infrastructure-related investment connected to the project, she explains. "That is what the city money will cover." CityMarket at O is a mixed-use project that will eventually deliver 100 units of senior affordable housing, 385 market rate rentals, 160 condos, a 200-room limited service hotel, 560 parking slots, 460 of which are below ground, 87,000-sf of retail, including a 71,000-sf Giant grocery store--the largest in DC, according to Linsky. These plans are still preliminary, she says, as the company is still in the schematic phase. As of right now, there will be five buildings all together: two multifamily buildings, a condo, the hotel and the Giant grocery store. It is the grocery store that is the adaptive use portion of the project. Roadside is restoring the O Street Market, a historic building, and incorporating it into the Giant. Built in 1881, the O Street Market served not only as a market but as a place for residents to meet and socialize.

Source: GlobeSt.com

Copley Place seeks city of Boston’s OK for 47-story tower

Copley Place owner Simon Property Group Inc. is moving ahead with plans to remake the Back Bay skyline with a 47-story condo tower that will also expand the upscale mall’s footprint.

The mall owner, in a proposal filed yesterday with City Hall, details plans for nearly 800,000 square feet of new residential and Retail space at the corner of Dartmouth and Stuart streets.

Along with 280 high-rise condos, Simon is also banking on a significant expansion of Copley Place.

The proposal calls for adding 54,000 square feet to the existing 115,000-square-foot Neiman Marcus store, which would be renovated as well. Another 60,000 square feet of retail would be added beyond that, including space for a restaurant and a winter garden.

The condo tower will include a health club, luxury day spa, library and concierge service.

“The project will enhance the urban fabric of the neighborhood and be a striking addition to the city’s skyline,” said Carl Dieterle, executive vice president for urban development at Simon, in a statement.

But state Rep. Marty Walz (D-Back Bay) said there are still significant concerns about the shadows the new tower will cast across nearby Copley Square and the Commonwealth Mall.

“A building of that height will cast significant shadows on those two green spaces,” Walz said.

Rick Stockwood, a spokesman for the project, said the tower has been specifically designed to minimize the impact of any shadows it will cast. The impact itself, which he described as limited, is laid out in a report included in the project plans submitted yesterday to the Boston Redevelopment Authority.

The shadows that cross Copley Square, for example, are confined to the late fall and winter months, Stockwood said.

Source: Boston Herald

Pembroke Launches Development's Phase II

MELROSE, MA-Pembroke Real Estate, the corporate real estate arm of Fidelity Investments, is pushing into its second phase of construction on Oak Grove Village here. The 16-acre neighborhood when complete will have 550 apartments and 15,000 sf of retail space. The second phase of the development will add 201 apartments and single-level, underground parking beneath five of its buildings. The projected completion for this phase is the spring of 2009. Pembroke would not comment on the estimated cost of the second phase.

The first phase of development entailed 349 apartments, a fitness center, media room, swimming pool and a great room for residents. The apartments vary one to two bedrooms that range in size from 615 sf to 1295 sf. The rent for single-bedroom units are $1690 to $1960 while two bedroom units go for $2175 to $2500. Officially, the development is considered to be in two different towns as neighborhood is bisected by the border of Malden and Melrose at the final stop of the Orange Line. The first phase of the development officially completed in August of 2007, although Pembroke began opening the development to tenants in 2006. Oak Grove Village is 97% leased to date. Pembroke is hoping the addition of retail shops to the neighborhood will attract tenants, recently opening three retailers in their development.

"We've taken special care in the design and development of this community, including our selection of retail amenities, to ensure it meets the needs of both Oak Grove Village residents and the surrounding neighborhoods," says Tom Walsh, development director of Pembroke Real Estate, in a prepared statement. The retailers--Bobby C's Ristorante, Forever Young Day Spa and Sal's Custom Dry Cleaning--total 6,000 sf with the fourth--Beauty Nail Design--opening later in the summer. Pembroke has been shopping the other three available stores at $14 per sf to lease up their entire retail space.

"We are very pleased with the response to the first phase of development and expect it to continue," says Walsh.

Source: GlobeSt.com

Foxborough development signs on six tenants

VinCo Properties Inc. announced Thursday it has signed six tenants for its 10,000 square feet of retail space in Foxborough, Mass.

Supercuts, Sharon Credit Union, Tanorama, Reliable Dry Cleaners, Foxy Nails, and Mamouzellos Pizza have signed leases for space ranging from 1,000 square feet to 2,400 square feet at Chestnut Green, a mixed-use 93-acre campus.

The new tenants join Walgreen's, The Learning Experience, Waxy O'Connor's Irish Pub and Restaurant, and Babel's Paint & Decorating Store. American Commercial Real Estate, which is managing the retail portion of Chestnut Green, brokered the deals.

The retail and commercial office will be complete in the fall of this year.

Boston-based VinCo announced in March it had closed on a $21 million financing package with Wells Fargo that allows for the final phase of office and retail construction at Chestnut Green.

Source: Boston Business Journal

Retailers evaluate new shopping centers more cautiously

ADDISON – Rising construction costs are causing some retailers to back out of new shopping center projects, according to a panel of retailers speaking Wednesday at a shopping center industry luncheon.

Still, major retailers such as Home Depot, J.C. Penney, Michaels Stores and Toys R Us say they want to hear about future projects but are scrutinizing the details more closely.

"We need a cooling-down period," said Hunter Stansbury, senior real estate manager for Home Depot Inc., which recently said it was closing 15 stores for the first time in the Atlanta-based chain's history.

But the Dallas area's population growth will create shopping center sites that the home improvement store expects to be in, he said during the event sponsored by the International Council of Shopping Centers.

Panel moderator John Weber Sr., president of Weber and Co., said construction costs are rising mostly from commodity prices rather than labor costs. It's a tough sell to explain to investors and lenders that prices have gone up 20 percent to 25 percent this year alone, he said.

Two proposed Home Depot stores that had been approved in December were canned last week, Mr. Stansbury said, due to stricter internal investment requirements and higher construction costs.

Projects that are being built in phases with two- and three-year lead times are also losing tenants as financing tightens, Mr. Weber said.
Irving-based Michaels Stores plans to open 45 stores this year, the same number it has built in each of the last 10 years, said Karen Slayton, real estate manager for the largest U.S. arts and crafts retailer. But the company will back out of a project if it's the only one left, she said.

"We're all expecting you to bring deals to us for 2010," she said.

Viral Patel, real estate negotiator for Plano-based Penney, said the company is going back over previously approved projects and delaying them "if the growth isn't going to be there."

He said that's happened in Arizona, but at the same time Penney is looking to fill in existing markets. The company is planning 36 new stores this year instead of 50.

Regardless, all deals are going through a stringent screening, including asking other retailers if they are committed to projects, Mr. Patel said.

But Texas is getting a bigger share of new stores, at least from these chains.

"Texas is our growth state," said Home Depot's Mr. Stansbury. Its Texas stores are performing better than the chain as a whole, with comparable store sales increases or slight declines.

"I'm in Texas every month," said Toys R Us real estate director Bill Oughton. The chain has no plans to retrench.

This year, the New Jersey-based chain is building 20 combination Toys R Us and Babies R Us stores under the same roof and plans to put Babies R Us stores inside 25 existing Toys R Us stores.

Source: The Dallas Morning News

120,000-SF Lifestyle Center Under Construction

GLOUCESTER TWP., NJ-Stanbery Development has launched construction for the Shoppes at Cross Keys, a 120,000-sf lifestyle shopping center on 24 acres. The site is at a newly created interchange of Berlin-Cross Keys Road, also known as County Road 689, and the Atlantic City Expressway in South Jersey. The cost of the project hasn't been released.

Slated to open in Sept. 2009, the center's tenant roster will feature such names as Banana Republic, Ann Taylor Loft, Coldwater Creek, Chico's, Jos. A. Band and White House Black Market. Also signed on to date are Select Comfort, Lane Bryant, T Mobile, New York & Co., Justice, Rack Room Shoes and Bensi Italian Grill.

"I support it 1,000%," said Gloucester Twp. Mayor Cindy Rau-Hatton at this week's formal groundbreaking. "It is an exciting opportunity for our community, and it will also provide much-needed job opportunities and economic growth. It includes a number of stores and restaurants that are welcomed."

P. Jon Meyer, a founding partner of the Columbus, OH-based Stanbery says that "retail development has been expanding dramatically along Berlin-Cross Keys Rd. because of the location halfway between Philadelphia and Atlantic City. But there has been little to satisfy shoppers that are looking for better apparel and dining. We're excited to fill that niche."

Harvey Sternberg, a local businessman who owns and is developing several outparcels surrounding the site, including Bertucci's Italian Ristorante and Texas Roadhouse units, says that "there is a lot of traffic and there are a lot of people." The Shoppes at Cross Keys trade area numbers more than 310,000 residents and a daytime workforce population of about 85,000.

The start of construction for the Shoppes at Cross Keys comes just as Stanbery is wrapping up another New Jersey project, the 113,000-sf Shoppes at Flemington to the north in Hunterdon County. That project is now slated to open in early September.

Source: GlobeSt.

Baltimore: Local developer to give Essex shopping center a facelift

An Essex shopping center is slated for a makeover, nearly six years after it lost its major anchor tenants and most of the smaller businesses that depended on them.

Pikesville developer Carl Verstandig has a contract to buy for the 29-acre Diamond Point Plaza for $15 million. Another six acres will cost about $3 million. He plans to spend another $12 million to redevelop the Eastern Avenue site, replace find new merchants to take the place of the former Sam's Club and Ames department store, and fill up the dozen vacant storefronts lining the center.

With the ink not yet dried on the deal, which is expected to close in the next 60 days, ShopRite Supermarkets and Food Lion have each signed letters of intent to take space in the 65,000-square-foot former Ames store. Lowe's Home Improvement and BJ's Wholesale Club also have said they are interested in moving into the 162,000-square-foot former Sam's building, but those discussions are not as far along, Verstandig said.

With those deals in place, Diamond Point could also attract a handful of smaller businesses. Among them, Verstandig said, a bank, drug store chain and an auto parts store have each said they are considering opening branches on a trio of 2-acre pad sites Verstandig bought adjacent to Diamond Point.

Breathing new life into the property has been on the mind of Baltimore County economic development officials, who view Diamond Point as an untapped resource.

Developed in 1988, the center is passed by a large number of motorists who commute along Maryland Route 150 between Middle River and Baltimore City, said Chris McCollum, a commercial revitalization specialist with Baltimore County's economic development department.

Giving those drivers a reason to stop off and shop, McCollum said, could be a great economic driver for the community.

The center lost its two major anchor stores, a Sam's Club and an Ames department store, in 2002, and one by one, most of its smaller tenants closed up shop as well. Now only two stores remain: a Chuck E. Cheese and a Sally Beauty Supply.

McCollum said the project could be eligible for commercial revitalization tax credits that would freeze property taxes at their current rate for up to 10 years. But that will depend on the extent of Verstandig's plans.

"The right plans could turn that center into a gem," McCollum said. "It has a ton of different options that would be exciting to us. The status quo is not exciting to us, and a low end retail is not exciting to us."

The redevelopment would come after a prolonged legal battle sparked when Diamond Point Plaza LP, which owned and operated the center, defaulted on its mortgage in 2002. Diamond Point later sold the center to ORIX Capital Markets LLC of Dallas in March 2006 for $10.3 million.

According to court documents, Wells Fargo Bank N.A. claimed Diamond Point failed to disclose Sam's Club was going to close its store when it refinanced a $16 million mortgage on the property in June 2000.

The loan, through Pinnacle Capital Group LP, was assigned to Paine Webber, and then to Wells Fargo. The Maryland Court of Appeals ruled against Diamond Point and awarded Wells Fargo $22.8 million in principal and interest from Diamond Point and its partners.

Source: Baltimore Business Journal

Patriot Place set to hire 2,000 workers

Patriot Place tenants will create 2,000 full and part-time jobs over the next year. Patriot Place, the 1.3 million-square-foot retail and hotel facility, which is under construction in Foxborough, Mass., will feature more than 70 shopping, dining and entertainment destinations. The project, backed by New England Patriots owner Robert Kraft, is being built adjacent to Gillette Stadium. Bass Pro Shops, Staples, Circuit City, Christmas Tree Shops and Off Broadway Shoe Warehouse are already open and more than half of the 70 stores will be open by this September. The CBS Scene Restaurant & Bar, a three-level, 15,000-square foot restaurant and entertainment venue, for example, needs to hire 150 people. Red Robin Gourmet Burgers, a family restaurant, is also hiring. Local retailers to open include Davio's, Skipjack's, Dunkin' Donuts and Baskin Robbins.

Source: BBJ

LeFrak Plots Luxury Retail Evolution on West 57th Street

West 57th Street is to its easterly counterpart what a deer-hunting, RV-driving homeowner is to his McMansion-owning neighbor—an embarrassment.

“There’s no question there’s a disconnect between the retail value on 57th Street east of Fifth Avenue, which is some of the highest in the city, and that which is west of Fifth Avenue, which is not even in the same area code,” said Richard LeFrak, chairman, president and CEO of the LeFrak Organization.

But not for long.

It’s a “historic inevitability” that, within the next few years, West 57th Street will become home to luxury retail tenants more consistent with East 57th Street, said Robert Freedman, president and CEO of GVA Williams.

Mr. Freedman is basing his predictions on the recent maneuvers of Mr. LeFrak, Vornado Realty Trust, and Sheldon Solow, who, over the past few years, have snapped up and consolidated a number of addresses along West 57th.

“I own 30, 40, 50, 29, 31, 33 and, I think, 49,” Mr. LeFrak said.

Mr. LeFrak co-owns 29-33, 49 and 50 with Vornado Realty Trust, a partnership that arose from something of a nonaggression pact.

“We were competing for the same properties, and I’m very friendly with them,” Mr. LeFrak said. “I think we both accepted that if there’s something on the street [we both want], we’ll talk to each other about it.”

Why purchase all these buildings, aside from that insatiable lust that afflicts all big-time New York developers?

“Some of the purchases I made were to protect [40 West 57th Street]—I have a 700,000-square-foot building there,” Mr. LeFrak said. Not only that, but Mr. LeFrak’s offices are there, he’s spent $30 million rehabbing it, and he has brought Nobu 57 and a high-end chemist (could a chemist be anything but?) to the ground floor.

Once the leases on many of his shlockier tenants along the avenue expire within the next five years or so, Mr. LeFrak said we can expect to see more of the same.

“I think you’ll start seeing some of the tenants on 57th Street that really shouldn’t be here go,” he said. “You’ve seen it already. There was a McDonald’s on the north side of the street that was removed. I don’t want to single out anybody, but I bet you could use your imagination.”

We don’t want to single anyone out, either. (It’s not like we can afford a $1,295 Bridle Check Tote from Burberry, at 9 East 57th Street.)

But a recent walk down 57th Street, from east to west, underscored a vast gulf between the two. The thoroughfare between Madison and Fifth avenues boasted, in addition to Burberry, gilded storefronts by Tourneau, Dior and Yves Saint Laurent. The glitz continued between Fifth and Sixth avenues, with Bulgari and Smythson at the foot of the Crown Building, and Club Monaco across from Bergdorf Goodman.

But then, things began to get, shall we say, less extravagant, with cell-phone outlets, hokey jewelry shops, a Strawberry, a Daffy’s, and some decidedly mid-brow eateries. In short, shops better suited for the diamond district or some lesser retail corridor, like, say, 42nd Street.

That, dear friends, won’t last for long.

“You have to consolidate the owners, so you have a fully integrated retail strategy, and it takes time,” Mr. Freedman said. “It’s marinating now.”

Jeffrey Roseman, executive vice president and principal at Newmark Knight Frank, agreed: “I don’t know if it will replace Madison Avenue for luxury, but it’s definitely changing, and for the positive.”

