Shopping Center Business

MAY 2015

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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286 • SHOPPING CENTER BUSINESS • MAY 2015 serve this need. Like many retailers, Prim- rose is also seeking infill and urban sites. Primrose's real estate strategy is the op- posite of many retailers. Retailers may want a corner location that is on the right side of the commute that may not be an ideal location for a school. "Most parents do not feel comfortable dropping their child off on a corner where there are 70,000 cars passing each day," says Pierquet. "While that may be a great location for a fast food location, we'd pre- fer to be near the high traffic corridor, with great access. Safety is our first prior- ity, not visibility. We do a lot with those excess parcels that developers and owners don't know what to do with." In addition to excess shopping center real estate, Primrose recently began open- ing schools in some non-traditional real estate. The company converted a former bank branch in the Dallas area. In Atlan- ta, a Primrose school opened four years ago at the Colony Square office towers in the Midtown area. Landlord Tishman Speyer worked with the school to create an environment that serves nearby fami- lies, as well as those who work in Colony Square and nearby buildings. The school is located on a plaza level between the high-rise buildings. "Millennials want to have a more ur- ban lifestyle," says Pierquet. "They want to live in the cities. We are working to fill the demand for high-quality child care in these growing markets so we can serve the families who choose to live in urban areas." Urban and infill locations come with their challenges. "They can be hard to find, and land- lords often question the fit," says Pierquet. "We've had to get creative about how we maximize use of space to create a great environment for children and families." Adding to that, each Primrose school is equipped with three to four outdoor play areas to meet states' requirements. In the Atlanta school, that was accomplished by utilizing a roof-top deck above the plaza that was converted to a playground. That play area is another reason that locating a Primrose school is often not as easy as it may seem: also regulations cause build- out to be more expensive. In older build- ings, Primrose often has to abate hazards and install new HVAC systems. "We find that we are essentially buying or leasing a shell that has to be cleaned and converted for an entirely new use," says Pierquet. "These buildings have to be child-friendly and handicapped acces- sible. We also install a number of new bathrooms requiring a lot of plumbing work. It is a much more costly conver- sion than it would be for a retailer." In the Buckhead section of Atlanta, Primrose is taking the first floor of an of- fice building for a new school. In Sandy Springs, Georgia, a franchise owner is buying a two-story office building that will be converted to a school. Primrose has recently converted two medical office buildings, including one in Minnetonka, Minnesota. In Denver, the company is converting a former church to a pre- school. In Houston, a Primrose school has opened in Simon Property Group's Houston Galleria in an underutilized part of the mall that had been vacant for sev- eral years. "About 25 percent of our development today involves repurposing buildings," says Pierquet. "We are actively seeking these opportunities because they tend to be in locations that we don't already serve. There is no building that we cannot con- vert to a school. We can build a school in almost any building, as long as it has the right amenities and location. Since we are less concerned about visibility, we can use a lot of hard-to-use spaces." Primrose recently opened its 300th lo- cation. The company grew methodically and intends to continue doing so at a strategic and measured pace to ensure it maintains its high quality standards. It now has locations coast-to-coast in 25 states. "Every school we build, we want to build right," says Pierquet. "We want to find the right owner and match them with the right location. For that reason, we have a very high success rate." Primrose provides franchise owners with a lot of support and training. Many franchise owners are new to education and business ownership as well. During the nine months before their opening, franchise owners go through a significant training process. That process includes on-site training that continues after the school has opened. The company has a strong presence in many markets, like its hometown of Atlanta. With 45 locations open to date, Dallas is the largest market for Primrose Schools. Primrose has refocused its ef- forts on infill and urban markets within those cities. In Atlanta, it is seeking loca- tions inside Interstate 285, including De- catur, Druid Hills and West Paces Ferry. In Dallas, Primrose only has one school inside the Beltway; it is seeking at least eight locations inside. Primrose is also expanding, especially on the East and West Coasts. The compa- ny has 30 new schools projected for 2015 and about the same amount for 2016 and 2017, with a slight uptick each year. Recent openings reflect the company's strategy. The first Primrose school in Cali- fornia recently opened in the Bay Area suburb of Pleasanton. There are two more schools under development in the Bay Area. Primrose also has new fran- chise agreements in Seattle and Portland. On the East Coast, Primrose is focused on Washington, D.C., which has four schools currently open and at least seven more in the process. Future expansion is also expected for Northern New Jersey, where there are currently four schools open. Primrose entered the Minneapo- lis-St. Paul market in 2006 and has nine schools open there, with several more in the process. Other markets for expansion include Boston, Chicago, and Cleveland. The school is also seeking what it terms, satellite cities; markets near larger areas that may have the need for one or two schools. Primrose opened a location in one of these towns, College Station, Tex- as, about 18 months ago. "That school has opened our eyes to other communities outside major met- ros," says Pierquet. "At 300 schools today, we plan to triple the number of schools in the U.S. over time. We will do that by continuing to discover new opportunities and new markets that are the right fit for our strategic goals." SCB The Primrose School of Midtown is located at Atlanta's Colony Square office park. Pictured is the school's rooftop playground.

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