In the beginning, there was a new breed of sophisticated shopper, demanding quality merchandise at a reasonable price and, ever in a rush, needing to purchase a few things quickly and go on to other errands.
Retailers responded. New chains of stores sprang up or greatly expanded over the last five years. These stores have a specific merchandise specialty to appeal to this person, ”the destination shopper.” They market themselves aggressively and price their goods lower than department stores and boutique shops.
This evolution in retailing has produced a form of shopping center as revolutionary in approach as the enclosed regional mall was 30 years ago. It has the retail development industry, merchandisers and the shopping public in a frenzy.
It`s called the ”power center,” a large open-air strip center with three to five or more anchor stores and a relatively small amount of small shop space.
These new centers draw customers from about the same distances as a regional mall. But they occupy just a fraction of the land and are therefore less expensive to build. Despite their being smaller than a regional mall, they can post sales that average 50 percent greater on a per-square-foot basis.
”Power centers offer something better than what`s in existence. With bigger users, they attract more people without losing the convenience side of it,” said Demetrios Dellaportas, president of First National Realty & Development Corp., a major developer of power centers in the Chicago area.
First National`s power centers include the Landings in Lansing, the Commons in Crystal Lake and Westview Center, a 670,000-square-foot project under construction on the border between Hanover Park and Streamwood.
The high-volume nature of the retailers creates a tremendous sales per square foot, Dellaportas said. For example, he cited the Landings as posting $180 million in sales last year, or about $300 a square foot. The national average for enclosed regional malls, he said, was $200-$225 a square foot.
The concept appeared in the Chicago area only about four years ago, with Burbank Town Center in Burbank. The center was developed by Melvin Simon & Associates, another major retail developer. The term ”power center” itself was coined that same year, on the West Coast.
Today there are 21 power centers in the metropolitan Chicago area, representing more than 7.2 million square feet of retail space, according to Mid-America Real Estate Corp., a leasing brokerage firm that specializes in representing retail chains. Mid-America partners David P. Bossy and Michael D. George have been responsible for placing many of the power center anchor stores in their locations.
Stores commonly found in power centers include Jewel/Osco, Cub Foods, Toys `R` Us/Kids `R` Us, Phar-Mor, F&M Distributors, Builders Square, Home Depot, T J Maxx, Marshall`s, Sportmart, Service Merchandise and Highland Appliance.
”This is not a gimmick that was thought of and will die,” George said.
”It`s clearly not a fad, but purely and simply a function of the evolution in retailing.”
During the last few years power centers have accounted for a major portion of Chicagoland`s tremendous retail building boom. In 1986, nearly half of the 4.8 million square feet of retail space constructed was in power centers; in 1987, it was more than half (1.7 million square feet of 3.3 million total); and 1988 will see 2 million square feet of power centers completed-about one-fourth of the total 7.5 million square feet that will come on line.
Power centers are generally about 250,000 to 700,000 square feet, more than double the size of standard community shopping centers. Their anchor stores occupy perhaps 70 percent of all space, whereas the anchors of a community center or a regional mall typically take up only about 40-50 percent, according to Dellaportas.
”The higher percentage of anchor stores, the more power a power center has,” he explained.
Other characteristics of power centers include adjacent anchor stores, but without a connecting interior walkway. Each anchor has its own parking field near the front entrance. The parking ratio is greater than a regional mall, about five cars per 1,000 square feet of retail space, because the power centers do a high-volume business on a more consistent basis than the mall.
”A regional mall will do 25 percent of its business in the month of December. And the average customer only spends a half-hour inside because it`s destination shopping,” Dellaportas said.
The power center concept has actually contributed to the success of this new brand of ”promotional retailer,” Dellaportas contended.
”It`s a symbiotic relationship. Power centers make it easier and cheaper and more efficient for a retailer to offer name-brand merchandise, selling it in high volume at a price lower than accepted retail prices.”
Also, their combined customer attraction means that all stores in the center do better than stores would do in a two-anchor community center or stand-alone stores in the same location.
Art Kainz, vice president of real estate and construction for F&M Distributors Inc., a deep-discount health and beauty chain based in Warren, Mich., is enthused about the concept and plans to do a majority of his expansion across the country in power centers.
”For us it`s an excellent vehicle. It brings together value-oriented tenants with an overhead expense that is substantially less than an enclosed mall. The combination creates a presence. It`s up to the tenant mix to create the power.”
But although power centers might be called a better mousetrap, that doesn`t mean they`re an easier one to create.
To make the concept work, a developer must have two things: the right location and the proper mix of tenants.
