Rick Caruso, CEO of one of the largest and most admired private real estate developers in the U.S. So, what these guys are saying about the future for SPG/Jamestown also applies to most of the other enclosed regional malls. Now, you don’t.”Īnd Nick Egelanian, president of retail real estate consultancy, SiteWorks said, “So now Simon is partnering with a company that’s one of the most clever and nimble, which will allow them to actually be clever and nimble, because they’re going to be in a different world - some of their malls will act like malls and some of them will act more like mixed centers. They’ll go different ways, at different times, in different formats, but they’ll happen, and this is the kind of expertise they need to do it.” Penney remains an anchor worthwhile to draw people, but at the end of the day it’s a numbers game, right? Your whole gig all along was that you got a lot of people coming to the property. You could argue whether Macy’s is a great anchor or not, or J.C. In a Retail Dive article, Shlomo Chopp, managing partner at real estate advisory firm Case Property Services said, “I think there’s a place for malls, and I also think there’s a challenge with regards to a lot of these boxes and anchors. In fact, this traffic slowdown and thus slower growth is so much so that many are breaking their leasing deals, however penalizing, to leave. Today, many department stores have come to believe the malls they have been anchoring for years are in fact anchors around their necks to preventing traffic growth. Ironically, department stores used to be the anchors in malls. The retail industry is right smack in the middle of a transformative era, particularly the legacy regional malls and department stores. Let me rephrase the question to an opinion. Does the acquisition of 50 percent of Jamestown signal a new era for all major legacy malls? SPG is the largest retail shopping center property company in the U.S., with around 241 million-square-feet under its management (Brookfield Properties, second in size with about 155 million-square-feet). In hindsight, I believe SPARC was a short-term tactic supporting a modicum of growth while he rolls out a long-term visionary strategy - transforming select malls to compelling 21 st Century mixed-use destinations. So, let me now tweak my assessment and give David Simon some serious credit. Whoa!!! What I didn’t foresee was SPG’s acquisition of 50 percent of Jamestown. Regardless, I suggest that Simon’s formation of SPARC and subsequent replacing JC Penney and mall vacancies with ABG’s brands, are in fact, short term tactics to find homes for ABG’s relatively stale brands, and for SPG to keep its malls as full as possible, for as long as possible.Īnd indeed in my article, I stated that this move, on its own, was a tactic that would sputter and collapse. Traffic, occupants’ performance, and percentage of occupancy are three that come to mind. In the enclosed mall business, it’s strong, yet we have naysayers out there that don’t believe it.” Our business is strong, growing - in the enclosed mall business. However, he commented on an analysts call, “We have refuted ecommerce taking the malls down. So, is this move a sign that David Simon finally realizes that consumers, and particularly among the younger cohorts, are simply no longer interested in wasting time traveling to, browsing through, or even hanging out in cavernous, drab, and uninspired enclosed malls? Maybe so. Some examples include Ponce City in Atlanta a redevelopment of a former Sears catalog facility Ghirardelli Square in San Francisco and Constitution Wharf in Boston. While there are some well-performing enclosed SPG malls that will continue, perhaps with some experiential tweaking other select underperforming malls will likely require massive overhauls to convert them into the types of mixed-use properties that Jamestown has developed. I may now “eat crow.” Upon closing, Simon’s acquisition of a 50 percent stake in mixed-use developer Jamestown, indicates to me that David Simon, CEO of SPG, does envision a future of reimagined malls, transformed into mixed-use lifestyle centers. One (loser), plus another, plus another, equals zero. By sticking a bunch of stale brands into Simon’s stale malls, including JC Penney, all of them might live another day or two. The only objective and strategy I could imagine, was really a short- term tactic. Today, many department stores have come to believe the malls they have been anchoring for years are in fact anchors around their necks preventing growth.
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