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May 10, 2009

Cross County Center Is Revamping

By ELSA BRENNER

YONKERS

WHEN Cross County Shopping Center, one of the nation’s first open-air shopping centers, opened to much fanfare here in 1954, well-known stars of the day like Martha Raye, Morey Amsterdam and Carl Reiner joined thousands of shoppers for the celebration. The ribbon-cutting was such a social event that 55 years later, Sandra Atlas Bass, the daughter of Sol G. Atlas, the developer, still remembers it, along with the festive hat her mother, Edythe, bought for the occasion.

“It was the place to shop in those days,” Mrs. Bass said.

Over the years, Cross County has fallen into disrepair and many shoppers have migrated to two upscale enclosed malls nearby in White Plains: the Galleria, which opened in 1980, and the Westchester, which opened in 1995. Yet Cross County remained among the largest shopping centers in the country.

Now, the owners say they will move forward with a $250 million plan to renovate Cross County even as shopping centers and malls face the most challenging retail environment in decades and longtime retailers like Fortunoff and Circuit City are shutting their doors.

The location of the shopping center, just 12 miles north of Times Square, is a major reason the owners are going ahead with the plan, said Alfred B. DelBello, a White Plains lawyer representing Brooks Shopping Centers of Manhattan, Cross County’s owners.

Despite the lure of malls like the Westchester, Cross County’s location at the crossroads of two major highways has contributed to its continued profitability, said Anthony J. Lembeck, chief operating officer of NAI Friedland Realty, a commercial real estate firm in Yonkers.

The 71-acre shopping center, which has more than 5,000 parking spaces, is at the intersection of the New York State Thruway (Interstate 87) and the Cross County Parkway. Its owners estimate that more than 222,000 vehicles pass by it each weekday and that it draws from a trade area that extends north into Westchester and south into the Bronx and parts of Manhattan.

Also, a growing number of older shopping centers around the country with outdoor parking and retail shops laid out along promenades began undergoing renovations in recent years and are finding success with shoppers.

“We’re seeing a lot of the older centers reinvent themselves as lifestyle centers,” said Erin Hershkowitz, a spokeswoman for the International Council of Shopping Centers, a trade organization. These reincarnations of the open-air mall resemble walkable downtowns, offering an array of shopping and dining options, along with spaces for socializing and people-watching.

No enclosed malls have been built in the United States since 2006, Ms. Hershkowitz said.

Cross County’s problems have included sections of its parking that buckled because they were built over a peat bog. Over time, storefronts also grew shabby. But because it continued to turn a profit, Cross County’s owners were not under pressure to renovate it until recently, Mr. DelBello said. “Now it’s tired, very tired, and rundown,” he said.

Despite its deterioration, the shopping center has long enjoyed a loyal base of customers, like Denise and Carlos Albarees of New Rochelle, who said they travel to Cross County regularly to buy clothing for themselves and their two children.

Jasmine Bygrave, 13, of Mount Vernon, who was shopping with a friend recently, said she was 4 when she first went to Cross County with her mother. “It’s not so nice anymore,” she said, “but I still like the stores here.”

Cross County caters to a middle-income market and will continue to do so, said John M. Genovese, the executive vice president for development at Macerich, a real estate investment trust based in Santa Monica, Calif., that has been hired to redevelop and manage the mall.

“The goal is to broaden the mix of tenants, to add new retailers, but not to make it into a high-end mall,” Mr. Genovese said. “Right now we don’t have the right mix of merchandisers, and we want to draw back the customer who may not have shopped here for years.”

Cross County’s retailers in the early days included a John Wanamaker department store, Gimbels, F. W. Woolworth, Fanny Farmer Candies, Thom McAn Shoes and a Horn & Hardart Automat. That lineup is vastly different now.

The renovation plans include an 11,000-square-foot expansion of Sears and a 75,000-square-foot expansion of Macy’s, the mall’s two major anchors. (Cross County pioneered the concept of a dumbbell-shaped mall, with an anchor store on each end and shops in between.)

Edward J. Goldberg, a spokesman for Macy’s, said it was “starting to see signs of new vibrancy” in the market.

“The store at its present size can only do so much business,” he said of Macy’s at Cross County. “So we’re making an investment in the future. Eventually, the recession will go away.”

Other major tenants include a Super Stop & Shop, a National Amusement movie theater complex and Old Navy, as well as smaller retailers including Aeropostale, Wet Seal, Claire’s and Charlotte Russe. They will remain open during the renovations.

