Everybody knows one when they see one, but it's hard to clearly define what a lifestyle center is. That was the consensus among developers and retailers at ICSC's 2002 Open Air Centers Conference inthis week.
If everybody agrees that lifestyle—however defined—is a major trend, why is ICSC trying to nail down the nebulous concept? Money, of course.
"The financing segment is pushing for a definition so they can get their arms around it and either finance it or not finance it," said Michael McCarty, president of the community centers division of Indianapolis-based Simon Property Group, which owns and manages some 75 open-air properties.
To standardize the concept, ICSC recently laid down the lifestyle rules. According to the organization, a lifestyle center must include the following attributes: a location near affluent residential neighborhoods; an upscale orientation; 150,000 sq. ft. to 500,000 sq. ft. of GLA; an open-air format; and at least 50,000 sq. ft. of national specialty chain stores.
ICSC is also looking at the people who frequent lifestyle centers. Lifestyle shoppers shop more often and spend more, according to statistics from an upcoming ICSC study comparing the habits of shoppers at five lifestyle centers to shoppers at five regional malls. According to the report, the average number of stores shoppers entered was 2.9 at the lifestyle centers versus 2.3 at conventional malls. The average retail expenditure per visit was $75.70 at the lifestyle centers versus $73.30 at the malls. Lifestyle shoppers made 3.8 visits to their centers in a 30 day period, while mall shoppers paid 3.4 visits to their centers in the same period.
These statistics have retailers such as Talbots, Pottery Barn, Banana Republic and Abercrombie & Fitch lining up for space in lifestyle centers, Simon’s McCarty said. In addition to the better results from shoppers, the chains see the open-air centers as a way to escape common area maintenance fees and rents at malls, he added. "Occupancy costs at lifestyle centers are half of what they are in a regional mall. The bottom line is dramatically better," said Richard O'Connell, senior vice president at Rye Brook, N.Y.-based Talbots Inc.
Department stores are also looking for a lifestyle change. Saks Fifth Avenue and Parisian are among the chains reporting successful sales in lifestyle centers. But they're finding developers less willing to woo them. "They're trying to fit into these lifestyle centers, but they're finding they're not going to get a free site from us," said James Bennett, managing director of business development for Washington, D.C.-based Madison Marquette. In fact, a department store anchor could even hurt a lifestyle center's access to capital, said James Easler, managing director at New York-based Teachers Insurance Annuity Association.
Lifestyle projects may continue to mushroom in markets across the United States. But only the centers with the magic ingredients - a densely packed base of affluent consumers, a commanding competitive alignment and a properly tuned tenant list - will succeed. "A lifestyle center makes sense if it is an infill location and has a restaurant and village component," Easler said. ICSC’s new definition of the lifestyle concept should help lenders monitor performance at these centers and structure financing andfor them accordingly, he added.
And the lifestyle phenomenon is only in its infancy, says Yaromir Steiner, owner of Columbus, Ohio-based Steiner + Associates and developer of such lifestyle juggernauts as Coco Walk in Miami and Easton Town Center in Columbus, Ohio. "The lifestyle center is a flash in the pan that will give birth to a new product with the financability of a mall or power center. But that new product is still two generations away."