Shopping Centers Today International

MAR 2016

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

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At the Owings Mills Mall, in Baltimore, meanwhile, Kimco is buying out joint-venture partner General Growth, along with some anchor parcels from J.C. Penney and Macy's, to acquire full ownership and revitalize the property as an open-air center. "That allows us to really start from scratch and take down the mall," Flynn said. While the development trend in Manhattan, including the likes of Hudson Yards and Westfield World Trade Center, con- tinues to be for enclosed projects, warmer climates keep lend- ing themselves to open-air center development, according to Baxter. But cool-weather outdoor retail properties in New York state, such as COR Development Co.'s Towne Center at Fay- etteville and Simon's Shops at Nanuet, which replaced Nanuet Mall, are an exception. They are succeeding thanks in part to their convenient access and practical design, she says. "They have shined despite being near large [enclosed] super-regional shopping centers," she said. Though some retailers thrive mainly in a large, enclosed- mall environment, thanks to the foot traffic, compatible ad- jacencies, overall experience and other factors, those that are facing Wall Street or internal pressure to control costs are opting increasingly for open-air centers. This is because com- mon-area-maintenance and marketing expenses are higher in the enclosed malls, says Baxter. But there is a trade-off, she says: "A cheaper center does not always equal a great experi- ence and lots of foot traffic." With fewer options in major markets, institutional buyers have begun looking at the best properties in secondary and tertiary markets, according to Olshan. "Obviously, return on cash remains so low that [large investors] need to put the money out." Smaller investors are more likely to balance their holdings using REIT allocations this year, since real estate finally became its own official sector in the Global Industry Classification Stan- dard in January. GISC had previously listed real estate under "financials," according to a Kimco company blog. Neighborhood grocery-anchored shopping centers stand dominant among shopping center investors for now, says Naveen Jaggi, president of retail brokerage at JLL. "But they are also liking quality A-plus power centers in major markets," Jaggi said. Because retailers are accelerating store growth, construc- tion of new open-air centers is imminent, says Moore, who notes that fewer retailer bankruptcies than had been projected bodes well for higher occupancy rates. Retail REITs, he says, will launch most of the projects "as they have access to capital, whereas the private guys may not. For owners of the best shop- ping centers in a market, the sky is very blue." S C T M a r c h 2 0 1 6 / S C T 37 s i m O n C O n v e R t e D t h e F O R m e R n a n u e t m a l l i n t O a n O p e n - a i R C e n t e R C a l l e D s h O p s a t n a n u e t .

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