Mall companies are going back to their roots as and massively growing the industry’spipeline, whether they are trendy concepts like urban projects, lifestyle centers and mixed-use complexes or the bread-and-butter neighborhood and community centers.
Concerns about rising interest rates and cap rates have less retail real estate firms talking about growing through acquisition. Sure, firms are happy to make the one-offto tweak their asset base. But there’s no talk of mergers or portfolio deals. Many firms, 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 & CEO of Urban Retail Properties. That sentiment was echoed by many other firms.
Donahue Schriber, which has grown through acquisitions in the past, has been a net seller, moving about $100 million worth of projects a year each of the last four years. It is recycling that capital and 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 sold assets out of its core and 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 right here 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, Summerlin itself will be seeing changes. General Growth unveiled plans for Summerlin Center, a 100-acre section of the 22,500-acre community that will feature between 1 million and 1.5 million square feet of commercial and retail space.