FUTURE DEVELOPMENT CHALLENGES TO THE ANCHOR TENANT ORTHODOXY IN RETAIL CENTERS. by Kim Wong Juris Doctorate Boston College Law School 1986 Masters in Business Administration Boston College Graduate School of Management 1986 SUBMITTED TO THE DEPARTMENT OF URBAN STUDIES AND PLANNING IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE DEGREE MASTER OF SCIENCE IN REAL ESTATE DEVELOPMENT AT THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY 1990 SEPTEMBER, 69Kim Wong 1990 The Author hereby grants to M.I.T. permission to reproduce and distribute publicly copies of this thesis document in whole or in part. Signature of the author j Department of Urban Kim Wong tudies and Planning September 1990 Certified by 4e/ Michael H. Buckley Lecturer in Urban Studies and Planning Thesis Supervisor -, Accepted by Gloria Schuck Chairperson Interdepartmental Degree Program in Real Estate Development MASSA4CHUSETTS INSTITUTE OF TEC (n!nnY FP 19 190 LIB 1 DEDICATION This thesis is dedicated to my family. Without the unyielding support that I have recieved from them none of this would have been possible. I promise, no more school after this. To my wonderful Mother, thank you for your unyielding faith and confidence. I only begin to express the immense pride I have in being your son. To my brother Bill, everyone should be so lucky to have a brother like you. I only can hope that some day I can return so much of the support and trust you have given to me. To my sister Ruth Anne, thank you for being the remarkably supportive and caring person that you are. Please know that I very much appreciate the concern that you have for me. Page 2 ACKNOWLEDGEMENTS To my thesis adviser Michael Buckley, I can only say how much I appreciate the time, effort and interest taken out of your extremely busy schedule to help me with this work. Needless to say, my admiration is immense for the diligence and energy you use in attempting to search out the answer to what appear to be seemingly impossible questions. In the writing of this thesis, I feel I have truly learned under both a fine educator and a consummate real estate professional. To Maria Viera, Gloria Schuck and the CRED staff, thank you for your help and patience. To Professors Donald Fishman and Dale Herbeck and John Katsulas and Mary Saunders at Boston College, thank you for your support, interest and learned ears. I very much appreciate our friendships. To the Mayor and Mark Conlin, my friends and colleages at the ICSC Convention in Las Vegas where the idea for this thesis materialized. May there be many more such trips to the Golden Nugget where such interesting ideas, events, and strategies are developed. To V.J. Conlin and Greg Ramsdale, thank you for your patience and fortitude. Now that the thesis is completed, let's start building courses. To my friend and peer Ed McPherson, it was quite a summer. Without you the entire thesis process would have been another typical academic exercise, with you it was an truly excellent adventure. I look forward to many more to come. You can have him back now Doreen. To my dear friend Lauri Webster, thank you for your support and friendship. Your time, care and interest are largely the reason for the completion of this work. I value our friendship immensely. Page 3 FUTURE DEVELOPMENT CHALLENGES TO THE ANCHOR TENANT ORTHODOXY IN RETAIL CENTERS. by Kim Wong Submitted to the Center for Real Estate Development on September 1, 1990 in partial fulfillment of the requirements for the degree of Master of Science in Real Estate Development ABSTRACT This thesis sets forth a series of definitions applicable to the retail and shopping center industries. These definitions are necessary in understanding and analyzing the scope of both industries. The thesis further analyzes the current state of the retailing industry and the significant trends which will likely take place within the industry over the next In addition, this thesis tracks the several decades. history of the development of anchorless retail centers which includes a description of several of the most noted of these type of centers. A number of factors including the financial problems currently facing the department store industry and the increasing difficulty with the approvals process for future site locations has made it increasingly difficult to develop a full-size, anchored regional shopping mall. In response to these problems, a definitive trend by developers has been towards the development of retail centers based on an anchorless design. The primary question being explored in this thesis is whether an anchorless retail center can be developed in such a way that the locational and customer draw characteristic of retail centers with strong anchor The thesis sets forth a tenants can be replicated. series of decision-making formulas in attempting to create a core attraction and tenant-mix which will guarantee a consumer following for anchorless retail centers. Thesis Supervisor: Michael H. Buckley Title: Lecturer in Urban Studies and Planning Page 4 TABLE OF CONTENTS DETCATTn .. . . . .. . . . 2 ACKNOWLEDGEMENTS........... .. . . . .. . . . 3 ABSTRACT................... .. . . . .. . . . 4 . . . . . . 10 ... A- The Market Place-.... . . . . . . 10 ... B- Retailing............ . . . . . . 11 ... C- Shopping Center...... . . . . . . 11 ... . . . . . . 17 ... E- Tenants .............. . . . . . . 18 ... 1- Key Tenants....... . . . . . . 18 ... 2- Tenant-Mix........ . . . . . . 18 ... F- Slot Stores.......... . . . . . . 19 ... I- CHAPTER ONE-DEFINITIONS. D- Anchor Stores........ .... 0 G- Retail Goods......... *..................20 1- Convenience Goods. *..................20 2- Shopping Goods.... *..................20 3- Specialty Goods... 4- Impulse Goods-... H- Thesis Definitions... . .. . . . . .. . . .21 . . .21 ..................21 1- Anchor Tenant Orth )dox. .. . . .. . . .21 2- Retail Center..... .. . . .. . . .22 3- Size of Retail Cent.er.. .. . . .. . . .22 4- Anchorless Retail Cente .. . . .. . . .23 II- CHAPTER TWO- THE RETAILING EXPERIENCE .. . .. . .24 A- The Current State of Retailing..... .. . .. . .24 B- The Future Direction in Retail Shopping.. ... Page 5 o. 27 ... 1- Changing Factors in Retail Shopping Experience..................................27 a- Demographics..............................27 b- Changing Shopping Habits of Consumers in Retail Complexes......................28 1- Declining Amount of Disposable Income Spent on Retail Goods..........28 2- The Polarization of Incomes in Households.............................29 3- The Trend of Job Availability Growing at a Rate Faster Than the Labor Force............................30 C- The Changing Factors in the Retail Industry.... 30 1- The Disarray of the Department Store Industry.....................................30 a- The Growing Number of Consolidations and Acquisitions..........................30 b- The Problems Facing the Department Store Industry............................31 c- Other Problems With the Department Store Industry............................33 1- Site Approval Difficulties............33 2- The Limitations of Key Tenants........33 3- An Overabundance of Retail Space......34 4- The Growing Means of Spending Disposable Income.....................35 D- The Rediscovery of the Village Center..........35 1- The Definition of a Trade Area..............36 2- The Principals Behind Locational Draw.......37 3- The Nature of the Village Center............38 E- The Chain Specialty Merchants..................40 1- The Growth of Chain Specialty Merchants.....40 Page 6 III- CHAPTER 3- THE ANCHORLESS RETAIL SHOPPING CENTER.........................................43 A- The Anchor Store Orthodoxy.....................43 B- History of Anchorless Retail Centers............45 1- Traditional Anchorless Retail Center Prototypes..................................45 a- Market Square- Lake Forest................47 b- Country Club Plaza- Kansas City...........47 c- Highland Park Shopping VillageDallas................................48 d- River Oaks Shopping CenterHouston...............................49 2- Post World War II Prototypes.................49 a- Northgate- Seattle.......................49 b- Southdale- Minneapolis...................51 c- Festival Centers- Various Locations......52 C- The Design and Locational Theories Behind the Anchorless Retail Center...................53 D- The Current Status of Anchorless Retail Centers........................................57 1- Notable Anchorless Retail Centers............57 a- Borgota- Scottsdale, AZ..................57 b- The Atrium- Chestnut Hill, MA............57 c- The Scottsdale Galleria- Scottsdale, AZ............... ........................ 58 d- Forrestal Village- Princeton, N.J........60 IV- CHAPTER 4- THE FUTURE OF ANCHORLESS RETAIL SHOPPING CENTERS...............................61 A- The Growth Patterns in Anchorless Retail Centers.............. .......................... 61 Page 7 B- Current Alternative Forms of Retail Center Design Which Attempt to Recreate the Draw of a Anchor Tenant.............................63 C- A Framework for Developing Clusters of Uses Which Create an Equivalent Locational Draw of an Anchor Tenant.......................67 1- The "Best-Fit" and "Triad Testing" Approach....................................67 a- Site and Use Concept.....................69 b- Core Attractors and Retail Stores........70 1- Core Attractors.......................70 2- Retail Stores.........................74 c- Financial Feasibility of the Project.....76 CONCLUSION...........................................79 ENDNOTES ....... ...................................... 90 BIBLIOGRAPHY.........................................97 Page 8 CHAPTER ONE- DEFINITIONS A complete anchorless understanding retail centers of the development requires that certain development and retailing terms be defined. understand what a anchorless must comprehend what an anchorless retailing not. Historically, retailing have defined many through the actual practice half of estate this chapter set center is and industry terms of their trades. will is, one development of the key key In order to retailing center real of forth the The first historical definitions of key terms and the second half will define key terms necessary to understand the concept of an anchorless retail center. A number of terms and phrases which are used within both industries appear to from the field practice have been established as much of development and retailing as from specific definitions being organization within definition centers in of terms this each used to paper can set by field. a professional Therefore, define anchorless be retail -considered generally accepted key terms within both industries. Page 9 the The Market Place The elements factors which practice where of the "market place" influence of retailing. the process consumer It behavior is within of exchange are the actual in the a market place and distribution takes place, a basic foundation of the practice of retailing: Market places are sites with social, economic cultural and other referents where there are a number of buyers and sellers, and where price offered and paid by each is affected by the decisions of the others. In many respects cultural elements of it is the the social, market place economic and which are key factors in establishing a significant consumer draw to a retailing and center. greeting These of the elements include various consumers the meeting drawn to the center, the convienent access to the center, the variety and choice of products available and the different price ranges represented. created an A feel many to various components consumer present of the same 'traditional place. successful developer ambience similar melding the center. A Thus, the will have market place of the retail shopping in a retail center should comforts and attractions bazaar' atmosphere a developer who Page 10 by created by is able to of the the market maximize the consumer attraction a retailing able to blend the elements in the feeling of what constitutes project has likely been such a way that much of a market place has been created. Retailing The term "retailing" invokes images of the everyday activity of economic retailer provides distribution a middleman's and exchange. The role the between producers and the consumers of goods as Robert Potter of The University of London describes: If the Concise Oxford Dictionary is consulted, it is found that the noun 'retail' is defined as the 'sale of goods in small quantities'. This definition certainly points to the principal function of the retailer, that is to act as the middleman or intermediary between the consumer on one hand, and the producer and/or wholesaler on the other, in the process of the physical distribution of goods. Shopping Center While the many practice of retailing can different forms of marketplaces take place in ranging from a street corner to an elaborate shop, the market place for the purposes of this paper term "shopping center" created is very much the is a "shopping center". implies that the market The place result of a significant amount Page 11 of forethought definitions of and planning. the concept one of of a "shopping the early center" was established by the Urban Land Institute in 1944: A group of architecturally unified commercial establishments built on a site that is planned, developed, owned and managed as an operating unit related in its location, size, and types of shops to the trade area that it serves. The unit provides on-site parking in definite relationship to the types and total sizes of the stores. Conceptually and in practice retail industries have historically centers into three major the trade While a area and blurred. into the tenant practice the mix of was used the division of groups shopping various centers. in defining actual lines of Nonetheless, the three divided categories based upon the size, specific criteria group, in the development and , is useful each demarcation are shopping centers in understanding the unique characteristics associated with each type. Neighborhood which sell Centers are convenience Gross leasable square square feet principal with a goods retail shopping and personal footage is in the supermarket anchor tenant. 