Everybody knows one when they see one, but it's hard to clearly define what a lifestyle center is. That was the consensus among developers and retailers at ICSC's 2002 Open Air Centers Conference in Chicago this October.
And money hangs in the balance of nailing down the nebulous concept. “The financing segment is pushing for a definition so they can get their arms around it and either finance it or not finance it,” said Michael McCarty, president of the community centers division of Indianapolis-based Simon Property Group.
To standardize the concept, ICSC recently laid down the lifestyle rules. According to the organization, a lifestyle center must include the following attributes: a location near affluent residential neighborhoods; an upscale orientation; 150,000 sq. ft. to 500,000 sq. ft. of GLA; an open-air format; and at least 50,000 sq. ft. of national specialty chain stores.
ICSC is also looking at the people who frequent lifestyle centers. Lifestyle patrons shop more often and spend more, according to statistics from an upcoming ICSC study that compares the habits of shoppers at five lifestyle centers to shoppers at five regional malls. According to the report, the average number of stores shoppers entered was 2.9 at the lifestyle centers versus 2.3 at conventional malls. The average retail expenditure per visit was $75.70 at the lifestyle centers versus $73.30 at the malls. Lifestyle shoppers made 3.8 visits to their centers in a 30-day period, while mall shoppers paid 3.4 visits to their centers in that same time.
These statistics have specialty retailers lining up for space in lifestyle centers, Simon's McCarty said. In addition to the better results from shoppers, the chains see the open-air centers as a way to escape common area maintenance fees and rents at malls, he added. “Occupancy costs at lifestyle centers are half of what they are in a regional mall,” says Richard O'Connell, senior vice president at Rye Brook, N.Y.-based Talbots Inc.
The future is less bright for department stores looking for a lifestyle change. Saks Fifth Avenue and Parisian are among the chains reporting successful sales in lifestyle centers. But they're finding developers less willing to woo them. “They're trying to fit into these lifestyle centers, but they're finding they're not going to get a free site from us,” says James Bennett, managing director of business development for Washington, D.C.-based Madison Marquette. In fact, a department store anchor could even hurt a lifestyle center's access to capital, says James Easler, managing director at New York-based Teachers Insurance Annuity Association.
ICSC's new definition of the lifestyle concept should help lenders monitor performance at these centers and structure financing and deals for them accordingly, he adds.
