Q. How did shopping centers in the Perimeter area perform during the recent recession?
A. The Perimeter area performed significantly better than many other submarkets in the Atlanta metro area. Retailers scaled back and “cherry picked” prime locations, taking minimal risks. Fortunately, the Perimeter area was on the short list of submarkets where retailers pursued a location, despite overall weak economic conditions.
Retailers have an incredibly positive view of the Perimeter – in addition to having considerable retail gravity, it’s the perfect storm of burgeoning daytime population – coupled with wealthy residents – that’s a recipe for success.
Q. Have the centers in the Perimeter area recovered? What changes have been or will be needed to respond to changes in the market?
A. They’ve almost fully recovered. At this point, occupancy rates are very strong, and rents aren’t far behind. One trend we are seeing is a “flight to quality,” where retailers are looking at more than standard site requirements (i.e. demographics, traffic counts, etc.), but rather a shopping center that increases their brand value.
Retailers have heightened their focus on the quality of the shopping centers they locate in, and who their neighbors will be. From a landlord’s perspective, we’ve placed a much stronger focus on merchandising, assessing the quality of prospective tenants, as well as keeping our shopping centers looking fresh.
Q. Planners in the Perimeter area project “live-work-play” developments in the future, which usually is interpreted to mean more mixed-use and medium-rise or high-rise buildings. How does the traditional retail shopping center fit into that sort of plan?
A. Retail, in its purest form, revolves around retailer sales. If retailers perform well in mixed-use developments, then that will drive demand and rents for these types of developments, and developers will consequently follow suit.
Besides some obvious management and coordination challenges when mixing residential with commercial uses, traditional retailers often shy away from mixed-use properties, as many retailers pose concerns about parking, access and visibility, which ultimately affects their ability to generate revenue.
A more desirable approach may be a “multi-use” format, rather than mixed-use, where office, retail and residential uses co-exist nearby each other, but are located on separate properties. You get most of the benefits of “live-work-play” without as much pushback from retailers.
Q. Looking forward, how do you see shopping centers changing?
A. Several key trends have impacted our centers, particularly in Dunwoody. With the proliferation of Internet retail, there will be a heightened focus on restaurants and service businesses.
Why? Because you cannot purchase services and a restaurant experience online. And many traditional, product-based retailers are starting to utilize their brick-and-mortar locations as showrooms to complement their online presence along with point-of-sale revenues.
We’ve also seen an uptick in interest from medical tenants, and we expect that trend to continue. Aging Baby Boomers will need more medical services in the coming years, and many medical users see the marketing benefit of having a retail presence.
Q. Much effort and discussion has recently centered on how to redevelop or renew older shopping centers. What can older centers do to appeal to shoppers today?
A. As I mentioned before, retailers have gravitated toward high-quality properties.
For example, we remodeled Dunwoody Hall, our Publix-anchored center on Chamblee-Dunwoody Road in 2011, and it’s nearly 100 percent leased. Dunwoody Hall was once an aging A&P-anchored shopping center that is now one of our most successful assets.
Also, we’ve been spending money to improve Dunwoody Village, our Fresh Market-anchored shopping center, and we’ve never had stronger leasing momentum.
Regency has a “Fresh Look” initiative that we’ve implemented for several key shopping centers to ensure the long-term excellence of our assets. Sometimes the capital costs are a hard pill to swallow, but well worth it in the end.
As Regency Centers’ Senior Leasing Agent, Matt Hagan is responsible for leasing 16 properties in the Atlanta metro area (three in Dunwoody), Alabama, Tennessee and South Carolina.
Hagan has worked at Regency Centers, a real estate investment trust focusing on Class A shopping centers, for almost seven years, where he’s managed over 350 transactions.
Hagan graduated from the College of Charleston, earned a MBA from the University of Florida and is a member of the International Council of Shopping Centers.