Lifestyle Centers Need Critical Mass: Steiner + Associates’ Rosenberg
- Jun 12, 2008
After years of dominating retail real estate development, lifestyle centers have been hit hardest by the economic slowdown. Developers are putting projects on the back burner as many retailers hesitate to commit to leases. A common explanation is that the upscale, destination-style retailers are taking a hit as consumers cut back on discretionary spending and gravitate toward discounters. In other cases, the current lull in lifestyle-center development stems from strategic misfires. “A lot of better retailers went into a lot of lifestyle centers, and not all lifestyle centers are created equal,” said Steiner + Associates president Barry Rosenberg, speaking with CPN at the recent International Council of Shopping Centers’ annual spring convention in Las Vegas. “A lot of lifestyle centers probably should not have been built.” In many cases, he explained, the new centers that have run into trouble lack the critical mass–and the right combination–of tenants that are necessary for the center to thrive. Despite that sobering assessment, Steiner and other leading lifestyle-center developers are preparing for the lifestyle-center market to swing back in a positive direction in a couple of years. Rosenberg said that retailers will the pace of new store openings and leasing will pick up in 2010 and 2011. Although there is no set formula for a successful lifestyle center, Rosenberg ticked off the elements that Steiner believes boost the chances for success. By definition, an upscale center needs a densely populated, upscale market that is not already saturated with similar retail product. A minimum of 400,000 square feet of in-line retail and department-store anchors, along with restaurants, typically represent the critical mass for lifestyle centers. In its projects, Steiner incorporates office and residential components and a generous amount of public space. For its part, Steiner is continuing to kick off construction of one major new lifestyle center project per year, on average. This policy promotes focus and also avoids the market saturation that is temporarily afflicting lifestyle centers. Most recently, Steiner kicked off construction of the $600 million Glorypark, a two-phase project near the Texas Rangers’ home park and the site of the Dallas Cowboys’ new stadium in Arlington, Tex. At full buildout in 2010, the development will include 1.2 million square of retail space, 300,000 square feet of office and residential space, plus two hotels. Glorypark’s blend of destination shopping with other elements is a Steiner hallmark. The firm is also wrapping up several expansion projects that were in the works long before consumers start to cut back on retail spending. This fall, Steiner expects to complete the second phase of Zona Rosa, a four-year-old, $270 million lifestyle center in Kansas City, Mo. The expansion will nearly double the development’s overall size to 1 million square feet and include 51 new rental apartments.