A hotly contested mall war is brewing in Richmond, Va., and before it's over, there could be some serious fallout.
Forest City Enterprises Inc. and local developer Thomas E. Pruitt want to build the 1.1 million-sq.-ft. Short Pump Town Center in Henrico County with four anchors, including Nordstrom and Lord & Taylor.
Taubman Centers Inc. plans Stony Point Fashion Park in the city of Richmond with Saks Fifth Avenue and Dillard's and a third unannounced anchor in a 690,000-sq.-ft. open air center. Both plan September 2003 openings.
But the contest to build two high-end malls in Richmond has landed the developers in court in a fight over city incentives. Taubman thinks Short Pump's city incentives are illegal and unfair to its existing Regency Square mall because the city turned down Taubman's own request for incentives for an expansion of that regional center. Taubman had acquired Regency Square, considered Richmond's premier mall, in 1997, gaining an entry into the market.
Taubman is trying also to protect its turf: Regency Square will likely lose shoppers when one or both malls get built.
Brian Glass, senior vice president of Grubb & Ellis/Harrison & Bates, doesn't even think the market can support high-end department stores. “The stakes are pretty high, particularly for Taubman,” says Glass. “Richmond does not have an upper-end mall. But there is a question out there on whether the market can support upper-end department stores.”
Glass says the court process has slowed down Forest City's progress, giving Taubman an opportunity to catch up.
Taubman's Steve Kieras, vice president of development, says there's no question that Stony Point will get built. But the company felt its only option was to level the playing field. “We want the same opportunity,” Kieras explains. “We're here as a taxpayer and we felt we had no other option but to take it to a legal battle.”
Observers expect a final decision in the 18-month court battle sometime in the next few months.
In the shopping center industry, lawsuits are about as common as the turf wars themselves. There are also few developable mall sites left. The shrinking availability of sites spawned this Richmond battle, Glass says.
Meanwhile, the legal contest has slowed Short Pump's progress — at least until now. The developers cleared the land a year ago and, according to Forest City spokeswoman Nancy McCann, steel is on order and construction is about to start. McCann says everything is on track for a Sept. 4, 2003 opening, just weeks before Taubman's Stony Point is set to open.
Taubman bought 145 acres for $19 million in March, and the land is cleared. Kieras says about 50% of specialty shop space is either already leased or close to being leased. He also says the company will soon announce a third anchor.
“We are moving forward absolutely,” Kieras says. “It's a little different than the Short Pump situation because we purchased our land, we cleared it and we're moving forward with foundation then steel.” Either way, Stony Point could still cannibalize Regency Square, Glass notes.
Barry Hofheimer, senior vice president of CB/Richard Ellis in Richmond, thinks decisions could be made during the annual International Council of Shopping Centers convention in Las Vegas this month. “It's a game of brinkmanship,” Hofheimer says. “It's pretty brutal.”
He thinks one of the developers will delay its mall by early summer. But according to Glass, no one will know until footers are in the ground. “When we see steel on the site, we'll know.”
Renée DeGross covers retail business and development for The Atlanta Journal-Constitution.
Stony Point Fashion Park
- Planned opening:
Sept. 18, 2003
690,000 sq. ft.
Saks Fifth Avenue, Dillard's and unannounced third anchor
Taubman Centers Inc.
CommArts, Boulder, Colo.
Source: Taubman Centers Inc.
Short Pump Town Center
- Planned opening:
Sept. 4, 2003
1.1 million sq. ft.
Nordstrom, Lord & Taylor, Hecht's and Dillard's
Forest City Enterprises and Thomas E. Pruitt
Source: Forest City Enterprises