Occasionally, Stanley Whitman thinks his son and grandson have gone mad.
The 86-year-old owner and developer of Bal Harbour Shops couldn’t figure out why his two relatives were recently set on bringing Vilebrequin, a Saint-Tropez-based bathing suit store for men, into Bal Harbour. Now, Vilebrequin, which operates only eight stores in North America, is one of the busiest shops in an open-air mall populated with the likes of Prada, Gucci, Christian Dior, Tod’s and Marc Jacobs.
“The business Vilebrequin does here is crazy,” laughed Whitman. “My son and grandson definitely give me some pleasant surprises.”
Of course, that’s one of the perks of running a family business. Bal Harbour Shops, which is nestled on the ocean just north of Miami Beach, posted sales per square foot of $1,421 in 2004 and is one of a handful of high-end shopping centers still owned independently of the giant retail real estate investment trusts, along with South Coast Plaza in Costa Mesa, Calif., Highland Park Village in Dallas and Americana Manhasset in Manhasset, N.Y., on Long Island. To get a sense of just how high-end these malls are, Americana Manhasset recently advertised its stores in the new magazine Absolute, which is available only to the Manhattan crowd who earn more than $500,000 a year.
At Bal Harbour, Stanley’s son Randy is the managing partner, and his grandson, Matthew Whitman Lazenby, runs the leasing.
Families like the Whitmans — or the Segerstroms who own South Coast; the Millers, who own Highland Park, and the Castanas, who own Manhasset — are getting scarce. As real estate investment trusts continue to gobble each other up, there are very few prominent mall companies that own fewer than 60 malls, much less families that own one or two properties. In the past several years, even midsized mall owners like Kravco, Wilmorite and The Rouse Co. have been absorbed by the larger REITs. Simon Property Group and General Growth Properties Inc., the two major players in the mall arena, each own roughly 200 regional mall properties, in addition to other retail ventures like community centers or power centers.
Still, Whitman is confident that those REITs won’t be touching his property. And as an elder statesman, he’s weathered more than a few takeover bids.
“From the day we opened in 1965, we literally had inquiries from investors and developers to buy the property every day for the next 20 years,” he said. “Even developers with far better reputations than mine came to me and said, ‘If you’ll just let us use your name in our development, we’ll give you a 50 percent interest in our center.’ But they’ve gotten the idea that I don’t have the desire to sell, and we don’t hear from them anymore.”
As an independent owner, Whitman admitted, “we don’t have the leverage that large mall companies do with tenants to negotiate.” But that’s hardly held the shopping center owner back. In fact, industry sources cite the family’s hands-on involvement and focus on just one property as a plus in getting the best and brightest luxury retailers into its property.
“The personality of family owners comes through in each property as opposed to a more institutional approach,” said Laura Pomerantz, principal at PBS Realty Advisors. “The big public corporations have certain numbers to make. The private owners have more freedom and are just trying to keep an exciting and unique mix. They aren’t obligated to leverage 20 or 40 or 100 centers.”
And while big owners might be able to leverage their size with retailers, an individual one can be more selective among large retailers throwing their size around.
This exclusivity also lends owners like Whitman a certain cachet in marketing to luxury shops. Oscar de la Renta opened its first mall-based store in the U.S. at Bal Harbour, and Custo Barcelona, Thomas Pink and Harry Winston are all expected to open in the coming weeks.
“With these owners, owning the mall isn’t just about the business,” said Elizabeth Obloy, managing director of the national retail division at Studley Inc., a brokerage firm. “It’s about maintaining the exclusivity and creating an experience. It’s more than just making money.”
And though Whitman was famously laughed at for paying “so much” for land — in 1957, he paid $2 per square foot for the prime oceanfront land just north of Miami Beach where Bal Harbour Shops is today — and for being crazy enough to develop a luxury open-air center instead of an enclosed mall, more and more mall REITs are trying to emulate Bal Harbour’s model. Taubman Centers attempts to retain its strictly luxury stance across its 21 properties, while both Simon and General Growth operate “premium” malls, which they distinguish from the rest of their portfolio. And, of course, almost every developer is trying his hand at an open-air lifestyle center.
They may always be riding on the Whitmans’ coattails. Though it already has the most successful open-air center in the country, the family plans to break new ground by adding additional stores, an eight-screen movie theater with a $20 ticket and bar, a 10,000-square-foot ballroom and a boutique “six-star” hotel.
“We have precious little land. We’re an elephant dancing on the head of a pin,” laughed Whitman. “But we’ll work it out.”