Source: New York Observer

No More Mall-ification: Developers Rejig Sites Rather Than Build Anew

LAS VEGAS — Developers are breaking ground — but it's the ground on which they've already built.

It's a matter of necessity with a weak U.S. economy, rising costs, little room left in the country to start up completely new projects, flattening rents and the shutting of retail doors, which leaves landlords with vacancies to fill.

The "intensification" or "densification" or "organic growth" of existing shopping centers, as executives call it, is the top priority in a nation that's overstored, overmalled and in an economic malaise.

And that means finding, then rolling out, new retail formats for selling fashion, and redeveloping tired and underutilized space with food and restaurant offerings that go beyond the traditional food court menu. It also means adding entertainment features, such as theaters and parks, as well as hotels and office and residential space.

"Intensifying the use of property is certainly the major innovation," said John Bucksbaum, chairman and chief executive officer of General Growth Properties, the nation's second-biggest developer, during an interview at last month's International Council of Shopping Centers annual convention here.

At the Cottonwood Mall, in Holladay, Utah, near Salt Lake City, for example, "we've put a lot of emphasis on offices and residential growth," Bucksbaum said. "That's a mall being de-malled." The conventional enclosed mall will reopen in 2010 with a mixed-use format for fashion shops, cafes, restaurants, a specialty grocery, a cinema, condos, town houses, cottages, single-family homes, offices, streets for strolling, riverside trails and a public plaza.

GGP also has an aggressive program to bring farmers' markets to its properties. "Maybe it's time for food to come back to shopping centers," said Alexander Berman, senior vice president at GGP, during one of the convention's panel discussions.

"You need to give people more choices," said Scott Schroeder, vice president of marketing and communications for Developers Diversified Realty. "Nobody wants to make eight stops to get what they need." He noted that the performance of certain specialty retailers and smaller "junior" anchors was an ongoing concern for the industry. "The more we can create a hub that combines value and fashion, the more appeal we have and the more customers we will retain."

"Isn't it time to reevaluate one-stop shopping?" asked Ian Thomas of the Vancouver-based Thomas Consultants, who moderated a panel on international growth.

The one-stop notion is an old format with renewed relevance as mall traffic wanes and gas prices spiral.

In Phoenix, Macerich is studying the addition of two residential towers at the Biltmore Fashion Park, a highly productive open-air center, and in Scottsdale, Ariz., it's looking at putting residential or office space on the site of a former Days Inn in Scottsdale Fashion Square, another upscale center. Macerich is moving forward with a number of projects in the West, including the Oaks Mall in Thousand Oaks, Calif., which will open in phases beginning this fall. The firm also is taking the roof off Santa Monica Place and overhauling the 30-year-old center to integrate it more with the coastal community.

"We are taking a fresh look at projects and asking, is there a demand for other mixed uses?" said John Genovese, executive vice president for development at Macerich. "We take a very patient approach. We want to do the right thing for [our] assets."

"Providing a sense of the outdoors is very important," said Robert Taubman, chairman, president and ceo of Taubman Centers, in describing an industry trend. In one of the few new projects going up, Taubman is developing the mixed-use City Creek Center in downtown Salt Lake City with a retractable glass roof over much of its 700,000 square feet of retail. The project is massive, with 1.4 million square feet of offices planned, along with a Marriott Hotel and a 50,000-square-foot Harmons grocery store, among other features. The project is being done in conjunction with the Church of Jesus Christ of Ladder Day Saints, at a cost sources put at around $2 billion, including $60 million for the roof.

Los Angeles developer Rick Caruso said, "Our main goal is to make the shopping experience feel different and feel special," noting that, at his Americana at Brand center, there are uniformed elevator operators and fountains with water displays choreographed to music. "Even the rest rooms are opulent. When the novelty wears off, we'll introduce new stores, we'll do something spectacular."

Caruso's planned Shops at Santa Anita, slated for 2010, will take the outdoor-village concept one step further, with opulent residences and horse-drawn carriages at the center.

The other big trend is going global. That expansion is happening faster than ever, with Russia, India, the Far East and Eastern Europe prime targets. "The shift to the global focus has rejuvenated the shopping center industry," stated Rene Tremblay, president and ceo of Ivanhoe Cambridge and the outgoing chairman of ICSC, in a keynote speech. "Shopping center development has continued to thrive around the world, though less in North America. In North America, not many new spaces are being built. I never would have imagined the day when we would be doing business in 12 countries."

But there is a big dilemma in going overseas. Can the developers lure the retailers abroad? Macy's and Lord & Taylor revealed that they're interested in exploring overseas opportunities, and Saks Fifth Avenue already has two stores operating in the Middle East, announced a third there recently, has one in Mexico and is planning another in Shanghai.

However, "any department store has difficulties translating across boundaries," said J.C. Penney chairman and ceo Myron Ullman 3rd, who was on stage at the convention for a Q&A. "It's easy to announce international expansion. It's much more difficult to make it work for shareholders."

RETAIL CONCEPTS TO WATCH

According to Taubman executives, Victoria's Secret, Apple and Abercrombie & Fitch are the three most desired U.S. specialty chains in overseas markets. Internationally, Inditex and its Zara chain and Hennes & Mauritz are the best poised for further expansion.

At home, developers said they're closely watching the expansion of Japanese fashion retailer Uniqlo, which opened its first U.S. store in November 2006. Safeway's new concept, called The Market, a 20,000-square-foot box for produce and prepared food and a service deli, is also on the radar, as is Gilly Hicks, the intimate apparel chain launched by Abercrombie & Fitch last winter.

Other retail nameplates of keen interest are Metro Park; Forever 21, which is looking to open larger footprint stores (for more details, see page 16); J. Crew and its two-year-old Madewell division, as well as the even newer VSX, a shop selling activewear and yogawear that was launched by Victoria's Secret in a single site in Easton, Ohio, last year.

Another newcomer from the West Coast, called Love Culture, is gathering steam. The chain has seven stores operating, five under construction, 15 set for next year and another 20 seen for 2010. It's privately owned and sells women's moderate-to-better-priced fashion.

Two chains that have been around for awhile, but continue to impress developers are Puma and Apple.

At ICSC's "hot retail" session, in the food category, Five Guys Burgers and Fries, Pinkberry, Pollo Campero and Stir Crazy took the honors, and women's fashion retailer Apricot Lane, board sports chain Billabong, Tesco's grocery concept Fresh & Easy, L.L. Bean and toy car retailer Ridemakerz were also honored as the best.

"We've seen a lot of innovation in new retail, even with the apparel retailers, which is not easy to do," said ICSC president and ceo Michael Kercheval. "It's great to see, but more importantly, it's imperative in order to keep shopping centers new and interesting."

At other sessions, developers at the conference cited Costco, Wal-Mart and Target as highly desirable tenants in a down economy, largely because of their pricing and their grocery offerings, which have fared well, and the new view that they can be neighbors to upscale stores in the same centers. Westfield Group, for example, will house Target as well as Neiman Marcus as anchors this year in its Topanga center near Los Angeles' San Fernando Valley. DDR has a Costco anchor in its Christown Spectrum Mall in Phoenix, and in the fall, Macerich will open its first in a former Macy's at Lakewood Center, one of the largest enclosed malls in the Los Angeles area. Other mall-based Costcos are in Simon Property Group's Potomac Mills in Prince William, Va.; General Growth Properties' Cumberland Mall in Atlanta, and the Cafaro Co.'s Spotsylvania Towne Centre in Fredericksburg, Va.

"In the old days, it was location, location, location. Now it’s location, location, location and timing, timing, timing.­­"

— Arthur Coppola, Macerich

"The lines are all blurred. The days of saying we won't or can't do a mix don't fly now," said Anthony Buono, CB Richard Ellis' executive managing director of retail services. "Your Target customer is the same as your Nordstrom customer is the same as your Saks customer."

ON THE ECONOMY, RETAIL PERFORMANCE AND CONSUMERS

While concerned about the state of the economy, developers are positive regarding the long term.

"The whole point is you've got to look at things down the road," said Taubman of Taubman Centers, which saw a 3 percent comparable-store gain last quarter. "The country is not technically in a recession. I believe we are in a period of slower growth. It's important the Fed do the things it's done to loosen monetary policy. Things will improve. The economy will continue to have slow growth, but should not worsen.

"You can't ignore the huge engines that are out there," he added, citing emerging economies including China and India, and sovereign funds with huge pools of capital from oil interests that must be invested.

"A quarterly event is really irrelevant. Our thinking is really 10 to 15 years out," said Arthur Coppola, president and ceo of Macerich. However, he added, Macerich "will not build before a market is ready for the project. "In the old days, it was location, location, location. Now it's location, location, location and timing, timing, timing. We will not build before the market is right."

Coppola believes retailers need to "constantly look for ways to keep their brands fresh and to look for brand extensions that drive repeat visits and grow their customer base. But at the end of the day, Americans love to shop, and we're in a position to capitalize on these new brand extensions, delivering prime real estate that can be a platform for retailers."

According to Ullman of Penney's: "Consumers are either buying the lowest possible price — door-busters — or something innovative or new."

"There is no question the Gen-X women's business is not good," said William Taubman, chief operating officer of Taubman Centers. "There is a changing fashion profile toward more contemporary silhouettes and some retail concepts have just not adjusted. Women don't want to feel old or tired."

On the development front, "money is tight. Fewer projects are being announced. People are making sure they're leasing what they've got," said Taubman.

GGP's Bucksbaum said comparable-store sales at his centers were down 1 to 2 percent during the first quarter of this year, and occupancy rates were down 20 basis points. He foresees sales relatively flat for the year overall and occupancy down 50 to 100 basis points by yearend relative to the fourth quarter.

"What's happening is that developers are moving at 80 miles an hour, retailers are doing 60 miles an hour and lenders are going 25 or 30 miles an hour," said David Solomon, president and ceo of NAI Global's ReStore unit. "For most, it doesn't look pretty right now and it will get worse before it gets better."

The average vacancy rate could reach 10 percent by the end of the year, and there likely will be more retail bankruptcies to come, Solomon predicted, before the market settles down.

Some projects have stalled or been called off: Two of Related Cos.' projects have experienced financing holdups. Downtown Los Angeles' Grand Avenue, a $3 billion project to include a shopping center, a supermarket, other stores, high-rise condos and a hotel, had been scheduled to break ground in fall 2007, but the date has been moved to February, with completion in 2012. The second phase of the company's CityNorth project with Thomas J. Klutznick Co. in Arizona has been delayed because potential lenders want to wait until the economy improves. The first phase of the $1.2 billion project is expected to open in October.

THE MOOD

"Developers have become very introspective and defensive," said Gary Mozer, managing director and principal at George Smith Partners, a financial intermediary that raises debt equity and mezzanine financing for commercial real estate. "They're trying to find how to deal with the marketplace in the most productive ways. There are more face-to-face meetings between [developer principals] and tenants, bankers, equity sources, city leaders and contractors. Nowadays, senior guys are cutting deals with senior guys. There is a lot more stress on the business and people are reacting to that."

How else are deals different these days? "There is a lot more equity required up front in transactions. The projects are more about urban infill rather than growth markets, and developers are getting squeezed because of increased construction costs and stagnant retail growth," Mozer said. Asphalt, which is oil-based; steel, and PVC are getting more expensive.

However, overall, he believes, developers are "doing OK right now. They're not going off the cliff."

"Over the last eight months, the deal cycle has lengthened from 60 days to 90 to 120 days," observed John Bemis, executive vice president and director of leasing and development for Jones Lang LaSalle. "Retailers and developers are negotiating leases harder. Lots of retailers are looking for options," such as five-year leases with options to renew.

"Nobody is really panicking. I thought the mood would have been worse," said Vincent Ottomanelli, president of Ferragamo USA, who was spotted walking the leasing floor of the Las Vegas Convention Center. "This is not a garage sale, but traffic is lighter" than a year ago.

The event was busy, but not as robust as in recent years, executives said. However, many sought to present a positive front by unveiling plans for new projects and beefing up existing facilities with an eye on the long term. They see retailers cutting their openings for next year by half of what they might have originally considered and getting back on track by 2010 with more aggressive expansions.

At the malls themselves, "my perception is traffic is off significantly, but we still have a full schedule with people looking to do business," said R. Webber Hudson, executive vice president of Related Urban. "If you buy into the notion that there's been economic turmoil for at least six months, and that typically you see an 18-month downturn, then it's easy to see 2010 as a safe bet for a strong recovery."

According to an ICSC media official, registration at just less than 50,000 was around the same as last year's, though the final tally will be released later this month.

GOING GREEN

GGP's Bucksbaum said his company has many initiatives to help the environment, some noticeable to the general public, others not so. The company has a program to install waterless urinals, for example, which will be obvious. "Ultimately, we will have them at every location," Bucksbaum said. "We have saved 6 million gallons of water this year."

He also said there has been a dramatic reduction in kilowatt usage through the GGP portfolio by using energy-efficient heating and cooling management systems. The company also is testing or introducing alternative sources of energy in certain markets, and as roofs come up for replacement, GGP is making them white to reduce the heat in the malls and cooling requirements.

"Rather than lowering quality of design or budgets, something we have noticed is an inclination of retail developers to explore more green design and new materials," said Kimberly Sheppard, design partner at Gabellini Sheppard Associates. "This is especially the case with some of our larger luxury retail projects like Westfield London, and in Las Vegas, City Center and Echelon."

Some shopping center operators said they were exploring Leadership in Energy and Environmental Design certification for projects in development to achieve long-term cost savings and attract an eco-minded consumer. While retailers picked up a lot of steam on the green front, it generally seems to be more of a catch-up for developers.

"The retailers are really getting into the green movement, and are trying to push that agenda more and more," said Justin Doak of the U.S. Green Building Council. "For big developers, it's easier to take an eco-friendly approach before things are built. Afterward, you typically see resistance, at least until we reach a critical mass of retailers that push for it."

Source: Women's Wear Daily

Boston Wants Year Round Market for Vendors

The city of Boston is considering the creation of a year-round, indoor-outdoor public food market district to rival Seattle’s Pike Place or Reading Terminal Market in Philadelphia.

The Boston Redevelopment Authority is commissioning a study to determine the physical and economic feasibility of locating the new district near the North End parks along the Rose Fitzgerald Kennedy Greenway.

The district would be dedicated to vendors selling locally grown and produced foods, including fruit, vegetables, fish, meats and artisan products such as bread and cheese, seven days a week.

“Boston is a great city, and it deserves to have a public market,” BRA director John Palmieri said. “I’m new to the city, but I can remember back in the ’70s that Quincy Market provided that kind of service to citizens. They had all kinds of locally operated vendors.”

The BRA envisions the market district encompassing the existing Haymarket pushcart vendors who operate on Hanover, Blackstone and North streets, in addition to new vendor areas on Cross Street, Salem Street and the stretch of Hanover Street between the parks.

Indoor vendor space is being eyed for Central Artery Parcel 7 and vendor facilities for Parcel 9.

Parcel 7 is between Congress and Blackstone streets by the Haymarket MBTA station. The Massachusetts Highway Department and Turnpike Authority have developed the parcel, which contains tunnel ventilation shafts and is wrapped with a parking garage and office space on the upper floors. But 29,400 square feet of first-floor retail space must be used for “marketplace” uses under an agreement with the BRA.

Parcel 9 is a vacant 56,500-square-foot parcel owned by the Highway Department and Turnpike Authority. The BRA will develop use guidelines for the parcel this summer, including market-related uses for the ground floor that could include vendor facilities for trash compacting, recycling, cleanup and sanitation.

The BRA’s plans call for maintaining existing farmers markets in other areas of the city, including those at Copley Square and on City Hall Plaza. The BRA will consult with the Boston Public Market Association, founded in 2001 with a goal of creating a year-round Boston food market, as it proceeds.

