Published: Saturday, October 13, 2012 at 10:28 p.m.
Last Modified: Saturday, October 13, 2012 at 10:28 p.m.
Amid the worst recession in decades, key future tenants ? among them, luxury retailers Neiman Marcus and Nordstrom ? bailed from the $315 million project, even as online shopping dug deeper than ever into traditional brick-and-mortar sales.
But now, a partnership between Taubman Centers Inc. and Manatee County's Benderson Development Co. plans to break ground Monday on a 276-acre parcel that will likely become the most upscale retail center between Tampa and Naples. In doing so, the mall's co-developers won't just resurrect a project left for dead ? the largest among dozens scuttled by the Great Recession. It will likely transform Southwest Florida shopping.
?High-end malls like this are very unique, especially now,? said Frank Falciani, senior vice president of Pittsburgh-based dck worldwide, which has built similar projects for Taubman and others and will work on University Town Center. ?There is not going to be anything quite like University Town Center in the southwest part of the state.?
The mall's size ? 880,000 square feet, with more than 100 merchants ? is expected to be matched by a level of extravagance this region has never seen. In many ways the project will mimic what Michigan-based Taubman has done in Tampa with its International Plaza, anchored by Neiman Marcus and Nordstrom, and at Orlando's Mall at Millenia, a Taubman property with another Neiman Marcus and a Bloomingdale's among its key merchants.
Anchored by department stores Saks Fifth Avenue, Macy's and Dillard's, this area's first new mall in nearly four decades also signals renewed confidence in a regional economy that has struggled mightily since the first Mall at University Town Center plan was shelved.
Additionally, the project's construction at University Parkway and Interstate 75 is expected to spark an eventual paradigm shift, drawing residents and tourists away from traditional shopping hubs downtown, at St. Armands Circle and at the pair of malls that have dominated retailing here for decades.
But that shift will not likely occur until months, or even years, after the new mall's scheduled opening sometime in late 2014.
?Trying to change a longstanding shopping pattern isn't going to be easy,? said Jeff Green, a Phoenix-based retail consultant who has done extensive work in Southwest Florida. ?I believe there is a psychological barrier between those who live on the coast and all that retail so far east.
?The drive feels a lot longer than it probably is, but when it comes to shopping, perception is reality.?
A select group
University Town Center will become only the second mall nationwide in any phase of construction this year, following the March opening of City Creek Center in Salt Lake City.
Though developers are expanding some properties in New York and elsewhere, and new malls plans are getting underway in places like Hawaii, traditional mall building has been scarce. Before the Utah property's opening, a new enclosed mall ? save for discount outlet centers ? hasn't been built since 2006, according to data collected by the Directory of Malls, which has been tracking properties since the 1970s.
?It is a good sign for the economy that malls are moving forward. They employ a lot of people,? Green said, adding that Taubman's decision to proceed with University Town Center is extraordinary, too, because of its location. ?It is strange that it is happening in Florida, as opposed to markets that haven't been hit by the recession as hard.?
Neither Taubman nor Benderson officials would comment on the project ahead of the planned Monday groundbreaking.
When completed, the University Town Center mall will be only 12 miles from the nearest existing enclosed center, Westfield Corp.'s Southgate Mall.
But it will likely shift the epicenter of shopping in Sarasota and beyond away from existing nodes to one that has only recently been developed, near Interstate 75 and the master-planned community of Lakewood Ranch.
There, Benderson has aggressively built or expanded several strip centers and a former outlet mall, adding merchants like Marshall's, The Fresh Market, Kohl's, Sports Authority and others to a roster that had included a Home Depot and BJ's Wholesale Club.
In advance of the mall that is now getting under way, Benderson also lured a SuperTarget, category killers like Best Buy and Total Wine, and a host of smaller specialty tenants, restaurants and service firms.
Taken together, the new stores are intended to capture retail traffic that had traditionally limited shopping to Tamiami Trail in either Bradenton or Sarasota.
?The mall is just the icing on the cake for that intersection,? said Dale Scott, Florida director of the International Council of Shopping Centers, a trade group, and senior executive vice president of Deerfield Beach-based Sikon Construction. ?People will be willing to drive there for that kind of retail selection.?
Some shoppers will have to drive farther than others because the mall is expected to siphon shoppers from as far as Longboat Key and Casey Key, another exclusive residential enclave that lacks upscale stores.
But it is the growing, affluent suburban developments in Lakewood Ranch, and others nearby in Manatee and Sarasota, that are the primary targets for University Town Center.
Falciani, the dck worldwide executive, noted that Taubman ? as well as sophisticated merchants like Saks ? has done extensive market research and demographic studies to map out who will shop at the new mall and how far people will be willing to travel.
?Taubman is very selective about where they are going to build, and I think the recession has only made them more selective,? Falciani said.
Other analysts question not whether the mall will draw shoppers, but how frequently.
?The appeal is there for the residents who live in that area, but the affluence comes from those who live west in the city,? Green said, pointing to wealthy neighborhoods west of Tamiami Trail in Sarasota.
?By developing so much in one area, they're banking on the risk that customers will be willing to pass by other retail concentration to find better shopping,? Green said. ?They will do it, but the question is how often??
There appears to be little debate that the new mall will compete with existing properties and concentrations of stores throughout Southwest Florida.
?The new mall is going to cannibalize the existing malls in the beginning, that's for sure,? said Scott, the International Council of Shopping Centers director. ?They may struggle to find their niche, but there is enough to go around in the south Sarasota and downtown Sarasota market.?
