New Haven Register (Sunday) (New Haven, CT)
Flexibility crucial to planning in atypical environment
We have entered into the fourth quarter of the year. Typically, many organizations in this time are engaged in strategic planning activities for the new year and beyond. However, 2020 has not been a typical year.
We have confronted COVID-19-related shutdowns and the associated supply chain constrictions and modifications. Personal losses have touched many. There have been changes in customers’ acquisition habits. What was a river of technology has become a tidal wave of virtual engagement with customers, suppliers and teammates.
Additionally, as we look forward to next year, interest rates seem as though they will remain low for the foreseeable future. The income of the unemployed may continue to be constrained due to the lack of a stimulus package from the federal government and slow rehiring. The above economic factors — plus more specific ones appropriate to your organization — will probably continue to be in a state of flux into next year. In this type of environment, your strategic planning must become flexible enough to adjust to the dynamic environment we are all experiencing.
In my work with clients, we usually spend some time at the end of a strategic planning activity with a little time to discuss contingency planning. However, at this time, I believe that contingency planning is the new strategic planning.
Typically, a key element of contingency planning is to engage in scenario planning. Scenario planning is fundamentally modeling
field Trumbull have proposed building apartments to diversify their sources of revenue. And Westfield Trumbull is among those attempting other nontraditional mall draws with its SeaQuest interactive aquarium.
Macerich converted a former Sears store this past summer into a hospital clinic at a mall outside Albany, N.Y. And in September 2019, Norwalkbased Stew Leonard’s established a grocery store in a onetime Sears at a New Jersey mall owned by Brookfield, weeks in advance of Brookfield opening The SoNo Collection mall.
‘Really good space opening up’
Danbury Fair mall owner Macerich lost $22 million between July and September, while buying time on a $191 million mortgage coming due that is secured by Danbury Fair. Macerich now has until April to pay off the loan which carries a 5.56 percent interest rate, by far the highest of any other mall in the Macerich portfolio of more than 50 nationally.
Danbury Fair enters the 2020 holiday shopping
season with about four of every five storefronts filled, including the spacious top level of a former Forever 21 store. Dick’s Sporting Goods expanded recently into the space, giving Dick’s an interior gateway to the mall that its original layout lacked.
While a second major hole is being filled in the Danbury Fair lineup with the arrival next month of Barbarie’s Grill in space vacated last May by Brio Tuscan Grille, the mall has yet to state its plans for its
Lord & Taylor anchor pad as the department store chain conducts clearance sales in a bankruptcy proceeding. Lord & Taylor is also shuttering its standalone department store in Stamford and mall stores at Westfield Trumbull and Westfarms in Farmington.
The pandemic mall closures brought leasing “to a screeching halt” across Macerich properties nationally, in the words of CEO Tom O’Hern who spoke with investment analysts Thursday on a conference call. But retailers have since adjusted, he added, and he anticipated new deals in the works next year.
“It’s interesting — our top 20 properties have normally been ... 95 percent, 96 percent leased; and now we see them 92 percent, 93 percent leased,” O’Hern said. “With that said, really it’s the first time in years we have some real good space opening up in some of our top-tier centers. And that hasn’t happened in a while, and that’s really piqued the interest of some of these retailers that want to be opportunistic.”
Still, Danbury Fair has yet to reveal any takers for its former Safavieh mall store spanning two levels adjacent to Lord & Taylor; nor for the lower level of the former Sears store at the opposite end of the mall, with Primark having taken the top deck three years ago.
“There’s been a ton of focus on traffic and the fact traffic is down compared with last year — and it is, there’s no arguing that,” said Doug Healey, senior executive vice president of leasing for Macerich. “However, I struggle with the notion that traffic seems to be perceived as the sole means to a retailer’s success. Why aren’t we talking more about conversion or sales or the combination of both? Despite less traffic, the Macerich portfolio is seeing tremendous success in the reopening of stores that were forced to close due to COVID, like Primark at Danbury being the No. 1 store in its region since reopening.”
As Barbarie’s Grill hires up for a Danbury Fair opening in early December, the SoNo Collection will be nearing the long-awaited activation of its West Avenue facade that greets motorists arriving from Interstate 95, with the opening of Yard House. The sports pub chain’s arrival comes more than a year after developer Brookfield Properties opened The SoNo Collection’s concourses with only a fraction of its full contingent of stores.
On Friday, the CEO of Brookfield Properties sold analysts “the worst of the economic shutdown is now behind us” — but with the company’s 2020 losses topping $2 billion heading into the final three months of the year. He added an “80-20 rule” could come into play in Brookfield cedes control of a percentage of retail properties for which it is unable to reach agreements on refinancing.
“We are beginning to see sales that are not only approaching normalized levels, but over-performance in some markets,” said Brookfield Properties CEO Brian Kingston, during a conference call. “Many of the weaker balance sheets or more-challenged retailers, they have hit the wall and they have gone bankrupt ... I think what we are left with now is a much stronger field of tenants, with businesses that have largely stabilized.”