4 In as centers services. range of 50,000 serving a national as the study of 388 centers conducted by the Urban Land Institute in 1984, it was found that the median size of a Neighborhood Center was 62,525 square feet.5 The trade area of a Neighborhood Page 12 Center is considered to be a mile drive radius within a five to ten which serves a population ranging from 3,000 to 40,000.6 In contrast, Community defined as Centers are traditionally retail shopping centers anchored by a junior department store, a variety store and a supermarket. Community Centers now tend to be anchored or off-price stores or or home by a discount specialty stores such as hardware improvements stores.7 hardware/home improvements The newest form anchor store is Quarters Warehouse chain of retail stores. Warehouses are New 'superstores' in that of these the Home Home Quarters they carry a comprehensive line of hardware and home improvement items in an The area approximately typical gross 150,000 square in size.8 100,000 square feet leasable feet serving square footage a trade area averages population of 40,000 to 150,000 with a ten to twenty minute drive.9 Regional the largest Regional and Super Regional Shopping of the retail Shopping Center Centers are shopping centers in is typically size. 400,000 A GLA (ranging from 300,000 up to 1 million) and is anchored by a at least one full-line department store. The usual size of a site for a Regional Shopping Center ranges from ten to sixty acres with a trade area population served of 150,000 or more.10 In contrast, a Super Regional Shopping Center typically is 800,000 in Page 13 GLA, anchored by three or more full-line department area which ranges from acres, and serves more. 11 The stores, contained fifteen to one hundred a trade area population product shopping centers are lines in a offered by site or more of 300,000 or both types of similar which includes "...shopping goods, general merchandise, apparel, furniture, and home furnishings. ,12 There are a three primary number of modern variations of categories of Neighborhood, Regional Shopping Centers. the Community and An additional categorization or subgrouping of each of these categories can be done by focusing on the approach of considered. within this particular product the By individual defining paper can be developers to design retail fashion. These goal to maintain shopping center being more focus these subgroups, placed upon the marketing intentions of centers in a non-traditional intentions are primarily based high customer draw to innovative design and product mix. intentions encouraged developers without traditional used in focus or a center through Many of these same to build retail centers anchor store tenants. developing the anchorless retail appear to be a combination upon the The theories center concept of many of the distinguishing features of these particular subgroups. While the first subgroup, generally accepted term Speciality Centers, is a within Page 14 the shopping center industry, no specific definition has ever been completely agreed upon. The primary distinguishing characteristics of the Specialty Centers are the lack of an anchor tenant and an emphasis retailing.13 The upon specialty, developers of gift, and these types fashion of projects attempt to replicate the same draw which an anchor tenant would create through a combination of stores essentially offering the same product mix. Festival/Speciality Centers shopping centers which also anchor tenant, development but, rather base theme intended 'festival' feeling. The prototype Faneuil Hall Rouse Company. Center Marketplace memorable authenticity, unique service and draw to create The are food to the a special festival marketplace of created by architecture, retailing primary the Festival/Specialty offerings, a blend of specialty entertainment. 1 4 the in Boston Characteristics include: comparison generally lack a traditional upon a is in focus ethnic on-site food and public of the Festival/Specialty Center is to encourage the purchase of impulse items. Fashion Centers are retail centers comprised collection of high quality apparel shops, custom shops. The potential of a boutiques and market for these centers is definitely focused at higher income areas, thus, limiting the number of potential markets. 15 Page 15 The product mix is composed of high quality and high priced merchandise. general, the design S...physically of Fashion distinctive, architecture using square foot with tend to are, better-quality and materials." 1 6 high-cost finishes The sites of Fashion Centers Centers In are smaller since sales per be higher averages. 7 Amenities such as then the industry valet and reserved parking are also common features of these centers. Off-Price and concept in Outlet Centers are a retail shopping both of these types of anchor store merchandise regular In general, retail centers lack a traditional Off-Price fashion malls prices department Centers are on the at center design. tenant. characteristically relatively new which substantially stores. 1 8 In are offer high discounted comparison, a collection of factory same price discount Centers end from Outlet outlet stores based theory, but, the tenant mix and product lines are much broader beyond apparel. 1 9 Discount or 'Power' Centers are becoming one of the most prevalent forms of retail shopping centers are generally the same a typical community distinguishing feature discount department rather than a regular centers. size in square footage as shopping center. of the Discount Center store or home Page 16 The main is that a improvement department store anchor tenant. 2 0 These is used center as the The final subcategory, comprised of retail specialty rehabilitated and Village Centers, is centers which are based in renovated structures. The tenant mix tends to be the types of stores which are appropriate for the prevailing demographics of the surrounding area. In many cases, Village Centers are based on an upscale theme consistent with communities. in the the Many surrounding affluent residential of these Village Centers are located traditional town squares that were often the primary business and retail centers of the community. 2 1 Many town recently city and planners have interested in the neo-traditional become form of planning which encourages this trend towards Village Center retailing. Anchor Stores Anchor Stores are commonly defined as the major and largest retail store within a provides the primary consumer shopping center which draw to the development. 2 2 In neighborhood and community centers, a food supermarket acts as currently the anchor include store. variety additional anchor stores. On Community and discount Centers stores also as a larger scale, the common practice in the design of regional malls is to include at least one fashion and soft goods department store as the Page 17 anchor store. Newer regional several fashion mall designs and soft goods department now include stores as the multiple anchor stores for the project. Tenants Key Tenants In many Store are respects, the terms Key completely interchangeable. Tenant and Anchor The selection of the key tenant is based on much of the same criteria that the selection of an anchor store Thus, in defining each precedent, also the Tenant based upon. specific term based on historical in virtually Key would be all cases in any the Anchor retail utilizing such a design. Anchor Tenant, the retail store which shopping However, absent Store is center a traditional provides the draw to the shopping center is by definition the Key Tenant. Tenant-Mix The Tenant-Mix is considered store types occupying space in retail shopping centers.23 The classifications used in include Food, Food Retail the collection of the the various types of different types of tenant determining Service, Page 18 the Tenant-Mix Clothing, Gifts, Jewelry, Cosmetics, Drugs, Financial, Home Appliance, Personal Services, Lifestyle, Liquor, Records/Tapes/Video, Professional Offices and Home Decor. Slot Stores For the purposes of the paper, a Slot Store will be defined as definition any of store the Key smaller in size with which are which is not Tenant. Slot within Stores are the much product mixes and merchandise lines very narrow in variety store. fall comparison to a In virtually all cases, are highly dependent on consumer department or the Slot Stores draw created by the Key Tenant. Slot stores are divided by geographic scope including national, Typically, through the Slot regional, and local Stores begin as popularity of and merchandise, eventually in scope. stores Slot luxury local the growth of retailers and their products become regional and national Stores divided which offer chain stores. 24 by product items and based upon a specialty concept. 2 5 Page 19 mix include stores which are Retail Goods Convenience Goods Convenience Goods products which "...are and are therefore convenient for Goods are are retail needed immediately and frequently purchased where the shopper." 2 6 As a generally those typically sold at it is the most result, Convenience Neighborhood Centers or smaller retail developments. Shopping Goods A definition useful of the term "shopping in understanding consumer "shopping beyond pure goods" tends much of the convenience. to invite part of the more sophisticated goods" is very motivations of The purchase participation on those on which the shoppers spend the most effort, and for which they have the greatest desire to do comparison shopping. The trade area for shopping goods tends to be governed by this urge among shoppers for comparison shopping, and, therefore its size 2 uill affected by the availability of such goods. Page 20 of the side of a consumer as the definition implies: ... a Specialty Goods as retail Are defined goods which are similar to shopping goods in that consumers tend to spend more care and effort in the decision-making process of selecting the goods. 2 8 Impulse Goods Impulse Goods are retail products are not actively seeking on which consumers a given shopping trip. The display location of these goods are based on the maximum visibility which can decisions, these be achieved. types of stores are In store location generally located near high traffic areas. 2 9 Thesis Definitions Anchor Tenant orthodoxy The custom and practice on the part of the participants (lenders, developers and retail tenants) in the development orient the process of retail shopping design, leasing and tenant-mix Page 21 centers to to require a and, preferably two fashion and minimum of at least one soft goods an anchor tenant department stores as in a shopping center. Retail Center For paper, a of this the purposes retail center will be defined the same as a shopping center as defined by the Urban Land Institute. Size of Retail Center The paper are anchorless retail centers examined shopping centers which have leasable area retail component in this an overall gross of greater than 50,000 gross leasable area. 3 0 The universally shopping comparison. term GLA or accepted center "gross definition industry The Urban Land leasable on the used for area" part is of statistical Institute defines "gross leasable area" as: ...the total floor area designed for the tenant's occupancy and exclusive use- including basements, mezzanines, or upper floorsexpressed in square feet and measured from the centerline of joint partitions and from the Page 22 the a outside wall faces. It is the space for which tenants pay rent iggluding sales areas and integral stock areas. Anchorless Retail Center A regional of a retail center without department store serving as of the types of anchorless center stores in the anchor. goods The tenant-mix towards boutique is oriented merchandise and anchorless center: and soft a fashion following types of stores may the the definition shopping center meeting size. One of the serve as the main draw to National Chain Store, Regional Chain Store and Local Speciality Store. A National Chain Store will business which operates "...in be defined as a retail four or more metropolitan areas in three or more states." 3 2 A Regional Chain Store will be defined as than four but than a retail business located more than one metropolitan three states. A Local Specialty in less areas in less Store will be defined as a retail business located in one metropolitan area. Page 23 CHAPTER TWO- THE RETAILING EXPERIENCE The Current State of Retailing of the changing trends facing A review of a number be useful in comprehending the the retail industry will role retail centers that anchorless future. market . weak, most analysts agree that problems fundamental exists vary from While these opinions very strong to generally there in the on the overall strength of Opinions are varied the retailing will play must which be The continued strength of retailing is fully addressed. problems are how well these fundamental dependent upon solved. The perceived value of the strength of retailing is reflected in the consistently high financial real estate returns which over the have been obtained from In last decade. retail properties other properties. 3 3 for all consistency of retailing Company outperformed all index other return from the 1980's, the percent was nearly of 14 7.1 percent Russell these properties is documented which stated sectors double the The long-term by the that Frank "...retail consistently for 24 quarters ending December 1988.34 Emerging Trends in Real Page 24 overall assessment with the 1990 agrees Estate: a strong area for retailing is investment, "..