Here's an update on my "shrunken kingdom" post about Regency Square and its new retail competition, courtesy of the Richmond Times-Dispatch:
Regency takes the biggest hit
Taubman expected drop linked to new malls; two other sites fared better
BY GREGORY J. GILLIGAN, TIMES-DISPATCH STAFF WRITER
Sunday, September 5, 2004
Regency Square took a hit last year.
Sales fell nearly 13 percent in 2003 compared with the prior year as the shopping center in Henrico County faced competition from two new malls.
The double-digit decline came despite Short Pump Town Center and Stony Point Fashion Park being open less than four months last year. Yet the real impact on Regency won't be known until the end of this year, when Short Pump and Stony Point will have a full year of sales, retail and shopping-center experts say.
"You can't draw any strong conclusions just yet, but clearly Regency Square was going to be impacted," said Michael P. Niemira, the chief economist and director of research for the International Council of Shopping Centers, a trade organization.
The sales hit last year wasn't as bad at the area's two other large regional malls Virginia Center Commons and Chesterfield Towne Center according to sales data compiled by Henrico and Chesterfield counties. The figures are based on the business license tax that localities collect from retailers on their annual gross sales.
Sales fell 1.17 percent at Virginia Center Commons in northern Henrico compared with 2002, the data indicate. Sales declined 0.49 percent at Chesterfield Towne Center during the same period.
Cloverleaf Mall, the area's oldest regional mall, saw sales decline 51 per cent last year compared with 2002. The shopping center lost Hecht's as its last anchor tenant as well as several other stores.
But Regency was the most vulnerable of the area malls when Short Pump and Stony Point opened last September.
Regency had been the area's most upscale regional mall, with sales soaring to about $200 million annually in recent years. But in its first nine months of operation, Short Pump's sales surpassed Regency's for all of 2003.
Short Pump generated about $181.7 million in sales from September through May, according to data compiled by Henrico. (Stony Point Fashion Park had sales of $106 million for the same time period.)
Regency had sales of $177.04 million last year, down from $203.02 million in 2002.
"We did expect that Regency would experience a reduction in sales activity, and that has occurred within our expectations," said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers Inc.
Taubman Centers bought Regency in 1997 and also developed Stony Point.
The company estimated that sales would fall between 15 percent and 25 percent at Regency in the first year or so after the two new malls opened, he said.
Such a sales reduction is typical when a new mall opens in an area, he said. Richmond had two shopping centers open within two weeks of each other.
"There always is a reduction in business that first year or so and then it stabilizes and grows back as the community absorbs all of the new retail activity that has occurred," Taubman said. "We are very confident in the future of Regency."
Regency lost some tenants Gap, Gap Kids, Banana Republic and Finks Jewelers, all of which relocated to Stony Point.
Brooks Bros. and Cache have stores in both Regency and Stony Point, and experts believe those locations in Regency probably will close when leases come up for renewal.
The same might happen to the Abercrombie & Fitch, J. Crew and Williams-Sonoma locations in Regency since those chains also opened stores in Short Pump.
Regency has six vacant stores, Taubman said. All of that space is under discussion for leasing with potential retail tenants.
The shopping center has lost some of its luster, some retail experts say, particularly as Regency has added A Dollar store and other temporary tenants to fill in some of the lost space. But some chains have opened there, including popular women's apparel retailer Forever 21 and shoe retailer Aldo.
"Regency is very well located in the county. . . . It is not an open-air mall and it has a different mix of department stores. It will continue to attract a customer base," Taubman said.
Chesterfield Towne Center and Virginia Center Commons have fared well because the two malls have a clearly defined customer base, experts said.
Michael Sullivan, mall manager of Virginia Center Commons, said his center is attracting a more serious shopper.
"There are fewer people here but they are buying just as much," Sullivan said.
Overall, he said, sales at Virginia Center Commons are much better than officials expected.
"People like to shop where they are comfortable. And our mix of tenants meets those needs of our primary and secondary markets," Sullivan said. "Our niche is with middle-and upper-middle income families. They have kids and mortgages and college funds. We have the stores that meet their pocketbooks."
The sales results for the area malls compiled by Henrico and Chesterfield counties are estimates, but county officials believe they are fairly close to actual figures.
In Chesterfield, for instance, the results are based on renewal or new filings for the business license tax. If a retailer left a mall midway during the year, they were not required to file their gross-receipts information to the county, thus no sales were recorded for that location.
Henrico, however, was more detailed. If a merchant left during the year, county officials pulled sales-tax data for the months the retailer was open and added those results to the total figure for a particular shopping center.
Localities are prohibited from providing sales information about a specific retailer or business. But local governments can provide sales data in general terms, such as for a mall.
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