Shopping Center Business

AUG 2016

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

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MERLE HAY MALL 88 • SHOPPING CENTER BUSINESS • August 2016 The result was a power strip center that had the entrance to a regional shopping mall in the middle. Ulta, Shoe Carnival, Old Navy, MC Sports and Staples were among the tenants who joined the center. Abbell also added restaurants, including a Panda Chinese, Old Chicago and a free- standing Starbucks Coffee. "These additions really changed the fre- quency of the shopping visits we saw from our customers," says Holland. "All of the stores we opened exceeded their sales ex- pectations. We hybridized the shopping center and dramatically changed the way people shopped; it really wasn't just a mall anymore. It was a power mall — a very dif- ferent line up of tenants." Shortly after the addition of its big box tenants, Abbell wanted to expand the entertainment offerings at Merle Hay Mall. The center has had a bowling alley — which was created from a former bomb shelter — on a lower level of the center for many years. "Between being the state capitol and the second largest insurance capital in the world, Des Moines is an extremely recession resistant and stable market," says Holland. "The cost of living is low, the public schools are stellar and as a result the quality of life is very high. The challenge is that the population has not grown very fast. We have learned that you don't succeed in Des Moines by dividing the same retail pie; you succeed by creat- ing a new pie." Abbell kept that in mind when it went seeking a movie theater for Merle Hay Mall. It didn't want a standard multi- screen cinema. It wanted an operator that would offer something different for the market. It came across Austin, Tex- as-based Flix Brewhouse. Flix had one theater at the time, in its hometown of Austin. The company combines first-run movies with a brewpub; brewing its own beer onsite. Flix was just as impressed with the idea of Des Moines as Abbell was with Flix, says Holland. Like Des Moines, Austin was the state capitol. Its original unit was also located in a shopping center with similar demographics. "What impressed us about Flix wasn't that the beer was good, but that these were operators who had been in hospital- ity, who then decided to enter the movie theater business," says Holland. Flix opened its second location with eight screens at Merle Hay Mall in 2014. In the first year, Flix grossed approximate- ly $7 million. For Des Moines, that tied it with an 18 screen cinema as the second highest grossing theater with number one going to a 20-screen theater in the market. For a follow up act, Merle Hay now has plans to continue to diversify its offerengs with an outlet element to the center. "Along with the convergence of the customer — online and in store — there has also been a convergence of property type," says Holland. "Shopping centers used to be enclosed malls; power cen- ters; or grocery-anchored centers. Today, those lines are blurred. The customer wants a different experience. The retailer wants a different experience; they realize that if they are in a hybrid center they get the benefit of all the uses of the various tenants, whether they are traditional re- tail, entertainment or food related." Outlet retail makes most sense for Mer- le Hay Mall, says Holland, because the Des Moines area does not have a lot of factory and outlet retail. As brands have eased their radius clauses around urban areas, the opportunity exists for Merle Hay to create an outlet area of the prop- erty and further diversify the center, while fulfilling shoppers' needs. "Our immediate trade area is the best part of the income segment of the mar- ket" says Holland. "Our goal is to pro- vide everyone what they are looking for. While we can't be all things to all people, we have definitely found that by creating a strong mix — where you can go to Kohl's, Target, the nail salon and the movies with one parking spot. The convenience piece of it is something that we've always strived to provide our customers since our open- ing in 1959." Abbell is moving some tenants around to aggregate some space for the outlet sec- tion of the center. It also plans on add- ing some space to accommodate outlet retailers. As well, the company plans to build two new restaurants near the Flix Brewhouse theater to create more food options at the north exterior entrance of the center, similar to how it added box retailers to the entrance on the east side of the center. Abbell Associates is working with The Was Group to lease the outlet section of the center. "We already have the major component that create an experiential center in place at Merle Hay Mall," says Jeffrey Was, CEO of The Was Group, which specializes in creating and managing outlet projects. "This is a project that doesn't need to bring that in — it is a step ahead of many projects. It is an ideal market for outlet retail because of the income in the mar- ket and the distance to other outlet and factory retail." The addition of the outlet retail space will take place over the next few years, and will likely be phased in over time. Along with it, says Holland, will likely come other changes as Merle Hay continually adapts to the changes in retail. "By size, we've always been a super-re- gional center," adds Holland. "We've add- ed a much wider bandwidth of options, not just for shopping but for entertain- ment and food. In any business, you have to see what the market is looking for, and give them what they want. People don't want to go to a single flavor shopping cen- ter anymore. Food, entertainment, daily needs, apparel and leisure all need to be in one place." SCB Merle Hay Mall has plans to add more offerings, including an outlet component, to the popular Des Moines area center.

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