The new tenants — including AX Armani Exchange, Bebe, American Eagle and Victoria’s Secret Pink — were chosen to appeal to what is known as “aspirational shoppers,” who buy mostly moderately priced goods but also want to acquire at least a few brand-name luxury items, said Liz Pollack, a marketing manager for Macerich.

For the economically needy City of Yonkers, the refurbished mall will be “a major, major revenue generator and a big employer,” said David Simpson, a spokesman for Mayor Philip A. Amicone.

The mall currently employs 2,540 workers and will add 380 by the time the renovations are completed next year, officials said. Also, under an agreement with the city, the mall owners will pay property taxes starting at $6.4 million this year, up from $4.5 million in 2008, and increasing over the next 14 years to $13.5 million annually.

The city, which has a $903 million annual municipal and school budget and is facing a large shortfall, sorely needs the added revenues, Mr. Simpson said.

Meanwhile, as the beeps and chugs of construction equipment echoed through the mall recently, Antonia Riley, a 13-year-old from Mount Vernon who was decked out in black jeans, a gray hoodie and purple running shoes, seemed unfazed by the disruption.

“Yeah, it’s kind of noisy and messy around here, but I don’t care,” she said, “because all our favorite stores are moving in.”

Copyright 2009 The New York Times Company

Interesting to note... In my own marketing of investment property, many prospective buyers are putting their resources into properties they already own. A good time for maintenance waiting for things to stabilize. That said, $250 Million is big $$ by anybody's standards and represents a huge investment in Real Estate. While there seems to be an increasing decrease (?) in acquisitions, consumer confidence is improving drastically, retail sales, according to an ICSC index U.S. chain store sales grew 0.7 percent in April.

The ICSC Report also cautions that the sales may be misrepresentation of the general economy due to a shift in the Easter Holiday and tax refund checks.

In any event, my business is noticeably improved in the last few weeks and continues to get stronger.

Regions Northeast

Retail REITs Continue to Score Financing as Kimco Lines Up $100M for Pennsylvania Project

May 11, 2009
By: Paul Rosta, Senior Associate Editor

Kimco Realty Corp. is the latest REIT to snag a successful refinancing for a trophy property. On Friday, Cushman & Wakefield Sonnenblick Goldman said that it had secured a $100 million refinancing for the REIT’s Suburban Square, a 360,000-square-foot retail center in Ardmore, Pa., an affluent Philadelphia suburb.

Details on terms were not immediately available. However, the transaction appears to dovetail with Kimco’s stated strategy of identifying financing sources that enable it to minimize its use of bank lines of credit. So far this year, Kimco has obtained secured debt commitments valued at $212 million, closed $106 million in secured debt for its joint venture programs, and wrapped a public common equity offering that yielded $718 million in net proceeds. Kimco’s recent financing moves also include a $220 million unsecured term loan that the REIT closed on last month. Terms will float at LIBOR, with a 2 percent floor, plus 465 basis points.

Anchored by a 100,000-square foot Macy's, Suburban Square numbers a lengthy list of upscale national chains among its tenants, including Apple Computer, Banana Republic, J. Crew, Talbot’s, and Trader Joe’s and Urban Outfitters, as well as a 9,300-square-foot, stand-alone market that hosts 19 food retailers. In a statement, Cushman & Wakefield Sonnenblick Goldman’s president, Steve Kohn, alluded to the property’s location and upscale tenant roster: “Despite the fact that a large number of lenders remain on the sidelines, we continue to see strong interest for loans on high-quality properties that are owned by strong, experienced sponsors."

Several other retail REITs are successfully refinancing top-tier properties. As CPN reported on March 31, Macerich is scheduled to close next month on a $205 million refinancing of the Shops at North Bridge, a 680,000-square-foot center in Chicago. A life insurance company is supplying that loan, which has a seven-year term and a 7.5 percent fixed interest rate. Located on Michigan Avenue, the center is anchored by one of the nation’s top-performing Nordstrom stores, according to Macerich’s Website. For another trophy property, Twenty Ninth Street in Boulder, CO, Macerich secured a $115 million bank refinancing. The loan on the 825,000-square-foot property has a two-year term plus a one-year extension option and an initial rate that starts at 5.25 percent and will float with LIBOR.

Great Job by Cushman & Wakefield Sonnenblick Goldman & some healthy REITs. This is the type of news we need...

BILL COLUCCI and JON PROPPER,

of Pyramid Brokerage Company's Syracuse Office, participated as guest lecturers at the Upstate New York Chapter of the Appraisal Institute Training Seminar titled "Distressed Real Estate Markets." The seminar was part of the Continuing Education Program approved for credit by the New York State Division of Licensing Services. Colucci lectured on the Upstate New York industrial real estate markets while Propper addressed the retail markets.