Source: Boston Herald

CEO Interview: Simon Property Group

DAVID SIMON'S COMPANY owns or co-owns nearly 400 shopping malls, stretching from Camarillo, Calif., to Catania, Sicily. But just steps from its Indianapolis headquarters is one of the company gems: Circle Centre. The mall's 60-foot-high arched, windowed ceiling allows visitors to bathe in natural light, making the atmosphere cheery even if shoppers can't find the perfect pair of jeans. And Circle Centre, built in 1995, was a big step toward reinvigorating a dreary downtown Indy.

But the mall and other gems aren't sparkling as brightly as usual. Consumers are holding on to their wallets as fears of a recession mount. Mall traffic has stalled, and some stores are even going under. All that has taken a toll on the value of Simon Property Group (SPG: 100.65, +1.65, +1.66%), the largest U.S. real estate investment trust, or REIT. Its stock has fallen about 12 percent since early 2007.

For more SmartMoney Magazine features, turn to the June issue.Still, to his critics, Simon, 46, can point out that the stock has returned nearly 700 percent, including dividends, to investors since he became the boss in 1995. Despite weak retail sales generally, Simon's sales and earnings (called "funds from operations," in REIT parlance) were both up 10 percent last year, and the company expects more gains in 2008. Simon makes its money by charging rent to retailers that lease mall space. Those leases typically last seven years, giving the company some breathing room in a consumer downturn. "We don't have to sell the goods," he says.

Under David Simon, son and nephew of the company's cofounders, the company has been on its own shopping spree. It now owns around $50 billion worth of real estate, up from $2 billion at its 1993 initial public offering. And more deals likely are on the way. Simon talked with contributing editor Evelyn Ellison Twitchell about the current retail malaise, the company's growth prospects and his own shopping habits.

People are cutting back on their shopping. How's that affecting the malls?

We're anticipating this year to have a somewhat higher level of store closings. What we're seeing is that some of the better retailers have tried a concept, and it's not producing the results they want. So they're shutting down the concept. Talbots tried Talbots Kids, and they're shutting down that chain. Pacific Sunwear has this concept that they want to shutter. Now, those retailers have leases, so we're going to get paid to let them out.

But you're still charging retailers more to be tenants?

In recent years, as leases have come up for renewal, we've been able to increase rates $7 to $10 per square foot, about 20 percent, which has obviously generated increased cash flow. That is going to be a little bit tougher to achieve, and the spread might not be as great. But I still think it's something we'll be able to do.

Okay, you're making the retailers pay more, so that helps your profits. Why has your stock suffered?

REITs had a huge run-up last year associated with mergers-and-acquisitions activity. There was a big move toward privatization and a lot of capital coming in. That's subsided. Now the momentum guys are out, and the capital markets are a little shaky. It's had an adjustment on valuation. But we strongly believe that the value of our assets is actually greater than our stock price.

How else does the economy affect you?

If the consumer slows down, will we have some potential cash-flow impact? The answer is yes. I think it will be de minimis. Remember, we're in the real estate business. We are somewhat — I know it's hard to believe — but we are somewhat insulated. These times are also when we can do some of our best transactions. When the economy was slipping into recession in 2001, we did one of the best deals that we've done in terms of buying a high-quality portfolio [of malls] at a very attractive price [from] Rodamco. So we're gearing up.

Are you looking at specific properties or whole companies?

We'll do both because we've always done both. There are some companies that have a little more pressure on them financially than we do, because of the way we have financed our growth. So we look at it as an opportunity.

You say you also can expand your business by actually demolishing department stores in your existing malls?

What you're seeing is, you probably don't need four or five anchor department stores; you may need two or three. That enables us to capture one of the stores, chop it up and bring in other smaller retailers, bookstores, restaurants, theaters, to broaden the appeal to the consumer.
What about building malls abroad?

In the U.S., clearly, there's a lot of retail space — about 20 square feet per capita. When you look at other markets, it's 2 to 3 square feet per capita. As we think about the future, we'd like to see more of our business going international. We're building five centers in China now. In Japan we've been successful with our premium-outlet-mall product. And we would hope over time to be bigger in Europe.

What about online shopping? I'm assuming you're not a fan of Amazon.com.

It is something that we've got to be very focused on. What I'm most concerned about is that it's not a level playing field. The dot-com-only stores don't collect sales tax, so they have an immediate advantage over our retailers. Ultimately, though, we believe if we produce the right kind of product and atmosphere, the physical shopping environment is here to stay and will continue to prosper.

So we haven't kissed our mall goodbye, as some predicted?

Yeah, Time magazine wrote that in 1998. I hope that's not on your cover. The mall's been bad-mouthed for almost two decades now. Yet if you look at not just us but other prominent companies in our space, we've all been able to grow our cash flow. Sales have gone up. So the question is, is our real estate good? At the end of the day, retailers come and go, but the mall continues to thrive and will continue to evolve. I think our results speak for themselves.

You seem like someone who has been successful at getting what you want. What do you want right now?

We have a market value of real estate of around $45 billion to $50 billion. I would like to see us become more global, and maybe that $50 billion goes to $100 billion. You've got to do it in a way that accretes to shareholders, but we would certainly like to see a bigger, broader platform. And we want to be excellent, excellent operators. So when people walk into our centers, they see a certain standard of excellence. If we had to emulate a brand, it would be the Four Seasons of the mall business.

So what's your ultimate shopping experience?

Keeping my wife happy! Otherwise, I want a clean product, a fresh product and a diversity of tenants. If I'm a shopper and have those, then I'm happy.

Source: SmartMoney.com

For $8.5M, Samuels Secures Fenway Block

BOSTON-Now they have the end piece. Continuing an aggressive development and investment campaign near Fenway Park that has already dramatically changed the district this decade, Samuels & Associates has closed on a package of conjoined buildings where Boylston Street and Brookline Avenue converge. The $8.5 million purchase gives Samuels control of a key triangular site, having previously secured several connecting buildings on the parcel that abuts the firm’s signature Trilogy residential high-rise.

Fueled by an $11.2 million loan from KeyBank, Samuels affiliate Fenway Ventures Point Properties LLC purchased 186-200 Brookline Ave. and the adjoining 1395-1399 Boylston St. The Brookline Avenue asset is home to D’Angelo’s Sandwich Shop, and fronts a major intersection at Park Drive leading into the Longwood Medical Area and onto the Jamaicaway. The acquired properties are across from the former Sears warehouse, a hulking art-deco building that now features a Best Buy and other shops, plus 450,000 sf of office space.

The seller of the Fenway buildings is Riverside Properties Inc. of Wellesley, whose faded sign on Brookline Avenue still advertises available space for lease in the low-slung structures. Riverside President Mark Levy did not return a phone call by press deadline. Levy’s firm paid $955,000 for the assets in June 1994.

Some observers predict Samuels will pursue a redevelopment play on the block. "Things are definitely going to change," opines one broker familiar with the new owner, and a spokeswoman for Samuels acknowledges as much, telling GlobeSt.com that the firm aims to "continue the spirit of Trilogy" on the parcel, although she says the vision remains undefined. "At this point, we have no specific plans and no timeframe for when we might submit something to the Boston Redevelopment Authority," the spokeswoman relays.

The $200 million Trilogy was the company’s first major undertaking in the Fenway, as Samuels acquired the site for $8 million in 1999 and constructed 581 high-end residential units in three towers of 12, 15 and 17 stories. Samuels sold 171 of the units to Harvard University for graduate students. The company is now putting the finishing touches on 1330 Boylston St., another mixed-use high-rise mere blocks from Trilogy and the newly acquired properties. The leasing office for units at 1330 Boylston St. is in the rear portion of the block now fully owned by Samuels. The firm purchased those buildings at 1383 Boylston St. and 176-184 Brookline Ave. in 2003 for $2.4 million.

The latest acquisitions by Samuels also follow the recent purchase of a Goodyear Tire operation at 1345 Boylston St on the opposite side of Trilogy. That $10 million deal was reported by GlobeSt.com.

Source: GlobeSt.

Fortifying the Flagships: Growth Engines Getting Big Bucks in Tough Times

In a year of cutting back on store openings, inventories and staff, there's one place where some retailers aren't scrimping: the flagship.

From Bloomingdale's 59th Street to Saks Fifth Avenue and Macy's Herald Square in Manhattan, retailers are pumping millions into their core stores to upgrade product presentations, reinvent key departments and capitalize on strong selling categories like accessories and shoes.

Bloomingdale's 59th Street has initiated the beginnings of a sweeping renovation of its 75,000-square-footmain floor, B-way and all, that will be accomplished over the course of a few seasons.

"This is a two-year project, covering the entire main floor," Bloomingdale's chairman and chief executive Michael Gould told WWD. "We've done handbags and elements of cosmetics before, but we have never done the whole floor."

The strategy has intensified since last fall when department store executives started sensing consumers holding back in many regions, except at those core flagships in gateway cities. They became their salvation. Tourists from overseas, taking advantage of the weak dollar and assortments offered at steep markdowns, flocked to the sites, helping retailers compensate for struggling branches elsewhere around the country.

Even competitors are taking notice. "The big flagship department stores are picking up huge benefits from tourists," observed J. Crew's chairman and ceo Millard "Mickey" Drexler, during a conference call last week.

Bearing in mind that flagships even in tough economies generate huge revenues, every aging nook and cranny are under examination. Brooks Brothers intends to rebuild its 120,000-square-foot Madison Avenue flagship, which it bought last year, in advance of the location's 100th anniversary in 2015. Nearby, the 646,000-square-foot Saks flagship generates close to $700 million in annual volume, while the 859,000-square-foot Bloomingdale's flagship generates an estimated $650 million.

At Bloomingdale's there already have been significant investments — often partially funded by vendors. In the past three years, bridge, lingerie, shoes, YES contemporary sportswear and contemporary men's wear, among other departments, have been overhauled or reinvented. In February, Bloomingdale's Metro level was remerchandised with young men's contemporary sportswear and premium denim, and rebranded No. 59 Metro. The bridge floor was renovated and rebranded The New View in 2005.

Bloomingdale's main floor project is the chain's biggest renovation at least since Gould became chairman and ceo 17 years ago. It's also the most critical, as the main floor sets the tone for the entire store.

Gould said it was too early to provide details of the project, which are still being worked out with designers and vendors. The mission is to capture greater selling space, create a cohesive and easier-to-shop floor, showcase designer brands and pump up an already energized floor and its slick, contemporary upper East Side aura. Currently, the main floor is tough to navigate and congested. But everything from the B-way for cosmetics and fragrances to designer handbags, fine leather goods and men's furnishings will get renovated at a cost that architecture sources conservatively estimate at $250 to $300 a foot.

However, it's not just about bricks and mortar. "This is a total branding exercise," said Gould, who is known for his marketing acumen, having recast Bloomingdale's into an upscale, contemporary national brand, at a price niche above Macy's and below Saks and Neiman Marcus.

With the right marketing hook, a renovated floor can cast a halo over the entire store and sharpen its image. Saks, for example, generated enormous buzz last year with its revamped shoe floor. It was rebranded 10022-SHOE and billed as "so big, it has its own zip code." With high-styled shoes encompassing most of the eighth floor at the flagship, which is on Fifth Avenue between 49th and 50th Streets, Saks seemed to one-up the competition. It's considered the city's biggest shoe assortment, aside from Macy's Herald Square. Even an express elevator right up to 10022-SHOE was rigged. The shoe concept will be replicated at several Saks branches, including Beverly Hills, San Francisco, South Coast Plaza and Houston.

Saks now sees additional branding opportunities stemming from other floors. "You will see some angles coming up as it relates to bridge, and as it relates to cosmetics — probably several. Not all right now but in '08 and '09, absolutely," said Saks chairman and chief executive Stephen I. Sadove.

"New York is doing extremely well. We are touching six of the 10 floors over the next year," Sadove added. A major piece is the third floor for designer collections, which Sadove said would be an 18-month project, opening in phases, with 35 new shops for designers to be created.

Most of the main floor's handbag shops are being redone this year. So are pieces of the sixth floor for men's including adding Kiton. On the fourth floor recently, space for evening collections was redone.

"It's not just renovations for renovations' sake. It's about adding vendors. It's about creating an environment. It's about creating a buzz," Sadove said.

Lord & Taylor is considering downsizing its Fifth Avenue flagship, situated between 38th and 39th Streets, from 10 to six selling floors. But the retailer also is bolstering its product assortment. On the drawing boards are Fortunoff jewelry and home floors, as well as possibly a bridal department and a restaurant. L&T's parent company NRDC Equity bought Fortunoff out of bankruptcy last February. NRDC is interested in Kleinfeld's, the bridal retailer, and in pursuing other retail acquisitions.

"When you are dealing with stores of this scale, it might seem as if you are in a constant state of renovation. In fact, we are," said Jim Gold, president and ceo of Bergdorf Goodman. "There is always another project around the corner. To keep the store current and special, it's important to reinvest in the physical plant. We are forging ahead."

About a year and a half ago, Bergdorf's renovated its contemporary floor and named it 5F. "We made the decision to put a branding effort behind our contemporary business," said Gold. "We think of that business differently than the rest of our business, from every perspective — advertising, merchandising, visual presentation, staffing, events. Bergdorf Goodman can be, for those clients who aren't familiar with the store, very intimidating. This was an effort to make us more accessible, to open up people's eyes to the breadth of what we do. We already had a nice contemporary business, but we felt we weren't getting enough credit for being in the business. It's not the first thing that comes to mind when you think of Bergdorf Goodman."

By Labor Day, Bergdorf's hopes to have 4,000 square feet on the 57th Street side of its main floor renovated to house "modern" handbags, jewelry and accessories at designer price points, Gold said. "It's been a mix of accessories and not clearly defined. But we developed a very specific merchandising strategy and once we put that in place, we will design an environment that would reinforce our product strategy."

Combined with the recently renovated 58th Street side of the flagship, Bergdorf's, said Gold, has "a much more powerful statement about the importance of jewelry. It's become a destination for designer and precious jewelry."

The new space, however, is not expected to pose the same kind of unique marketing opportunity for a "subbrand' that 5F presented. "We are not going to have seven or eight subbrands," Gold said. "You have to pick your shots where it makes sense."

This month, Macy's Herald Square, which does an estimated $800 million in volume in its 1.1 million square feet of selling space, will be opening bridge and fashion jewelry shops in June, luggage in September and last month opened new mattress, men's and sunglass areas.

Macy's, which has long been criticized for poor housekeeping, fitting rooms and rest rooms, is upgrading service departments such as MBA personal shopping and bridal, according to Ron Klein, chairman and ceo of Macy's East.

Macy's has seen some resistance from consumers who shopped various regional nameplates converted to Macy's, so upgrades are as critical as ever. According to Klein, the Downtown Crossing store in Boston, formerly Filene's, is remodeling cosmetics, adding FAO Schwarz, as are many other Macy's units. Also, taller windows on the Washington Street side were added. "The windows look into our cosmetics department so we wanted to create an exciting environment for our customers not only on the inside but from the outside who are passing by."

At the former Marshall Field's in Chicago on State Street, men's is being remodeled. And the former Hecht's in Metro Center in Washington is expanding better sportswear and suits.

"We are committed to making capital investments at our major metropolitan stores based on their performance and sales trends," said Klein. "New York, Boston, Chicago, Philadelphia and Washington have and will continue to see renovations that will upgrade the shopping experience for our customers. In cities such as Philadelphia and Washington, Macy's is the only department store in the downtown area, so these destination stores in downtown will see new concepts, merchandise and continuous renovations and improvements."
Source: Women's Wear Daily

Core Plus Retail Project To Begin in Fall

WHITE PLAINS-Core Plus Properties of Stamford, CT is set to break ground in early fall on its $25-million the Venue on Bloomingdale Road retail project. The development will total 42,000 sf of boutique retail space and specialty shops as well as a 6,000-sf restaurant and an outdoor café,

The Venue will be constructed on a 6.6-acre site that includes the former NYNEX office building at 120 Bloomingdale Rd. that was originally constructed as the headquarters for Nestle USA. The 145,000-sf building, owned by Core Plus, is now a multi-tenant office building with the New York State Department of Labor as its largest tenant. The Venue will be built on what is a surface parking lot for the office building, Core Plus officials stated. The project received final approval from the White Plains Common Council earlier this month.

