Shopping Centers Today

DEC 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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102 S C T / D E C E M B E R 2 0 1 6 shopped only as a value retailer, not as a traditional department store," he said. "What does that do for traditional, full-price-ori- ented retailers in the balance of the mall? Not much." This points to the counterintuitive notion that anchor va- cancies can potentially be good for better-located malls. "If you have a poor-performing store and you can replace it with something that is more productive and more exciting, that can be a rejuvenation for a shopping center," Rome said. "There are some properties where [an anchor vacancy] is a great opportu- nity." Some mall landlords, in fact, are eager to recapture space from their department store anchors. "We are working with a mall in the Carolinas where they are trying to get the anchor spac- es back," Bomar said. "The an- chors are like: 'I am not making a lot, but I'm not losing money, either. How much are you going to give me to leave?' That is hap- pening a lot." As in-line tenants' lease lan- guage grows more flexible, mall landlords will have even more freedom to experiment with tenant lineups that promise to drive higher traffic and sales, says Bomar. "Grocery stores right now are undergoing explosive growth, and so it is not unheard of for a grocer to go in to evaluate being part of a mall," he said. "That would have been unheard of 20 years ago, when they were put- ting JCPenneys in the mall. There are uses now that weren't even remotely considered back then." Finding those new uses will be critically important for some properties. Credit Suisse estimates that about 200 malls are at risk of shutting down if Sears keeps closing money-los- ing stores. Fortunately, in-line tenants' anchor co-tenancy clauses are less likely to hamstring landlords' efforts to find such replacements. n have more volume than the old tenancy," Bieri said. The new anchor tenant at the 1.4 million-square-foot Fairlane Town Center, in Dearborn, Mich., is the furthest thing from a depart- ment store. In October employees from Ford Motor Co. moved into the former Lord & Taylor space at the mall, which is across the street from Ford's headquarters. All told, Ford and Starwood reportedly ren- ovated about 240,000 square feet of space at Fairlane for the office workers. Also emblematic of the diminished role of the department store is Simon's Shops at Clearfork, in Fort Worth, Texas, Bieri points out. The open-air center, slated to open in February, might have been built with three or four department stores in a bygone era. Instead, it is opening with just one — Neiman Marcus — and several high-end restaurants. "The change is accelerating," Bieri said. But as mall landlords continue to replace department stores with offices, theaters, restaurants and other uses, they need to consider how such changes will affect cross-shopping in the rest of the mall, experts say. After all, department stores could bring in different demographic groups than food halls or cor- porate offices. This is why retailers can sometimes be skittish about landlords' anchor-replacement plans. "A lot of these existing retailers are like, 'Yeah, it is going to drive traffic, but what kind of traffic?'" noted Bomar. To promote cross-shopping throughout the mall, he suggests that landlords include strong retail shops in the mix whenever they fill vacant anchor spaces. "You cannot just have food shoppers," he said. "There needs to be a balance." When Macy's announced plans in August to close 100 stores by early 2017 (the retailer had already closed 38 stores this past spring), a sense of alarm spread through the mall sector. But Green, for one, says this could be an overreaction. "Macy's was generating the traffic, certainly, but it is now viewed and "The anchors are like: 'I am not making a lot, but I'm not losing money, either. How much are you going to give me to leave?'" W E I G H I N G A N C H O R S

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