| Recently we (TKO) received a call
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| | my mind that 99% of all the mall-oriented
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| requesting a proposal for leasing a
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| | retailers within 50 miles knows of the
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| "turnaround" for a mall of a million
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| | project and has a negative view of the
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| sq.ft. that is 65% vacant. Turnarounds
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| | center's future. Yes, there are many
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| like this are extremely difficult, and
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| | mall-oriented retailers I'd love to have
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| often the buyers of these centers have no
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| | and some of 'em might be willing to be
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| idea what they are doing, but because
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| | "bought" in order to entice them in, but
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| they acquired the project for $10 psf or
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| | besides requiring lot's of TI money and
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| less, they think they're getting a
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| | kickouts I don't think they would have an
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| bargain (which they never are). So before
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| | immediate impact on traffic because they
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| going into our services and costs, I
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| | are in every mall.(there are three
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| asked some questions on what its owner
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| | competing malls within 15 miles). Anyway,
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| thought could be done, what type of money
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| | the new buyer asked that I put together a
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| he had for TI, how long the owner
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| | proposal and list of tenants I'd go after
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| anticipated waiting before seeing
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| | and that got me thinking of my "dream
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| results, etc. (why waste both of our time
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| | team of mall tenants" and guess what,
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| if we can't do the job) The good news was
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| | most are not mall-oriented. I want
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| that the new owner recently did a
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| | tenants that build traffic and draw on
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| Steve&Barry's deal, which in my opinion
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| | their own, not needing their neighbors
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| makes sense, since they're so unique that
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| | traffic to survive, at least at the
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| they'll draw from a larger radius than a
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| | beginning. Rent considerations were
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| typical JCPenneys, Sears, Wal*Mart, etc.
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| | secondary, since the center was bought
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| So our conversation started off on the
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| | "right," so we could make it work.
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| right track. (Oh, the center can't be
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| | So here's the type of retailers I'd want
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| demalled).
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| | to start a turnaround with: (not in any
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| The owner also built into his proforma a
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| | order of importance) Five Below (if I
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| substantial TI budget; is prepared to do
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| | couldn't get them, then Dollar Tree), MJM
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| "sweetheart" deals and wait 18 months
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| | Shoes or DSW would be excellent draws;
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| before seeing any real results. A rare
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| | While I'd love a Barnes & Noble or
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| and knowledgeable buyer of distressed
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| | Borders, realistically I can probably do
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| enclosed malls compared to most I meet.
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| | a Book Warehouse or Books-A-Million deal.
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| Our conversations went well, but there
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| | Stein Mart would also be an excellent
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| were two areas I disagreed with him on.
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| | draw, as would Guitar City. Add to the
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| First, when we take over a center of this
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| | list Children's Place, Ann Taylor Loft,
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| size with problems we want to also manage
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| | Radio Shack, Causal Male, Dress Barn,
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| it, not for the money (you never make
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| | Fashion Barn, Mandees, HomeGoods,
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| real money off managing) but because it
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| | Sleepy's, Verizon and in a rear, outside
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| provides us with the degree of control we
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| | location, the Post Office (a great draw
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| need to make a turnaround work. The owner
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| | from 9-to-5), Hancock Fabrics/JoAnn's,
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| felt that currently the amount of tenants
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| | David's Bridal, Cato Fashion, Deb Shops,
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| in the center is small enough where he
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| | K&G Men's Center, Hobby Lobby, Party
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| could manage it until the project begins
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| | City, Shoe Carnival, Famous Brand Shoes,
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| to lease. Yes, he's right, it's small
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| | Petland, Wood Workers Warehouse, Sally
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| enough for him to manage as a one-man
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| | Beauty, Dot's, Eastern Mountain Sports
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| show BUT you have to treat a turnaround
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| | and I could go on and on. As far as food,
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| not only as a leasing situation but also
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| | I'd want a 10,000 sq.ft. Chinese
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| have to "turn" the marketing and
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| | restaurant or Old Time Buffet, they'll
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| management around at the same time so not
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| | cater to my immediate customers and are
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| only are new tenants being solicited but
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| | in the right price points. I can afford
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| the few existing retailers are kept
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| | to do a deal with the Chinese restaurant,
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| somewhat happy. And keeping existing
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| | but can't afford a "Friday's" deal. I'd
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| tenants happy and getting new ones
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| | also want a large and well merchandised
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| interested means that there has to be
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| | nursery somewhere on the outside of the
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| traffic in the center and centers with
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| | property.