A two-level parking garage will be built as part of the complex. There will be a total of 501 parking spaces on-site including the new garage and existing outdoor parking adjacent to the front and rear of the office building and at the upper level parking lot along Hale Avenue, company officials say.

"The Venue will be a perfect fit within this very strong, up-scale retail area," says Frank Gallo, managing director of Core Plus. "We have approached the site with special care to assure that we create a project that will not only complement the existing retail environment but that will enhance the entire surrounding area."

The center is located in the Bloomingdale Road retail corridor and will be adjacent to such retailers as: Bloomingdale’s, The Container Store, Fortunoff, Whole Foods, Morton’s, Cheesecake Factory, P.F Changs, Crate & Barrel, Brooks Brothers, Tiffany’s, Sony Style, The Apple Store, Abercrombie and Fitch, Tommy Hilfiger, Louis Vuitton, Club Monaco and Hugo Boss.

Although Gallo reports no lease signings to date, he adds, "the interest we have already received from retailers and restaurant operators has been tremendous. With the plan now approved, we expect the level of tenant interest will increase. There are very few locations that offer what Bloomingdale Road in White Plains does, and prospective tenants are acutely aware of that."

The building has been designed by architectural firm, Arrowstreet Inc. of Sommerville, MA and is being planned with "green" technologies and efficient heating and cooling systems to minimize its carbon footprint.

Source: GlobeSt.

Grief at General Growth

CEO Bucksbaum's buying spree thrust it into the big leagues—at a staggering cost

by Joseph Weber

It's been one patch of bad road after another for John Bucksbaum, a hard-riding amateur cyclist who tests his mettle in the Alps. At General Growth Properties (GGP), the Chicago real estate trust he runs, Bucksbaum is struggling against stiff headwinds in retailing and housing. What's more, the credit crunch is jacking up the cost of refinancing billions of dollars of debt coming due over the next 18 months. To top it off, General Growth has been socked with punitive damages for the roughshod way it fought a rival shopping-center developer.

Investors are paying the price. General Growth's stock, which closed at 40.74 on May 21, has lost nearly 40% of its value in the past year and trades about where it was three years ago. Meantime, the company's publicly traded debt sells at discounts as steep as 16.5%. "There's no question the world we operate in has changed dramatically," Bucksbaum said on an Apr. 30 conference call. "We recognize the change and we are adapting to it."

Overbinging

For much of this grief, the 51-year-old chief executive may have no one to blame but himself. Like over­extended homeowners who wagered that housing prices could only go up, he went into hock to swing some big deals. Now, like those homeowners, he has learned he overpaid. He agreed in 2004 to spend more than $1 billion in Las Vegas, snapping up shopping arcades in the Venetian and the just-opened Palazzo casinos, only to see the glitzy city recently slump. That same year, he also bought Rouse, a planned-community and retail giant, in a debt-heavy $14 billion deal. With it came land in real estate purgatories, such as Vegas, that now lies idle.

To be sure, Bucksbaum's buying spree thrust General Growth into the big leagues. Since taking over as CEO in 1999 from his father, Matthew, the company's now 82-year-old co-founder, John has nearly doubled the number of malls in General Growth's portfolio. Its more than 200 malls in 45 states include Water Tower Place on Michigan Avenue's Magnificent Mile and Northbrook Court in the Chicago suburb. A trendy sort who, in company reports, quotes Beatles songs about changing the world, Bucksbaum also added master-planned communities, such as Columbia, Md., and Summerlin in Las Vegas.

But transforming the company, which traces back to a 1954 shopping center in Cedar Rapids, Iowa, into the nation's second-largest mall company has come at a staggering cost. The $3.26 billion-a-year outfit—run from a 1950s, mausoleum-like headquarters in the West Loop that used to house Morton Salt—labors under $27.3 billion in debt. That's nearly three times its $11 billion market value. "They have way too much debt," concludes analyst Richard Moore II of RBC Capital Markets in Cleveland. "They are struggling under the weight."

A buddy of cycling phenom Lance Armstrong, Bucksbaum is known for pushing himself faster every year on rides in Europe's mountains. At work, he has proven far more aggressive than his rivals at the No. 1 player, Simon Property Group (SPG) in Indianapolis. Simon's $22.6 billion market value more than covers its $18.3 billion in debt. Short-sellers, who bet share prices will decline, have ganged up on Bucksbaum and dumped more than 12% of his stock. By contrast, they've sold only 7.1% of Simon. Analysts expect General Growth's funds from operations—the key income measure for real estate investment trusts—to slip from $3.71 to $3.54 a share, the first slide in at least a decade.

Bucksbaum vows his company will deliver gains, but plenty are skeptical. When critics such as MarketWatch columnist Herb Greenberg raised questions in January about high debt levels, the company lashed out in a press release, insisting it was "absolutely not in any danger" of filing for bankruptcy protection—a prospect that most industry experts agree is far-fetched. Still, just two months later, Standard & Poor's, which, like BW Chicago, is owned by The McGraw-Hill Companies (MHP), downgraded the REIT's credit rating to junk status, warning that borrowing costs could climb. "They are more likely to significantly pare back development," notes S&P Managing Director Lisa Sarajian. Indeed, General Growth has shelved a planned $600 million in developments.

Mauling Other Malls

While taking blows, General Growth has thrown a few, too. Its drawn-out battle with Caruso Affiliated, a Los Angeles developer, is one example. When Caruso proposed an open-air mall in Glendale, Calif., near a mall that General Growth bought in 2002, General Growth orchestrated an election to challenge it. After losing the 2004 vote, it sued the city, claiming the developer-selection process was flawed. Once in court, however, its foe showed how General Growth tried to pressure restaurant operator Cheesecake Factory (CAKE) to stay out of the Caruso center—a legal no-no that last fall led a jury to decide General Growth should pay Caruso $89.2 million, including $15 million in punitive damages.

Caruso's lawyers claimed in court that General Growth's tactics—bare-knuckled even by industry standards—were part of a "corporate plan, practice, and pattern" of thwarting competitors. General Growth is appealing the judgment. But rivals allege it tried to block centers elsewhere, too. In Connecticut, e-mails in one case suggest that General Growth staffers plotted to seek out "dinosaur lovers" who would claim bones or remains could be found on a site where Poag & McEwen, a Memphis developer, planned a mall. Ultimately, that shopping center was built. The Caruso mall went ahead, too.

Sweetened Dividend

Just how Bucksbaum will guide his company out of trouble isn't clear. He's trolling for partners to take stakes in some mall properties, and he recently lined up more than $1 billion in loans to put a dent in $10.51 billion worth of debt that matures through 2010. In late March, the company issued 22.8 million new shares to raise $822 million. Showing confidence, Bucksbaum and his father bought 2.4 million shares, or more than 10% of the offering. In April, he boosted the quarterly dividend 11%, to 50¢ a share, hoping to woo back shareholders—but with little immediate effect. "They're probably going to get through this, but it's obviously a higher risk," says Goldman Sachs (GS) analyst Jonathan Habermann.

Once the panic over real estate and credit dies down, General Growth should fare fine, contend longtime Bucksbaum watchers. "A year from now, people will look back and say, 'Wow, we were worried about a lot of things that we were wrong about,' " argues Louis Taylor, an analyst at Deutsche Bank (DB). Still, to get from here to there, Bucksbaum will have to pedal hard—and he may well find the course rougher than the Alps.

Source: Business Week

Simon: New-Center Growth to Slow For a Decade

INDIANAPOLIS–While its own schedule of retailer meetings at next month’s ICSC RECon meeting is strong, Simon Property Group warned the industry that it should prepare for a decade-long slowdown in new shopping center development.

Macroeconomic and industry issues will result in years of slow new center growth, benefiting major owners, said David Simon, chairman and CEO of Simon Property Group, at his company’s first-quarter conference call.

“Frankly, I see a decade where retail development will be slow,” Simon said. “And that will be fabulous for us and other major owners of retail real estate.”

After the industry slowdown of the late 1980s/early 1990s, which virtually shut down new center construction, developers focused on redeveloping existing projects for the rest of the decade. It was only after the trauma of the Sept. 11 attacks was assimilated, that new construction began in earnest, Simon said.

“It was 15 years before development picked up the pace again,” Simon said. “I don’t think it will be that long [this time] because everything is faster today.”

Even so, the number of retailer meetings is comparable to previous years, and a far cry from the types of meetings held in the early to mid 1990s, Simon said.

“There were several years where all we did were workouts,” Simon recalled. “I don’t sense this at all at the upcoming convention.”

Source: GlobeSt.

Transit-Oriented Retail Takes Center Stage

LAS VEGAS-Leading off a discussion on transit-oriented development, or TOD, noted urbanist Chris Leinberger termed it “one of the most important trends of our time. It is a structural shift in development,” he told ICSC REcon attendees.

Specifically, it’s part of a larger trend that has seen retail development move away from the standard enclosed mall or community strip, and toward such things as lifestyle centers and mixed-uses. “It’s the biggest structural change since the 1950s,” said Leinberger, who is a visiting fellow at the Brookings Institute and a professor at the University of Michigan.

His message, specifically in terms of TOD, was that, “for the built environment, the pendulum is swinging from drivable suburban projects to walkable urban projects. It’s tied to market demand: People want much of their daily needs met on foot.” One target market: The growing number of households that don’t have children, created in part by the aging of the baby boomer generation.

Leinberger led into the rest of the panel by noting that metro Washington, DC seems to have more TODs than just about anyplace else. The rest of the panel had a decidedly metro DC tone.

Andy Scott, special assistant to the secretary for economic development for the Maryland DOT, termed TOD “a Maryland priority.” He specifically noted the rising price of gas and global warming issues as among the catalysts, and the goals include sustainable development, increased transit ridership, community revitalization and reduced emissions.

“As a matter of public policy, it is an effort to leverage private investment into the huge public investment we have in transit,” Scott said. “Public infrastructure needs to support growth and create a use of publicly owned station property.”

Local government’s role has to come in the form of planning, zoning, permitting, incentives and infrastructure support, he explained. “At the state level, we can provide leadership,” Scott said. “On the back end, we’re even involved in marketing through the Maryland Department of Economic and Community Development.”

A lot of metro DC TOD is related to the Washington Metro system, of course. One interesting statistic from Scott: “There are 1,107 undeveloped acres within the Capital Beltway available for TOD.”

With a view of TOD as a transit function, Chris Patusky, real estate director for the MDOT, outlined three projects currently under way, the largest of which is the $1.6 billion, 2.3 million-sf Station Center in Baltimore. It’s being done as a joint venture of Steuver Brothers, McCormack Baron and Doracon.

Patuskey gave credit to new TOD legislation now in place in Maryland. While to some extent it’s symbolic in that it defines TOD and effectively puts it on the table, there are numerous legal aspects to the legislation. “It enables us to spend our money, to use our resources,” he said.

On the local level, business improvement districts can play a key role in TOD. “Our group is a strategic manager,” Rich Bradley, executive director of the Downtown DC BID Corp., told attendees. “Our focus is on the basics. If we like the deal, we provide the strategic leadership to get it done.”

Deborah Ratner-Salzberg, president of the Forest City Washington division of Forest City Enterprises, noted that because her company does a lot of different property types, “mixed-use development is a natural for us.” That includes TOD, urban and in-fill projects.

And she related some lessons learned from previous TOD projects. For one, “it should connect with the existing fabric of the city,” she said. Also, “transit is great for people to walk to work, but it’s not enough,” she said, alluding to the inclusion of residential and other uses in the mix.

“People want sustainable and walkable uses,” Ratner-Salzberg concluded.

Source: GlobeSt.

National retail industry keeps adding shopping centers to mix

Nearly 450 new shopping centers were added through May 10, according to the latest industry report by from the International Council of Shopping Centers.

The 98,791 shopping centers represented 6.8 billion square feet, or 53.6 percent, of gross leasable retail space, according to the report prepared by the CoStar Group Inc. That compares with 98,351 centers in 2007 and 96,132 in 2006.

So far this year, 67 percent of shopping centers had 50,000 square feet or less of gross leasable area, which also represented 70 percent of the growth in the number of centers this year. Only 2.5 percent of the total number of centers in the U.S. have leaseable space of 400,000 square feet or more. . . . more

VA: Gainesville shopping center almost complete

Gainesville shopping center almost complete

Construction work is nearing completion on The Shops at Stonewall shopping center that will be anchored by Wegmans supermarket.

Regency Centers, a national owner, operator and developer of grocery-anchored and community centers, is building the shopping center at Lee Highway (Va. 29) and Old Carolina Road in Gainesville.

Regency originally closed on the acquisition of 36.9 acres of land in May 2007 with plans for a 317,076-square-foot community shopping center that included a 140,000 square-foot Wegmans.

According to Don Stedham, Regency Centers vice president of investments, the company has been most impressed with Wegmans’ quality and pace of construction.

“Wegmans’ iconic tower was erected several weeks ago and the grocer has already begun to complete the store’s interior,” said Stedham. “We’re equally as proud to host several of the area’s finest retailers and service providers at the shopping center, including The Athlete’s Foot, Escape Salon and Day Spa and SunTrust Bank.

“When completed, the center will host 27 stores, restaurants, banks and shops comprising more than 318,000 square feet. We are pleased that over the past year, Regency Centers has fostered close to 1,000 jobs for local design and construction professionals, just to name a few,” Stedham said.

In addition to Wegmans, center will include brand-name merchants such as Staples, Michaels, Ross, Dress for Less and Bed, Bath & Beyond.

“We continue to develop and expand our presence in Virginia with quality shopping centers such as The Shops at Stonewall. We are very fortunate to be involved with the Lake Manassas community and to have been able to assemble such an attractive lineup of retailers,” he said.

The company recently closed on a 0.4 acre parcel adjacent to the center which will allow the firm to significantly enhance the curbside presentation of the facility.

Since 2000, Regency has developed 189 shopping centers, including those currently in-process, representing an investment at completion of nearly $3 billion.

Michael Dempsey, Wegmans manager, said the chain is conducting open employee interviews all this week at 7500 Iron Bar Lane, Suite 221, Gainesville.

Dempsey said anyone interested in working for the company can call 571-222-7117 for more information. He said more than 3,000 people applied for positions before a recent store opening.

Founded in 1916 by the Wegman family in Rochester, N.Y., Wegmans has become one of the largest privately owned companies in the U.S., and is slated to open a store in Woodbridge on June 8.

Due to its innovative and state-of-the-art services and atmosphere, the business has flourished and has been able to maintain a wide customer base. Market cafes, in-store dining and cappuccino bars make grocery shopping an experience while children’s areas make it less of chore. Endless selection, wide aisles and attention to detail also set Wegmans apart. The chain currently operates more than 70 stores in the Northeast, and is planning to open stores in suburban Boston for its first foray into New England.

The company is still led by the Wegman family — CEO Danny Wegman and his two daughters, Colleen and Nicole. Their employee-first philosophy has put the company on Fortune magazine’s list of the “100 Best Companies to Work For” each year it has been published. The company was ranked number three in 2008, the 11th year on the list.

The Stonewall Wegmans store plans to open this fall.

Source: InsideNova.com

Potomac Mills to expand, add Neiman Marcus clearance store

Potomac Mills in Prince William County will soon be able to house more shoppers.

The Mills, a Simon Property Group Inc. company, will add 50,000 square feet of new restaurant and retail space and a new 34,000-square-foot Neiman Marcus Last Call Clearance Center.