[R]etail neck and neck with development runs that industrial for top rating is borne out in the ratings in 1990."35 This top premium prices which retail properties are still able to Among properties are still due to still are properties considered excellent returns. high their retail community, investment the command. prices Top investments for despite being paid, very retail high asking prices. In the development, specific retailing area of significant growth continue. patterns in the and 1989, growth slowdown between 1985 After a shopping center development of new centers as well as the renovation of existing centers is likely to be strong into the 1990's. The main growth areas will be the development of "power centers" due to the unprecedented expansion of "category killers" chain store retailers and the rehabilitation and re-positioning of existing shopping centers. 3 6 Regional because of immune mall development will remain their near-monopoly status which from competition. strong makes them Currently existing regional malls remain financially strong due to the extended time period currently process. being The required in existing regional more service ready for Page 25 the zoning malls also their already approvals benefit by existing The financial returns from these malls has client base. justified is malls The this conclusion. in evident strength of their regional low exceptionally capitalization rates averaging 4.5% to 5.5% with some as low as 3% possibilities significant repositioning if exist.37 Nevertheless, despite retailing will performance of the industry due to a factors are related to be as the future strong as in the over the short-term outlook of past, their is confusion the industry the feeling that Many of these number of factors. basic fundamental changes within itself as Emerging Trends in Real Estate: 1990 indicates: ... Consolidations and shakeouts among retailers, developers; and center stores, department vulnerability of older (say '60s vintage) malls to new competition; and shiftigg consumer spending patterns and demographics. The feeling that many of these problems are directly related to the very foundation of the retailing industry is also held by others within the industry. Nina Gruen, a sociologist specializing in the areas of retailing and marketing feels... "The systematic and retailing industry's goes well beyond... the recent trouble is spate of famous, or should I say infamous, bankruptcies." 3 9 Page 26 The Future Direction in Retail Shopping Changing Factors in Retail Shopping Experience Demographics on the average customers are larger portion of the work force. tend changes more women entering the work more conservative, be will preferences in that style to become working In addition, less junior apparel, which is a apparel will thus, annual designers by influenced less retailers. representing a that a getting older and female population is entering the The effect of will be force retail that show trends demographic General women will style and purchase product line currently large proportion of the space currently leased in retail centers. 4 0 As of this point in time, retailers recognize that the buyers growing older and are number of apparel Bendel have have failed to of apparel, mainly woman, are joining the workforce. stores such as Anne recognized the A limited Taylor and Henri desire of working women to maintain a sense of style with the apparel they purchase for work. 4 1 Page 27 Shopping Changing Habits of in Consumers Retail Complexes of Disposable Declining Amount Income Spent on Retail Goods Opinions the baby boom generation conclusion that and 1950's currently support experts of retail of the 1940's fifty year the forty to currently reaching the old age group will spend less on disposable goods as the group grows out of the traditionally high-spending years of Some life. generation high representative of are looking become have extraordinarly feel experts levels that alienated baby the towards the that were of consumption the 1980's. Consumers of for better value as ". boomer the 1990's ..they are borrowing less, shopping carefully and saving more." 42 There is a discernable trend in the portion of disposable goods. income being The percentage spent on non-essential retail of disposable non-essential retail goods has on dropped steadily from 20 percent in 1975 to 18.1% in 1989.43 Page 28 income spent The Polarization of Incomes in Households Growth of the specialty and discount stores has very changes in consumer buying accurately corresponded with habits. The changing directly reflective of middle-class consumer the make-up market. As a of consumers are shrinking of the result, successful the ends tailored product lines towards retailers have of the price buying habits spectrum ranging from competitively-priced to luxury goods.44 Significant towards a underclass. demographic shifts shrinking In households fell middle-class households within the income levels the growing the American considered as middle class were percent below $25,000 and 7.6 percent above $75,000. of 1990, the distributions have trend The distribution of $75,000). outside a and 48 percent of 1980, over middle-class ($25,000 to the document the changed with a 44.2 As 2.7 percent drop in the middle-class, a 2.1 percent increase in the lower income group, and a .8 percent increase in the higher income group. 4 5 Page 29 Job Availability Growing at The Trend of a Rate Faster Than the Labor Force The full by the be felt As result, a retailing community by all high-end carrying labor shortage will effect of the current retailers goods) training costs in order to (and will be the mid-1990's. especially faced those higher with maintain a better quality of service. 4 6 In addition, the shrinking labor pool insures greater power on the part of the unions representing the retail workers.4 The Changing Factors in the Retail Industry The Disarray of the Department Store Industry The Growing Number of Consolidations and Acquisitions The department store industry has undergone a number of significant growing past. With the consolidations and acquisitions and levels of leverage carried by purchasers of number of the higher the changes over the recent department stores an exceedingly high level uncertainty within the industry has been created. Page 30 of within the of number unprecedented An changes structural retailing industry have taken place over in Major consolidations and acquisitions the recent past. involving some of the nations' largest retailers has led change in both the to a significant retailers industry. describes and Emerging some of methods operational the in Trends the major number of existing Real used by Estate: changes which the 1990 have taken place: .Ames's acquisition of Zayre; May Company's realignment of a number of its stores; Mark & Spencer's acquisition of Brooks Brothers from Campeau; the leveraged buyout of Montgomery Ward's from Mobil; Bergner's acquisition of Carson Pirie Scott; and Dillgd's acquisition of D.H. Holmes in New Orleans. Since then, Ames problems faced Federated has by the department for re-organization, filed Campeau Company have stores creditors, and Dillard's has to seek the forced the protection from acquired the Ivey's retail chain. The Problems Facing the Department Store Industry One facing of the most the department significant problems store Page 31 industry currently deals with the of Perhaps the acquisitions. the are situations Canadian developer, the and Bloomingdales financial purchase of store chain (including L.J. the of purchase Marsh). Bonwit retail Other difficult faced equally have include parent company the facing in his Jordan problems these Robert Campeau stores which department known of problems financial department Federated well most of recent wave the from which resulted leverage high levels associated with the financial difficulties Teller filing for Chapter Hooker Sakowitz and it's with Parisian 11 and by their management. 4 9 Critics of the current trend towards the ownership of by department stores developers feel number of potential problems there are which may be created. a The critics foresee the new owner/developers using the newly acquired anchor justification tenant to develop which normally would not addition, the of the moot store store chain by the anchor by a competing centers a the ownership developer gives a tenant for a retail developer.51 Nevertheless, unfair lease shake-out a the negotiations involving the as the issue regarding as retail shopping as be economically feasible. 50 In inequitable advantage in center owned new stores industry critics feel that a department department department within industry continues. Page 32 negotiations may the department be store Other Problems With the Department Store Industry Site Approval Difficulties Shopping center developers are currently facing problems in unprecedented the reluctance on the growing traffic increased the part of infrastructure. 5 2 dependence and communitites to result which the upon community reluctance This of result of developed as a additional burdens the with Many projects. their future these problems have these of bear of development sites for locating adequate from existing expresses itself in the form of increasing difficulty in recieving shopping areas. accepting a of number of retail While many communities still appreciate economic and tax the added the development approvals for the necessary retail shopping center, both communities obtained in benefits to be and site the potential locations are consistently shrinking.53 The Limitations of Key Tenants In addition retailing industry to the financial problems which may availability department stores as Page 33 potentially within the limit the anchor tenants in the expandibility of potential successful key tenants who can act as leader in providing excellent department store industry service, local markets. 5 4 Nordstrom have outgrown the expansion expanding into "... New sales per square national Nordstrom. is at an all-time high. must be two questions much how First, the popularity of averages, the it's expansion With higher than significantly an anchor tenant Nevertheless, in by foot area." 5 5 D.C. Washington, department store Nordstrom as asked Chicago, Minneapolis, Indianapolis, the Jersey, and currently is Nordstrom firm. the of a key is also an example tenant whose popularity may of on a focus and lines comprehensive product possibilities a Nordstrom is center. retailing for a anchor the the is problem The face. also must which developers also growth limitations future, there expansion is actually feasible from a financial and operational point of view? And second, presence and reputation lose position will the firm it's vaulted within the oversaturate it's service personal local and national retailing markets with continued aggressive expansion? An Overabundance of Retail Space The retail industry currently is facing an overabundance describes of available market the disproportionate Page 34 space. amount of Nina Gruen retail space that is currently available: Between 1974 and 1984, total retail square footage in the U.S. increased 80 percent. At the same time, personal income increased by about 30 percent, if the impact of inflation is discounted. While the rate of the increase in new shopping center space slowed down somewhat in the latter part of the decade, almost 700 million square feet of gross leasable area shopping center space and over 6,000 shopping centers were constructed in the U.S. over the Despite this 4-year 1986-1990 time period. center space shopping additional in slowdown between the beginning of 1986 and the end of 1989, shopping center GLA still increased by 20 Disposable personal income increased percent. by only one-half tha 6 amount during the same four-year time period. The Growing Means of Spending Disposable Income The growth in the alternative means of spending disposable income on continuing threat to are There now 65,000 In addition, houses. retail goods provide will traditional shopping catalog and mail virtually all cable a centers. order sales television 57 systems offer at least one home shopping network. The Rediscovery of the Village Center Recent changes in the shopping patterns of consumers attests to typical the rediscovery of the is Village Center primary business district usually Village Center. The identified as the of any residential community. Page 35 In many respects, the Village Center is a small suburban retail shopping will Village Center elements are which currently drawing consumers back If an in the the back to anchorless of the atmosphere to the Village Center, a large may also develop retail center the anchorless sameness of in recreating many fundamental higher a standard likely the trend continue. is successful retail center or the center mall, it is typical regional the refined and environment in contrast to quality shopping strip of a more consumer seeking older trend towards the Street U.S.A." With the town's "Main following and subsequent trade area for itself. The Definition of a Trade Area The industry definition of a "trade area" is useful which a retail establishment a purely traditional as, ". ..that purchase area containing a given same principles the "trade In "trade area" is defined people who are likely to of goods class ultimate market will eventually serve. sense, a or services from a of firms." 5 8 In many respects, particular firm or group the of the an understanding in developing underscoring the area" are the determination of basis behind the draw to the Village Center. The standard trade area Page 36 for most Village Centers a group of consumers with has not necessarily contained an of the orientation Center is per high unusually within a contained shops While income. capita likely toward high quality the Village and custom goods, In contrast, the retail price are not necessarily high. anchorless retail centers have historically been located in geographic incomes are areas well where per above the disposable income in these in contrast to capita national and household average.59 The areas is also extremely high communities with comparable demographics. 