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VOL. 35 | NO. 4 | Friday, January 28, 2011

'Ideally situated' for high-end shoppers

The Mall at Green Hills continues upscale evolution

By Bill Lewis

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It’s usually bad for a shopping mall when stores don’t renew leases and close their doors. It’s even worse when one of them is a beloved institution like Davis-Kidd Booksellers. But for the Mall at Green Hills, it’s a sign that times are good and getting better.

Shoppers at The Mall at Green Hills can no longer buy a book at Davis-Kidd, home furnishings at Pottery Barn or a pair of discount shoes at Payless, but they can purchase an $870 pair of sandals and a $2,800 handbag at Louis Vuitton or a $35,000 diamond and platinum necklace at Tiffany & Co. Beginning Sept. 16, they’ll be able to shop at the Nordstrom department store now under construction.

That’s the way the mall’s owner, Davis Street Land Co., likes it.

Once an ordinary neighborhood shopping center where Nashvillians could buy a hammer and nails or sewing needles and hem tape, the mall and the surrounding area have been transformed into one of the most upscale retailing districts in the entire Southeast. Some stores won’t survive the transition, but those that do will be in the heart of a neighborhood with some of the highest incomes in the region.

“They are in the bullseye of one of the highest income levels in the Southeast,” says Tom Frye, managing director of CB Richard Ellis Commercial Real Estate. “Why is Pottery Barn at Cool Springs and not in Green Hills? It’s because of that demographic.”

With just 738,000 square feet of leasable space, the mall is a tiny universe where the needs of the retail and the commercial real estate collide. Davis Street has focused on attracting luxury retailers like Tiffany, with products that sell for a high markup. A store that sells a high quantity of goods at a low price – even a popular bookstore or discount shoe retailer -- doesn’t fit that business model.

The reason, says Frye, is that a store like Tiffany pays more rent than a Payless, even if it has the same amount of space. Malls aren’t like office buildings, with each tenant paying pretty much the same rent for each square foot of space. In a mall, rent is calculated as a percentage of sales. When sales go over a certain amount, that month’s rent also goes up.

“You’ve exceeded expectations and the landlord ought to share in that,” Frye explains.

When a store such as Pottery Barn’s lease expires, that creates an opportunity for the mall to attract retailers that are likely to pay higher rents. In this case, the mall is subdividing Pottery Barn’s space for high-end retailers Michael Kors and Tory Burch.

During 2010, the mall announced eight new store leases, including True Religion Brand Jeans, and several lease renewals including J. Crew clothing store.

“The Mall at Green Hills will have securely positioned itself as the premier shopping destination in the Midsouth, a status punctuated by the fall 2011 opening of Tennessee’s first Nordstrom store at the mall,” Hank Woerner, the mall’s general manager, touts in a news release.

Higher rent payments obviously are good for the mall, but Frye says they aren’t the only reason for targeting luxury retailers. Those stores are the reason shoppers from high-income neighborhoods in Davidson and Williamson counties come to the Mall at Green Hills instead of other malls, such as CoolSprings Galleria in Franklin.

Davis Street officials did not respond to requests for comment, but a statement on the company’s website seems to confirm Frye’s theory.

“The Mall at Green Hills finds itself ideally situated in the heart of Nashville’s most affluent communities … including Belle Meade, Brentwood and Forest Hills,” the company explains. “The population in the immediate trade area … is 585,066 with an average household income of more than $79,238. Nearly 24 percent of the households earn more than $100,000.”

At the Hill Center, the outdoor “lifestyle center” near the mall, the focus is on upscale shopping as well.

“Luxury or higher-end/quality is a target and is in keeping with the overall Green Hills shopping district,” spokeswoman Amy Gray says.

“The Hill Center has worked hard to create a balanced blend of unique local, regional and national retailers and restaurants, different but complementary to the mall’s luxury high-end presentation. It provides a true upscale Main Street environment which affords each store more individuality that a mall setting,” Gray adds.

CoolSprings Galleria has its own strategy, casting a broad net to attract shoppers from luxury to low-end.

“CoolSprings Galleria has many upscale retailers as well as retailers that are perfect for the cost-conscious, making CoolSprings Galleria a very desirable shopping destination for all customers,” says Jennifer Cardwell, the mall’s spokeswoman.

Where The Mall at Green Hills has added luxurious touches such as marble and granite, CoolSprings Galleria has added amenities that you won’t find in Green Hills, including the largest food court in the Midstate, a play area for children and soft seating areas where Cardwell says men can watch sports on TV while their wives shop.

The Cool Springs area has something else that Green Hills lacks – lots of restaurants. Green Hills mall is home to The Cheesecake Factory. The surrounding area features F Scott’s and a number of other establishments, and Hill Center is home to several restaurants. But Cool Springs boasts more than 200 dining choices, ranging from fast food to Jasmine Thai restaurant, Stoney River Legendary Steaks, Outback, Bonefish Grill, P.F. Chang’s, J. Alexander’s, and Sperry’s, to name just a few.

The reason? A number of companies, including Nissan North America, have headquarters or offices in Cool Springs. Also, land is less expensive in Cool Springs than Green Hills.

Cool Springs possesses something Green Hills lacks – plentiful parking.

So you can’t find a Stoney River steak in Green Hills, but you can shop at Brooks Brothers. The mall is making the most out of a very limited amount of space.

“If you go back 10 years and take a snapshot of the tenants, you wouldn’t think it’s the same mall,” Frye says. “It’s clear there was a game plan from the very beginning.”

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