Building On

Editor’s Note:Chain Store Age’s 18th annual survey of Fastest-Growing Developers identified the country’s top developers based on square footage opened in newly developed or expanded shopping centers during the preceding calendar year–2006.

With tenants seeking different locations to continue their expansion, and the regional-mall format currently out of favor, the top builders have broadened their repertoire to continue to grow. Developers Diversified Realty has expanded beyond its traditional open-air retail format to include other uses. Mall developers Simon Property Group and General Growth Properties both opened major open-air mixed-use projects.

Expansions and renovations have been and will be critical to the growth of Westfield Group and Kimco Realty, respectively. And all are looking outside the United States for development opportunities, contributing to the globalization of the shopping center industry.

2006 Fastest-Growing Developers


Source: Chain Store Age research and company reports
Developers Diversified Realty Beachwood, Ohio 6,081,756 sq. ft.
Simon Property Group Indianapolis, Ind. 3,876,000 sq. ft.
Westfield Group Los Angeles, Calif. 3,760,750 sq. ft.
Kimco Realty Corp. New Hyde Park, N.Y. 3,058,598 sq. ft.
General Growth Properties Chicago, Ill. 2,631,293 sq. ft.

No. 1: Developers Diversified Realty

This year’s top developer, Developers Diversified Realty, is also the third-fastest-growing acquirer (see page 74). But even as it continues its role in consolidation, the Beachwood, Ohio-based company’s 6.1 million sq. ft. of new space shows it is pursuing a building path.

“Development is critical to our corporate growth,” said Scott Wolstein, CEO.

In a low cap-rate environment, development has become more profitable, he explained.

“We used to build to a 12% return and sell at 9.5%,” Wolstein said. “Now we build at 11% and sell at 5%. That’s almost a 100% return.”

Developers Diversified Realty
New and Expanded Properties Completed in 2006


Total for 2006: 38 properties in 19 states and Puerto Rico Source: Chain Store Age research and company reports Properties alphabetized by state.
Brookhighland Plaza Birmingham, Ala. 55,398 sq. ft.
East Side Plaza Gadsden, Ala. 64,400 sq. ft.
Phoenix Spectrum Mall Phoenix, Ariz. 403,571 sq. ft.
Buena Park Downtown Buena Park, Calif. 84,901 sq. ft.
Valley Central Shopping Center Lancaster, Calif. 323,109 sq. ft.
Crystal River Plaza Crystal River, Fla. 24,000 sq. ft.
Lakeland Marketplace Lakeland, Fla. 77,557 sq. ft.
The Shops at Midtown Miami Miami, Fla. 633,001 sq. ft.
Ocala West Ocala, Fla. 53,000 sq. ft.
Freeway Junction Stockbridge, Ga. 79,232 sq. ft.
Quincy Place Mall Ottumwa, Iowa 81,922 sq. ft.
Deer Park Town Center Deer Park, Ill. 13,500 sq. ft.
The Shops at Fox River McHenry, Ill. 426,078 sq. ft.
Outer Loop Plaza Louisville, Ky. 6,000 sq. ft.
Fairplain Plaza Benton Harbor, Mich. 108,747 ft.
Chesterfield Marketplace Chesterfield, Mich. 338,614 ft.
Pine Ridge Square Gaylord, Mich. 149,488 sq. ft.
Ward Parkway Center Kansas City, Mo. 142,731 sq. ft.
Crossroads Center Gulfport, Miss. 15,000 sq. ft.
Beaver Creek Crossings I & II Apex, N.C. 629,523 sq. ft.
Mooresville Consumer Square Mooresville, N.C. 67,101 sq. ft.
Freehold Marketplace Freehold, N.J. 500,000 sq. ft.
Hamilton Marketplace Hamilton, N.J. 22,500 sq. ft.
Boulevard Consumer Square Amherst, N.Y. 5,300 sq. ft.
Wal-Mart Plaza Olean, N.Y. 76,000 sq. ft.
Freedom Plaza Rome, N.Y. 28,081 sq. ft.
Tri County Mall Cincinnati, Ohio 160,000 sq. ft.
North Heights Plaza Huber Heights, Ohio 45,000 sq. ft.
Stow Community Center Stow, Ohio 78,288 sq. ft.
Mt. Nebo Pointe Pittsburgh, Pa. 367,719 sq. ft.
Plaza Rio Hondo Bayamon, Puerto Rico 109,013 sq. ft.
Plaza Del Sol Bayamon, Puerto Rico 144,000 sq. ft.
Plaza Del Norte Hatillo, Puerto Rico 21,000 sq. ft.
Plaza Senioral San Juan, Puerto Rico 5,982 sq. ft.
McKinney Marketplace McKinney, Texas 87,757 sq. ft.
Westover Marketplace San Antonio, Texas 560,220 sq. ft.
The Family Center at Fort Union Fort Union, Utah 79,023 sq. ft.
Shoppers World of Brookfield Brookfield, Wis. 15,000 sq. ft.
6,081,756 sq. ft.