The multimillion-dollar project will feature approximately 30,000 square feet of restaurant space, 20,000 square feet of retail and a redesigned main entrance and exterior facade. Located on the south side of the property, the expansion will begin at AMC Theatres and extend towards Costco.

Construction on the Neiman Marcus will start this fall with an opening scheduled for spring 2009. . . .

more

Hale unveils expanded retail plans for Canton Crossing development

Baltimore developer and banker Edwin F. Hale Sr. announced plans to add 31 acres of waterfront land to his Canton Crossing development, teaming with Greenberg Gibbons Commercial to help manage the project.

Hale said felt he needed the expertise of an established commercial developer to aid with the project's large-scale retail plan, and selected Greenberg Gibbons for its experience in the field.

"I am, after all, a banker," Hale said during a press conference on the penthouse floor of the First Mariner Tower, the first office tower to emerge in Canton Crossing. "I'm 61 years old, and I do not want to learn how to do a shopping center," as envisioned with Canton Crossing, Hale added.

The retail space, to be called the District at Canton Crossing, is slated to include up to 600,000 square feet of retail space. Greenberg Gibbons CEO Brian Gibbons said groundbreaking for the project is slated to start next year and could be completed by late 2010 or early 2011.

Greenberg Gibbons' portfolio includes the Hunt Valley Towne Centre and Village at Waugh Chapel. Greenberg Gibbons is also building the Annapolis Towne Center at Parole, a mixed-use project slated to include 2 million square feet of retail, office, residential and restaurant space.

"We're very excited to be a part of this Canton project, we feel it's a very unique building project to be a part of," Gibbons said.

Gibbons confirmed media reports the developers are courting retailer Target (NYSE: TGT) and supermarket chain Harris Teeter for the project, but said no deals have been signed yet.

Also planned for Canton Crossing is 2.5 million square feet of office space, two hotels, 500 high-rise residential units and 100 homes.

The high-rise units, to be developed by another Hale partner, Bush Cos. of Williamsburg, Va., will be spread over three buildings.

Hale also announced a deal Tuesday to acquire the additional 31 acres, which previously served as an oil refinery, from ExxonMobil Corp. (NYSE: XOM). Terms of the deal were not disclosed.

Hale's development arm, Hale Properties, will start a cleanup of the contaminated site this summer. That work, which must precede development, is expected to take six months to a year to complete.

Speaking before a crowd of city officials, First Mariner Tower office tenants and other officials, Hale took the opportunity to dismiss naysayers who have questioned the wisdom of building an office space in what they considered the "hinterlands," removed from Baltimore City's established commercial core.

"It's here, it's done, and we're 91 percent leased," Hale said.

Office tenants in the building include defense contractor Alliant Techsystems Inc., health insurer CareFirst BlueCross BlueShield and First Mariner Bank (NASDAQ: FMAR), of which Hale is the CEO.

The sentiment was not lost on Baltimore Mayor Sheila Dixon, who praised Hale's vision to transform the industrial land into a vibrant, mixed-use development.

"You know how, sometimes, Ed can be quite crazy, but it's a good crazy," Dixon said. Of Canton's waterfront, she said: "Now it is of the future, the 21st century, and so it's a bright future."

Hale also announced CareFirst, the state's largest health insurer, plans to relocate its headquarters to the 17-story office tower and to take additional space there.

The company has about 120,000 square feet in the building. CareFirst Chief Marketing Officer Gregory A. Devou, named to First Mariner's board of directors in March, confirmed the plans but did not elaborate.

Source: Baltimore Business Journal

DC to lease final old convention center parcel to Hines and Archstone

The District will lease the final parcel of land on the old convention center site to developers Hines and Archstone, where they'll build an upscale, 400-room hotel and an 400-room upscale hotel and 100,000 square feet of additional retail space.

Located north of Eye Street N.W., and bounded by New York Avenue and 9th Street N.W., the 10-acre site will be part of the developers' $850 million mixed-use project, to be called CityCenter D.C.

The retail portion of the site would encompass the ground, first and second floors of the hotel - and possibly the sub-ground level, too, said Kenneth Miller, senior vice president of Archstone, which is based in Englewood, Colo. City officials and developers have long been considering a department store or a large format retailer - such as a Crate and Barrel - for the site. Discussions continue with Nordstrom, Bloomingdale's, and several others.

"This isn't Rodeo Drive," Miller said. "We want to keep it tangible for people working here; at the same time, this is an international city," so that audience's interests have to be considered as well.

The price of the developers' 99-year lease with the city will depend largely on what kind of retail is built, a city spokesperson said.

Hines and Archstone, as well as D.C. Mayor Adrian Fenty, council members and representatives from Washington, D.C. Economic Partnership will meet with prospective retailers for CityCenter D.C. next week in Las Vegas, during the International Council of Shopping Centers' annual conference of worldwide real estate developers and retailers.

Fenty said he expected a decision on the retail component to come within the next six months.

Meanwhile, the hotel component of the site will satisfy up to 40 percent of the demand generated by groups using the nearby Walter E. Washington Convention Center, said William Alsup, senior vice president of the Houston-based Hines. Developers said they are in discussions with several operators.

The latest lodging facility will join the convention center's long-awaited headquarters hotel, a 1,150-room Marriott at the corner of Massachusetts Avenue and 9th Street NW. It's still on tap to break ground next year for a 2012 opening.

The final, 53,700-square-foot component at CityCenter D.C. had earlier been considered as a potential site for a new central library. But under the terms of agreement with the District, Hines and Archstone had the first right of refusal to lease the property from the city, if it decided not to locate a library there.

Late last year, the District also completed a land swap with developer Kingdon Gould III, which gave Gould the parcel on the Northeast corner of the site. He is preceding with his own development plans, which must be consistent with the master plan.

Located between New York Avenue and 9th, H and 11th streets downtown, the CityCenter D.C. calls for more than 350,000 square feet of retail; more than 670 apartment and condominiums, including at least 134 units of affordable units and 465,000 square feet of office space. It will also include a plaza area and a half-acre public park.

The development team is expected to break ground on the project by the second quarter of 2009, and is aiming to complete it by 2011.

Source: Washington Business Journal

NJ: Quakerbridge Mall Set to Expand

LAWRENCEVILLE, NJ-The long-anticipated expansion of the 1.1 million-sf Quakerbridge Mall could be underway by this summer, pending planning board approval. The multimillion-dollar project would enlarge the mall by slightly more than 600,000 sf. adding two new anchors as well as additional shops, parking and restaurants.

Development of the property is being handled by Indiana-based Simon Property Group and Kravco Simon Co., based in King of Prussia, PA. Kravco Simon, which is 50% owned by Simon Property Group, has a 38% stake in the Quakerbridge Mall.

Plans to expand the mall were revealed in Sept. 2005, and in May 2007 it was revealed that the expanded mall would include a 90,000-sf Neiman Marcus and a 144,000-sf Nordstrom. The new stores join current anchors JCPenney, Lord & Taylor, Macy’s and Sears. The current JCPenney store will be demolished and a new 140,000-sf JCPenney will be built.

The first phase of the project, which is scheduled to go before the planning board for a vote on June 2, would include construction of the new anchors and a three-level parking garage. Construction could begin about a month after the planning board gives approval and is scheduled for completion in 2011. Specific financial details of the project were not disclosed.

Representatives of the developers met with the planning board on Monday to answer questions regarding traffic and energy conservation. The mall’s owners have pledged $8 million for traffic improvements in the area that include adding an additional lane on Route 1 south and widening Clarksville and Franklin Corner roads.

In addition, the developers addressed concerns about energy use and promised to incorporate sustainable measures into the project. Such measures include orienting JCPenney to take advantage of passive heating and cooling and working with the US Environmental Protection Agency to reduce energy use in the new building.

"We’re working closely with government bodies and officials to do the right and proper thing," a spokesperson for Simon Property Group, tells GlobeSt.com.

The spokesperson continues that "we’re very focused on improving the malls and making them as attractive as they can be for our shoppers, and that helps the area as well."

Source: GlobeSt.

MA: NorthPoint buyer quits deal

A Texas-based investment group has pulled out of a deal to buy NorthPoint, a grand city-within-a-city slated to take shape near the Charles River in Cambridge.

Archon Group, which had won a bidding war for the high-profile project last fall, is out of the deal, said David Fink, one of the development’s owners. However, he said other bidders are circling and are interested in making a deal for the sprawling 40-acre site and its ambitious development plans.

“It’s just the capital markets are in such upheaval,” said Fink, president of Pan Am Railways, the umbrella company for NorthPoint owner Boston and Maine Corp.

The deal’s collapse comes with construction in full swing on the first phase of the project, with NorthPoint’s first two condo buildings set to open next month.

All told, 5.5 million square feet of new homes, offices and shops are planned - as well as a new Lechemere MBTA station.

The project’s owners, a partnership between Boston and Maine and a group of top local real estate executives, agreed to put the property up for sale after a falling out that led to a bitter court battle.

Archon had reportedly agreed to pay $175 million when it won out after a bidding war last fall.

But in a market where lenders are cautious about putting up financing for big deals, finding another buyer may not be so easy, said Hub commercial real-estate finance expert George Fantini. He also suggested NorthPoint’s owners may have to lower the bar when it comes to price.

“The storm flags are up,” Fantini said. “Banks are being very cautious. When you get to large transactions like this, it is going to be a very difficult property to sell.”

A spokesman for Archon declined comment, other than to say he believed the deal is still in progress.

Source: Boston Herald

Regency Forges Ahead with New Centers

JACKSONVILLE, FL-Regency Centers Corp. is forging ahead with development plans in spite of the prospect of losing some retail tenants to the economic downturn. The national owner and operator of grocery-anchored shopping centers says it has 48 projects under development, representing an estimated investment of $1.1 billion.

The company says it is nearing completion of its 318,000-sf Shops at Stonewall community shopping center in Gainesville, VA, nearly a year after acquiring 37 acres at Lee Highway and Old Carolina Road. Wegmans Food Markets Inc. will anchor the center with a 140,000-sf store, marking only the third Virginia location for the Rochester, NY-based upscale grocer.

Besides featuring Wegmans’ iconic clock tower, the Shoppes at Stonewall will feature a broad range of retail tenants in 27 stores serving Lake Manassas area residents. Other anchors include Staples, Michaels, Ross Dress for Less and Bed Bath & Beyond.

“This is more of a community center, rather than a typical neighborhood center. It’s a much more complete environment,” Don Stedham, vice president of investments for Regency Centers, tells GlobeSt.com. He adds that the strength of the center’s anchors and other retailers will provide a stronger draw in selling outparcels.

Regency Centers, which owns 450 retail properties totaling 60 million sf in top national markets, this week posted first-quarter financial results including funds from operations totaling $61.2 million or 87 cents per share, just ahead of analysts’ expectations. Same-store net operating income grew 3.1% over the quarter, with total occupancy sustaining at 95% from the same quarter a year ago.

“We expect internal growth to moderate as store closings accelerate” during the current quarter, says Paul Morgan of Friedman Billings Ramsey & Co. in his latest research report. He points out that Regency Centers made no acquisitions during the first quarter, yet sold five outparcels for $29 million as well as the residential portion of King Farm Village in Rockville, MD for $9.5 million, at an “impressive” cap rate of just over 4.8%.

In a March interview, Regency Centers president and COO Mary Lou Fiala told GlobeSt.com that the retail sector was preparing for tough times through the remainder of this year. Fiala will become chair of the International Council of Shopping Centers during this month’s Las Vegas convention.

“I believe over time there will be more retail bankruptcies and a slight decline in occupancy in most portfolios, and not the kind of rent growth we have had,” Fiala said during an ICSC conference in Hollywood, FL. “You have to stand back, do what you need to do and wait for the credit markets to turn back around.”

Source: GlobeSt.

DC: Howard University ready to start town center project

Howard University, fresh off of hiring a new president, began seeking developers Thursday for Howard Town Center, a 2.2-acre mixed use project long delayed by litigation.

According to the solicitation, Howard wants to lease the land for the construction of more than 300 rental apartments, 70,000 square feet of retail (including a 35,000-square-foot grocery store) and parking. The area is at the corner of V Street and Georgia Avenue NW, three blocks north of the Shaw-Howard University Metro station and across from Howard's campus.

Developer Trammell Crow Co. had been planning 322 apartments, 450 parking spaces and a Philadelphia-based Fresh Grocer store for the site but was not mentioned in the solicitation. Howard University officials were not available for comment. The school named Sidney Ribeau, current president of Bowling Green University, its 16th president May 7.

The search for developers was enabled by a land swap between the university and D.C. that Mayor Adrian Fenty announced April 24. In it, D.C. dealt away a former bakery at Georgia Avenue and W Street NW -- known as the Bond Building -- to Howard University for a 63,400-square-foot parcel at Florida and Sherman avenues. A D.C. Superior Court judge ruled in 2005 that the parcel belonged to the District.

The District plans a second solicitation for that parcel, which faces both Florida Avenue and Seventh Street, for a mixed-use project featuring at least 300 housing units.

Responses to the solicitation are due June 10.

Source: Washington Business Journal

Retail to Residential

Boston-based Abbott Real Estate Development has secured a bridge loan for its planned conversion of a former Wal-Mart store in Weymouth, Mass., into a 150-unit apartment complex. Equibase Capital Group L.L.C. provided the financing, which will be utilized for acquisition and redevelopment purposes, as well as for zoning of the nearly six-acre site located about 40 miles from Boston. The project, Abbott Residences at Cordage Park, will be a transit-oriented development.

Source: Commercial Property News

Lowell development plan seeks expedited review

The city of Lowell said that an ambitious plan to redevelop the Hamilton Canal District is the first project to file for environmental approval from the state under a new streamlined review and permitting process. The city hopes the project will transform "the gateway to Downtown Lowell" through plans to construct environmentally friendly buildings along with the adaptive re-use of old mill buildings. Plans call for the creation of more than 600 mixed-income housing units along three canals as well as 350,000 square feet of commercial development and more than 50,000 square feet of retail; the developer is Trinity Hamilton Canal Limited Partnership, an affiliate of Boston developer Trinity Financial. The result of the state's new expedited permitting process is expected to be a better coordinated, more predictable, and more efficient permitting process for priority developments, city officials said.

Source: Boston.com

Liquor vote could lure specialty grocery

Westwood Station gets OK for license sought by Wegmans chain

WESTWOOD - A New York-based gourmet grocery store could make its first move into the New England market with a superstore in the Westwood Station development. Voters agreed to create the town's first liquor license for off-premise consumption solely for Westwood Station, a vote in direct support of Wegmans, a high-end grocery chain with 71 stores, mostly in New York.
Wegmans officials have called Westwood Station a "bull's-eye" site for the company's move into New England, but also said the ability to sell alcohol would be a critical factor in any decision. The company incorporates the sale of beer and wine in its superstore design and wants to keep the design as it continues to expand.

The town's approval of the license could be the catalyst for luring the grocery chain here, bringing a unique store to a project that is already changing the landscape of Westwood.
"There has been so much focus on Wegmans because they are the type of anchor tenant that helps to bring viability to Westwood Station," said Nancy Hyde, the chairwoman of the Board of Selectmen. The measure was approved by a 410-to-372 vote. The state Legislature must now grant the town's home-rule petition for the liquor license, typically a routine vote after Town Meeting decides on an issue.

Wegmans bills itself as a specialized, multipurpose store with a fresh variety of produce and also restaurant-quality prepared foods.Its stores include tea bars, cafes, sushi stands, and bakeries. Stores also carry everyday household products, making Wegmans a cross among a supermarket, restaurant, and retail store.

"They're top of the line when you think of a food-shopping experience," said Kevin Griffin, publisher of The Griffin Report of Food Marketing, a Duxbury-based trade newspaper for the Northeast.

