Mall at University Town Center 90 percent leased

cschelle@bradenton.comApril 26, 2014 

UNIVERSITY PARK -- Retailers are vying for space at the new Mall at University Town Center, taking shape on Cattlemen Road near University Parkway, officials from the mall's owners announced Friday.

More than 100 stores and restaurants are expected to come to the mall managed by Taubman Centers, based in Bloomfield Hills, Mich. Taubman is partners with University Park's Benderson Development Co., for the mall.

Robert Taubman, chairman, president and chief executive officer of Taubman Centers, announced Friday on an earnings call that the mall is on track to open Oct. 16 and is already nearly fully leased.

"The names of many tenants have started to become public through the permitting process. We're not announcing stores at this time, but we're over 90 percent leased and committed," Taubman said. "We're very pleased with the merchandising, which will feature over half our stores unique to market. We're excited to open the center soon and welcome you to come to the opening."

The building permit applications have revealed about a quarter of the store and restaurant names coming soon, including Apple, Everything But Water, Edward Benier, Lululemon Athletica, Omega, Sephora, Teavana and restaurants Zinburger Wine & Burger Bar to name a few, beyond the already announced tenants Macy's, Dillard's, Saks Fifth Avenue, BRIO Tuscan Grille, Capital Grille, Cheesecake Factory, Kona Grill and Seasons 52.

According to Taubman's projections, it means that the mall only has about 10 to 15 spaces to lease in the 880,000-square-foot, two-level mall.

The mall is also projected to meet its $315 million construction cost, he said, with an unlevered return of 8 to 8.5 percent on the company's share of the costs. Taubman funded 50 percent of the project and is responsible for management, leasing and development, and Benderson has the other 50 percent. As of Dec. 31, 2013, Taubman invested $91.6 million in the mall, according to the com

pany's annual report filed this week.

DCK Construction from Pittsburgh is the general contractor for the mall.

Lease rates and sales remain strong for Taubman. Taubman said the average rent per square foot for the quarter was up 3.6 percent to $50.21, compared to the same quarter last year. However, Taubman's 12-month trailing mall tenant sales per square foot decreased 0.7 percent to $712. He did not see this as a trend, but instead a one-time occurrence considering that figure had increased 17 quarters in a row.

"There are a lot of potential factors: the harsh winter, the four-week, five-week January retail calendar and of course, the late Easter," Taubman said. "As we look at our categories, women's ready wear, junior apparel and electronics are still hurting. In fact, excluding Apple, our sales trend for the quarter would have been nearly 200 points better."

Luxury retailers in women's specialty and fine jewelry also outperformed non-luxury retailers at its malls and shopping centers, Taubman said, but he did not see that as a trend. However, higher unscheduled store closures occurred this quarter, said Lisa Payne, vice chairman and chief financial officer, pointing to Sony as an example. Taubman tends to have more stores closures that are highly productive, but have higher rents, Payne said.

Florida strong for Taubman

The mall executive praised Florida, with its strong tourism and growth, as a strong market for its properties.

"Population growth in the United States is about one percent. It's nearly one percent compounded. The very basis of retail sales growth starts with that number. Why is the country so strong? It's because we have been able to continuously grow regardless of our base at about one percent a year," Taubman said. "Those people tend to be growing in markets that we're in -- places like Florida."

Strong tourism is also making Taubman properties attractive here, he added. Florida had record tourism in 2013 with 94.7 million visitors to the Sunshine State.

However, Florida properties were also impacted from the northern weather for the first quarter.

"So if you think of Orlando as an example, or Miami, where there's a huge tourist population from the northeast, there were plenty of families that had their vacations canceled or shortened as a result of planes that were canceled on them because of snow issues," Taubman said. "There is no question that travel was impacted in Florida as a result of the weather conditions in the Midwest and northeast."

Foreign policies are also affecting Dolphin Mall in Miami, Taubman said.

"In addition in Florida, we are seeing the impact of the Venezuelan policies," he said. "We have a significant proportion of people that live around the Dolphin Mall that are Venezuelan, and that country has limited the amount of cash and credit that people can spend in the United States on a yearly basis. You also have well-known and well-discussed in the media, issues in Brazil."

When open, the Mall at UTC will be only the third mall to open in the U.S. since 2006. The last mall that opened in 2012, City Creek Center in Salt Lake City, was also at Taubman property.

"We are the only one building new shopping centers out there," Taubman said.

Taubman is proceeding with other malls around the world, including announcing Gucci and Louis Vuitton will be coming to the Mall of San Juan in Puerto Rico and the company has broken ground in March on the International Market Place in Honolulu, Hawaii, and construction is expected to start this summer with a 2016 opening date.

The costs for the multiblock Miami Worldcenter project in South Florida is expected at the end of the year, Taubman said, and he continues to work with landowner Forbes Co. on the project. The project would create a retail and residential center along several city blocks in the city's former Skid Row.

Taubman has more than a billion dollars of available credit on its balance sheet, Payne said.

It seems unlikely Taubman will sell its stake in the Mall at UTC to raise cash, like the company did in January with its 49.9 percent stake in International Plaza, given its liquidity.

The company is not marketing any property for sale of its stake, Taubman said.

"We don't need to do anything to fund our capital pipeline," Taubman said.

Charles Schelle, Herald business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck.

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