It's not every day or even every year that developer Nathan Forbes, managing partner of The Forbes Co., breaks new ground, considering that the U.S. has an overabundance of malls.
But when he does, Forbes takes a different tack from others in the real estate business. He builds with a flourish, with distinct architecture that's expensive, and seeks to selectively lease space to upscale retailers and restaurants that don't yet have a presence in the area.
Forbes is planning the University Town Center in Sarasota, Fla., a two-level, 1 million-square-foot indoor and outdoor center, which is aiming for a late 2009 opening. "We have started our schematic design, and right now [we're] just trying to secure department stores,'' he said. "We have no commitments, but ultimately there will be three."
Beyond Sarasota, "we are looking at a couple of other [potential projects] in the South, including one in Florida," said Forbes, 44. He would not specify locations under consideration.
Wherever the project, he said the company follows a "four-legged" formula:
"Department store separation" — meaning at least one of the anchors must be new to the area.
At least 40 percent of the small specialty shops are required to be exclusive in the marketplace.
Restaurants must be nationally recognized, sit-down experiences and the menus must be different.
The architecture and the environment must be distinctive, impressive and devoid of clutter.
"We are all about creating a great retail environment through architectural design," Forbes explained. "There are no carts or kiosks in our malls. We don't sell any sponsorship. We have no temporary leasing. We don't clutter up common areas for income purposes. We are more about building great environments to create a subliminal mind-set that makes shoppers feel great. The storefronts become the major players.
"So what does all this mean? It means we have created a brand, a retail shopping destination that is a brand."
Based in Southfield, Mich., The Forbes Co.'s properties include the Somerset Collection in Troy, Mich. It's a 1.5 million-square-foot shopping destination housing Macy's, Neiman Marcus, Nordstrom and Saks Fifth Avenue, and, in two separate wings, Somerset Collection North and Somerset Collection South. The 700-foot-long climate-controlled enclosed Skywalk spans the six-lane Big Beaver Road, linking the two centers.Forbes also owns the 1.2 million-square-foot Mall at Millenia in Orlando, Fla., which is anchored by Neiman Marcus, Bloomingdale's and Macy's and rigged with vaulted end-to-end skylights eight stories high, a 60-foot-high glass rotunda and light technology that includes 10-foot LED screens.
Another property is the 1.4 million-square-foot Gardens Mall in Palm Beach Gardens, Fla., anchored by Nordstrom, Saks, Bloomingdale's, Macy's and Sears which is being renovated to enhance the exterior landscape with added entrances and updated common areas and food court. The central Grand Court will be transformed into a large piazza with glass art, a porcelain floor, mosaic fountain tile finishes, a computer-controlled, undulating water feature and a glass elevator.
Then there is the 370,000-square-foot, open-air Waterside Shops at Pelican Bay in Naples, Fla., anchored by Nordstrom — the store is to open in fall 2008 — as well as Saks Fifth Avenue and Barnes & Noble. It's undergoing structural and facade improvements as part of an overall upgrading involving the addition of 30,000 tropical plants and flowering shrubs, fountains, footbridges and a 550-foot-long rock wall with a reflecting pool. A former Jacobson's store will be occupied by Tiffany, Burberry and Gucci.
Forbes said the portfolio averages $720 in sales per square foot with specialty store tenants, and The Mall at Millenia is the most productive property, though not by much. Overall productivity has been increasing at a rate of 8 to 10 percent for the last three years. The average drive time for shoppers going to a Forbes mall is 33 to 34 minutes, while the industry average is in the low- to mid-20-minute range. He also said that the average length of stay is about an hour and 40 minutes, or 20 percent higher than the industry average, and that the average expenditure per consumer per visit is between $250 and $300.
"We have never had a down year or a flat year. Somerset has shown increases even with all the bad things you hear about Detroit," Forbes said.
The Forbes Co. is part of a rare breed in retailing that includes Bal Harbour Shops in Miami; Highland Park Village in Dallas; the Americana Manhasset on Long Island, N.Y., and South Coast Plaza in Costa Mesa, Calif. Each of these centers are independently owned by families that are hands-on and create upscale environments with a high percentage of designer shops. At Forbes, about 20 to 25 percent of the specialty store space is leased to designer brands such as Louis Vuitton and Gucci, as well as Tiffany and Burberry, Forbes said.In industry circles, Forbes feels somewhat slighted. "Everybody always mentions South Coast Plaza, but we have four of these jewels," he said. "The reason we can maintain them is [that] we are a small business and we can just focus. We are not trying to slay 150 different dragons. We are always trying to update our merchandise mix and to be first to market with new retail concepts….Our portfolio is 99 percent leased, and if tenants are not making the grade in doing the mall average, we are very aggressive in trying to remake the center.
"We make sure we are spending enough so that the property is going to withstand the test of time," Forbes added. "We look to make a return on Day One, but it doesn't always come out that way. It could be three years or five years.''
Nathan Forbes was born into the business. His father, Sidney, is chairman of the 35-year-old company. Nathan's brother, David, is in charge of the leasing, while Nathan acts as chief executive, without formerly holding the title.
For almost three decades, the company specialized in creating middle-market centers in places such as Warren or Kalamazoo, Mich. "Ever since I was eight or nine, I traveled with my father on weekends to our shopping centers," Forbes recalled.
Seven years ago, the Forbes family decided to sell off its midtier properties to larger developers, such as General Growth Properties, enabling the family to concentrate on its four upscale centers. "We don't have any interest in selling the business," Forbes stressed, though he said he has been approached by larger developers looking to take over the business.
While not looking to sell, the company often partners with other developers to reduce risk and not waste time and resources competing for sites and tenants. On the Sarasota project, for example, Forbes is partners with Benderson Development, a much larger family-run firm with about 250 properties that it owns and manages across the country.
The Mall at Millenia is a partnership with Taubman Centers, a real estate investment trust with several high-end malls. Waterside is also a partnership with Taubman, as well as the Oregon Public Employees Retirement Fund. Somerset, originally developed by Frankel Associates, has been a partnership since 1990, when Forbes bought in and expanded the center. They're 50-50 partnerships, with Forbes the managing partner in each. The Gardens Mall is solely owned.At one time in Orlando, the Taubmans and Forbes were both working on separate sites. "Every time we rounded a corner trying to make some progress, we kept running into each other," Forbes said. "We are friendly competitors. We are friends. We have all known each other our whole lives. So instead of beating each other up, we became partners" on one site. Forbes is the managing partner.
"There are not a lot of new shopping centers being built, and when you do build one you have to be very careful," Forbes noted. The limited opportunities for new projects "is our biggest concern going forward, and for the industry as a whole." Instead, developers are putting their resources into redeveloping and upgrading existing centers. And as Forbes concluded, "Everything is always about reinventing yourself."
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