6 0 The Principals Behind Locational Draw An examination of the urban geography concept of locational draw rediscovery of is also many of 'activity' which is useful in understanding the Village Center has these same taken place. principals of are attempted why the It 'place' and to be recreated in the design of the anchorless retail center. Locational urban draw in geography concept retailing of the is based upon Central Place the Theory. The Central Place Theory recognizes the premise that the activity related to a location creates area and thus, is a: Page 37 a draw to the .theory of the location, size, nature, and spacing of these clusters of activity, and is therefore the theoretical base of much of urban geography of retail and geography and tg service business. Related to the Central Place Theory is the principle of illustrates which Centrality convenient point purchase goods. the the consumer to of focus for The centrality of concept a visit to concept is rooted in the principle that consumers will base their choice of retail centers they where locations on can conduct their business with the least amount of effort possible.62 The overall concept assumes that if the consumer choice of locations choice will always least amount willing to needed with similar characteristics, be the location which the involves the of effort. 6 3 Therefore, consumers are only for items that are short distance travel a on a is given a Infrequent purchases basis. regular are combined with a number of usually delayed and ultimately other activities such as socializing and entertainment. 6 4 The Nature of the Village Center There are a number of factors that create an attraction on the part Center environment. of the While a related to the general consumer to the Village number of these factors are theories of urban geography, many Page 38 design, effective an customers, retail background of the to the age and the others are related persceptive merchandising and excellent service. Characteristic of virtually every Village Center is the unique architectural style-- the vernacular --that is in which it is located. typical of the geographic region From the New England Cape Cod architecture of the Village vast. 6 5 is of Santa rehabilitation the of respected has Centers Village of renovation Most Wellesley, and range of local venacular Fe, New Mexico, the variety styles Adobe style the Southwestern Massachusetts to or Connecticut Greenwich, of Centers and the architectural heritage of the existing structures. 6 6 The design associated with and locational factors the Village Center have also contributed significantly to visibility of in the addition, shops and the the village the destination as a consumer The "high street" these centers. the current success of convienence of shopping trip are important factors to back draw the configuration of centers. 67 In Village Center is these the oriented towards comfortable circulation patterns for the pedestrians. As for the Village Center stores traditional nature of the stores draw for consumers. themselves, the has also proven to be a Custom design and decor is common in Page 39 many of the stores with emphasis on effective display and The presentation. experienced within a emphasize personalized selling proprietors who The merchandise in Village specialty store environment. unique with in-depth stock and Center stores tends to be While the merchandise also comprehensive product lines. tends to generally are tenants be of high value and quality it is not always necessarily expensive. 68 The Chain Specialty Merchants The Growth of Chain Specialty Merchants Another dramatic trend within retailing is the growing number of national base is focused upon a product national chain store specialty product line offered to above average single product line or consistent merchandising The theme. chain store whose merchandise concept is to company to maintain higher line at a much deeper range of choice line. 7 0 In will allow the price points. 6 9 The specialty theme utilized by these companies product limit the manageable levels and to provide service to customers which specific product the behind theory allows them to carry a higher quality level with a for the consumer within that addition, much greater oversite in inventory flow and control takes place as a result of the more focused merchandise. This control Page 40 allows these firms to respond to more demand quickly through computerized inventory control and reduce inventory costs through faster efficiency in inventory turnover.7 1 The noted most of merchants is specialty the ownership of The Limited. chain national the store stores under group of the The Limited store itself is an upscale womens' clothing store with an emphasis on sports and casual wear. 7 2 The Limited store was the first major retailer to introduce point-of purchase computer tracking of the currently of tracking existing inventory stock. allows company inventory the Computer the and individual stores to be immediately responsive to fastest selling products.73 The Limited company is by in Columbus, Leslie Wexner, is based retailing maverick owned Ohio and is composed of several different types of stores Secret (lingerie), including Victoria's (juniors' casual professional womens' (mens' sportswear (high end apparel), Lane Bryant apparel), and casual while Ambercrombie fashion apparel).74 The separate & sized Fitch Henri Bendel merchandising concept to create a product mix in selection similar to a maintaining (larger apparel) and behind The Limited company is scope and Limited Express small department store store fronts. 7 5 The large amount of square footage represented by the collection of The their Limited stores part during creates a competitive advantage lease negotiations. As a on result, a developer is faced with a competitive disadvantage as The Page 41 square of amount collection of on the total negotiates the lease based Limited company by represented footage store fronts desired rather chain store the entire than on a store-by-store basis. Other merchants noted national include the upscale specialty cooking equipment store Williams Sonoma and The Pottery Barn, a store focusing on less expensive glassware traditional Ralph and Lauren Polo dining merchandise. line of The high-end apparel which has also started a series of boutique shops in more affluent communities and Talbots, an retail centers. upscale womens' clothier has comprehensive expansion strategy. Page 42 In addition, also started a CHAPTER 3- THE ANCHORLESS RETAIL SHOPPING CENTER The Anchor Store Orthodoxy The Anchor development bias Store within the shopping absolutely necessary and shopper consumer draw the center. believe Both the center community. an before the retail center level of to create the to sustain traffic required developers and that securing store" tenants. with to succeed, a traditional anchor In order for a project tenant is deals Orthodoxy anchor leasing agents tenant is also essential is leasable to potential "slot This feeling is not without merit since the first question tenants commonly ask is "who are the anchors?" Examples of this bias in favor of anchor tenants is pervasive throughout the Urban Land the shopping center Institute Shopping Center Handbook common references are securing project. an The anchor ULI industry. In Development made to the necessity of tenant before proceeding Handbook describes the with a industry's general feelings regarding the far reaching implications of the anchor tenant within an entire project: Page 43 a rule, a shopping center will not be secured has developer the until built commitments from key tenants. The choice of key design, determine site will help tenants and financial and layout, building design negotiation. And as already noted, it is the key tenant or tenants, not the size of either the site or the center, that determines the type of center. The key tenants will also detlgmine project. the image that the center will As A classic example of the anchor tenant orthodoxy is found in the development of Horton Plaza Horton Plaza is mixed-use utilizes a Hahn which area of revitalized project by developer Ernest in a festival marketplace theme downtown San Horton Plaza is 900,000 portion of in San Diego. retail The Diego. square feet located over five levels. with was faced of anchor Horton Plaza, a barrier reflective tremendous tenant bias of both industries. In the Ernest Hahn In developing eyes of subsidies absolutely the shopping center City of San were requested, critical and retailing feasible in make the project order to the the that Diego from whom city officials Ernest Hahn felt it secure large was major department stores in order to create customer draw.78 On the other hand, the major department stores were very reluctant to locate in Horton Plaza for several reasons. These reasons included that the department Page 44 stores were suburban San Diego levels high maintaining already in their locations, the unconventional design counter to many of Plaza which was of Horton sales of the most design for regional shopping commonly accepted rules of centers, the unknown nature of the festival marketplace concept and the previously undesirable atmosphere of the downtown San Diego area. 7 9 After search a diligent possible department stores Hahn had to undertake an secure commitments to as for the anchor tenants, unusual approach in Horton Plaza. of general pool Ernest order to Professors Bernard Frieden and Lynne Sagalyn of the Massachusetts Institute of Technology explain the means which were taken by Ernest Hahn in Downtown, Inc.: ... Hahn still had to mount a special campaign to suburban the attachment to loosen their prototype. He managed to bypass the usual store planners and made his pitch directly to the heads of divisions and chairmen of 8 0 boards who had "imagination of good merchants." History of Anchorless Retail Centers Traditional Anchorless Retail Center Prototypes Many of the contemporary anchorless retail shopping centers center owe their designs of antecedents to innovative the Retail shopping past. Page 45 shopping center created many 1930's in the development eventually establish the current prototypes which would of shopping center design generally accepted principles and shops of collection a simply early of the Many configuration. first of the geographic proximity of one located another. centers were within close In many respects, the early retail centers were the functional equivalents behind the the Similar to the Village Center. of the anchorless retail center, the created through atmosphere the the draw to the area. shopping centers, there was developers of assumed that offered would in these Thus, the retail combination of the variety of merchandise merchants and create shopping centers retail early design concept early no single store which acted as an anchor or key tenant to the area.81 New forms of shopping centers were created with the development of shopping regional These centers. shopping centers were built by developers in response to the demand created households and for retail general with the housing growth formations of into suburban areas which followed the Second World War.82 Many of the design principles of have also centers. these regional shopping been incorporated into the A review of a centers anchorless retail number of these prototypes will be useful in understanding the anchorless center. Page 46 Market Square- Lake Forest the by is credited Forest Lake of suburb the in is located which Square Market Chicago National Register of Historical Places as being the first planned shopping district in the United States.83 The timing of the development of Market Square in 1916 coincided with American nation into a automobile the transition of the primary the as automobile increasing the With society. based means shopping center developers were of which design shopper and the transportation, attempted both developers Pioneer car. the faced with the question accomodated best of reliance on chose the to address this question by actually separating the shopper Market from their automobiles. shopping center Square was the earliest which fully separated the shopper from the automobile by locating them in different areas. 8 Country Club Plaza- Kansas City is located immediately adjacent Country Club Plaza to Kansas City in a high-quality residential suburb. a traditional sense, district stores containing and Country Club free-standing seperately Plaza is a shopping independently-owned designated Page 47 In store fronts. introduced the early design Nichols, Country Club Plaza unified vocabularies, architectural of concepts J.C. developer by 1920's early the in Developed management, signage control and landscaping amenities. 8 5 blending Old Spanish, Mexican The stylized architecture and Southern time. 8 6 Plaza Club Today, Country service and retail 200 its is considered the the Kansas City area with largest tourist attraction in nearly for unprecedented was Californian shops. 7 Plaza The very successful retailing environment continues to be a which has experienced a history of sustained high sales volumes. Highland Park ShopDing Village- Dallas Considered to be the prototype of many contemporary retail shopping centers, Village in Dallas the the was built in 1931 thus, operated Highland Park by developer retail development rather shops. The development is Shopping being one of as a single first shopping centers constructed planned unit. and Park the Highland Shopping Village was built Hugh than Prather just as a single a collection considered to be of the first unified commercial district with inward facing stores to be developed. 88 The separation design is on a single by public based upon a consistent streets. The store fronts and uniform image. Page 48 site with no are The complex such a way that it has has been thoroughly renovated in it's historical architectural style. 