"We don't have anything in the New England market that has a similar experience."
Griffin said the southern Boston suburbs are saturated with supermarkets, with several traditional stores in the Walpole area, a Whole Foods Market planned for Dedham, and a Target with a full-blown grocery store planned in Randolph. But consumers will benefit from the competition, he said, and he predicts Wegmans will capitalize on what he called a high-density, high-affluent market in Westwood.

"Westwood is a perfect launching ground for Wegmans to come to the Boston market, and if there's any way to make it happen at Westwood Station, they will find a way to make that happen."

Jay Doherty, president of Cabot, Cabot & Forbes, the lead developer of Westwood Station, said the store will help lure other high-end businesses that the town is looking for. The vote on the liquor license was significant for a town that up until five years ago banned the sale of any alcohol, and then restricted alcohol sales to restaurants that serve food. But town officials have said that past decisions to approve the sale of alcohol have always been tied to promoting economic development, and they said that a Wegmans move here would further legitimize Westwood Station, a $1.5 billion mixed-use development of commercial and office space and high-end condominiums.

Source: Boston.com

Natick, MA: Downscaled hopes for an upscale mall

The Natick Collection was envisioned as a destination for suburban shoppers searching for luxury goods, but sales at some high-end boutiques, some merchants say, are stagnating, and other stores are opting out of the mall altogether.

NATICK - On a recent spring day, Neiman Marcus is a ghost town. Almost everything is on sale at Calvin Klein. Gucci has delayed its opening several times, and Italian designer Piazza Sempione has bailed on its lease entirely.

The highly anticipated Natick Collection, a suburban bastion of luxury shopping where some rents are higher than coveted Newbury Street, is off to a slow start, according to retail analysts, store owners, managers, and employees at more than a dozen stores.

Some merchants blame the weak traffic on a potential recession and anemic consumer spending. Indeed, across the country retailers are seeing fewer shoppers, shutting stores, or filing for bankruptcy as people pull back on discretionary spending and worry more about paying for basics like milk and gas.

Yet others say the problem may go even deeper, that high-end designers and top-notch fashion in the suburbs simply haven't caught on. Natick was supposed to be the next fashion frontier, debuting the state's first Nordstrom and first suburban Neiman Marcus as part of a multimillion-dollar 500,000-square-foot expansion that opened last fall.

But the hype has fallen short in this town 20 miles west of Boston. After a brisk holiday season, traffic has slowed, on some days, to a near standstill, merchants say. The older part of the mall, which features sta ples like Macy's and Gap, still sees a crush of shoppers on the weekends, they say. And while Nordstrom is popular, much of the vast new wing - with soaring skylights, concierge service, and fake birch trees - often remains empty.

"We had a rough winter," said Betty Riaz, owner of trendy boutique Stil, who pays upwards of $100 per square foot for the Natick store, which is more than her Newbury Street shop. "It's been quiet. Even if you have money, you may not have taste. We have to educate our customers on style. It's hard. I thought it would be easier in Natick."

General Growth Properties, which runs the mall, said it has not heard concerns about sluggish sales and that the slowdown in consumer spending and luxury shopping has not had an impact on the mall. Michael McNaughton, General Growth's vice president for asset management Northeast, said business at stores in the original part of the mall has "grown tremendously" since the expansion opened last fall, and that the new wing has exceeded expectations. But he declined to provide specific traffic or sales numbers.

McNaughton disputed the suggestion that Natick wasn't ready for high fashion, but added: "Not every retailer is for every customer."

In recent weeks, stores have stepped up promotions in an attempt to lure people into the luxury wing, where $3,000 Louis Vuitton bags and $500 shaving kits are plentiful. For the month of April, Neiman Marcus offered free Bellini cocktails every Saturday afternoon as part of a "Sip and Shop" event to showcase its designer handbags. Bright pink banners hung from the ceiling near Sears in the older section of the mall, beseeching customers: "Neiman Marcus. Go Back. Turn Right. Shop Fabulous."

Last month, Lululemon Athletica hosted "Zen Wednesday" outside Neiman Marcus, offering a free yoga class followed by tapas and juice elixirs served by the French restaurant Sel de la Terre. Two weeks ago, boutique Stil hosted a luncheon and fashion show in the middle of the mall.

Retail analysts say General Growth may have misread the demographics and overestimated the reach of the shopping center. While there is ample wealth in this region - the average household income is about $110,000, nearly double the state average - there is still a culture of buttoned-up Yankees who aren't accustomed to indulgent spending on luxury goods, according to Madison Riley, a retail analyst at Kurt Salmon Associates in Boston. And the younger moms paying attention to fashion are more likely to buy a Burberry blanket for their baby carriage than $350 designer jeans for themselves.

"There has been a culture in the Boston area of that Yankee thriftiness, even when one had money," Riley said. "That's changed in the city of Boston but the mentality still resides in the suburbs, and that is impacting Natick."

Boston, with its influx of tourists, wealthy empty-nesters, and stylish yuppies, has had better success proving its fashion sense, keeping busy new stores like Jimmy Choo and Gucci. Fashionistas on the North and South shores are also more likely to hit the Boston Neiman Marcus and the shops on Newbury, rather than head out to the western suburbs, according to Mike Tesler, president of Retail Concepts, a consultant firm in Norwell who was not involved in the project.

The combination of Gucci's multiple delays, the pullout of Piazza Sempione, and other vacancies in the new wing has worried some retailers about the future of the mall. Gucci would not comment on the reasons behind its delays, and Piazza Sempione would only confirm that it had backed out of the lease in Natick.

Tesler, who recently visited Natick Collection for a business lunch, said only three other cars were parked in the new premium lot, which charges $5 and is closer to the luxury wing. Over the five times he's visited the mall in recent months, the number of cars in the lot has decreased with each trip.

Several Neiman Marcus employees, not authorized to speak publicly to the Globe, complained of very slow sales and Neiman bosses instructing employees to make calls to the same customers two to three times a week to seek more business.

Retail analysts believe Natick will ultimately be successful, but it may take some time.

"At cocktail parties in Chicago, LA, and New York, they talk about fashion the way we talk about sports. The focus on fashion is less and less as you get out in the suburbs," Tesler said. "That is gradually changing, but there's some education and work to be done."

Paula Brennan, assistant store manager at The Art of Shaving, said the new section of the mall is pretty empty during the week, and even during busy weekends, people seem to be merely window shopping. The upscale shaving business has stayed afloat because of customers who work in the city, bought products at the Copley Place shop, and are looking for replenishments at the Natick store, near where they live.

Sel de La Terre partner Frank McClelland said his French restaurant has met expectations in Natick, but attributed the success to its regional reputation.

"We're more of a destination and not reliant on mall traffic as much as other retailers," McClelland said.

The economy certainly isn't helping Natick, with luxury retailers, once the pillar of strength, showing signs of lost momentum nationwide. Louis Constant, a salesman at Tommy Bahama, which sells high-end resort wear, said he blames slow business in Natick on customers being more conservative with their spending. Across the industry, sales at stores open at least a year have fallen recently at upscale merchants, including Saks Inc. and Nordstrom, which reported declines of 2.9 percent and 9.1 percent respectively.

But in Natick, department store Nordstrom is one of the exceptions. Retail analysts say the newness of Nordstrom - Natick was the first location in the state - along with its broad price points make it more accessible for shoppers, offering $1,200 Versace top coats and $30 T-shirts. Nordstrom spokesman Michael Boyd said the company has "been really pleased by the results we've had in Natick," but would not comment on whether sales had met or exceeded expectations.

Riaz, owner of boutique Stil, said she has followed Nordstrom's lead and changed the mix of her wares in Natick to include more lower-priced items over the past two months. She now sells T-shirt dresses for under $100 alongside her $800 dresses.

Nadia Nielsen, 21, of Wayland, recently had a dose of sticker shock after walking out of Neiman Marcus empty-handed. As she headed to the older part of the mall, Nielsen questioned the idea behind the upscale shopping experience.

"Out here in the suburbs, people are pretty casual," she said. "When you go to Whole Foods and wear heels, you feel too dressed up."

But the Natick Collection does have its hard-core loyalists, like 32-year-old Vivian Wexler.

"Yes, it's conspicuous consumption at its finest, and I am ashamed to admit that it rocked my world down to the core," Wexler said. "However, even if you're not a die-hard capitalist, you'll be astounded at how . . . convenient it is to go to one mall and be able to get your entire list of holiday gifts. They've got such a diversity of stores that it's mind-boggling."

But her last visit to Natick? December.

Source: Boston Globe

Redstone sees a new market niche in live venue

In her black leather jacket with "Patriot Place" stitched in red and blue on the front, National Amusements president Shari Redstone linked arms yesterday with her new partners Robert and Jonathan Kraft at a glitzy press conference to launch Showcase Live.

In August, the new state-of-the-art live entertainment venue will open at the Krafts' shopping extravaganza, Patriot Place, next to Gillette Stadium. The new venue will have 500 seats, dinner service, and acts from Chaka Khan to Dave Brubeck to Boyz II Men. Redstone, 54, has focused on reinventing the Dedham movie business and quieting family clashes that spilled into the public after a critical letter by her media mogul father Sumner Redstone was posted to Forbes's website. In the letter, Sumner Redstone lashed out against his daughter over issues of succession and the future of the cinema chain. Shari Redstone spoke with the Globe at yesterday's event.

Q. There are tons of music and entertainment venues around New England. How does Showcase Live fill a niche?
A. It's going to be a much more sophisticated, intimate, and luxurious environment than exists anywhere else. The experience is going to be at a much higher VIP level. VIP packages will include concierge services and reserved tables for events.

Q.Why is live entertainment necessary for National Amusements?
A. There isn't any movie theater business out there today that doesn't have to re invent itself. We've been successful in what we've done in the theaters by bringing alternative programming and by bringing live entertainment. The feedback we've gotten from live entertainment is that people really love it, and that was where we came up with this idea for a live music-comedy venue.

Q. Why Patriot Place?
A. We spent a lot of time looking at what would be the ideal first location to launch the project, and of course, there's nothing more well-known and more prominent and more accessible in the area than Patriot Place in Foxborough.

Q. Cinema chains like National Amusements make most of their money from concessions. Will the Showcase Live business model be the same?
A. A lot of revenue will come from concessions, and that's why it's really important to us to provide great food, to have signature cocktails, and to really make it a place people will want to go to all the time, not just to see the great talent but to have a wonderful dining experience.

Q. How does Showcase Live fit in with the overall long-term vision of the cinema business?
A. I'm looking at creating entertainment destinations within our theaters right now and this would be a wonderful adjunct to that business. We will be looking at it as a stand-alone business and you might see Showcase Live where you don't see one of our Cinema De Lux theaters. And I look at expanding not only domestically but around the world. This would be a great concept for Russia and South America where people love entertainment, they love to go out in the evenings. We look at this as our flagship, but also an opportunity to learn and figure out where we could take it next.

Q. Would you consider converting cinemas into Showcase Live venues?
A. It would really be hard to re-create this merely by retrofitting an existing auditorium. That doesn't mean that we wouldn't add a new facility to a place where we have an existing theater. But to do this right, we really need to build it from scratch.

Q. Your father has long expressed doubts over the long-term viability of the movie business. What does he think about this new venture?
A. I'm sure that he'd be really proud of what we're doing here today. We're reinventing the business and doing everything that we can to not only ensure the success in what we do, but getting involved in new concepts and building new businesses and continuing the success of the company that was started by my grandfather.

Q. How do you feel about your father's critical letter that was posted to Forbes's website last summer?
A. I'm not going to comment on any personal relationship issues.

Q. Is your father still trying to negotiate a buyout of your 20 percent stake in National Amusements?
A. I'm not going to comment on any personal business issues.

Q. When was the last time you saw your father?
A. You don't want to keep asking me questions that I'm not going to answer.

Q. The popular video game Grand Theft Auto IV is being unveiled this week and could be the most lucrative launch in entertainment history, beating out any movie debut. How does that make you feel, being in the movie business?
A. I used to say when I first came into this business that I was competing with other movie theaters. Then I realized I was competing with all out-of-home entertainment. Then I realized I was competing with out-of-home entertainment and in-home entertainment. And now I'm competing for people's time. The video game business is something that's strong and certainly something our patrons are very interested in. But that is why we are focused on giving our patrons a compelling reason to go to the movie theaters. That is why we provide a VIP experience, why we have luxe level service, so people can have martinis and food in the auditoriums. That is why we have Showcase Live. We know we have a lot of competition out there and we don't stay there with our head in the sand.

Source: Boston.com

Boston: Samuels & Associates Completes $10M Purchase

BOSTON-An automotive service center, that has been a fixture in the city’s Fenway District since the 1970s, has been sold to an affiliate of local developer Samuels & Associates. The buyer paid just under $10 million for 1345 Boylston St. to its owner/operator, Goodyear Tire & Rubber Co., which signed a short-term leaseback of the property.

The purchase of the Fenway building, apparently, has been in the works for some time, with Samuels & Associates forming 1345 Boylston St. LLC, more than two years ago, before then changing the name to Fenway Enterprises 1345 Boylston St. LLC, in late 2007, which acquired the asset. Calls to Goodyear in Akron, OH, and to Samuels & Associates principal Steven Samuels at his Newbury St. headquarters in Boston were not returned by press deadline.

The $9.9 million paid for 1345 Boylston St. was more than twice what the $4.4 million that Goodyear’s 30,000-sf property is valued at by the Boston Assessing Department. If history is any guide, Samuels is likely eyeing the parcel for development, having already undertaken two major commercial projects in the immediate vicinity. Samuels and partner Boylston Properties built the 576-unit Trilogy Apartments mere blocks from 1345 Boylston St., and Samuels is constructing another high-rise across the street at 1330 Boylston St. That project includes 450,000 sf of space that combines office, residential and retail with three levels of underground parking.

All of the activity is within a few blocks of Fenway Park, home to the Boston Red Sox for close to 100 years. After a concept to erect another ballpark next door fizzled when the team’s new ownership opted to preserve the revered stadium, a revitalization of the area slated for demolition has been underway for much of the decade. The Fenway now features a growing strip of restaurants and retail, a multiplex cinema and the two apartment developments. Meanwhile, Trilogy Partners' partner, Boylston Properties, is building a six-story life sciences facility to take advantage of the Fenway’s location next to the Longwood Medical Area. Boylston Properties paid $8.7 million for the site at 121 Brookline Ave. where the building will be constructed, as reported by GlobeSt.com.

NJ: 93,000-SF Center To Get Upgrade

OLD BRIDGE, NJ-The Lightstone Group is getting ready to launch a major renovation of its Browntown Shopping Center, a 93,250-sf strip on Route 516 here. The specific cost hasn't been released, but company officials term it "a multi-million-dollar" project. The center, which dates to the early 1960s, was acquired in 2003 from the estate of Saul Cantor as part of a three-center portfolio for $20 million.

"This reflects our continued reinvestment in our existing portfolio," says Jeffrey Dash, VP of retail leasing and management for the Lakewood, NJ-based Lightstone Group. The renovation will include a general building facelift and enhanced lighting, parking and landscaping, according to Dash.

Long-time major tenants New York Sports Club, Drug Fair and Wendy's remain in place as the property's anchors. Browntown Shopping Center is currently listed on Lightstone's website with a total availability of approximately 6,100 sf.

"We plan to also remodel the interior and exterior of our store as well," says Timothy LaBeau, president and CEO of Drug Fair, a regional Somerset, NJ-based chain with 40 stores in New Jersey. The other two centers acquired from Cantor in 2003, Millburn Mall in Vauxhall, NJ, and Newbridge Shopping Center in Bergenfield, have both also subsequently undergone major renovations.

Source: GlobeSt.

DC: Kettler secures $217M for Leesburg project

Kettler will get a hand from Sovereign Bank as it proceeds with a major mixed-use project in Leesburg.

Kettler and its development partners, Dallas-based Cypress Equities and District-based The Carlyle Group, secured the loan for the Village at Leesburg development. The project will have 1.2 million square feet of residential, retail, restaurant and office space when complete.

