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Revamped NorthPark Looks to Join Billionaire Club

NEW YORK — Through a two-year, $170 million expansion and renovation, NorthPark Center in Dallas hopes to join a very exclusive club — malls that generate more than $1 billion in annual volume.<BR><BR>Only a handful of U.S. shopping...

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NEW YORK — Through a two-year, $170 million expansion and renovation, NorthPark Center in Dallas hopes to join a very exclusive club — malls that generate more than $1 billion in annual volume.

Only a handful of U.S. shopping centers eclipse that mark, including South Coast Plaza in Costa Mesa, Calif., Ala Moana in Honolulu, King of Prussia outside Philadelphia, the Houston Galleria and possibly Tyson’s Galleria in McLean, Va., according to real estate sources.

NorthPark does have a long way to go to catch the field, and the Dallas area has become flooded with retail. Last year, the 1.4-million-square-foot center generated about $600 million in sales, or $615 in sales per square foot of leasable space. But the mall is projecting $890 million in sales in 2006 and $1 billion by the end of 2008.

The expansion project, under way since December, will add about 260,000 square feet for 110 specialty stores, as well as 30,500 square feet for restaurants and another 10,000 for the food court, potentially generating some $200 million in sales. The specialty store count increases to 200.

A 200,000-square-foot Nordstrom will open in November, which sources close to the project said should far exceed $100 million in yearly sales, and could approach $150 million, although Nordstrom has a unit only eight miles away in the Dallas Galleria.

An AMC 15-screen theater will open in April 2006, and two parking garages with 4,000 spaces should be ready in March, while the infrastructure, including new electric, gas, and sewer systems, also is getting an overhaul.

The gross leasable area will increase to 1.9 million square feet, from 1.4 million, making the mall the largest in the Dallas-Fort Worth area. There’s also a former Lord & Taylor unit that sits dark and may be carved up into retail spaces, though it’s not in development at this point.

The 40-year-old center last year sold a 50 percent stake to The Macerich Co., a large real estate investment trust, providing additional financial clout and property management expertise, though the original owners of NorthPark say Macerich has purely an investment interest and that the mall continues to be run independently.

“We still lease. We still manage. It’s basically the same situation,” said David Haemisegger, president of the family-run NorthPark Management Co. “Macerich is a large organization and we are small. We can leverage their financial strengths and a lot of their resources. But the fact that we are small means we can be very focused. Every space, every tenant is a big deal for us. We do not just fill space.”

Haemisegger, whose wife, Nancy, is the daughter of Raymond Nasher, the founder of NorthPark and an art collector, said all the changes won’t alter the character of the mall. There will be continuity between the old and the new, he said, adding that the best example of that is the signature cream-colored brick from east Texas. It’s on the exterior of the mall, encases all of the existing stores and will frame the stores being added with the expansion.

Although there is plenty of competition in the Dallas area, primarily from Highland Park Village, Willow Bend and the Dallas Galleria, it’s NorthPark that boasts some of the nation’s top-performing department store branches. The  three-level, 225,000-square-foot Neiman Marcus generates in excess of $150 million in annual volume and is considered one of the highest-volume units in the chain, perhaps second only to Neiman’s in Beverly Hills.

“NorthPark is an extremely productive store. Sales and profits continue to grow year over year,” said Karen Katz, president and chief executive of Neiman Marcus Stores.

There’s also one of the top two Dillard’s sites in the country, a four-level, 300,000-square-foot unit producing $65 million to $70 million in annual sales, according to NorthPark officials.  Dillard’s did not confirm the number.

NorthPark officials said the two-level, 250,000-square-foot Foley’s is the chain’s best location in the Dallas market. May Department Stores, which operates Foley’s, said it doesn’t disclose individual store performances.

NorthPark’s productivity could be even higher, but the philosophy is to maintain a serene, uncluttered environment — at least by mall standards. No kiosks or advertisements are permitted on the common areas. There’s a 1.5-acre garden being created in the middle of the center, and 70 works of art are displayed, with pieces from Andy Warhol, Jonathan Borofsky, Anthony Gormley and Barry Flanagan among them.

“The goal here is not to maximize every square inch for profitability,” Haemisegger said. “We keep it peaceful and tranquil.”

As for the billion dollar goal, “It’s extremely doable,” said Christine Szalay, director of marketing and tourism, NorthPark Management. “Everybody is very comfortable with that objective, considering we’re coming off a strong base, on a growth curve, and we came out of the holidays extremely well, even with the construction starting. Take all the factors, including the new retail and dining, and it’s an extremely strong package.”

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