89 retained much of The architecture is roofs, cotta ...terra original Spanish which includes, and intricate walls stucco ironwork. River Oaks Shopping Center- Houston River The Hugh developer Oaks Potter as a upscale residential name. center The buildings which (started in years of is took a detracting architecture, the center has which are the same of the seven seperate to complete years in 1949). 91 After several original style of been renovated back to the the past.92 River Oaks is original contemporary look of noted for initiating community by series from by directly over twelve 1937, completed built complex retail adjacent to was Center Shopping many operational systems practices industry standards for today including percentage leases and merchants' associations. 9 3 Post World War II Prototypes Northgate- Seattle Though Northgate is a Page 49 fully anchored retail shopping center, an examination of prove to be useful. Northgate is context of the design anchorless the center important within the shopping centers much for what it is as for what it is not. renowned as being, as Northgate is suburban first "...the should regional shopping center built with a full-line branch department store as the leading tenant." 9 4 Northgate first shopping feature a center to also was the central pedestrian mall.95 Many planning of of the design Northgate are anchorless center would an architect the elements which incorporate. at the University of distinctive nature involving the features of site a successful Meredith Clausen, Washington describes the site planning used in Northgate: Aimed at maximum customer convenience in terms of both access and circulation, it was the careful synthesis of land-use planning, Its traffic analysis. and merchandising, concept- a long, straight, tightly compressed pedestrian mall lined on both sides with a dense array of stores and services- doubled the number of stores while reducing the distances the public had to walk, and at the same timg 6 it enhanced the opportunity for impulse sales. The merchandising program used at Northgate is also instructive for anchorless centers. one of the ways for for an anchorless center to be successful is to create a tenant mix which maximizes the Page 50 use of the retail space. The program of at Northgate emphasized the in order the center to encourage overall design as higher sales Meredith Clausen continues: The carefully conceived merchandising plan controlled and coordinated the number, type, and location of all stores and services in the center in terms of greatest benefit to the center as a whole; the plan, furthermore, called for a variety of block sizes, flexibility of interior spaces, and expandibility of the mall complex. All these 9 actors contributed to the success of the mall. Nevertheless, Northgate is considered a "thoroughly practical affair" with a towards center. modernist designs the products selling The strong central design oriented architecture with few are also of is the tenants of considered distinctive features. very conventional the bare-bones The store with simple forms focusing on display. 98 Southdale- Minneapolis The element prototype is of Southdale the fact that it regional shopping center. 1956 and is located which was the useful as The completed in complex is garden court all enclosed by a single roof. 9 9 Page 51 a first enclosed Southdale was near Minneapolis. two levels with a center is Festival Centers- Various Locations centers and marketplaces have A number of festival also proven to be useful because a main of result centers is through high the to the and "theatrical" draw to The locational generally achieved the without This draw is mainly store. presence of a tenant anchor created anchorless draws customer theme orientation. historical festival the is developments for These marketplaces are excellent models retail centers. mainly prototypes complexes located density office adjacent to the development as well as the tourist trade attracted to the area. The developed Faneuil Hall festival by marketplace the Rouse Hall Marketplace was successful in Company concept with in Boston was first the opening in 1976. converting what of Faneuil was once a deteriorating part of Boston into a viable retail center directed at marketplace is restaurants, the sizeable tourist a collection of small and entertainment market. 1 0 0 The specialty stores, spots without a traditional anchor tenant. The Rouse other Company has festival marketplaces also developed a thus, becoming Page 52 number of ubiquitous throughout the country. These marketplaces also relied upon the main festival theme draw to the center. as Faneuil successful to develop Though Hall, not the the customer as dramatically Rouse Company was successful in creating marketplaces in Baltimore (Harbor Place), New York (Bayside). (South Street James Corporation Rouse which Seaport), later formed developed mini-festival and Miami Enterprise centers in Toledo, Ohio, Flint, Michigan, and Richmond and Norfolk, Virginia. 101 The Design and Locational Theories Behind the Anchorless Retail Center The draw anchorless First, which center can the customer concept such restaurants. result of as will attract customers to take several different forms. draw can be entertainment Second, the created or a choice located at the may be due to the center. theme collection customer draw the combination of merchants by a may be the of the and merchandise Third, the customer draw spillover resulting from a previously established regional retail center. In behind the develop a general, the design and anchorless retail locational center are "draw" for customers similar Page 53 theories quite simple, to that created by a large anchor tenant and a loyal customer center will follow. 1 0 2 The support the base to same concept is the premise behind the rediscovery of the Village Center as customers continue street retail centers to be drawn in which they had difference between the two types Village Center and a to the main grown up. The of centers is that the previously had an history of back established clientele an identity as the town's center of focus.103 In contrast, the anchorless center must create its client base from the beginning. The locational anchorless retail theory the centers demonstrates demographics are critical if survive. for placement that of adequete an anchorless center is to This dependence reflects the previous industry bias towards making anchorless retail centers upscale in nature. In Executive, the the demographics to May 1988 absolute an edition importance anchorless of Chain of retail an Store areas center is explained: Location seems to be, as always in the development field, the key to the success or failure of anchorless projects... In certain selected markets, there's room for an unancggged center--you need density and decent income. The limited amount demographics necessary to center raises of markets which have the sustain an upscale anchorless the question whether the Page 54 current form of centers which anchorless upscale help the would in form a change surfaces whether additional question an Additionally, available. become would markets that more in such a way can be redesigned the centers are currently struggling. to or orientation the occupying Theme centers center. draw of the create to sought combination the through a have generally anchor In the May, 1988 edition of Chain Store Executive, Joan consultant explains draw tenants of traditional through restaurants or entertainment. the theme a either through draw customer create are attempting types of anchorless centers The new created Primo, a retail by theme the orientation: You start getting into something that's more of a festival or theme orientation, and/or having restaurant 'anchors.' So, although a restaurant is not defined as an anchor, it may be a suffigygntly unique draw so that it acts as an anchor. have attempted tenant mix. larger centers, the comparison, in In developers draw through the to create the customer In many respects, the developer is creating an anchor store merchandise mix and product line through the combination of center. different The collection of atmosphere that works off tenants located at the stores attempts to create an of Page 55 one another as Marvin Neely, a developer of anchorless centers maintains: create that environment All the stores because of the tenant mix... We put together the best retailers in their categories together so that any one of them would do well freestanding on ant of these sites; when 1 gu put them together, you create a synergism. Many centers of the borrow from current the designs Village of Center creating a full vision of the shopping area. of the anchorless centers is conducive scanning the general shopping area and to enter the shops directly. anchorless concept The layout to the consumer then being able Marvin Neely continues: We're actually easier and more convenient to shop than a department store. We're half the size... It's laid out in a strip center fashion, so it's not intermingling, wandering from this department to that. You can drive to the front of the cggger and see where you want to start shopping. Page 56 of The Current Status of Anchorless Retail Centers Notable Anchorless Retail Centers Borgota- Scottsdale, AZ. The Borgota is a collection of of specialty stores located Considered one of collection of The affluent area in the Borgota the of Scottsdale, examples of most successful high-end specialty shops in has been consistently Arizona. a the country, praised for it's ability in creating a very upscale shopping environment. William Kowinski descibes the overall atmosphere created at The Borgota in The Malling of America: It was a malled village of expensive shops a to replicate designed the desert, in thirteenth-century walled village in Italy. The illusion was carried out with such dedication that the mall's bricks were brought from Rome and the shops signs and menus were printed in Italian.. .the Borgota's inaugural festivities included the launching of a flock of white doves from its imj tion Italian bell tower into the Arizona sky. The Atrium- Chestnut Hill, MA. Developed and owned by Atrium is 250,000 New England Development, the square feet in size Page 57 over four levels and is located in the Chestnut Hill area Boston.109 The Chestnut areas with the demographics appropriate for retail center Hill area is one as Stephen Karp, chairman west of the of few an upscale of New England Development explains: The demographics of Chestnut Hill place it among the country's most affluent communities.. .As a consequence, every major retailer has been trying to locate there for a long time. Jut there's simply been no room for development. The development is centered around a design which includes no large anchor store. retail and shopping Chestnut Hill Stanley Marcus, a noted center consultant claims, Mall is actually ". .. [T]he anchor."1 1 1 our The Chestnut Hill Mall has experienced sales per square foot levels which "...may be as U.S., square are unmatched in the retailing industry, successful as any shopping reportedly generating foot." 1 1 2 The within one mile of the sales center in the averaging $500 Chestnut Hill Mall is per located Atrium, thus, making it directly adjacent for consumers. The Scottsdale Galleria- Scottsdale, AZ. Currently under Galleria is a part of a construction, the Scottsdale twenty year master plan for the Page 58 Simon & Melvin between Scottsdale, for the placement of community of area is Phoenix the economy are anchorless billion will of the exceed general with 100,000 strong exceedingly and eight million tourists a ($2.5 Scottsdale rate in retail sales fastest growth year retail center an upscale year moving into the residents per project Scottsdale Galleria the In addition, $60,000. of By the year 1993, the expected household retail center. income ISCC Inc. with the Atrium, the demographics surrounding for the excellent joint venture square-foot completed be the largest specialty in the country.113 As the area and Associates the 400,000 will eventually of A downtown Scottsdale. redevelopment of new area,115 the second in the country, 1 1 6 year spending $6 billion a specifically in the Scottsdale area). 117 The Scottsdale Galleria will design features that are consistently previously developed upscale The design features will cascading fountains and granite, comprised brass and of of international Bally associated with anchorless retail centers. include exotic landscaping, all-natural finishes of marble, copper. high-end designers of Switzerland combine many of the The tenant-mix will retailers with including Adrienne and, Vidal Sassion. a number be of Vittadini, 9 The most dramatic design feature will be a skybridge built over a planned loop road that will Page 59 connect the two separate buildings included in the design.120 Forrestal Village- Princeton, Princeton Forrestal foot anchorless N.J. Village is a retail center located in and Within a households, are 273,493 and, and average of $42,808.122 The tenant-mix is also a population upscale in nature Rodier disproportionately high. radius, fifteen-mile household income the density of the population income are the household the community project is aimed at an of Princeton, New Jersey. 