Place Making - Five Questions for CenterCal’s Fred Bruning
Fred Bruning, CEO of CenterCal Properties, has more than four decades of experience in Utah real estate, having started as legal counsel for Sears, Roebuck and Co. in 1977 with responsibility for their real estate portfolio in the Western U.S.
CenterCal has 12 offices in five western states, and 120 employees managing 20 shopping centers. The company has a $3 billion portfolio and an additional $1 billion under construction. We recently caught up with Fred to get his thoughts on retail trends, mixed-use development, and the Utah market.
What’s CenterCal’s footprint in Utah?
We’re best known for Station Park in Farmington, Utah. It’s got 1.8 million square feet of retail, restaurants, theater, hotel, and class A office space, all on 62 acres.
We’ve got a smaller operation at Canyon Corners, near the outlet malls in Park City. It’s got retail, residential, and a 40,000 square foot Whole Foods store.
And we’re really excited to be working on the Mountain View Village in Riverton. We just broke ground on Phase 2 last August, and when it’s complete, we will have 1 million square feet of retail, restaurant, office space, gym, theater, and hotel options on 85 acres. The use of technology to create a gathering place and a sense of community here is going to be remarkable. The landscaping will also be impressive; we’re planting 1,700 trees throughout the development, including some that are 40 feet tall.
Jordan Landing is another well-known location we are involved with, though on a limited basis. This is a 500-acre master planned community with close to 2 million square feet of shopping and dining options.
What kind of investments do the first three developments represent?
Station Park – which opened six years ago – represents a $320 million investment. Canyon Corners is about three years old and represents $80 million. When it’s complete, Mountain View Village will be a $400 million investment. We’re pleased that Phase 1 is open and anchored by a Harmon’s store, and the retail component in the development is already 94 percent leased.
What changes in the retail market have you seen over time?
Don’t believe people who say retail is dead, but it is evolving because of changing demographics. The traditional concept of a mall is out of date. Malls used to prohibit gyms, restaurants, movie theaters, office space, and residential. There was a big-box store as the anchor.
Now more women are in the workforce and in the gym. Families are dining out much more frequently. You used to go to a restaurant only if there was a graduation or a funeral. Now families are dining out several times a week.
As a result, the new model of mixed development has a retail element, a food element, a fitness element, and an entertainment element – such as a theater, a comedy club, or game center.
You can see it in the sales numbers. A traditional department store is lucky to make $200 to $250 per square foot in annual revenue. A restaurant can hit $1,000 per square foot, and a specialty apparel store can land in the $700 to $1,000 per square foot range.
Can you elaborate on “creating a gathering place”?
Retail is becoming more experiential. It’s really just returning to a 2,000-year-old model. You think about the marketplace in Rome during Emperor Trajan’s time. That marketplace had 150 stalls selling everything under the sun. You could drink tea at an open-air café, watch dancers, listen to music, go to the gymnasium, or hear orators in the square. The marketplace was a place for the community to gather.
The fountain area at Station Park is a just an extension of that “gathering place” model. You’re in an open air retail area, where you can see the water display, attend a concert, go skating, or have a nice meal. The technology we’re putting into place at Mountain View Village is along the same lines. It’s no longer just retail; we want to give you thirty different reasons to visit our properties.
When we consider a new location, I like to ask the mayor or city manager “Where’s your gathering place? What would it look like?” We’re in the business of place making. We want to create meaning and surprise and help bring families and communities together.
What’s the role of office space and residential going forward?
These days, people are more apt to like close, walkable options to their places of work or residence. That’s part of the trend toward adding office and residential elements to developments. The well-designed, mixed-use development honors all the components.
Station Park offers 400,000 square feet of office space out of the 1.8 million square foot total. Mountain View Village is going to have 400,000 square feet of residential, 800,000 square feet of retail, and 250,000 square feet of class A office space. It’s a key strategy for us.
What are your thoughts on the Utah market?
Utah and Idaho are both more profitable markets than California, Oregon, and Washington. Restaurants in California for example may have more gross revenue than ones in Utah, but the margins are tighter, due in large part to labor regulations.
Twenty years ago, retailers passed the Utah market by. Folks said you couldn’t successfully do retail here. They were wrong. After we opened Station Park and saw how well people were embracing the concept, we played Toby Keith’s “How Do You Like Me Now?” over the sound system at the fountain, just to reinforce the idea that Utah’s communities do, in fact, deserve the best of the best.
I think in the next ten years, you will see the best ideas in multi-use developments and experiential technology coming to Utah. Hundreds of store owners are putting Utah on the list. It’s a business-friendly, growth market.
CenterCal Properties is an Ambassador-level investor in EDCUtah. For more information, visit www.centercal.com.