Discount and specialty retailers alike are interested in opening stores in Michigan, say local developers, brokers and mall managers who attended this year’s International Council of Shopping Centers conference.
It’s a departure from the mood in 2008 and 2009, when discount retailers such as Dollar General and Auto Zone were among the only businesses looking to grow.
National retailers at May’s four-day conference in Las Vegas were eager to expand in Michigan, where retail sales have been relatively strong compared with the rest of the country, Metro Detroit retail real estate professionals said.
“Retailers are beginning to commit,” said Bill Taubman, chief operating officer of Bloomfield Hills-based Taubman Centers Inc.
“People were there doing business,” said Earl Clements, a Grand Rapids-based broker with Colliers International and director of the Michigan chapter of the International Council of Shopping Centers. Contrary to previous years, Clements said, “there were leases actually being signed.”
Taubman said the company’s four Michigan properties — Twelve Oaks in Novi, Great Lakes Crossing Outlets in Auburn Hills, The Mall at Partridge Creek in Clinton Township and Fairlane Town Center in Dearborn — continue to perform well and attract tenants.
This year’s more upbeat mood built on last year’s turnaround, with many retailers looking at prime and expensive leasing space, said Nathan Forbes, managing partner of The Forbes Co., the Southfield-based owner and developer of the Somerset Collection in Troy.
Luxury retailers such as Gucci, Louis Vuitton and Burberry don’t attend the national mall gathering, holding their meetings in New York instead, but other upscale mall staples including Williams-Sonoma and Abercrombie came to this year’s conference ready to do business, Forbes said.
“Detroit as a whole is doing very, very well,” Forbes said. “Our sales are good. Confidence is back.”
Melinda Jensen, director of business development for the Detroit Economic Growth Corp., met with retailers who were willing to hear her message that Detroit is ripe with opportunity and affordable real estate.
“There was a different type of energy on the conference floor,” Jensen said. “In some instances, you had to actually stand still and wait for crowds to go by. I hadn’t seen that before.”
“The goal is to always market the city of Detroit and the state of Michigan,” she said.
The retail climate at shopping centers seems to be improving nationwide, judging from the increase in conference attendance and deal-making in Las Vegas. Attendance at the shopping center conference has strengthened during the last two years, after falling 39 percent in 2009 as the industry contracted and financing for new deals ran dry.
But the improvement occurs against worry that the U.S. economy is stalling. Sales among U.S. retailers fell 0.2 percent in May, the Commerce Department reported Tuesday, the first decline after 10 consecutive increases.
That concern wasn’t evident in Las Vegas, where past shopping center conventions seemed to stigmatize the Great Lakes State, which suffered for many years from a single-state recession, Clements said.
“You’d walk into a retailer’s booth and as soon as they saw your name tag, they’d say, ‘We’re not doing anything in Michigan,'” he said. “This year, I didn’t get that at all.”
Target, T.J. Maxx, PetSmart and Kohl’s are some of the retailers setting their sights on Michigan, conference goers said. Restaurant franchises growing here include P.F. Chang’s China Bistro, California Pizza Kitchen, Qdoba Mexican Grill and Subway.
“There is a much different attitude toward Michigan,” said Cynthia Kratchman, a broker with Landmark Commercial Real Estate Services in Farmington Hills. “We didn’t get that negativism (from retailers) that we had for the last two or three years.”
The country added 259 shopping centers last year, marking the slowest industry growth in four decades, according to CoStar Group Inc. This means that supply and demand will start to balance as the retail economy recovers, said Michael Sullivan, senior vice president of asset management at Farmington Hills-based real estate investment trust Ramco Gershenson.
“With new development on hold, good centers with existing vacancies are at a premium,” Sullivan said.
“In many cases, these national retailers have recognized the turnaround in Michigan’s fortunes and acknowledged the excellent demographics here and are starting again to open stores here.”
By Jacyln Trop, The Detroit News