Queens Mall Tops All

SANTA MONICA, CA-The Macerich Co.’s expanded Queens Center has already produced JC Penney’s highest-grossing store in the Continental United States and Macerich expects the 1 million-sf mall in the New York borough to rank among the top two or three in the country, with $1,000 per sf in sales. The performance of the Queens Center, which Macerich is expanding from its former 620,000 sf, ranked among the highlights of the retail REIT’s third quarter quarterly earnings report conference call Friday. The shopping center owner and developer also provided updates on the progress of its other projects and reported a drop in net income along with an increase in funds from operations.

“The big story that we have now in the development arena is Queens Center,” said Arthur Coppola, president and CEO of Macerich. He said the company expects that the 1 million-sf super regional center will be “if not the highest sales per sf shopping center in the US, certainly one of the top two or three,” with sales of $1,000 per sf. Macerich opened the first phase of the Queens expansion in March with the relocation of JC Penney from the existing mall to a new 200,000-sf store. “JC Penney is reporting that this is its highest volume store in the Continental US,” Coppola said. The Queens Center, which is slated for a grand opening Nov. 19, is 98% leased and by year end will be 91% open for business, Coppola said, with the balance of the center’s expansion expected to open in the first or second quarter next year.

Coppola reported that Macerich expect5s to close in about 10 days on its $135 million purchase of the 1 million-sf Fiesta Mall in the Phoenix area. “We don’t usually talk about acquisitions before they close, but it’s been in all the local press,” the Macerich CEO said. The company sees big potential in the Phoenix marketplace, where the population of 3 million is expected to double in the next 15 years, compared with a projected population growth of 5 million in all of California over the next 30 years, Coppola pointed out.

In other updates, Macerich reported that it is pursuing entitlements for the addition of a 92,780-sf lifestyle retail center at Fresno Fashion Fair in California, is expanding Washington Square in Portland, OR by adding 80,000 sf of shop space, and is planning the 29-acre Phase I of its San Tan Village in Gilbert, AZ. San Tan Village will be a 120-acre regional mall that will be part of a 500-acre master planned project. The mall ultimately will comprise 3 million sf of retail space, including a Wal-Mart in Phase I in 2005 and a Sam’s Club later in the year. Retailers that have signed leases for the project include OfficeMax, Jo-Ann Superstore, Bed Bath & Beyond, Marshall’s and DSW Designer Shoes.

In the earnings portion of its conference call, Macerich reported that net income dropped to 29 cents per share in the third quarter ended Sept. 30, compared with 69 cents in the comparable quarter last year, but the difference consisted mainly of a large gain last year from the sale of the Bristol Center in Santa Ana, CA. FFO rose to 95 cents per share in the quarter versus 85 cents per share in last year’s third quarter. Same center sales for the quarter rose 5.5%, with total sales of $128.4 million in the quarter, up from $117.7 million in last year’s third quarter.