Retail plaza makeovers try to woo shoppers, tenants

Rochester Business Journal
September 12, 2014

Shopping plaza face-lifts are not cheap. But if they create an inviting environment, shoppers—and tenants—will come, developers say.

Dennis Wilmot, senior vice president of leasing and retail development for Wilmorite Management Group LLC, perceives a correlation between a landlord making improvements to a plaza and potential tenants being willing to locate their businesses there.

“It provides an attractive option for retailers,” Wilmot says. “It’s easier to market a vibrant property than a dead, tired one.”

Research shows that while consumers may shop through various channels, a physical store still is important. In its July survey of 2,500 consumers, management consulting firm A.T. Kearney found that stores play a crucial role in online purchases. Two-thirds of customers purchasing online use a physical store before or after the transaction. The store makes a significant contribution to converting the sale, the report states, even though the transaction is eventually handled online.

At Pittsford Plaza, Wilmorite first undertook improvements around 2005 when Chase-Pitkin Home & Garden Centers announced it was closing its stores, including the 120,000-square-foot one there.

“That served as the genesis for redevelopment at that section of the plaza,” Wilmot says.

In addition to overhauling the space vacated by Chase-Pitkin—which includes the area where the Cheesecake Factory is now—Wilmorite undertook facade improvements throughout the plaza, which opened in 1962. The entire project cost some $15 million.

The upgrades, along with the location of Pittsford Plaza on Route 31 in an affluent area, have helped make it an attractive option for popular retailers new to Rochester, including Trader Joe’s, which opened there in 2012.

The plaza has some 450,000 square feet of leasable space and is 98 percent occupied, Wilmot notes.

“Consumers have seemed to embrace what we’ve done,” he says.

While improvements are needed at times, careful consideration should be given when thinking of a major plaza overhaul, since it can be expensive.

“It’s important for landlords to commit the necessary capital to keep improving,” Wilmot says. “You need to determine if something like an outdated look (increases) your ability to attract tenants you’d like to see.”

The need for developers to update facilities, whether that involves new facades, parking improvements or additional amenities, is individual in nature.

“Every landlord looks at it differently,” Wilmot says. “We have tried to balance our capital expenses with a desire to (get) tenants to enter the Rochester-area market. I think we’ve been successful to date.”

Wilmorite is not the only local developer making improvements at shopping plazas. Frontier Management of New York Inc. is renovating Suburban Plaza in Henrietta, spending some $2 million on improvements at the 125,000-square-foot site. The DiMarco Group also is involved in a number of local plaza upgrades.

Renovation and reconfiguration of retail centers is a national phenomenon as well. A recent report by the International Council of Shopping Centers, a New York City trade organization, discusses the trend of integrating different types of uses within a plaza to achieve higher occupancy and higher rents.

Andy Hart, business segment manager at Bergmann Associates, says a developer also can get higher rents with a good mix of tenants. Plaza developers today are looking to provide dining and entertainment options as well as other customer amenities to enhance the shopping experience, he says.

Hart has worked on the design of improvements at retail centers in Rochester and outside the area. He says sometimes upgrading plazas and their facades can produce more business for underperforming tenants. Financial considerations are always important.

“We want to make as many improvements as we can without breaking the budget,” Hart says.

Getting the projects done in a timely manner can also be a challenge, he notes. A number of factors can affect the timing, from seeking municipal approvals to discovering a need for unanticipated work during the remodel.

“When dealing with an existing structure, you don’t know what you will get until it comes down,” Hart says.

John DiMarco, president of the DiMarco Group, says the main goal of upgrading a shopping plaza is making it more appealing to shoppers. At his firm, there is an emphasis on making shopping centers more pedestrian-friendly, he says.

The DiMarco Group bought Perinton Square Mall in 2013. The 17-acre plaza at Routes 31 and 250 has nearly 194,000 square feet occupied by a mix of grocery, dining and other retailers. Tenants include a Tops Friendly Markets store, Rite Aid Pharmacy, Scott’s Hallmark and Bill Gray’s restaurant.

Improvements to Perinton Square Mall have begun and will continue into next year. The upgrades include a new look for the dated facade, as well as sign and pedestrian improvements.

Like Wilmot, DiMarco says a developer has to balance the work needed at a plaza with the cost. At Perinton Square, for example, there are no physical or structural problems with the exterior, but the colors and style are so outdated that they could be a deterrent to drawing in new tenants.

The plan is to give the property a timeless look, DiMarco says; one that “won’t go out of style before it wears out.”

When making changes to a plaza, the developer has to take into account ideas from town representatives, shoppers and tenants.

Getting everyone on board can be a challenge, but it is rewarding in the end, DiMarco says.

“It’s fun to do, and when you get it all done, it looks great,” he says.

DiMarco’s firm also has recently upgraded its 280,000-square-foot BayTowne Plaza in Penfield and is renovating the 140,000-square-foot Tops Brighton Plaza on South Clinton Avenue, which included the expansion of the Tops store there.

The Tops Plaza was built in the early 1980s. Improvements there have been ongoing and are expected to be completed in the fall. When done, the project will have cost nearly $9 million.

While the longevity of a plaza renovation depends on the property, DiMarco says it can last up to 25 years if done correctly.

“You hope you make the right decisions so it will stand the test of time,” he says.