Even though a power center needs only 20-60 acres (a regional mall might require 100-200 acres or more, as do the Oak Brook and Woodfield malls), those acres must be in close proximity to an established regional mall, preferably on a busy corner with a minimum of 25,000 cars passing a day. There must be no less than 200,000 people living within a five-mile trading area, with a minimum average household income of $25,000, Mid-America`s Bossy said. ”Those sites are not that easy to find,” George added.
Once control of a proper site is attained, the developer identifies the major tenants most likely to want that location. But once a handful of appropriate anchors agree to locate together on one site, getting them to agree on design and positioning is one of the biggest challenges to bringing off the deal.
”They all want premier position, with a premier parking field,” Bossy said. But granting that cannot be at the expense of small shop space. ”The developer has to lease the smaller shop space to make his profit,” he said.
The design is also difficult. ”Most major anchors want to keep their identities,” Dellaportas said, but the developer must produce a package that looks like a unified shopping center. ”If you can tie it all together with pleasant looks, you are a hero,” he added.
For those reasons, as well as dealing with increased traffic congestion and carefully considered ingress and egress routes, creating a power center is thought of as the ”grand slam” or ”royal flush” of retail brokerage and development.
But all the trouble is worth it. As son Peter Dellaportas, executive vice president of First National Realty, summed up: ”Power centers bring the four marketing P`s together: price, product, place and promotion.”
Map Center Square
Key Location Developer Anchors feet Date
1. Touhy/Lehigh Trammell Crow Jewel/Osco, 700,000 1989
Skokie Phar-Mor, Montgomery Ward
2. Danada Square West Centennial Jewel/Osco 177,000 1987
Ace, TJ Maxx 200,000 1989
3. Chicago Ridge Commons Tucker Cos. TJ Maxx, Odeon, 255,000 1988
Chicago Ridge Phar-Mor,
Marshall`s,
4. Matteson Shopping Mel Simon Phar-Mor, 200,000 1988
Center K mart
Matteson Dominick`s
5. Merrillville Plaza Trammell Crow TJ Maxx 275,000 1988
Merrillville Toys R Us,
Highland, F&M,
Kids R Us
6. River Tree Vantage Highland, TJ Maxx 400,000 1988
Vernon Hills Phar-Mor, Odeon,
Child World
7. Bloomingdale Court Mel Simon Phar-Mor 76,000 1987
Bloomingdale Highland, Franks, 300,000 1988
Builders Square,
Service Merchandise,
General Cinema
8. Bricktown Maisel & Associates Toys R Us, 80,000 1987 Chicago Sportmart, Odeon, 205,000 1988
Marshall`s, Frank`s,
Kids R Us, Fretter`s
9. High Point 1st National Realty Highland, 60,000 1987 Center Child World, 180,000 1988
Lombard TJ Maxx,
Cub Foods
10. Melrose Crossing Ron March Venture, F&M, 255,000 1987 Melrose Park TJ Maxx, 90,000 1988
Highland
11. Park Place Jupiter Industries Office Square, 256,000 1987 Palatine Builders Square, 100,000 1988
Spiegel, Phar-Mor
12. Riverfront Plaza Mark IV Cub Foods, 100,000 1987 Chicago Fretter`s, 150,000 1988
Handy Andy
13. The Commons 1st National Realty Jewel, Venture, 361,000 1987 Crystal Lake Handy Andy
14. Evanston Plaza Banbury Development Toys R Us, 205,000 1987 Evanston Phar-Mor, Frank`s,
Fretter`s,
Kids R Us
15. Spring Hill Glimscher Co. F&M, TJ Maxx, 125,000 1985 Fashion Center Highland, 60,000 1987
16. The Grove Robin Realty Builders Square, 570,000 1986 Downers Grove Plitt, TJ Maxx
Service Merchandise,
Cub Foods, Highland,
F&M, Sears
17. Lake View Plaza Mel Simon Marshall`s, Zayre, 400,000 1986
Orland Park Service Merchandise,
Omni, L. Fish Furniture
18. The Landings 1st National Realty Cub Foods, F&M, 575,000 1986
Lansing Handy Andy, Zayre,
Kids R Us, Toys R Us,
Highland,
Service Merchandise
19. North Ridge Plaza Mel Simon Cub Foods 260,000 1986
Joliet Builders Square,
Service Merchandise,
Zayre
20. Yorkshire Plaza Zaremba Builders Square, 280,000 1986
Aurora Marshall`s, Ward`s,
Sportmart, Kids R Us
21. Burbank Town Center Mel Simon Cub Foods, 325,000 1984
Burbank MainStreet,
Service Merchandise,
Handy Andy
Tribune Graphic; Source: Mid-America Real Estate Corp.