121 The area of the country where 200,000 square of 759,191 with stores such as Paris, Cignal, being reflective of there Aca Joe and, Johnston the types of stores Village.123 Page 60 Esprit for Kids, & Murphy located in the CHAPTER 4- THE OF FUTURE SHOPPING ANCHORLESS RETAIL CENTERS The Growth Patterns in Anchorless Retail Centers exist which confirm the Several industry factors need for alternative designs away from the traditionally anchored retail legal and department financial the growing First, center. facing problems currently store chains limits their number of major ability in short term to fully commit to new retail centers. the These problems could also easily restrict the long term growth potential of unresolved. developers the department Second, are facing stores the if increasing in finding they remain difficulty locational sites of adequate size and subsequently obtaining the appropriate approvals will naturally for smaller sized developed lease in the locations for future. payment subsidies stores in order for retail center result in developers searching retail centers And third, the increasing by major department required the store in many cases to anchor will result in center losing economic feasibility. Page 61 to be a particular the retail use of an anchorless development industry regarding the The faction of the design in retail center development. design, to failures of in located centers anchorless retail the with country the of areas certain in centers of rates high vacancy the equate developers same these of Many Orthodoxy. Tenant Store Anchor the incorporated within feelings the general reflect design anchorless the dislike who developers those In contrast, of anchors. ,124 or needs the demands not chained them to be innovative, believe "... anchorless of the favor in center industry shopping center shopping within the exist currently opinions divergent a number these factors, light of In those areas. 125 the divergent opinions Regardless of anchorless retail anchorless popularity in comprehensive developers center retail the use of survey reflects national the built. A patterns in the use of the design. of conducted by be continue to centers comparison of the current growth the clear, that industry, one fact remains shopping center within the The a growing most recent shopping center International Council of Shopping Centers reflects a 3% increase in the amount of shopping centers defining The 1989 operating Cost themselves as "anchorless". Analysis Report issued Page 62 by the the total sample of shopping ICSC indicates that 18% of center developers polled placed their developments under "Are of category survey the Anchored". 1 2 6 Not In of the same survey, 15% comparison, in the 1987 edition were considered "Are Not Anchored". 1 2 7 Current Alternative Forms of Retail Center Design Which Attempt to Recreate the Draw of a Anchor Tenant A how of review through means other than a of an anchored retail center department store framework economically of future critical that is viable, it a anchorless centers to be order for the retail In retail centers. in creating be useful will development the for currently locational and consumer draw attempting to recreate the large are developers a level of consumer traffic necessary to sustain the development be developed. Cinema Complexes to eight screen which are centered in the development of the desire on Cinema the growth center designs. The growth development community to use facility as a traditional anchor Complexes include Century City project centers reflects these types of the part of the create a specific replace the one of theaters represent areas in alternative retail around four locational draw to store. the Cineplex in Los Angeles and Page 63 The most noted Odeom in the the Fox Cinema prototype proposed for New Jersey. 128 also attempt to create Mini-Theme Park Complexes the anchor traditional is that is used isolate one particular theme difficult to store While it design approach. an alternative through a of draw locational by the different types of complexes, the one factor that remains constant is traffic to complex the the attempt through The more classic "attractions". to create a consumer collection of example of a retailing draw developing from the use of "attractions" is Village Square area in Cincinnati. Village of carnival rides and traditional types as a In supplement to create draw Square, games are used for potential customers to an area historically known for retailing. of Mini-Theme Park Complexes emphasis the of complexes include Entertainment complex Enterprises. collection interactive Others The of with prototypical being types of Skywalker currently being pursued special effects/black for the proposed types of Rockopolis which Page 64 box Houston complexes MCA/Universal City complex featuring facilities130, retail Examples of these the the main by Lucas Skywalker Entertainment complex games similar focus more upon "attractions" a sidelight. developed as other types to the older complexes, In contrast types is a of area. 1 2 9 include the tours of the movie is a rock and roll contained within museum structure currently a pyramid proposed for the Memphis area 1 3 1 and, the Disney and MGM parks located theme and Florida.132 in California It should be noted that while these types of facilities may prove instructional retail discerning in industry provide limited insight into trends, the complexes only the development of anchorless retail centers. also represent a General Entertainment Districts type design retail These types of areas within the development community. are of comprised generally and food services turn locate immediately these individual clubs and adjacent to entertainment individual performance clubs and discos. facilities including live Typically, retail discos which in entertainment district. creates the popularity in growing currently Examples of General Entertainment Districts include the Dallas Alley area located Theatre district in Orlando, Hollywood Dallas, the in in Los Angeles, Church Florida and, the proposed Center/Mann's Street Station Yerba Buena Gardens in San Francisco. 1 3 3 Food Theme Complexes are also starting to develop as an alternative developers traffic of Food environment locational Complexes feel Theme can combination of facilities. The volume draw be different created types of traffic Page 65 of concept. The that a high through the food service created will then the develop customer to necessary draw sustain a significant amount of retail facilities. can Complexes Theme Food two take Restaurant Centers and Gourmet Food Centers. Centers usually consists of forms: Restaurant of restaurants a grouping Perhaps representing various cuisines and price points. the most famous of these types of centers is The Borgata Also widely known as a located in Scottsdale, Arizona. the how reflects center, retail anchorless successful insightful clustering Borgota The of different types of restaurants can create the consumer draw needed to sustain an entire retail complex. 1 3 4 Market Centers provide an In comparison, Gourmet of retail offering theme. from upscale Centers such store complexes country. food courts as Faneuil Hall to located in an upscale Market Centers exist wide variety of Gourmet A ranging based on food services located in Festival entire upscale grocery various regions across the In many ways, Gourmet Food Complexes represent an upscale surrogate "food hall" environment offerings such as fresh yogurt shops, fresh bars. The Gourmet such strong interest that large Development with food bakeries, gourmet ice cream and pasta, regional Market Complex as an companies raw concept has gained alternative retail design such Corporation cuisines and have Page 66 as the created R.J. and Reynolds studied approximately 60,000 square feet foods, gourmet of will feature fresh and and bakery, in-store complete a marketplace proposed the Place", Fresh "The Known as national development. prototypes for possible demonstration areas for the preparation of foods. 1 3 5 A Framework for Developing Clusters of Uses Which Create an Equivalent Locational Draw of an Anchor Tenant The "Best-Fit" and "Triad Testing" Approach and consumers American of an developer cluster of uses which Developing an most of the of the the best interest anchorless retail amount of significant part within definitive trends it is in retailing industry, the on habits buying changing With center to devote a into the eventual pre-planning center's space. will occupy the for evaluating effective framework this eventual cluster of uses requires the consideration of factors several scenario. theories within a Retail Project" The "Best Retail Project" criteria draws upon which underscore criteria utilizes three factors "Best Retail Corporate the emphasized in management Planning Model Project" is-- Attractors and Retail of "Best the Project. planning method Strategic schools. This in determining what the Site and Use Concept, Core Stores, and Financial Feasibility (Exhibit provides a 1) This type of developer of Page 67 strategic an anchorless retail center with an objective approach in searching for the most competitive and "Best Retail Project" for a future development. 1 3 6 In addition to the definition of "Best Retail Project", the includes a three level testing process Corporate Strategic Planning Model known as "Triad Testing" which introduces critical objective factors for consideration when formulating future retail projects. During of the developer should each phase spend the time necessary to insure that use run a quick Triad the project is continuing that are consistent with The project, a of Triad Triad Testing control circle". Testing developer Model and needs to under conditions the original assumptions made. involves evaluation and reevaluation of "quality Test to consider continuous project factors within a Exhibit the the 2 illustrates various in factors that evaluating any the a new project. Another important be applied at various center design process model. Under model of testing stages of the is the this model which should anchorless retail Developer Design set forth in Exhibit Review 3, the developer establishes a concept evaluation process which imposes during a level of review at the development process. several critical These times reviews insure that the original design and use goals of the anchorless Page 68 intent is original design that the a way such modified in are being met or are being retail center being served. Site and Use Concept of use possibilities a developer could variety of site and for an consider which handful there are a While used in the project. use site and are the retail center an anchorless concepts to be a developer area of consideration for The first anchorless have proven are only center, there to successful. be a When considering the site and use concept, the developer must in mind keep the unusual challenge represented by an anchorless center: that significant traffic flow must be created without the benefit of the locational draw of an anchor store tenant. Obviously, which exist for future with every design which is probably in the limitations range from the the With zoning regulations. being considered by the anchorless retail likely to be the reason an first place. even more anchorless Site and use restraints that exist due to physical capabilities limits imposed limitations and use possible site limitations are was chosen the sheer site retail development. centers, these imposing there are of the development to applicable state An important Page 69 and local additional restraint is the limitation imposed by the consumer demands of the Regardless market. local income of an area is, retailing that the area are centers market since of how per capita high the amount of there exists a finite can sustain. to extra sensitive Anchorless retail of sales in successful levels local of the limits all retail stores is necessary to create the synergy of the center. It is absolutely necessary from the beginning of the developer retail center project that an anchorless determine how much physical space will be available. determining this amount, a developer can By then proceed with deciding upon which Core Attractor the project will utilize and the complimentary retail tenant mix. these preliminary decisions are then proceed After made, the developer can to configure the center and determine its financial feasibilty. Core Attractors and Retail Stores Core Attractors The decision regarding what the "Core Attractors" will be earliest and The anchorless within an is one most critical choices facing development essential in center of successful Core creating the locational and Page 70 of the a developer. Attractors is consumer draw is the Festival Centers, itself with the center is usually Core Attractor In Key Tenant. or the Anchor Store retail center. the Core Attractor retail centers, In anchored building traffic within a strategically located devices the as consumer defined are Attractors Core unanchored retail center. necessary to sustain an it's historical background or unusual location. anchorless retail centers can Core Attractors in Included in this list would take many different forms. be the very obvious retail stores locational creating Attractors who developers for draws Core types the of the addition, In together. working examples successful most effective combination of the have already put them in use are Cinema Complexes, Mini-Theme Parks an in Entertainment areas Districts, and both (including expanded established list of Core Theme Food Retail and Food retail, for General Complexes Service). Food An Attractors includes activities the general population amongst growing in popularity such as Cultural/Performing Arts and Home Improvements and Decoration. While there disadvantages to are each of the possible one thing is obvious: and Core Attractors, under the right circumstances the activities or combination of consumer advantages significant and locational activities will create the draw Page 71 necessary to sustain a The selection of significant amount of retail activity. upon a number of factors a Core Attraction is dependent ranging from draw locational maximum the to efficiency in creating of feasibility the economic the activity or combination of activities. group can be further Each general Core Attractor broken under Core Entertainment the example, For group. the contained within activities different subcategories representing down into Attractor group, the subcategories include restaurants, bars/live performance games, exhibits Similar exhibits. a list breakdown of each Core effect of types of the use and, be Exhibit a detailed contained