So Kroger made a big splash at the Newport Pavilion with their grand opening last week and the question that may arise is 'what's next for the Pavilion?' The following represent some significant challenges for the development:
- The main problem with tenants and Newport is the length of the construction and delays. You may have read of past commitments from retailers like
which had a signed lease but terminated it because of an out clause for delays ( it didn't hurt that they pulled back on their expansion plans). Had the site been completed sooner, they may not have had the right to terminate. Fifth Third also had a signed lease and they terminated.
- This leads into the next big problem for the site - the current economy. Best Buy for instance has shown interest in the site but the glut of available sites and buildings is depressing rents. Instead of the $13/ square foot that Newport may want for a retailer like Best Buy the retailer is finding deals in the $8/ square foot range and not necessarily in the Cincinnati area. The Newport site has to not only compete with sites in the Cincinnati area but across the US. If a retailer limits its expansion plans to 20 locations in 2010 they are going to find the best deals in under served markets regardless of where they are.
- The last and probably least important issue are the issues with the Kenwood site. These have been well chronicled and the final chapter has yet to be written. Undoubtadly this has to be yet another detracter. The last thing any retailer wants to consider is a store fully stocked and not able to serve customers because of maintenance or site issues.
With all that being said there is a bit of a silver lining and that is the location and incredible traffic that Kroger has generated. The old real estate mantra is 'location, location, location' and this site has it in bunches. I hear it from a local retail consultant that retailer interest in the site is still strong and hopefully with completed site infrastructure and a recovering econcomy retailers start hopping on board.