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NEW YORK ROUNDTABLE 78 • SHOPPING CENTER BUSINESS • December 2016 erally are not doing well, depending on the department store. You're in a situation where, if you're a great mall, you can't wait to buy them out. Many of you know that I represent Westfield throughout the coun- try, and this has been a boon for them. They bought Sears and Macy's through- out their portfolio and that allowed them to open up the center and create some lifestyle components. Who it impacts al- ways is the lesser — the C stores and C malls. Those guys were teetering anyway. Once you lose an anchor, you can sit in Ohio with a vacant Lazarus for 20 years. Then what do you do? You put in a clinic or a karate place or church because you are limited. Nobody wants to come. Campione: You can take some of those stores back for next to nothing. The de- partment stores that are in the A malls, what's hurting our developers is the fact that the numbers being given to buy out that store are ridiculous. Then the fear is that you've got an A mall or an A-plus mall and you don't own the department store buildings. You're in a situation where some of these major mall owners in the best malls are fighting with the anchor tenants that they have no control over anymore who are playing it as a game. Kampler: Even in a great situation where the buy-outs work and everything pencils out, you're left with the domino effect on all of the inline retailers within that mall. Some may now be able to pay different rents and so the economic model, while they may win the battle in the short term, in the long term what's going to happen with the rest of the mall? It's far more complicated because the closures and the re-leasing of it or repurposing is going to trigger co-tenancy clauses. Stephanou: The other thing is that you're assuming you can fix it by having a better tenant in place. Some of these centers are demographically challenged. When you're talking about most of these C malls or the B-minus malls, there's either a competitive center that is doing well or other economic factors, but it may just not be that viable. I think there really isn't a need for some of those C centers; that's the reality. Lee Spiegelman: Those C centers are going to disappear and be repurposed into other types of real estate not having anything to do with retail. Stephanou: Let's talk about the athletic gear category. I was looking at a leasing plan for the New England Development project in Boston for the Seaport, and they have a ton of these small, new athlet- ic wear-type companies. That's obviously a category that has taken off. Lululemon started the trend, then there were spin- offs and now there is a whole series of other retailers that have come up that have customer loyalty. It is like 25 years ago when everyone supposedly played tennis and people were shopping in their tennis outfits; now everyone is basically hanging out in their yoga gear, even if they don't exercise. Department stores were very successful, among other things, at providing basics for the family. I think it's been lopped off by derivative, successful retailers that hit those categories — wheth- er that trend lasts for five years or 10 years. Under Armour is a great example of that. Their brand has become a destination and so that category has hit the department stores' sales too. For cities like New York City, there's a tourism factor. Tourists are not spending money in a lot of retailers and the department stores like they were. Rosenthal: Sometimes retail is placed in the wrong geographic location. This is definitely a business about the right place. We're seeing a bunch of online business- es that want to open their first brick-and- mortar stores, and their second stores to really bring the consumer in to experience the product. We saw that with Sonos, who just opened in SoHo. We're working with a couple of brands who want people to come experience their product. While they do think that they'll be selling prod- uct in their stores, they really want to ed- ucate the consumer to create a stronger bond. When you go to Williamsburg, ev- ery store — while it might be one of 100 in the chain — does something unique, whether it's a used record store or a shop- within-a-shop or a coffee bar. Each one is something unique and I think that is what we're going to be experiencing in strong retail. I don't think retail is dead, I just think it's evolving. Swagerty: It's evolving and the best retail- ers today rely more on an omnichannel strategy to have online sales, really excit- ing websites and strong word of mouth. They're still going to need bricks-and-mor- tar stores and they're going to concentrate those in urban markets where they can capitalize on eyeballs and street visibility. We think that's where growth is going to come and tenant demand will be there for that. It won't be next to a 100,000-square- foot box in the suburbs. Spiegelman: The boroughs are still heav- ily under-retailed. We're very active in these markets and they're very under-re- tailed. We've got 2.5 million people liv- From left, Lisa Rosenthal, Lansco; Lee Spiegelman, Ripco Real Estate; and Ariel Schuster, RKF.