But the projects themselves have gotten more complicated. Building larger complexes such as The Shops at Midtown Miami, in Miami, and Beaver Creek Crossings, in Apex, N.C., both of which opened last year, requires more time and resources than when the company focused on community and neighborhood centers.

“It’s more like the mall business,” Wolstein said. “The approvals are far more involved than they used to be. You’re now dealing with the Environmental Protection Agency, with wet-lands.”

Development also is taking place outside the United States, as Developers Diversified has bought a 50% interest in Brazilian developer Sonae Sierra Brazil, which will acquire and build in that country. “What we’ve discovered in South America and Europe is a cross between the U.S. mall and the U.S. community center,” Wolstein observed. “They are typically enclosed, but anchored by hyper-markets, and the equivalent of Best Buy.”

Simon Property Group
New and Expanded Properties Completed in 2006


Total for 2006: 8 properties in two states and 4 countries Source: Chain Store Age research and company reports Properties alphabetized by state.
Coconut Point Estero, Fla. 1,200,000 sq. ft.
Shops at Arbor Walk Austin, Texas 460,000 sq. ft.
Rio Grande Premium Outlets Mercedes, Texas 403,000 sq. ft.
Round Rock Premium Outlets Round Rock, Texas 432,000 sq. ft.
Wasquehal Shopping Center Wasquehal, France 200,000 sq. ft.
Giugliano Naples, Italy 748,000 sq. ft.
Toki Premium Outlets Toki, Japan 53,000 sq. ft.
Gliwice Shopping Center Gliwice, Poland 380,000 sq. ft.
3,876,000 sq. ft.

But these centers are influencing U.S. developments, including the mixed-use projects, which are more vertical in nature.

“The pipeline is bigger now than it’s ever been,” Wolstein said. “The question is when it gets started.”

No. 2: Simon Property Group

Building a combination of property types helped Simon Property Group place second among developers. Last year, Simon opened a mixed-use complex, outlets and a community center around the United States.

“It was a bit by happenstance. We’ve only owned Chelsea Property Group [its outlet-center subsidiary] for about three years,” said Stephen E. Sterrett, executive VP and CFO. “But one of the things that is unique about us is our different formats, giving us the ability to look at a piece of dirt and develop whatever is appropriate on it.”

Its pending acquisition of The Mills Corp. also will add new redevelopment opportunities.

Westfield Group
New and Expanded Properties Completed in 2006


Total for 2006: 12 properties in 5 states, Australia and New Zealand Source: Chain Store Age research and company reports Properties alphabetized by state.
Westfield Topanga Conoga Park, Calif. 600,000 sq. ft.
Westfield Century City Los Angeles, Calif. 250,000 sq. ft.
Westfield San Francisco Centre San Francisco, Calif. 1,000,000 sq. ft.
Westfield Connecticut Post Milford, Conn. 415,000 sq. ft.
Westfield Southlake Merrillville, Ind. 140,000 sq. ft.
Westfield Chesterfield Chesterfield, Mo. 194,000 sq. ft.
Westfield Capital Olympia, Wash. 250,000 sq. ft.
Westfield Chermside, Chermside (phase 1) Queensland, Australia 343,950 sq. ft.
Westfield Liverpool Liverpool, NSW, Australia 251,900 sq. ft.
Westfield Paramatta Paramatta, NSW, Australia 137,200 sq. ft.
Westfield Chartwell Chartwell, Hamilton, New Zealand 74,300 sq. ft.
Westfield Newmarket Newmarket, Auckland, New Zealand 178,700 sq. ft.
3,760,750 sq. ft.