within of uses the range such as can subcategories ranking of the Attractor, a arcade demonstration Core Attractors, the subcategory of each and Core Attractor groups. developed for the other 4 provides artisans and, and rides scheduled events and museums, arts performing games, interactive clubs/discos, locational draw of minimum square footage necessary for each use. A number of the Core Attractor subcategory uses have several different elements represented within them. For example, the subcategory of restaurant uses would in most liklihood not be limited to a single restaurant. developer should attempt to create restaurants which would enhance Page 72 a combination A of the locational draw for In types of consumers. many different the subcategory of retailing, the various types and combinations of uses detail the 5 describes in Exhibit significant. is is various uses contained within each of the subcategories. Attractor itself can be a In some cases the Core from activities Attractor Core the however, cases In most a Cinema Complex. single activity such as with groups can be combined to produce a synergy within the anchorless retail center. This kind several different of can synergy right the with produced be also combination of Core Attractors and related retail shops. This synergy results the as affect the to undoubtedly specific combinations, it some better natural "fits" In is obvious than synergy the maximum location. others. Within The resulting support are created. of degree result in the through subsidizes other uses as additional levels of economic overall Exhibit 6 types of uses. another. synergy affect contributes and highest the has a unique dependency and the entire center, each use relationship of segment created synergy interdependency of the different cross-sales one from are influenced by others. the economic a cross-subsidizing customers anchorless center documents in created consumer draw evaluating that some In many of uses consistent with areas demographics. Page 73 The will to a different uses compliment cases there are the surrounding Retail Stores After the decision of what type of Core Attractor most creating in Centers Retail Anchorless successful The efficiency. maximum at draw to center for the store mix correct retail determine the an next step for a developer Anchorless Retail Center, the is to to draw locational create the to used be will consumer traffic thus far have been based on the synergy such as the Saddle Creek Some anchorless retail centers Germantown, in located Center and stores. of top retailers a combination created by have Tennessee flow from creating the necessary traffic successful in been their inception.137 other anchorless centers such as the create to centers for the still waiting Atrium are New traffic. customer in their main draws England Development, the developers of the Atrium see the recent the key providing expected Henri Bendel sales during as the level of the center. has resulted the store Bendel in developing factor to sustain traffic necessary opening of Henri high-fashion the of opening Atrium's The delayed in a first lower than year of operation. 1 3 8 A developer all of the retail hoping to create a stores and Page 74 tenant-mix where other uses within an together must carefully evaluate anchorless design work the stores and types of must also be given to the the local set services out in given the tenant-mix footage and square stores and associated 7 Exhibit is essential use limitations size and food to a the appropriate to create is attempting developer who information regarding uses of retail of requirements The market. types various the feasibility of the tenant-mix capabilities of the center and the in light of both the needs of Consideration uses desired. of the proposed anchorless center. retail centers anchorless approach Niche" serving affluent examples of the market. tenant-mix and areas being a "Market merchandising. retail centers most the successful thus far, anchorless design there is following can be believe that a similar good reason to created in to future is in the With the upscale anchorless (Exhibit 8) developers of distinct possibility for One very an anchorless center targeted at a specific It is possible that an anchorless retail center can be developed around a family oriented theme with the Core Attractors anchorless retail stores specifically family. a sizeable range drawback to the Market Page 75 Approaching Niche strategy markets away from well as creates A all centers from a Market number of expands the locations. retail various members of the focused at areas as and just affluent of possible Niche approach is while affluence critical factor, a no longer remains a densely populated Target Area is still required. Financial Feasibility of the Project in the final factor The "Best Retail Project" model is the testing of the Financial Feasibility of the It Project. is very important that a pre-development a proposed anchorless retail feasibility of financial center be conducted since this type of study will inform the developer if the anchorless retail center planned given the various proceed as influencing The format the project. financial feasibility of an should financial factors for testing the anchorless retail center is similar to the format used to test the viability of most retail projects. With anchorless retail centers a base assumption must be made that the Core Attractors and the of the synergy customer traffic From that the development the level will create flow necessary to sustain point, the anchorless retail the center. testing of financial feasibility much the proceed in center can of same way as a general retail center. Financial examining retail decision Feasibility the target center's must be market support proposed made center will focus on a location. whether begins analysis of an A by anchorless fundamental the anchorless retail specific Market Niche or whether Page 76 If the choice is made center at a is consistent conducting a financial required anchorless center Feasibility approach financial the analysis conducted require an The developer information will feasibility be determined. can prior to prior to the analysis because more specific that before with that goal feasibility test. must make these decisions is likely developer must Niche the and develop an effective retail select a Core Attractor it anchorless retail to target the specific Market tenant-mix that general public. will be to the of the project the aim under the evaluation of retail market conditions of The both be of the Financial Market Niche the general the proposed target area as well as the individual consumer purchasing habits of the market receiving critical in information are Both types of focus. determining the financial feasibility of a retail center with such a precise focus. In contrast, if center will the proposed attempt to appe al to as its potential market anchorless retail entire general public are a, the financial feasibility analysis will undoubtedly be much broader in scope. target market support of The th is type of anchorless retail center will depend highly upon the overall acceptance of the center by the community. After the complete analysis support existing within the Page 77 of the tarket market surrounding area, a financial pre-development study feasibility of the entire anchorless retail center should then be conducted by the developer. development costs Attractor, and analysis is the three-step include will effects and of tenant-mix and facilities. features analysis and revenue retail the Forma Format, This Typical of format of and Return Measures set 9. Page 78 the this the the Core supporting type Base Case, of Pro forth in Exhibit CONCLUSION for alternative solid constraints the facing whole as society as a to changes within surfacing due are reasonable be a centers can developers of histories with centers that these profitability should mixed, there been has retail centers anchorless enough which While the success record of with their future projects. anchorless exist anchorless design of an the option carefully consider center developers center shopping that dictate shopping industries retailing and development within the trends Significant well as communities in specific. Research careful planning an anchorless retail type a fully of anchored development. locational core different tenant-mix. design must A draw can attractions and a from a be invaluable in number an anchorless necessary in design will the ultimate success project. Page 79 of Much of the pre-planning anchorless an of this well-formulated time and resources spend the in considering prove to be The source developer contemplating fully evaluating this option. used shopping center have the same locational draw can be created which will of that with paper indicates within this later of the still An anchorless retail shopping center be considered too radical Neverthelss, if the shopping center current design will rather than a choice. of retail ultimately For the developers. in retailing trends development continue, anchorless developers for many design may the role become a of the necessity innovative and creative shopping centers, the anchorless design has already proven to be a viable option. Page 80 and EXHIBIT 1 Best Fit For Anchorless Retail Centers Page 81 EXHIBIT 2 Triad Testing For Anchorless Retail Centers Page 82 EXHIBIT 3 Construction & Tenant Occupancy Control Sessions For Retail Development Page 83 EXHIBIT 4 CORE ATTRACTORS SUBCATEGORIES DRAW MINIMUM S.F. Entertaiment * Restaurants * Bars/Dance Clubs * Interactive Games * Carnival Rides/ High High Unknown High/ Medium High Medium Medium 20,000 S.F. 25,000 S.F. 3-5,000 S.F. 10-30,000 S.F. 5-50,000 S.F. 1-5,000 S.F. 1-5,000 S.F. Four Screen Eight Screen Medium Medium 15,000 S.F. 25,000 S.F. High High 12-15,000 S.F. 12-15,000 S.F. High Low High/ Medium 7-10,000 S.F. 5,000 S.F. 3-5,000 S.F. High Low Medium High High Low High 5-10,000 S.F. 1-3,000 S.F. 3-10,000 S.F. 2-10,000 S.F. 5-15,000 S.F. 2-5,000 S.F. 1-3,000 S.F. Amusement Games * Exhibits/Museums * Planned Events * Artisan Demonstration Cinema Complex * * Food Retail * Local Farmers Market * Market Hall * * Family Oriented Premium Sit-Down * Cafe/Bistros Restaurants Retail * Fashion * * * * * * Gift Home Decor Lifestyle Leisure Convenience Food Retail Page 84 EXHIBIT 5 CORE ATTRACTOR: SUBCATEGORY DESCRIPTION OF USES Entertainment: Exhibits/Museums * Children's Discovery (1) * Science (1) * Aquarium (1) Food Retail: Local Farmers Market * Local Green Grocer (1) * Special Energy and Quality Level (1) Food Retail: Market Hall (2) (Stylized and subleased using architectural shell and signage to create the illusion of a Market Hall) * * * * * * * Restaurants: Family Oriented (2) Fresh Bakery Produce Deli Meats and Poultry Pasta Wine Gourmet Teas/Spices * Theme * Various * Design Price Points Restaurants: Cafe Bistros (3) * Grills * Ethnic * Bakery/Deli Retail: Fashion * Childrens (3) * Shoe Stores * Cosmetics/Perfumes * Guild Jewelry (3) * Handcrafted Jewelry * Mens Ready To Where * Ladies Ready To Where (1) * Sportwear * Swimwear Retail: Gift (1) * Artisan Crafts (1) * Cards/Stationary * Luggage * Import * Bed & Bath * Prints & Frame Shop * Flowers/Plants * Furniture/Housewares * Appliances Retail: Home Decor Page 85 Retail: Lifestyle * * * * * Retail: Leisure * Hobby * Toys (3) * Sports Equipment * Athletic Shoes Records/Tapes (1) Videos (1) Art Materials Bookstores (1) Travel Services Retail: Convenience * * * * * * * * * * Retail: Food Retail * Wine (3) * Ice Cream * Food Court (3) Hardware (1) Drugstore Shoe Repair Laundry Financial Office Supply Doctors Office Dentists Office Insurance Optomologist (1) Notes: (1) Single use has significant effect on locational customer draw for entire facility. (2) Whole subcategory has positive effect on locational customer draw for entire facility. (3) Single use has medium effect on locational customer draw for entire facility. Page 86 EXHIBIT 6 Core Attractor and Retal Mix Synergy Leisure Retail +4 Craft & Gi Retail +3t Food +5I Service Men's & Women's Specialty Fashion +3 Cinema/Theater +4 Entertainment Attractions +5 4 Page 87 Core Attractor t EXHIBIT 7 RETAIL AND FOOD SERVICE USES Square footages included are approximates and should only act as a guide when merchandising plans. FAST FOD Juice Yogurt Raw Bar Ice Cream Italian Pizza/Grinders German 400-600 500-800 800-1200 400-1000 400-600 Bagels/Pretzels Greek/Mid East Chinese Hungarian Mexican Fresh Pasta Delicatessen Hot Dogs/Hamburgers Soups & Salads Coffee & Pastry Sandwiches Soul Baked Potato Pasta/Charcuterie Raw Bar Sushi Bar 300-600 600+ RESTAURA-NT Cafe Theme Bar Bookstore/Cafe Cocktail Lounge Greek Amerian Regional Northern Italian Chinese Healthy Food Restaurant Mexican French Bistro Charcuterie Candy/Nuts Candies Cookies Dried Fruits & Nuts Coffee/Tea/Spices Chocolates Cheeses Gourmet Foods Bakery Greengrocer Fresh Meats/Fish Butcher General Store 1500-5000 4000-6500 5000-7000 3500+ 1500-2000 2000-5000 3500 1500-2000 1000-2000 1500+ 1500+ 800+ Tablecloth (full menu) Ice Cream Parlor French Restaurant Japanese Restaurant Seafood Restaurant Traditional Steak House Northern Italian Indian Grillage Vietnamese Greek Taverna ADDITIONAL USES 400-600 Farmer's Market 300-600 Produce Market Charcuterie 300-600 Wine Shop 300 + Wines/Liquors 300-500 Delicatessen 300-600 Supermarket 800-2000 1500-3000 Fresh Pasta (Gourmet Foods) 1500-2000 Health Foods 1800+ 1500 Breads Bakery-Patisserie 1500 Gourmet Groceria 1500-2000 Wine Bar 300-400 400-600 5000-7000 1500-2500 4000-7000 2000-4500 1500-3500 1500-2000 1500+ 1800+ 1800+ 1500-2000 1500+ 1500-3000 3000+ 6000-45000 600-2000 800-1500 500-600 12000-25000 FASHI2N Women's Sportswear European Men's & Women's Preppy Fashions European Women's Knitwear English Prints & Fabrics Maternity Shop WRTW Contemp. Career Apparel MRTW (Designer-Traditional) Men's Shoes 100-5000 1500+ 1500+ 1000-1500 Designer Fashions Sweaters & Knitwear Westernwear Irish Woolens 1200-2000 1000-1500 1200-2500 1200-6000 1500-2000 Dancewear/Hosiery Maternity Formalwear Jeans Sportswear/Men/Women Page 88 1000-1500 500-1000 1500-2000 800-1500 600-800 1200-1500 1500+ 1500-2000 1500+ Designer Fashion Shoes Women's Shoes Shirts/Ties Casualwear/Men & Women Activewear Formalwear Coordinates Eurosport 1500-2000 1500-2000 1000-1500 2000-3000 Perfume/Cosmetics Handbags Accessories Gloves, Belts & Scarves Leather/Luggage Fashion Eyewear 350-1000 600-800 600+ 400-600 600-1500 European Jewelry Guild Jewelry (fine jewelry, crystal & china) Estate Jewelry Antique Jewelry Fashion Jewelry Vogue Jewelry 1000-2500 2000-3000+ 900-1500 1500-2000 1000-1500 1200-1800 Rainy Day Clothing Leather Fashions Family Shoe Store Athletic Shoes Petite Fashions Plus Sizes Children's Apparel Fun Fashions 1200-2000 1000-2000 1200-1800 ACCESSQRIS Canvas Bags & Totes Haberdasher Hosiery Cosmetics Lingerie 500-1000 1500 300-500 500-1000 600-1000 JEWELRY 600-1000 " Contemporary Jewelry Handcrafted Jewelry 600-1000 Credit Jewelry 1000-1500 Fine Watches 500-750 (Honore) Type Jewelry 600 (antique, contemporary estate & antique) Barber Hair Stylist Optician Dry Cleaner/Laundry Bank Automatic Teller (24 hour) Keys Shoe Shine Stand Travel Agent Museum Store Hardware/House Decor Vitamins & Health Foods Apothecary/Pharmacy Drugs & Sundries Health & Skin Care Salon Sun Tanning Video Rentals Cards/Stationery SERVICE 1000+ Photography Studio 1000 Office Supply 1000 Fine Custom Stationer 1000-1500 Pipes/Tobacco 4000+ News/Tobacco 350 Copy Center 100 Florist/Plants 50-75 Car Rental 500 Tailor 1500-2000 Phone Store 2000 Shoe Repair 750-1200 Film/Camera 3500+ Ticketron 1500 Sundries 1000-1500 Figure Salon 500-1800+ Air Ticket Office 1000-3000 Stationery for Business 1500 & Home Hobby/Crafts Artist Supplies Artisan's Co-op Pottery/Crockery International Crafts & Gifts 1500+ 1500-2000 2000-3000 1000-1500 1000-2000 Pro Shop Racquet/Ski/Swim Hunting & Fishing Athletic Shoes Sports Gift Shop i.e. Whalers 300-500 1500 1500-2000 1000 1500-3000 800-1000 1000-1500 500-1000 600 600-1000 400-500 1000 1500-2000 600 600 100-200 1000+ 2000+ 600 1000-2000 LIFESTYLE - ARTS Art Gallery Sculpture Gallery Arts/Crafts Bookstore Art Prints & Framing SPORTS & ACCESSORIES 1500+ Typical Sporting Goods 2500+ Major Sporting Goods 1000-2000 i.e. EMS, Herman's 1000+ Abercrombie & Fitch 1500-2000 Page 89 1500-3000 1500-3000 1500-2000 2000-4500 1500-2000 2500-7000 10000-25000 LIFESTYLE - GIFTS Soaps & Scents Toys/Games Lighter Shop Watch Shop Apothecaria Jam/Jellies/Soaps Leather/Luggage Sea Shell Shop & Tropic Jewelry Clocks & Other Time Pieces 600-1000 1500-2000 300 300 1500-2000 600-1000 600-1500 Tabletop Fine Cutlery & Kitch. Gadgets Cookware/Housewares Glassware Bath Shop Fabric/Notions Fabrics & Wallhangings Furniture (Scandanavian antique, contemporary) Flowers/Plants Small Furn. & Accessories Knock-down Furniture Wicker & Seasonal Furniture & Accessories Oriental Carpet Gallery 1200+ 600-1000 1800-4500 750-1500 800-1500 1000-3000 1000+ 5000+ 300-500 1000+ Brookstone Chandlery/Candles Brass & Crystal Gifts Brass & Pewter Gifts Party Supplies Cards & Gifts Kites Candle Shop Music Boxes 3000 (2200 w/mezz.) 1200-1500 400-1000 400-1000 1000+ 1500-3000 600 1000+ 500+ LIFESTYLE - HOME 600+ 1500-2000 1000-1500 1500-2000 1000+ LIFE STYLE Tools & Hardware China/Glassware Bedding & Linens Buttons Sefving Machine Yarn Shop/Needlepoint Clock Shop Paint/Wallpaper Garden Shop Music Boxes & Clocks Antique Collectives Silk & Dried Flowers Lighting Store Tabletop (Linens & Access.) 2500-3500 1500-2000 1500+ 300 1506-2000 1000-1500 1000-2000 2000 2000+ 500-800 2000-4000 600-1000 1500 1000-1500 - MUSICAL/ELECTRONIC Records/Stereo & Electronics Camera/Video Camera/Film 2000-4000 800-1200 600-1000 Parfumerie Leather Crafts Handcrafted Jewelry Handmade China & Glassware Handmade Pillows Doll House Furniture Antique Dolls Antique Nautical & Meteorology Collectible Records & Phonographs Puppets & Clowns CRAFTS & ANTIQUES Handmade Woolens 300-400 500/CART Wooden Toys & Sculpture 500+ Handthrown Pottery & Ceramics 500-1000 500+/CART Miniatures & Collectibles 500 Grandfather Clocks 500/CART & Timepieces 500-1000 Rare Books & Signed Letters & Prints 800 Puzzles & Magic Tricks 500/CART Train & Hobby Shop Children's Apparel Children's Toys Stuffed Animals CHILDREN 1500 Bicycle Shop 1500 Toys & Kites 1000-1500 Children's Books Computer Store Pianos/Musical Instruments 1500-2000 2500-3500 500-600 500/CART 500+/CART 500/CART 500-1000 500-1000 500/CART 500/CART 1500+ 500-800 500-1000 ENTERTAINMENT & HEALTH Health Club 10000-25000 Exercise Clubs 10000-15000 Cinema (movie theatre) 2500-5000ea (Racquet Ball Courts) 20ft. high - 800 sf Dinner Theatre (24 seats-76 seats) Auto Bank Teller Bank Stock Brokerage Firm MISCELLANEOUS 100-200 Auto Repair Center 1500+ Gas Station Page 90 10000 1500-3000 EXHIBIT 8 MARKET NICHE TYPES OF USES Family * * * * * * * * Childrens Clothing Young Professionals * * * * * * * * Food Market Hall Ready To Wear Jewelry Stores Artisan Crafts Bookstores Travel Services Sportswear Records/Tapes Upscale * Premium Restaurant * Cafes/Bistros * Food Market Hall * Fashion Clothing * Cards/Stationer * Luggage * Wine Store * Bookstores Mature Adolescent * * * * * * * * Page 91 Toys Ready To Wear Sportswear Cinemas Hobby Sports Equipment Family Restaurant Hair Salons Swimwear Sports Equipment Records/Tapes Video Sportswear Jewelry Prints/Framing Shop EXHIBIT 9 Anchorless Retail Center Pre-Development Financial Feasibility Base Case Pro Forma Format Page 92 Return Measures ENDNOTES 1 Cyril S. Belshaw, Traditional Exchange and Modern Markets (Englewood Cliffs: Prentice-Hall, 1965), 1. 2 Robert B. Potter, The Urban Retailing System (Aldershot: Gower Publishing Company Limited, 1982), 3. 3 Urban Land Institute, Commercial and Retail Development Council, Shopping Center Development Handbook, 2nd ed. (Washington, D.C.: Privately printed, 1985), 1. 4 Ibid, 3. 5 Urban Land Institute, Dollars & Sense of Shopping Centers: 1984 (Washington, D.C.: Privately printed, 1984), 155. 6 Urban Land Institute, Commercial and Retail Development Council, Shopping Center Development Handbook, 1st ed. (Washington, D.C.: Privately printed, 1977), 4. 7 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 4. 8 "The Bigger, The Better," Home Quarters Warehouse Advertisement, Boston Globe, 17 August 1990, 24. 9 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 4. 10 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 7. 11 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 7. 12 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 7. 13 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 10-11. 14 Bernard J. Frieden and Lynne B. Sagalyn, Downtown, Inc. (Cambridge: The MIT Press, 1989), 172. 15 Urban Land Institute, Dollars & Sense of Fashion (Washington, D.C.: Privately printed, 1988), Malls: 1988 64. Page 93 16 Ibid, 64. 17 Ibid, 64. 18 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 9. 19 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 9. 20 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 9. 21 Halcyon Ltd., "Retailing Industry Information 1990), photocopied, Memoradum," (Hartford: Halcyon Ltd., 1. 22 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 147. 23 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 154. 24 Halcyon Ltd., Retailing, 2. 25 Halcyon Ltd., Retailing, 2. 26 Urban Land Institute, Shopping Handbook, 1st ed., 3. 27 Urban Land Institute, Shopping Handbook, 2nd ed., 3. 28 Urban Land Institute, Shopping Handbook, 1st ed., 3. 29 Urban Land Institute, Shopping Handbook, 1st ed., 3. Center Development Center Development Center Development Center Development 30 "Opinions Differ on Anchorless Centers: Are They Innovative? Or Responsible for High Retail Vacancy Rates?" Chain Store Executive, Vol. 64, May 1988, 59. 31 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 3. 32 Urban Land Institute, Dollars & Sense of Fashion Malls, 5. 33 Real Estate Research Corporation, Emerging Trends in Real Estate: 1990 (Atlanta: Privately printed, 1990), 24. 34 Ibid, 24. Page 94 35 Ibid, 23. 36 "Pile'em High and Go Bust," The Economist, 7 July 1990, 70. 37 Real Estate Research Corporation, 24. 38 Real Estate Research Corporation, 23. 39 Nina J. Gruen "1990 Retailing Fundamentals: Problems and Solutions" (San Francisco: Gruen + Gruen Associates, 1990), photocopied, 1. 40 Ibid, 5. 41 Julie Hatfield, "'Retail is detail,' and there's Boston Globe, 7 August 1990, plenty at the new Bendel's," 51. 42 "Hunkering Down," Time, July 23, 1990, 56. 43 Gruen, 2-3. 44 Gruen, 3. 45 Gruen, 4. 46 Gruen, 5. 47 Gruen, 5. 48 Real Estate Research Corporation, 25. 49 Landauer Real Estate Counselors, 1990 Real Estate Market Forecast, (New York: Privately printed, 1989), 7. 50 Real Estate Research Corporation, 25. 51 Real Estate Research Corporation, 25. 52 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 39. 53 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 54 Business 1984, 3. 308. Harvard Business School, "Nordstrom," Harvard School Case Study, 9-579-218, Rev. November 55 Real Estate Research Corporation, 26. 56 Gruen, 1-2. Page 95 57 Gruen, 4. 58 Urban Land Institute, Development Handbook, 1st ed., 3. Shopping Center 59 Halcyon Ltd., Retailing, 2. 60 Halcyon Ltd., Retailing, 2. 61 B. Berry, Geography of Market Centers and Retail Distribution, (Englewood Cliffs: Prentice-Hall 1967), 3. 62 G.E. Weisbrod, R.J. Parcells, and C. Kern, "A Disaggerate Model for Predicting Shopping Area Market Attraction," Journal of Retailing, Vol. 60, No. 1, 1984, 66. 63 Berry, 3. 64 Glen E. Weisbrod, and Karl Radov, "Retail Success or Failure--Any Connection to Market Studies," (Cambridge, Massachusetts: Cambridge Systematics, October, photocopied, 2. 1984), 65 Halcyon Ltd., Retailing, 2. 66 Halcyon Ltd., Retailing, 2. 67 Halcyon Ltd., Retailing, 3. 68 Halcyon Ltd., Retailing, 3. 69 Stephen Karp, President of New England Development, Massachusetts Institute of Technology Center Lunchbox Series, Estate Development, Rose for Real February 1990. 70 Karp. 71 Karp. 72 "Leslie Wexner Pushes Limited's Fast Growth Despite Retailing's Ills," Wall Street Journal, 15 August 1990, A5. 73 Karp. 74 Wall Street Journal, 1. 75 Karp. 76 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 39. Page 96 Frieden and Sagalyn, 123-4. 78 Frieden and Sagalyn, 138. 79 Jacques Gordon, "Horton Plaza, San Diego: A Case Massachusetts Public-Private Development," of Study Estate Development Real Center for of Technology Institute Case Study, December 1985, 107-8. 80 Frieden and Sagalyn, 193. 81 Halcyon Ltd., Retailing, 2. 82 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 12. 83 William S. Kowinski, The Malling of America, (New York: William Morrow and Company, Inc.), 1985, 104. 84 Ibid, 104 85 Halcyon Ltd., "Cameron Village; Raleigh, North (Hartford: Carolina Memoradum," 1990), photocopied, 10. Halcyon Ltd., 30 May 86 Halcyon Ltd., Cameron Village, 10. 87 Halcyon Ltd., Cameron Village, 10. 88 Halcyon Ltd., Cameron Village, 13. 89 Halcyon Ltd., Cameron Village, 13. 90 Halcyon Ltd., Cameron Village, 13. 91 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 13. 92 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 13. 93 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 13. 94 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 13. 95 Urban Land Institute, Shopping Center Development Handbook, 2nd ed., 13. 96 Meredith L. Clausen, "Northgate Regional Shopping Center-Paradigm From the Provinces," Journal of Architectural Historians, Vol. XLIII, No. 2, May 1984, 160. Page 97 97 Clausen, 160. 98 Clausen, 160. 99 Urban Land Institute, Shopping Center Development Handbook, 1st ed., 16. 100 Frieden and Sagalyn, 1. 101 Frieden and Sagalyn, 312. 102 Halcyon Ltd., Retailing, 3. 103 Halcyon Ltd., Retailing, 3. 104 Chain Store Executive, 60. 105 Chain Store Executive, 60. 106 Chain Store Executive, 60. 107 Chain Store Executive, 60. 108 Kowinski, 233. 109 "The Atrium: 21st Century Shopping Center: Chestnut Hill Project Brings New Look to Massachusetts Market," Chain Store Executive, Vol. 64, May 1988, 145. 110 Chain Store Executive, May 1988, 145. 111 Chain Store Executive, May 1988, 145. 112 Chain Store Executive, May 1988, 145. 113 Melvin Simon & Associates, Inc., "Gateway to the West," Simon Developments, (Indianapolis: Privately printed, 1990), 18. 114 Melvin Simon & Associates, Inc., Scottsdale Galleria, (Scottsdale: Privately printed), 1990, 13. 115 Melvin Simon & Associates, Inc., Scottsdale Galleria, 13. 116 Melvin Simon & Associates, Inc., Scottsdale Galleria, 14. 117 Melvin Simon & Associates, Inc., Scottsdale Galleria, 14. 118 Melvin Simon & Associates, Inc., Scottsdale Galleria, 5. 119 Melvin Simon & Associates, Inc., Gateway, 18. Page 98 120 Galleria, 121 Village, 122 Melvin Simon & Associates, Inc., Scottsdale 5. Toombs Development Company, Princeton Forrestal (Princeton: Privately printed), 1990, Al. Toombs, A2. 123 Toombs, A4. 124 "Anchorless Centers," Chain Store Executive, 59. 125 "Anchorless Centers," Chain Store Executive, 59. 126 International Council of Shopping Centers, Shopping Center Operating Cost Analysis Report 1987, York: Privately printed, 1987), 1. 127 International Council of Shopping Centers, Shopping Center Operating Cost Analysis Report 1989, York: Privately printed, 1989) 1. 128 Halcyon Ltd., Retailing, 1. 129 Halcyon Ltd., Retailing, 1. 130 "MCA Faces The Future," Premiere, ICSC (New ICSC (New August 1990, 84. 131 Halcyon Ltd., Retailing, 1. 132 Premiere, 84. 133 Halcyon Ltd., Retailing, 1. 134 Kowinski, 233. 135 Halcyon Ltd., "Strategic Planning: Fresh Place", Hartford: Halcyon Ltd., 1990, 1. 136 Halcyon Ltd., "Strategic Planning for Asset Appreciation", Hartford: Halcyon Ltd., 1990, 1. 137 "Anchorless Centers," Chain Store Executive, 59. 138 "Henri Bendel drops 31 July 1990, 8. Page 99 anchor," The Brookline Tab, BIBLIOGRAPHY Berry, B. 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