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Bringing outlet centers to Canada is Anthony Grossi’s new mission

By Anna Robaton

Growing up in the 1960s, Anthony Grossi watched Toronto’s transformation through the eyes of his father, a construction worker who labored on the iconic Toronto-Dominion Centre and other projects developed by The Cadillac Fairview Corp. “Toronto was breaking out of its stodgy mold and becoming a world-class city with gleaming skyscrapers,” Grossi recalled. “I was a little boy, and my father would point out the projects he worked on.”

Years later Grossi got his start in the real estate business at Toronto-based Cadillac Fairview, one of North America’s largest commercial real estate companies. He joined the firm as a financial analyst in 1985, after earning a master’s in business administration from York University’s Schulich School of Business, in Toronto. Over the next two decades, he rose through the ranks to become executive vice president of operations. In 2007 Grossi became COO of Macerich Co., in Santa Monica, Calif., where he oversaw a portfolio of nearly 95 million square feet, including 72 malls, and supervised development, property strategy and business planning.

Now Grossi returns home to Canada, where he is getting another chance to transform that country’s retail real estate sector. This year he became senior managing director of the joint venture between RioCan Real Estate Investment Trust, Canada’s largest shopping center REIT, and Tanger Factory Outlet Centers, the only publicly traded outlet center REIT in the U.S. The venture plans to develop as many as 15 outlet centers over the next five years or so in urban markets and tourist destinations across Canada. There are now only about a half dozen properties categorized as outlet centers in Canada, including two Mills-brand centers owned by Montréal-based Ivanhoe Cambridge.

“It is very refreshing after 25 years of being behind a desk to be out there with my shirt sleeves rolled up,” said Grossi, who is based in both Toronto and New York City. “Now that I’m building something, my dad understands what I do,” he quipped.

In addition to working with the joint venture, Grossi runs his own real estate advisory practice, Grossi NorthBound, which he launched after leaving Macerich last year. The practice specializes in crafting cross-border retail strategies and forging alliances like the RioCan-Tanger venture Grossi brokered.

The firm is seeking to capitalize on the push by U.S. retailers to expand into Canada, a market they generally view as the first step in a global expansion. It is also a market that can be difficult to crack, because of space limitations and the possibility of higher rents than in the U.S., Grossi says. “Rents are higher, but sales performance is as well,” he said. “Retailers coming into the market need to reset expectations – they may pay more, but they will get more.”

Grossi is no stranger to the leaders of RioCan and Tanger. Having spent 22 years at Cadillac Fairview, he is well known among RioCan’s executives. He established a relationship with Steven B. Tanger, president and CEO of Tanger Factory Outlet Centers, through ICSC, where the two are trustees. Grossi says he first suggested to Steven Tanger that he look at Canada during the recession as they heard regional economic reports at ICSC meetings. Canada and Brazil were among the few bright spots explored at those meetings, Grossi recalls.

Tanger Factory Outlet has been busy developing projects at home, where the outlet center sector has held up well in the downturn and many retailers are expanding or rolling out new outlet concepts. With some of his own company’s tenants setting their sights on Canada, Steven Tanger decided to consider prospects there, says Grossi. Meanwhile, RioCan had been contemplating entering the outlet center sector for some time.

“It’s not so much what Steve saw in Canada as what he did not see,” Grossi said. “What he didn’t see is the kind of factory outlets [his father and company founder] Stanley Tanger first developed 30 years ago, projects that are thoughtful, organized and seamless.”

The centers, Tanger’s first outside the U.S., will operate under the Tanger banner and be similar to the company’s projects back home, where the tenant mix is focused on leading designer and brand-name manufacturers. American brands will make up about 80 percent of the tenants at each center, and the balance will be Canadian.

Early this year the partnership announced an agreement to acquire a 35-acre site in Halton Hills, part of the Greater Toronto area, for its first center. Construction of the 350,000-square-foot center is slated to begin later this year for an April 2013 opening.

In his new role, Grossi is tasked with identifying potential markets, which is challenging in a country where it is difficult to find land zoned for retail use and to obtain entitlements. He must also ensure that the venture remains nimble as it leverages the talents of both companies. Tanger will oversee design and leasing, and RioCan will handle development, construction and property management.

Grossi must not only answer to two chief executives, but also manage teams of executives from both companies. “It’s not an easy task from a human-relations perspective,” said RioCan CEO Edward Sonshine. But Grossi clearly possesses the finesse and communication skills needed, Sonshine says. Of course, he will also leverage his considerable industry connections and knowledge of the American and Canadian markets.

“You won’t find anyone that won’t tell you that Tony Grossi is the proverbial nice guy,” said Sonshine. “Likeability is a very underrated asset. People will tend to do more for you if they like you.”

This story is from the June 2011 issue of Shopping Centers Today.

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