Mall companies are going back to their roots and massively growing the industry'spipeline. Projects range from trendy urban concepts, lifestyle centers and mixed-use complexes to bread-and-butter neighborhood and community centers. The result: A development pipeline, from both public and private firms, is far larger than it has been in years.
Interest rate and cap rate concerns have fewer retail real estate firms talking about growing through acquisition‥ Sure, firms are happy to make the one-offto tweak their asset base. But firms think they can get higher returns through building. Many have $500 million or more in the pipeline, meaning dozens and dozens of new centers will be opening in 2006, 2007 and beyond.
“We're not chasing assets because we're not liking cap rates,” says Ross Glickman, president and CEO of Urban Retail Properties. That sentiment was echoed by other firms.
Donahue Schriber, which has grown through acquisitions in the past, has been a net seller, moving about $100 million worth of projects in each of the last four years. It currently has 22 projects in development worth a combined $500 million.
“We rode the acquisition wave in the early part of the decade,” says Patrick Donahue, president of Donahue Schriber. “You could see us continue to expand, but we don't have an edict that we have to.” As a result, the firm has focused on building in markets where it already has a presence, rather than try to buy its way into new regions.
Some of the most ambitious development projects will be in Las Vegas. Taubman Co. is part of MGM Grand's effort to build a $7-billion complex on the strip that will include several upscale hotels. Steve Kieras, Taubman senior vice president of development, says they will boast the highest room rates in town. The complex will be rounded out with 500,000 square feet of retail.
Executive Home Builders is working on the $850-million Village at Queensridge master planned community that will include 700,000 square feet of retail. It will sit 11 miles off the Las Vegas strip, at the edge of General Growth Properties' Summerlin community. Meanwhile, General Growth unveiled plans for Summerlin Center, a 100-acre section of the 22,500-acre community that will feature up to 1.5 million square feet of commercial and retail space.