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| this low of vacancy usually have no
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| | What I chose are both strip and mall
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| traffic to speak of, which is why the
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| | tenants (in today's world, most retailers
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| center is in trouble (Which came first,
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| | are bi-center...(the political correct
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| the chicken or the egg?).
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| | way of saying it. Ann corrected me; they
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| I've written this before but I'll say it
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| | go either way) and few of the retailers I
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| again, traditional advertising doesn't
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| | mentioned are high rent payers. I picked
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| work for a "C" or lower center. You have
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| | the retailer based on tenant mix and
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| to do "event marketing" in order to have
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| | their ability to draw customers into the
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| an impact. Event marketing means having
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| | center on their own. Neither JoAnn
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| traffic-generating events that bring
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| | Fabrics nor Hancock are high-volume
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| people in for that specific show but then
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| | retailers, but they are "unique," not
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| hopefully they shop the rest of the
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| | usually found at every street corner and
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| center. In traditional advertising, you
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| | command a high degree of loyalty from
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| promote the center, the consumer comes,
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| | their customers. All are
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| but if the center has few retailers, the
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| | destination-oriented tenants, which in
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| shopper is disappointed because of the
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| | the long run will strengthen the entire
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| lack of merchants and they never return
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| | center. Few of these retailers are
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| (you only have one chance to make a first
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| | considered "trophy" tenants, but they can
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| impression). We've promoted gun shows,
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| | all do a lot of good for the right
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| arcade auctions, book events, etc,
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| | center.
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| sometimes bringing in as many as 25,000
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| | Non-category killers, such as a Petland,
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| consumers over a weekend. We gave space
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| | are good traffic builders for a center.
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| for free to hold comedy clubs on
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| | Parents bring in their children to show
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| alternate Fridays and allowed Yoga
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| | the "mini-zoo" to their children and
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| teachers use of stores during the week to
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| | animal lovers of all types can't resist
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| help increase traffic. All our food and
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| | the cute rabbits in the front window. The
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| many of the other stores benefit from
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| | buzz word of our industry today is
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| this increased traffic. They did enough
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| | Lifestyle Centers, but isn't a pet shop
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| volume to keep the existing retailer's
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| | part of a "lifestyle," as is a fabric
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| spirits "up." That's why marketing goes
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| | store or hobby shop or a "Guitar City," a
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| hand in hand with leasing.
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| | well-merchandised nursery definitely adds
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| We also want to have enough control that
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| | to my center's "lifestyle" and we've dont
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| we can minimize the number of retailers
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| | it on the "cheap." Maybe they're not all
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| closing every month, and in a problem
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| | high end merchants but they bring in a
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| center there's always a high turnaround.
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| | dedicated customer willing to spend time
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| I'm a great believer in temporary
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| | and money.
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| tenants, but they have an extremely high
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| | Now in all probability, we won't get the
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| failure rate since most are startups with
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| | account since I'm taking an unorthodox
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| limited capital and with no walk-bye
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| | approach, and all owners would rather
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| traffic, they usually fail. Therefore,
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| | hear that we're going after the Limited
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| you have to be extremely selective on who
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| | instead of Dots. And in the perfect world
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| what you put into the center. Also, we've
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| | I agree, but we don't live in a perfect
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| learned that we have to keep cash flow as
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| | world. First, the Limited builds-out
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| high as possible or at least keep the
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| | costs a fortune and second they are
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| losses low, which means working hard on
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| | already in every mall within 10 miles.
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| lowering CAM costs. Anyway, that's why we
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| | So, while we are making it more
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| "need" the management.
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| | convenient for some customers to come to
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| The next point I disagreed on is that the
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| | "our" center, the drawing power is
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| buyer put together an elaborate and
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| | probably limited to three miles, while a
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| well-documented report on every
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| | "Guitar City" will draw customers from a
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| mall-oriented retailer operating within
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| | larger radius. Problem centers can't
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| 20 miles of his project. You could tell
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| | compete with their successful neighbors,
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| there was a lot of time and effort
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| | they have to complement and that's why
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| researching this info, BUT I'm not sure
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| | leasing and marketing have to take a
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| how useful it is. The center itself is
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| | non-traditional approach.
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| over 20 years old and there's no doubt in
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