New malls living up to projections

Operators upbeat despite challenges

By John Rebchook, Rocky Mountain News (Contact)

Published November 22, 2007 at 12:05 a.m.

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Photo by George Kochanies Jr. © The Rocky

Gail Bosh strolls along Main Street with daughter Heidi while shopping Tuesday at Northfield at Stapleton. The mall's developer, Forest City, says business is picking up.

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Unlike last year, there won't be a host of new malls welcoming holiday shoppers this year.

But shoppers always can look ahead to the handful of new regional malls that will be ready in 2008 and 2009.

Southlands was the biggest of three high-profile malls completed last year; the other two were the Shops at Northfield Stapleton and Twenty Ninth Street in Boulder.

Overall, Southlands, Northfield Stapleton and Twenty Ninth Street appear to be performing fairly well, although all three have their own specific challenges, said Tom Mathews, a retail broker with CB Richard Ellis.

It's not unusual to have a year here or there, like 2007, when no mall opens.

Research by CB Richard Ellis shows that at least one retail center with a minimum of 750,000 square feet of space opened in the metro area from 2004 to 2006, but no malls opened in the area in 2001 and 2003.

"Generally, mall openings go through cycles, and this year we went through a bit of a lull, or a gap," Mathews said.

Considering problems in the subprime financial markets and the housing slump, no mall openings this year probably is a good thing, Mathews said.

At the Southlands mall in Aurora, developer Don Provost said, "We're just doing great." The 1.7 million-square-foot mall completed its town center in 2006. "We are performing beyond everybody's projections," Provost said. "We have our sales numbers from a variety of tenants, and they are pleased."

The mall at E-470 and Smoky Hill Road brought in $7.8 million in sales tax revenues from September 2006 to September 2007, making it the single largest source of sales tax revenues for the city.

"We're thrilled," said Mike Trevithick, Aurora's acting finance director. "The developer was projecting more, but that was right in our projections of $6 million to $8 million."

At Northfield Stapleton, Forest City last year generated $3.97 million in revenues from its real estate operations there. Its operating expenses were $4.9 million.

By comparison, Forest City's 600,000-square-foot Simi Valley Town Center in California, which opened a year earlier than Northfield Stapleton and is about half its size, generated $13.69 million in real estate operation revenues, while its operating expenses were only $4 million.

"California is a different market than Denver," said Kem Blue, a regional vice president at Forest City. "California certainly has a greater population base and bigger demographics than the Denver market."

However, Blue said, "business is improving" at Northfield Stapleton, and he expects it will only get better as more housing is added along the northeast corridor.

Although the company doesn't release sales figures on any of its properties, Blue said SuperTarget "is doing well above projections" and J.C. Penney, which just opened, "will be a great addition to Northfield."

Twenty Ninth Street, built on the former Crossroads Mall site in Boulder, has "met all of its economic and financial expectations," said David Scholl, an executive with Macerich, developer of the 805,000-square-foot center.

However, mergers involving two key anchors on the site have created challenges beyond Macerich's control, he said.

In one deal, Cinemark USA bought the Century Theatres chain, delaying the opening of a movie house. Also, the purchase of Boulder-based Wild Oats by Whole Foods has left a major building at the center vacant.

"I'm sad that the theater opened nine months later than the rest of the center, but now that it is open, it is giving the rest of the center, especially the restaurants, a shot in the arm," he said.

Scholl said "nothing has been worked out" to lease or sell what was to be the Wild Oats building.

"We went out of our way to accommodate the corporate headquarters and flagship store for Wild Oats, and I feel bad for the citizens of Boulder that we were unable to deliver, but we tried."

Overall, Southland's Provost said, "Denver is not immune to what is happening across the country. And clearly, a lot of retail has been brought into the Denver metro marketplace - probably a little too much in some areas."

He said, however, that he remains upbeat.

"I think people are going to spend money, albeit a little bit more conservatively than in the past couple of years."

Three year-old malls at a glance

Shops at Northfield Stapleton

Location: Interstate 70 and Northfield Boulevard

Size: 1.2 million square feet

Developer: Forest City

Notable: The only Bass Pro Shop in the Denver area is here. It's the first silver LEED-certified shopping center in the country.

Southlands

Location: E-470 and Smoky Hill Road, Aurora

Size: 1.7 million square feet

Developer: Alberta Development

Notable: Despite 100 retailers, restaurants and entertainment venues, making it the biggest mall in the metro area, developer Don Provost calls it the "anti-sprawl" mall.

Twenty Ninth Street

Location: Built on the former Crossroads Mall at 1900 28th St., in Boulder

Size: 805,000 square feet

Developer: Macerich

Notable: Boulder, known for decades as a bastion for anti-growth, embraced a redevelopment to replace the aging Crossroads Mall.

Black Friday starts with strike of midnight

* Midnight: The Outlets at Castle Rock's "Midnight Madness." Stores will be open from 12 a.m. to 8 p.m.

* 4 a.m.: J.C. Penney and Kohl's

* 5 a.m.: Best Buy, Wal-Mart, Old Navy, Ultimate Electronics, Comp USA and Circuit City, Aurora Town Center

* 5:30 a.m.: Sports Authority

* 6 a.m.: Bass Pro Shops, Bath and Body Works, Macy's, Target, Kmart, Park Meadows mall, Southlands in Aurora, SouthWest Plaza in Littleton

* 7 a.m.: Office Max, Dillard's, Westminster Mall