Saturday, March 31, 2012

Providence Town Center closing in on leasing goal

by Natalie Kostelni

" Three years ago, the sprawling Providence Town Center was a reflection of the toll the recession was taking on retail projects.

It was struggling to get tenants.

The center on 80 acres off Routes 422 and 29 was desolate but for a Wegmans and some other big box tenants including Raymour &Flanigan, Dick’s Sporting Goods and L.A. Fitness. But they only filled a fraction of the space — a combined 277,000 square feet out of the entire 760,000-square-foot center.

Other developers of large retail and mixed-use projects in the region were also hit by the recession, the credit crunch or a combination of factors that affected businesses. Tenants put plans on hold and others just weren’t comfortable expanding during the economic downturn.

Brandolini Cos., the Berwyn developer of the $200 million project, wasn’t anywhere close to reaching its goal to have the lifestyle center fully leased by October — in 2009. That was a goal Brandolini missed, but now that the economy is showing signs of a recovery, retail tenants and consumer spending are making a comeback.

“There’s definitely more activity, but it’s a new environment and new world. I think people, whether they are developers, brokers or tenants, are getting used to working in that environment.”

Five years ago there were more tenants than spaces to fill. Today’s it’s the opposite, Samtmann said. Because of that, landlords and tenants are working hard with each other to do deals.

In the case of Providence Town Center, the developer has been proactive but discriminating about which tenants it has leased space to.

“They need to be cautious of the tenants they put in there to maintain a certain level of rent, a certain level of traffic and synergy of those tenants.”

Around the end of 2010 and beginning of 2011, David Waterman, a leasing executive with Brandolini, started to see signs tenants were getting interested in leasing space again and got the green light to do more deals.

Tenants that recently opened at the center included Chico’s, White House Black Market, Charming Charlie, Tilly’s, Razr Bar, Massage Envy and Firebirds Restaurant. Last week, Brandolini signed on Jos. A. Bank men’s store for 4,500 square feet and Parmida Home for 9,500 square feet.

“We’re approaching a precipice at the center,” Waterman said. “We’re approaching 80 percent leased and opened.”

The company has another 10 percent or more under letter of intent and in active negotiations. By the end of the year, Waterman expects the center to be 90 percent leased and opened.

“We have 80,000 [square feet] to go,” Waterman said.

When Movie Tavern signed a lease at Providence Town Center in July 2010, the center was still weighed down by a lot of vacancy.

“It reminded me of when I worked at Paramount Studios and looking out at a back lot,” said John Herkser, president of the Dallas-based theater chain. “There were lots of buildings and no people.”

In spite of that, the company signed on for 30,000 square feet at the faux town center.

“We knew it was a good area and a growing area,” Herkser recalled.

Movie Tavern opened last spring and has been a success since day one, he said. Movie-goers not only come from nearby towns but also as far as Reading and Philadelphia. On most Fridays and Saturdays movies on its eight screens are almost always sold out. That was expected last weekend when it dedicated all of its auditoriums to showing highly anticipated “The Hunger Games.”

“It has just really exceeded our expectations,” Herkser said.

Wegman’s was a bit of a pioneer. It opened a 132,000-square-foot store in October 2009 when the recession was in full throttle and much of the center empty. It didn’t matter. Shoppers came in droves.

“We are very pleased with the success of our Collegeville store,” said Jo Natalie, Wegmans spokeswoman in an email. “Sales are outpacing company growth, and as more tenant spaces are filled, we anticipate that sales will continue to grow.”

The grocer does expect some sales will shift to its King of Prussia store when it opens in May, but that was projected.

When leasing was a challenge, Brandolini decided to seek out more regional and local retail tenants to fill portions of the second phase space. That was a shift in its initial strategy to concentrate on lining up only well-recognized national names and brands. But that’s as far as it veered from its plans. Well-capitalized, the company didn’t have to settle on tenants that didn’t necessarily fit what it had planned.

“We had a vision for the property to create a vibrant project that separated itself from the rest of the shopping centers,” Waterman said. “We held onto the long-term vision of the project and were willing to weather the storm.”
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