“With any portfolio, you look at it with a fresh pair of eyes. And Mills has been distracted as a company for the last two or three years,” Sterrett said. “We’ll see some opportunities. The timing is something we’ll figure out over the next six-to-12 months.”

The pipeline shows no signs of slowing down, with Simon working on some $5 billion in projects to open in the next three to five years. The company has six projects under construction in China; its first in South Korea is to open this year, and it is looking seriously at Russia and India.

“We want to bring the sophistication of a world-class retail development and pair with a good local partner,” Sterrett said. “We’ve already done it in a few different countries.”

No. 3: Westfield Group

Having spent much of the 1990s as a major acquirer of centers in the United States and United Kingdom, Westfield Group is becoming a major developer. But the two roles are linked—Westfield is now redeveloping some of the many projects it acquired over the years.

Kimco Realty Corp.
New and Expanded Properties Completed in 2006


Total for 2006: 22 properties in 9 states Source: Chain Store Age research and company reports Properties alphabetized by state.
Main Street at Anthem Anthem, Ariz. 128,038 sq. ft.
Mesa Riverview Mesa, Ariz. 59,389 sq. ft.
Peoria Crossings Peoria, Ariz. 9,057 sq. ft.
Plantation Crossing Middleburg, Fla. 151,116 sq. ft.
Shoppes at Amelia Concourse Yulee, Fla. 299,439 sq. ft.
Treasure Valley Marketplace Nampa, Idaho 334,099 sq. ft.
Turtle Creek Crossing Hattiesburg, Miss. 392,604 sq. ft.
Sorensen Park Plaza Omaha, Neb. 306,593 sq. ft.
Warm Springs Promenade Henderson, Nev. 71,160 sq. ft.
Central Islip Town Center Central Islip, N.Y. 264,464 sq. ft.
Shoppes at Midway Plantation Knightdale, N.C. 405,783 sq. ft.
Wakefield Commons II Raleigh, N.C. 3,200 sq. ft.
Edgewater Place Raleigh, N.C. 5,759 sq. ft.
Dowlen Towne Center Beaumont, Texas 38,821 sq. ft.
Las Tiendas Plaza Brownsville, Texas 268,363 sq. ft.
Gateway Station Burleson, Texas 23,696 sq. ft.
South Towne Crossing Burleson, Texas 9,438 sq. ft.
Cypress Towne Center Cypress, Texas 64,741 sq. ft.
Montgomery Plaza Fort Worth, Texas 113,088 sq. ft.
Lake Worth Towne Crossing Lake Worth, Texas 30,125 sq. ft.
Forum at Olympia Parkway San Antonio, Texas 38,870 sq. ft.
Market Street at the Woodlands Woodlands, Texas 40,755 sq. ft.
3,058,598 sq. ft.

The result: Last year, Sydney, Australia-based Westfield (its U.S. headquarters is in Los Angeles) opened more than 3.7 million sq. ft. of space, including expansions of San Francisco Centre, Topanga and Century City, placing it third among developers. And that’s just the beginning of a multibillion-dollar development platform in the United States, United Kingdom, Australia and New Zealand.

“We have a philosophy of reinvesting in our assets all over the world,” said Peter Lowy, a group managing director of Westfield. “You get a much better return out of redeveloping— returns are far in excess of acquisitions.”

Westfield is investing more than $1 billion annually in redevelopment over the next three years, Lowy said. The company is in the midst of more than $1 billion in U.S. work alone, including expansions of Westfield Garden State Plaza in Paramus, N.J.; Westfield Annapolis (Md.), opening this year; and Westfield Southcenter in Seattle, slated for a 2009 completion. The £1.6 billion Westfield London, with 1.6 million sq. ft. of retail and entertainment facilities, is expected to open in late 2008.

“You invest to suit the marketplace you’re in,” Lowy said. “We put the portfolio together for that reason.”

No. 4: Kimco Realty Corp.

Observers shouldn’t think of Kimco Realty Corp. as a neighborhood-center developer any longer. Its projects are consistently getting larger, often approaching 500,000 sq. ft.

