Commercial Real Estate Strategy Tips

The Essence of A Shopping Center

by Marvin Levin

In 1963, I was invited to participate in a CREA seminar in Los Angeles. My co-panelist was one of the developers of the Stonestown Shopping Center in San Francisco. Although it was more than 40 years ago, he made an indelible impression on me that paid big dividends in years to come.

His proposition was that downtown retail had become obsolete for several reasons. The obvious cause was inadequate parking, which resulted inevitably in the parking meter. Shopping centers could provide free and adequate parking.

He then said that an additional factor was that downtown retail merchants had no organization that allowed them to cooperate. On the other hand, a shopping center merchant might be a member of a merchants association that would foster cooperation. The reader will probably acknowledge that sometimes this is done brilliantly, and sometimes it is not done at all. However, the potential is there if the provisions in the leases establish the formation and operation of a merchants association.

About 12 years after the CREA seminar, we were offered a derelict center in Modesto, California. The center was more than 50% vacant. It was well located in the city, but had suffered from major neglect. It did not take long to diagnose the problem. I watched shoppers drive in and park in front of their target merchant, then walk back to their car and drive away. My thought at the time was that this particular shopper may have been interested in other services and products at the center, however, there simply was no way for the shopper to know about their availability.

Although the center needed some loving care, it seemed to us that the fundamental problem was that the basic advantage of a center compared to the downtown merchants was being ignored.

The major idea that we launched was a shopping center bulletin that we named after the center, and called it the Green Pages” (a somewhat obvious reference to the Yellow Pages). The Green Pages listed the products and services available in the center, and contained room where each merchant could elect to list a special for the current Green Pages term – usually two weeks. Today, with desktop publishing, providing such a bulletin would be a snap.

We then invited each merchant to display the Green Pages in a stand-up counter stand at each register. We hired a part-time person to keep the Green Pages up to date and to keep a supply on everyone’s counter. No one refused. The response was superb. This cannot be seen as a controlled experiment, because several things were going on at the same time.

The Green Pages helped with our leasing effort. Filling up the dark spaces contributed to more leasing and a more complete Green Pages directory.

As we resurfaced the parking area, tenant morale increased and the tenants, without exception, were enthused about our promotional efforts. The center was substantially full in about 18 months. Shortly thereafter, we sold the center for a little more than twice our original cost.

Except for retailers who are part of a well-managed franchise organization, most retailers tend to be “order takers” and are not necessarily inclined to cooperate with neighbors. However, in the subject case, the situation was ripe for a boom in cooperation. Although every shopping center is different, I believe that the fundamental principle applies to all centers – that is, areas of potential cooperation should be explored and developed to the fullest.

If you know of a neglected shopping center for sale, please contact me.