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Tuesday, December 15, 2009

What's Next for the Newport Pavilion?



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:
  1. 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 Logan's Roadhouse 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. 
  2. 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.
  3. 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.
Additionally, the earliest Target could be opened is October.  The generally only open in March, June, or October and with the lead time for a June opening past the window on October is closing as well.  If we don't see the building rising soon this could be more clouds gathering on the horizon.

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.

3 comments:

  1. Good post, Darrin. These points confirm the feeling of those on the Newport Pavilion Fans page on Facebook as well, who have been passionate about the Kroger opening and future development, yet are pessimistic about the Target schedule. Also, wondering if there's a list of the confirmed retail and restaurants. Some hints from Newport, the developers, whomever... about the signed and sealed retail would help instill some additional excitement about the Pavilion and perhaps have a domino effect on those businesses who are on the fence about signing on.

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  2. Jason: How in the heck some someone be "passionate" about a store opening? You can be passionate about music or cars or weight lifting but a store opening?

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  3. Donna, did you see the line at Krogers last Thursday morning? It's gotta take a little passion to stand out in the cold for a Kroger opening.

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