That was enough to place it fourth this year among developers.

“It takes the same number of people to build 500,000 sq. ft. as 100,000 sq. ft.,” said David Henry, chief investment officer of New Hyde Park, N.Y.-based Kimco.

Future building will continue, as will Kimco’s policy of working with local partners to find development opportunities in the United States.

General Growth Properties
New and Expanded Properties Completed in 2006


Total for 2006: 23 properties in 16 states and Brazil Source: Chain Store Age research and company reports Properties alphabetized by state.
Pinnacle Hills Promenade Rogers, Ark. 880,991 sq. ft.
Pinnacle West Rogers, Ark. 55,740 sq. ft.
Mall at Sierra Vista Sierra Vista, Ariz. 20,000 sq. ft.
Otay Ranch East Chula Vista, Calif. 736,237 sq. ft.
Bayshore Eureka, Calif. 10,894 sq. ft.
Montclair Plaza Montclair, Calif. 1,134 sq. ft.
Moreno Valley Moreno Valley, Calif. 57,367 sq. ft.
Altamonte Altamonte Springs, Fla. 1,656 sq. ft.
Perimeter Mall Atlanta, Ga. 20,000 sq. ft.
Lincolnshire Site Lincolnshire, Ill. 131,282 sq. ft.
Coral Ridge Coralville, Iowa 1,887 sq. ft.
Mall of the Bluffs Council Bluffs, Iowa 4,281 sq. ft.
Florence Mall Florence, Ky. 7,953 sq. ft.
Mall of Louisiana Baton Rouge, La. 74,400 sq. ft.
Westroads Omaha, Neb. 10,209 sq. ft.
Westroads Omaha, Neb. 10,155 sq. ft.
Bridgewater Commons Bridgewater, N.J. 78,796 sq. ft.
Kenwood Towne Centre Cincinnati, Ohio 49,428 sq. ft.
Gateway Mall Springfield, Ore. 98,497 sq. ft.
First Colony Sugarland, Texas 133,286 sq. ft.
Orem Plaza – Center Street Orem, Utah 4,000 sq. ft.
Eastridge Mall Eastridge, Wyo. 3,100 sq. ft.
Shopping Leblon Rio de Janeiro, Brazil 240,000 sq. ft.
2,631,293 sq. ft.

“We have a heavy development pipeline. In California, we partner with Vestar; in Texas, we partner with Trademark,” Henry said.

Future construction also will focus more heavily on rebuilding Kimco’s older properties.

“We haven’t been particularly good at that,” Henry admitted. “We haven’t focused as much on our own portfolio. As we’re beginning to do that, we’re finding lots of opportunities. It’s like finding change under the car seat.”

Mexico will provide significant development opportunities, too. In 2006, Kimco began construction on six new centers.

“Mexico is a development game,” Henry said. “There are not a lot of existing properties.”

No. 5: General Growth Properties

With more than 2.6 million sq. ft. in new retail space opened last year, General Growth Properties continues as a perennial on the Fastest-Growing Developers list, this year placing fifth.

And though the company opened two new major projects, Otay Ranch Town Center in Chula Vista, Calif., and Pinnacle Hills Promenade in Rogers, Ark., General Growth is in something of a transition.

“The real story is that of expansions,” said Thomas J. D’Alesandro IV, a senior VP of Chicago-based General Growth Properties (GGP). “We have over 100 properties in various stages of expansion.”

A major expansion of Natick (Mass.) Mall that will add both retail and luxury condominium space will open this year. The other story, he noted, is the type of expansion taking place. More often than not, the company is adding an open-air component to an enclosed center.

“As the mall evolves to something slightly different, the hybrid is the best solution,” D’Alesandro said. “It’s kind of a return to the Main Street.”

Another story is international expansion. GGP formed partnerships with Brazilian developer Nacional Iguatemi Group to invest in centers in Brazil, and with ECE Projektmanagement to invest and develop centers in Turkey. It also formed a joint venture with Grupo Sambil of Venezuela and Genesis Fund of Costa Rica to develop the 500,000-sq.-ft. Sambil Costa Rica in San Jose.

“A lot of U.S. merchants have been more aggressive about expanding, and we want to move across markets,” D’Alesandro said.