Sovereign Bank is the administrative agent for several national and local financial institutions that are providing the loan to Kettler.

An open-air shopping market at the Village at Leesburg will be anchored by a Wegmans supermarket.

As part of the project, McLean-based Kettler and Cypress are building a new $31 million interchange on Route 7 that is expected to be finished by July 2009. The development is located at the juncture of Route 7 and Crosstrail Boulevard.

Aside from the commercial space, the 150-acre Village at Leesburg will include 335 luxury apartments.

Source: Washington Business Journal

Developer picked for 16 acres at Fort Point

Postal Service moves plan to redevelop annex site forward

The Postal Service has named the big real estate firm Jones Lang LaSalle to develop the annex site it will vacate, 16 acres on Fort Point Channel in a rapidly developing section of downtown near South Station.

Jones Lang LaSalle beat out a team made up of the Beal Cos. of Boston and the Related Cos. of New York, as well as three other companies in earlier bidding, for the right to turn the property into a bustling mixed-use urban development.

Last year, the Postal Service said it would sell the site and move farther down Summer Street, next to the Reserved Channel on the South Boston Waterfront.

The selection of a developer begins a long process. Permitting for the annex's redevelopment and construction of a new Postal Service facility could take five years or more, officials said.
"Our piece of property seems to hold the key to the renovation of the whole waterfront," said Bob Cannon, public affairs manager for the Postal Service in Boston. "That simply can't happen while we stay here."

Jones Lang LaSalle executives said they will meet with abutters, neighbors, and city officials before deciding what to propose to build there.
The site is currently zoned to accommodate about 6.2 million square feet - or roughly the same amount tentatively planned for the 23-acre Seaport Square project on the South Boston Waterfront.

The Postal Service site is subject to the stringent limitations and requirements of the state's Chapter 91 law, which governs waterfront property, as well the city's exhaustive permitting process. In the end, the development could be smaller than current zoning al lows, in part because of the extensive amount of open space that could be required.

"Our plan will focus on the public realm and public access," said Daniel J. St. Clair, managing director at Jones Lang LaSalle.

The developers will have to coordinate their project with the planned expansion of rail lines at South Station, which could include as many as six new tracks to accommodate increased commuter-rail traffic from the south and Amtrak trains.

The Postal Service will now begin negotiating a purchase-and-sale agreement with Jones Lang LaSalle. It could be completed this year, and under the current plan the sale of the site would not be completed until all city and state permits are in place, and a project of a specific size is proposed.

The price of the property would be determined by how much the developer is permitted to build.
Vivien Li, executive director of the Boston Harbor Association, noted the area has several other major developments in planning, including an office tower behind South Station, plus great access to transportation, all of which will result in an exciting new neighborhood.

But, she cautioned, it will take time.

"It's a very complicated site," she said. "It will just help to bring even more people down to the waterfront, but the planning itself is going to take many, many months."

Jones Lang LaSalle has experience in that. The firm, or Boston-based Spaulding & Slye, which it bought in 2005, previously managed the complex permitting for large development sites, including Fan Pier on the South Boston Waterfront, NorthPoint, a 45-acre mixed-use project in East Cambridge, and the redevelopment of historic Russia Wharf.

"We've master-planned 10 million square feet in 10 years," a happy Kyle B. Warwick, managing director for investment development of Jones Lang LaSalle, said yesterday. "That has been our expertise."

Jones Lang LaSalle is the managing partner in a joint venture on the Postal Service site with Walton Street Capital, a real estate investment firm it has had business relationships with before. The development team includes CBT Architects of Boston and urban planner Ken Greenberg of Toronto.

None of the three big sites Jones Lang LaSalle moved forward is finished, but all are under construction. NorthPoint is being sold but is stalled as its current owners, including Jones Lang LaSalle, resolve a lawsuit with their partner.

The Beal-Related team, which is building The Clarendon, a residential project in the Back Bay, expressed disappointment that it wasn't selected "to work with the USPS to develop what we believe will be a new front door to downtown Boston."

Source: The Boston Globe

NJ: Chelsea Starts 435,000-SF Outlet Mall

TINTON FALLS, NJ-Legal challenges had tied the project up for a couple of years, putting it behind schedule, but Chelsea Property Group’s Jersey Shore Premium Outlets is now on target for a November opening. As reported by GlobeSt.com, the legal delays were related to traffic patterns, construction of an overpass and stormwater management regulations.

As GlobeSt.com previously reported, the 435,000-sf shopping complex finally passed muster in late 2007, and a subsequent groundbreaking kicked off the project’s current construction. "We are well under way, and are on schedule for a November opening," confirms Michele Rothstein, SVP of the Roseland, NJ-based Chelsea, a division of Simon Property Group. As reported in the Simon 2007 annual report, the estimated gross cost of the project is $157 million.

Premium Outlets' construction

The shopping center is rising on 60 acres at Route 66 East and Essex Road along this community’s border with Neptune Twp., and will have a total of 120 stores with a fashion-oriented, upscale tenant mix. That tenant mix will also include a food court.

The single-level, village-style center will be Chelsea’s third in New Jersey bearing the company’s Premium Outlet brand, joining properties Flemington and Jackson. The site is also directly off an exit of the Garden State Parkway.

As far as tenants, "we have yet to announce stores’ names, but will do so to coincide with a large job fair several months before the opening," Rothstein tells GlobeSt.com. Retail names that had earlier surfaced during the approval process included Saks Fifth Avenue, Brooks Brothers, Armani and Nordstrom. And Ann Taylor Loft has posted a hiring notice on its website relating to a location in this Monmouth County township.

"During construction, the development is creating more than 300 construction jobs," Rothstein says. "Upon opening, the center will provide between 800 and 1,000 permanent and part-time jobs. It is projected to generate more than $170 million annually in retail sales, and annual real estate property tax revenues of more than $1.2 million."

Source: GlobeSt.

Demolition Moves $189M Mixed-Use Project Forward in Virginia

The Aquia Towne Center in Stafford County, Va., is about to be reduced to rubble in order to pave the way for the continued redevelopment of the shopping center into a 725,000-square-foot mixed-use destination. Ramco-Gershenson Properties Trust will spend $189 million on the redevelopment effort.

Located about 25 miles from Washington, D.C., and five miles from the Marine Corps Base at Quantico, Aquia will feature 350,000 square feet of premier office space, 250,000 square feet of retail space, 125,000 square feet of entertainment offerings and 287 residential units. The architectural firm of Brown/Craig/Turner is overseeing the design of the new live-work-play site that will replace the 240,000-square-foot, 19-year-old strip mall that Ramco-Gershenson acquired for $22 million 10 years ago.

Ramco-Gershenson has already completed one facet of the project, having delivered in January a 100,000-square-foot office and retail structure that is predominantly occupied by Northrop-Grumman. Aquia, in its entirety, is on schedule to emerge from its massive makeover in 2011. The completion date is quite apropos, as Stafford County and surrounding Northern Virginia communities will grow by leaps and bounds due in great part to the 3,000 workers that will relocate to the Quantico area by 2011 as a result of the U.S. Department of Defense's 2005 Base Realignment and Closure process.

Ramco-Gershenson has already completed one facet of the project, having delivered in January an office structure that is 66 percent occupied by Northrop-Grumman.

Headquartered in Farmington Hills, Mich., Ramco-Gershenson is a fully integrated public REIT that owns, develops and manages community shopping centers, regional malls and single-tenant retail properties across the country.

Source: Commercial Property News

VA: Prime Outlets - Williamsburgh to Expand

WILLIAMSBURG, Va., April 11 /PRNewswire/ -- Prime Retail, one of the largest developers of outlet centers in the country, will unveil a 115,000 square foot, $55 million expansion, to include 25 new top designer and brand- name stores and a 300-seat food court, at Prime Outlets - Williamsburg on Friday, April 18 at 11:00 a.m. With a total gross leasable area of 456,922 square feet, the region's largest outlet shopping destination will now offer shoppers 120 stores.

Located on Richmond Road, four miles from I-64, Prime Outlets - Williamsburg serves the Williamsburg, Richmond and Norfolk metro markets. The shopping center will celebrate the public grand opening of its newly expanded property with local officials and its construction partners at a ribbon cutting and tree planting ceremony beginning at 11:00 a.m.

Adidas Factory Outlet, American Eagle Outfitters, Burberry, COACH Factory, kate spade, Kenneth Cole, Juicy Couture, Lucky Brand Jeans, PUMA, Skechers, Tommy Bahama and True Religion Brand Jeans will join leading brands such as BCBG MAX AZRIA Factory Store, Calvin Klein, Michael Kors, Nike, Polo Ralph Lauren and Under Armour at Prime Outlets - Williamsburg.

According to Prime Retail's Senior Vice President of Marketing Karen Fluharty, the expansion project at Prime Outlets - Williamsburg represents the company's commitment to create large, well-tenanted outlet centers throughout its portfolio.

"We are enhancing the shopping experience for both regional shoppers and tourists alike at Prime Outlets - Williamsburg. Our goal is to offer a large and compelling mix of leading designer and brand name stores that offer shoppers everyday savings of up to 65 percent off regular retail
prices in major markets throughout the U.S."

In addition, the expansion at Prime Outlets - Williamsburg was designed to comply with federal requirements for "green building." Construction elements including the largest pervious concrete paving project in the U.S., eco-conscious storm water management, rain water recycling irrigation and reduced water consumption will qualify the property for LEED certification (Leadership in Energy and Environmental Design).

Prime Outlets - Williamsburg's public grand opening weekend schedule of events include:



-- A complimentary, limited-edition Prime Outlets - Williamsburg "Green is Gorgeous" canvas tote bag for the first 500 shoppers visiting Guest Services located in the food court on Friday, April 18.
-- Special merchant discounts and offers during extended grand opening weekend shopping hours from Friday, April 18 through Sunday, April 20.
-- The chance to win Prime Outlets - Williamsburg's Ultimate Shop and Stay Sweepstakes worth $1,000.

Source: PRNews

Council OKs Chelsea Outlet Mall Deal

Published: Friday, April 11, 2008

By KAREN LOVETT, Telegraph Staff

MERRIMACK, NH – The town council propelled a proposed outlet mall through its next step Thursday but not without some reservations about the project.

A majority of councilors authorized the execution of a development agreement with Chelsea Property Group, which is vying to build an outlet mall off Exit 10 on the F.E. Everett Turnpike.

The agreement was put together by the planning board, town staff, consultants, attorneys and Chelsea’s representatives. The 16-page document represents a baseline of requirements that Chelsea must comply with and holds the company to earlier promises.

Though Chelsea has mostly dealt with the planning board, the town council was brought on board to sign off on the development agreement in part because of financial impacts to fire, police and emergency services.

However, some were not pleased about signing an agreement that they had no part in negotiating.

Councilor Mike Malzone said it felt like “signing somebody else’s homework.”

“Believe me, the planning board did do the best they can,” Chairwoman Betty Spence said. “My expectation of it was different, and I didn’t realize that I would be sitting here today with an agreement in front of me, that I had no say in negotiating, that I was being asked to execute.”

Councilor Tom Mahon, liaison to the planning board, and others who worked on the agreement described it as simply part of the permitting process. Most concerns raised about the agreement, they said, would be addressed in a much stricter site plan review by the planning board.

Still, some residents and councilors were concerned about what they called general vague language and unanswered questions.

Concerned Citizens of Merrimack Alliance members Mike Mills said the document was “poorly written and incomplete,” and Jamie McFarland added, “I looked at this development agreement as very much a cookie-cutter agreement.”

Mills presented a laundry list of issues, including: enlarging the area qualifying people for property surveys before rock blasting; excluding holidays from blasting operations; and undefined police patrols.

Councilor Tim Tenhave echoed their worries, saying he wasn’t convinced traffic had been fully addressed or that Chelsea’s pledged $650,000 for the fire department would be adequate to cover its needs.

Councilor Dave McCray said he couldn’t “write a letter long enough to capture everything he’s uncomfortable with,” but that he trusts the planning board and Chelsea to work through it.

“We have been put in a very tenuous position, a lousy position,” McCray said. “My feeling is this has been going on three years . . . to me it is about faith.”

On the measure to execute the agreement, including a letter outlining council concerns, Mahon, McCray and Finlay Rothhaus supported, Spence opposed and Malzone and Tim Tenhave abstained. Councilor Nancy Harrington dismissed herself from the discussion because she is a neighbor and has been a vocal opponent of the project.

Source: Nashua Telegraph

Mass. AG proposes changes to Brownfields regulations

Changes to the state's Brownfields regulations have been proposed by Attorney General Martha Coakley to encourage more redevelopment of abandoned or contaminated properties by making the state's application process more user-friendly, less complicated and more predictable, it was announced Thursday.

The Brownfields Covenant Program, which began in 1999, encourages the cleanup and development of old industrial sites by providing state liability protection to individuals or companies that undertake redevelopment projects.

"Brownfields redevelopment is an important part of our economic development; it allows us to make our communities cleaner and safer, and contribute to smart growth in the already-developed areas of the state," said Coakley in a statement. "By making the process for acquiring Brownfield Covenants more timely and predictable for developers, we are offering more incentives for this kind of development."

The amendments Coakley has proposed include reducing the public comment period from 90 to 30 days for applicants who did not cause the contamination; clarify procedures such as public comment deadlines and the rights of affected third parties; eliminate some procedures on particularly difficult cleanups; and create a more streamlined and predictable process for those applying to undertake Brownfields projects.

The attorney general's office also is releasing the findings of a public review of the program that took place last year, when developers, communities and environmental specialists suggested revisions to the Brownfields covenants. The report is available at www.mass.gov/ago.

Since it was approved a decade ago, the Brownfields Covenant Program has allowed more than 30 properties statewide to be redeveloped into affordable and market-rate housing, commercial and industrial buildings, and parks. The revitalization of once-blighted areas has led to new jobs and tax revenue, restored buildings and infrastructure, provided and clean open space for neighborhoods.

"We would like to acknowledge Senator Harriette Chandler, who has been examining how to build on the successes of the 1998 Brownfields Act, and all who participated in our program review process," said Coakley. "These conversations will help our program to continue to respond to the needs of developers, communities and the environment."

Three public hearings on the proposed regulations are planned: 2 p.m. May 2 at Worcester City Hall, noon May 5 at Lynn City Hall and 10:30 a.m. May 7 at the Attorney General's office, 1 Ashburton Place in Boston.

Source: Boston Business Journal

Despite Bad Economy, New Mall Planned

Legacy Place To Feature Restaurants, Shops

BOSTON -- Groundbreaking began Thursday in Dedham on the construction of a 675,000-square-foot open-air shopping center that will house dozens of restaurants and shops.

National Amusements and WS Development said that Legacy Place will feature a contemporary blend of more than 60 of the nation’s leading fashion, restaurant and entertainment tenants. Located at the intersection of Route 1 and Interstate 95, the center will house a Whole Foods Market, L.L.Bean, Borders and Kings -- a restaurant offering billiards and bowling. The center will also be home to the new world headquarters for National Amusements.

Legacy Place will also have a Showcase Cinema de Lux -- National Amusements’ high-end entertainment concept. The 15-screen theatre will include a new premium, reserved-seating concept called Lux Level, which features in-seat dining and a lounge.

Legal Sea Foods, P.F. Chang’s China Bistro, Yardhouse, Aquitaine, Ruth’s Chris Steak House, and Daily Grill will blend with more than 60 specialty stores. These include: Anthropologie, Victoria’s Secret/Pink, Lucy, Glee, b.good, Banana Republic, National Jean Company, Gap, Bath and Body Works, Levi’s, Finale, Clarks, Lucky Brand Jeans, nau, Company C, Green Tangerine Day Spa and Salon, Urban Outfitters, Stil Hus, Stride Rite, Free People, Au Bon Pain and lululemon athletica.