University Town Center also may influence the types of merchants that come to populate existing retail nodes. In place of apparel-themed fashion stores, Green and others contend that nontraditional retailers will fill in a void that the newest mall creates.
To a degree, that transformation toward more mixed-use centers is already happening. In August, for example, Costco Wholesale Corp. opened a members' discount club in Westfield's Sarasota Square Mall on South Tamiami Trail ? space that had been a Dillard's department store.
?Value is king in today's market,? said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York-based retail consultancy and investment banking firm. ?It's what shoppers want, so companies are investing in that.?
Although Westfield has flirted for years with the concept of renovating and expanding its Southgate Mall ? a former strip center at South Tamiami Trail and Siesta Drive in Sarasota ? it has never gone forward.
Ironically, the loss of its Saks anchor in two years may provide the impetus for Westfield to finally invest in Southgate, with new tenants, a new footprint, and even new concepts.
That, experts note, combined with its proximity to downtown, upscale neighborhoods and tourist hotels, is expected to keep Southgate a viable retail property, even with the new competition.
Notably, Westfield has yet to name a replacement for Saks at Southgate, and Macy's has been mum on whether it plans to stay in the 425,000-square-foot mall or exit along with Saks.
Starts and stops
The Mall at University Town Center was conceived during the mid-2000s housing bubble, a time of fervent discretionary spending before the stock market collapse and the recession.
At the time, the glitzy mall was believed to be the answer to a market largely underserved by tony retailers, despite wealthy demographics that matched Naples and even parts of Miami.
To the surprise of some, the project landed Neiman Marcus and Nordstrom ? even though both were tenants in Taubman's International Plaza. Saks was not invited to be one of the anchors.
Taubman came into the project through The Forbes Co., another upscale Michigan mall developer. But by 2008, Forbes had dropped out, citing the recession.
Benderson renewed its focus on strip centers, like the Target-anchored one it owns at Fruitville Road and Bahia Vista Street, and on acquisitions. Taubman, meanwhile, bided its time and concentrated on its existing portfolio.
For the next three years, the land where the Mall at University Town Center will be built sat fallow, as housing values plummeted and unemployment soared in Southwest Florida and nationally.
It was not the only retail-themed project to stay in the design phase.
Plans for Sarasota Bayside, a $1 billion mix of condominiums, stores, restaurants, offices and hotel rooms at the former Sarasota Quay eroded. Pineapple Square, a collection of shops and condos slated to transform downtown Sarasota, stalled ? though it has since made incremental progress with tenants including Brooks Brothers and Sur la Table. Other mixed-use projects heavy on retail, including a Benderson-owned site at Stickney Point Road, also faltered.
During the same period, online shopping grew in popularity, both among convenience-seeking customers and retailers fearful of making expensive inventory and lease commitments for new, physical stores.
?What stalled this mall for so long wasn't necessarily just the economy,? Green said. ?It was the retailers. No one wanted to commit to building new stores ? it was too early to build a mall. It might still be.?
By mid-2011 Benderson began making noises that the mall was not dead. Sarasota County commissioners once again blessed the concept, even without a prior commitment to building affordable housing nearby. The developer said while it would likely partner with another firm, Taubman was not yet on board again.
In late April, just weeks after Benderson patriarch and founder Nathan Benderson died at 94, Taubman announced its renewed involvement, and the trio of anchor department stores that would kick it off.
?We feel we have partnered with the premier mall developer in the country, with an ability to attract a great mix of fashion retailers,? Mark Chait, Benderson's executive director of leasing for the Southeast, said at the time.
?This is a market that is ripe for these types of tenants,? Chait said. ?This market is underetailed, and has been in need of this type of project for quite some time.?
Manageable risk
Though the mall may serve to fill a retail void, and experts say it is a tangible sign of the ongoing economic recovery, the development is not without risk.
?No one is building malls right now for a reason,? Davidowitz said. ?Stores are getting smaller and people are buying more online. I don't think retail will ever be the same.?
Between now and 2020, only 28 enclosed mall projects are scheduled to open in the U.S., according to the Directory of Malls.
But some analysts contend that Southwest Florida's unique demographics ? hundreds of thousands of tourists and more wealthy retirees per capita than in most regions of similar size ? make University Town Center different. They note that mall's freshness, combined with a gradual movement away from overbuilt strip and lifestyle centers, could benefit University Town Center.
?The mall is coming at a good time. By the time it is completed, it should be just fine,? said Rick McAllister, president and chief executive of the Florida Retail Federation trade group.
?The economy is slowly improving. Retailers are reporting a slow increase in sales every year,? McAllister said. ?Sarasota is an upscale area and I think the region can afford to support it. Moreover, new always wins. We as consumers like new and shiny things.?
But others note that Benderson and Taubman have failed to draw the exclusive retailers promised back in the early stages of the project. That could be mitigated if the pair is able to convince Nordstrom or a similar merchant to commit to being the mall's fourth ? and likely final ? anchor department store.
Nordstrom, which opened three new department stores last year, has been largely silent on the question. In July 2011, a company spokesman said only that there was a ?possibility? that the Seattle-based retailer would revisit opening an anchor in the mall. The company has been largely focused on developing its Nordstrom Rack concept, an outlet division.
This year, the chain planned to open 15 Rack stores but just a single full-line department store.
?Nordstrom is the next logical choice,? Green said. ?But I don't think they'll come until the mall is open and has matured some.?
Source: http://www.heraldtribune.com/article/20121013/ARTICLE/121019784/2416/NEWS
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Public release date: 11-Oct-2012
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