By Elana Krasner
Regency Centers is one of the largest owners of shopping centers across the country, and is also leading the way in grocery-anchored assets, a huge trend throughout the industry–that has helped reinvent and revitalize the typical shopping center. To help educate future industry leaders, Alan Roth, Senior Vice President and Senior Marketing Officer, Regency Centers, presented a case study of Kings Park Shopping Center in Washington, D.C., at ICSC’s annual Next Generation Conference in Philadelphia.
King’s Park Shopping Center faced a challenge in a highly competitive marketplace as its grocery store, which anchors the property, was undersized, outdated, and quickly approaching an option notice date. In order for the center to thrive in an area that was saturated with other grocers like Whole Foods and Safeway, Regency considered its options; was an expansion feasible? Studies showed that 50-60,000 sq. ft. is the ‘sweet spot’ for most grocery stores, and the Giant at Kings Park was only 28,000. By taking a look at the lease terms and provisions, exclusion terms, and recapture clauses, Regency was able to determine whether or not an expansion would help bring life back into the shopping center. *Spoiler Alert* Giant is currently closed while the store is undergoing a renovation that will significantly increase the store size, and better serve the 125,000 residents in the center’s direct trade area.
Roth noted that there were several key things in play here; first and foremost was thinking about the property strategically. What was happening in the direct trade area? Taking a look at other properties, Roth noted that there was direct competition just down the road from Kings Park. He also noted that a major expansion may take a bite out of the other tenants’ space, so it’s important for an owner or landlord to also control the adjacent shop space.
While each shopping center varies in its nuances and needs, the take away from the Kings Park Shopping Center expansion was that it took an eye for the big picture, from competition to market size, to really determine if an expansion is feasible, and more than that, worth it.