"We're thrilled to work with National Amusements and begin construction on this phenomenal project,” said Jeremy Sclar, president of WS Development. "We’ve spent years thinking, planning, designing, and redesigning to achieve the right architecture, the best tenants, and the most enjoyable experience for the visitor. When it opens, we believe Legacy Place will not only be one of the best shopping and entertainment destinations in New England, but in the entire country."

Legacy Place is scheduled to open in the summer of 2009.

Source: TheBostonChannel.com

DC: Sequel for the Strand Theater

A team led by D.C.-based Banneker Ventures LLC and the Deanwood Baptist church plans to rebuild the 80-year-old District-owned Strand Theatre into a 36,000-square-foot mix of office space for nonprofits, retailers, restaurants and arts uses.

A November solicitation to redevelop the two-story former movie theater, at 5131 Nannie Helen Burroughs Ave. NE, received only one response.

But city officials decided to go ahead with the deal, saying the site has the potential to be an anchor for surrounding neighborhoods and could boost the planned $576 million redevelopment of distressed housing in Lincoln Heights and Richardson Dwellings.

"If the city can do so much downtown and in Georgetown and everywhere else, why can't they do it here?" asked Stephen Young Sr., pastor of Holy Christian Missionary Baptist Church across from the theater. He helped create a community development corporation so the church could leverage a 4,500-square-foot parcel next to the theater for the project.

The plan, presented April 1, calls for expanding the existing building and adding two stories, creating 18,000 square feet of retail and a second-story restaurant, 17,000 square feet of office space for community groups, 1,600 square feet for cultural institutions and a restoration of the Strand's facade.

Designed by D.C.-based Martinez & Johnson Architecture and being constructed by D.C.-based Blue Skye Development and Construction, the development is expected to create 30 to 40 jobs.

The development might have been bigger if the city or the development team succeeded in buying out the owners of China Cafe Carryout behind the theater.

The project, expected to cost $12 million to $14 million, will likely require an undetermined additional contribution from the city.

A D.C. official said the deal makes sense despite the lack of competitive bids.

"I can't say why we only got one," said David Jannerone, director of development for the city. "But that's OK because we're happy with the one we did receive."

He pointed out that even renovations of historic theaters in hotter real estate areas, like the Lincoln Theatre on U Street NW or the Howard Theatre in Shaw, require public money to rebuild and operate.

Unlike the Lincoln and the Howard, plans for the Strand do not include a theater.

Instead, developers proposed a combination of neighborhood uses such as a restaurant and catering company, Sinfully Wright, and a tutoring nonprofit, Positive Choices Inc. Councilwoman Yvette Alexander, D-Ward 7, said she expects the Ward 7 Arts Collaborative Inc. would also have a role.

Source: Washington Business Journal

Changes Ahead for Mixed Use Developments

Just when it appeared that the industry was getting a handle on this mixed-use thing, the housing market had to go and shake things up. Now the residential components of mixed-use projects don't look quite as appealing as they once did. At the same time, the fallout on Wall Street from the subprime implosion has made capital scarce.

Less money means that design visions have to be compromised. Developers are slashing budgets. So you can forget about using exotic materials or doing anything that's too out of the norm.

Welcome to 2008.

For the past few years architects have embraced the mixed-use trend with open arms. No one is building regional malls. Instead, the largest projects coming on-line today feature a combination of retail, office, hospitality and residential. You can't just throw a bunch of different uses on a site and expect it to work. Design matters in making a project work. Finding the right tenants and the right aesthetic requires a deft hand. And it has resulted in a flurry of compelling environments rising across the country — enough to lead communities once averse to new construction to come knocking on developers' doors asking for their own mixed-use meccas.

All of that gave retail architects a powerful say in the process. Cookie-cutter boxes were out. Every mixed-use project tries to be different. The most successful designers found a way to placate egos and blend brands and uses. But now they have a new challenge. With the economic landscape shifting underfoot, it's time for architects to again burn the midnight oil and rethink schemes to create projects that can still work in spite of the new uncertainties. Architects dealing with this new reality offer this bracing counsel: “Be ready to change your design on the fly.”

Back to the drawing board

Somerville, Mass.-based Arrowstreet Inc. reports that more and more it designs mixed-use projects with the expectation that the design will change even after construction starts.

“I think the marketplace is much more complex for the tenant,” says Scott Pollack, principal with Arrowstreet. “It's very hard to read what different markets are going to want out of the tenants.” So Arrowstreet is “much more careful to design more flexibility into the project.”

To wit: Arrowstreet's plan for Wayside Commons in Burlington, Mass., called originally for a high-end grocer that Pollack declines to name. But the grocer deal never bore fruit and Arrowstreet scrambled to re-create the two-level, 215,000-square-foot project. When it opened in late 2006, its tenants were L.L. Bean and Borders.

The same kind of thing can happen with much larger projects — and it falls to the architect to adapt the design and make it all work. At the Bravern, a one-million-square foot mixed-use project in Bellevue, Wash., developer Schnitzer West LLC started signing retail deals before it signed up office tenants and even before it committed to residential, says architect Stan Laegreid.

Then Neiman Marcus signed up as an anchor in the 300,000-square-foot retail space. That meant an upgrade in the housing component, and Neiman Marcus and upscale housing in turn pointed to a premium collection of luxury and boutique shops flanking the anchor. “We wanted to be real consistent about what the retail offering was,” says Laegreid, principal with the Callison architecture firm in Seattle. “Once we did the Neiman Marcus deal, that started to positon the whole project It pointed to a premium collection of shops,” says Laegreid.

Retail developers and their tenants don't like change, however. Getting them to agree to new combinations may not be so easy. But that's the direction in which designers will push. If you're involved in a mixed-use project, don't be surprised by things becoming more uncertain. And if that happens, architect Pollack has this advice: overcommunicate.

Owners, leasing agents, construction managers and architects should meet weekly — or more. “If you meet on Wednesday and something comes up on Friday, you may not be able to wait until the following Wednesday to meet again,” Pollack says.

And get unit costs from suppliers, he adds — detailed prices for specific materials. If you redesign midway and need more building supplies, unit costs will help you patch up your budget with some precision.

Meanwhile, anticipate more active financiers. Banks tend to lend and let you do what you do, but private equity groups are more involved — offering ideas for design and visiting construction sites.

“The private equity groups tend to be very sophisticated about development and construction and leasing issues,” says Arrowstreet's Pollack — on retail as well as other components of mixed-use.

Retail development may see more of this hands-on financier as the economy struggles. “Interest rates are lower,” says Pollack, “but the availability of capital is still fairly tight.”

Projects may need such fresh eyes. The proliferation of lifestyle centers is such that now they compete with one another, not just with the regional malls, says Laegreid. Each such “village,” as Laegreid calls them, must distinguish itself somehow. Food and beverage, for example, is a key component — but you can't count on Starbucks the way you once did. That chain announced early in 2008 that it was cutting back new store plans. So your designer and/or leasing agent may have to look at a hip local independent restaurant as a key draw.

As mixed-use projects get tested by the economic climate, the diversity of uses is allowing development to move ahead, even if some components don't look like strong bets in the present. Uses can be phased. So residential portions of projects can be put on hold for now while development continues on other portions. The fact that mixed-use includes multiple property types lets designers make fine adjustments. “What we're looking for is kind of a niche market,” says Tammy McKerrow, partner and director of design for Jerde Partnership, a Los Angeles architecture firm. “More creative leasing mixes to drive the projects.”

That means, in McKerrow's case, reusing upper levels — such as converting an old department store to residential or an old theater to office, two of her own firm's projects. McKerrow thinks retail will adapt. She sees “a future in more dense areas that are going to be making sense economically — if the customer will get used to it.”

Moving ahead

In spite of how uncertain things may seem today, some architects are soldiering ahead.

Laegreid says he and his clients can't get caught up in the volatility of Wall Street when making long-term decisions. For now, everyone's banking on the economy staying out of recession or — if that happens — that it will be short and shallow. With that view, it makes sense to persist with plans for 2011 and 2012 unaltered.

But it's also an all-or-nothing kind of bet. In Laegreid's view, if the market turns, the projects will go ahead. If things get worse, it won't be a matter of going back and scaling down plans. Instead, a prolonged recession would mean that those projects will be scrapped entirely.

Source: Retail Traffic

Town Centers on the Rise in Southern Virginia

Nestled along the Virginia waterfront between the Atlantic Ocean and the Chesapeake Bay is a region known as Hampton Roads. There, in a handful of cities stretching from Virginia's Newport News south to Norfolk on down to Virginia Beach, just above the North Carolina border, more than a dozen mixed-used projects are in development.

These projects largely are not the sort of vertical mixed-use centers you find in urban environments. Rather, the majority of the mixed-use projects rising in Hampton Roads cities like Chesapeake, Hampton and Portsmouth are sprawling live/work/play hubs meant to create centers of gravity.

And even with a spate of these projects already operating or in development, local industry pros say the area's population of 1.7 million could still stand to absorb even more of these centers.

The development, in part, is the result of officials in cities around the region doling out millions of dollars in incentives for such projects. And consumers have embraced the concepts. The process has unfolded so smoothly, in fact, that the Virginia Economic Developers Association held its fall conference last year in Hampton Roads in part to showcase the region's leadership in urban and mixed-use development.

“It seems like every community has created or is creating a town center. It's sort of been a bandwagon effect,” says John Lombard, director of the Center for Real Estate and Economic Development at Old Dominion University in Norfolk, Va. “It's been a wholesale movement toward the mixed-use environment.”

In just the most recent quarter, 16 retail centers containing nearly 780,000 square feet came on-line — about half of the entire total square footage for 2007, according to Bethesda, Md.-based CoStar Group Inc., a provider of commercial real estate data. Moreover, another 1.2 million square feet of retail space was under construction at the close of 2007.

One such project is the 4.3-million-square-foot Town Center of Virginia Beach. Construction began in 2000. Once it's completed in 2012, the 17-block, mixed-use project will contain more than 800,000 square feet of retail. The $500 million-plus development has established a downtown in a city that had lacked a true downtown and also serves as a model for other projects in the area. The second phase was finished in 2005, the third phase is under construction, and ground-breaking for the fourth phase is slated for later this year.

Another project in the works is the Marquis, in Williamsburg. The first phase is set to open later this year. At build-out, the two-phase retail project — which combines elements of power and lifestyle centers — will encompass about one million square feet and 238 acres.

In Hampton, work has begun to redevelop Coliseum Mall as Peninsula Town Center. The open-air mixed-use town center, scheduled for completion in 2009, replaces the 35-year-old enclosed mall, most of which has been demolished. The project, with a price tag exceeding $200 million, will feature more than one million square feet of retail, dining, office and residential space on 75 acres.

And in Suffolk, the mixed-use Harbour View Station Town Center will contain about 600,000 square feet of retail, as well as offices, apartments, condos and a hotel. The 3-million-square-foot development is on track to be completed in 2013.

Riptide

While city officials, developers and shoppers are giddy about town centers, some observers express “cautious optimism” about the near-future outlook for the Hampton Roads retail sector as a whole. Spooked by the slumping national economy, some retailers are skittish about committing to deals in Hampton Roads just now.

“A lot of the retailers are evaluating whether there is a true recession or whether this is one that got self-prophesized,” says John Knibb, senior vice president and partner at commercial real estate firm Divaris Real Estate Inc. in Virginia Beach.

Michael Gurley, senior vice president of commercial real estate firm S.L. Nusbaum Realty Co. in Norfolk, says that although retailers aren't calling him as much as they did last year, the ones that are contacting him are expanding selectively — and all of those retailers are forging ahead with deals in Hampton Roads.

A report from Thalhimer/Cushman & Wakefield, a commercial real estate firm in Virginia Beach, calls this trend “cautious expansion.” Even in the face of this “cautious expansion,” some retailers are backing off from deals at the moment because of the rising prices and falling supply of desirable land in the region.

Monty Spencer, senior vice president of Mid-Atlantic Commercial, a real estate services company in Yorktown, says the supply-and-demand curve for land “is way out of whack.” Further hampering the availability of land, Hampton Roads is hemmed in by the Atlantic Ocean and the Chesapeake Bay as well as several rivers. When it comes to financial considerations, “the pencil has been sharpened for everyone,” Spencer says.

For the past several years, however, developers have been penciling in a lot of retail projects. The stepped-up activity was driven by years of pent-up shopping demand. Spencer says many retailers had ignored the region for quite awhile, particularly because they doubted Hampton Roads could sustain higher-end formats.

While the area's retail development flurry has subsided, retailers and developers are still poking around for opportunities. Chris Rouzie, senior vice president of Thalhimer/Cushman & Wakefield, foresees those opportunities being more prevalent for junior anchors and smaller retailers.

Not to be outdone by the town center barrage, traditional developments remain a part of the retail mix in Hampton Roads. In May during the upcoming ICSC RECon in Las Vegas, S.L. Nusbaum will be promoting six new retail developments in Hampton Roads — none of which are town centers. For example, the 510,000-square-foot, mixed-use Landstown Commons is on schedule to be completed this spring.

In shipshape

Although retailers may be anxious about the national economy, observers say Hampton Roads fundamentals remain strong. For one thing, even though the local housing market has cooled, Hampton Roads has largely been spared from the subprime mortgage mess, experts say.

Retail sales in the region are projected to grow 3.6 percent in 2008, down slightly from 3.8 percent last year, according to a forecast from the Hampton Roads Planning District Commission. The region's unemployment rate in December stood at 3.5 percent, below the national figure of 4.8 percent. The commission estimates the jobless rate for 2008 will be 3.2 percent; a report from Thalhimer/Cushman & Wakefield pegs this year's rate at 3.7 percent. The enormous presence of the military, defense contractors and shipping terminals in the region — the Navy alone employs more than 100,000 people — helps insulate the economy from dramatic fluctuations.

Another insulating factor: the region's “hidden income.” Many of the more than 50,000 military retirees who live in the area draw retirement benefits and also earn paychecks from jobs in the private sector. Knibb, the Divaris executive, says national retailers have taken notice of the “tremendous amount of buying power” in Hampton Roads.

Median household income in the region hovers around $55,000, compared with the national median of around $48,000. A report from Old Dominion University estimates total compensation for Hampton Roads military personnel rose 41.3 percent between 2001 and 2006, while compensation for all other Hampton Roads workers increased 22.6 percent.

However, the region's buying power hasn't shielded the retail market entirely from some rough waters.

During the fourth quarter of 2007, the retail vacancy rate crept up to 5.3 percent from 5.1 percent in the previous quarter and from 4.5 percent at the end of the first quarter, according to a report from CoStar.

The amount of vacant sublease space in the Hampton Roads market climbed steadily in 2007, according to the Thalhimer/Cushman & Wakefield report. At the end of the first quarter in 2007, more than 75,000 square feet of vacant sublease space was available. By the end of the year, that figure had surpassed 100,000 square feet. By jumping to 16.7 percent, Hampton Roads had the ninth largest surge in vacant retail space in the country, according to CoStar.

Still, “I don't think we're to going see any bloodletting in the retail side of the business,” says Tony Nero, president of development at Armada Hoffler Development Co. in Virginia Beach.

HAMPTON ROADS

Population: 1.67 million (2007)

Unemployment rate: 3.5 percent (December 2007)

Active-duty military: 94,573 (2007)

Navy's economic impact: $12.6 billion (2006)

Home ownership rate: 68.3 percent (2006)

Median household income: $51,077 (2005)

Per capita income: $33,163 (2005)

Retail sales: $17.7 billion (2006)

Retail rank: Largest market between Washington, D.C., and Atlanta

People per square mile: 694.2 (2004)

Sources: Hampton Roads Economic Development Alliance, Hampton Roads Planning District Commission, Newport News Economic Development Authority, Norfolk Department of Development, U.S. Census Bureau, Virginia Department of Taxation, Virginia Employment Commission, Weldon Cooper Center for Public Service

Source: Retail Traffic