Open-Air Centers Evolving

There are 47,000 open-air centers in the United States, compared to 1,100 enclosed malls, according to ICSC research. Power centers, which count home-improvement, electronics and other big boxes as anchors, accounted for 43% of the new gross leaseable area that came onto the market during the first 10 months of last year.

The industry name for open-air centers used to be "strip" centers, but now, with lifestyle, power and mixed-use property types popping up throughout the years, that term has changed, said Michael Kercheval, ICSC's president and CEO. "Clearly, now the image has been updated," he said.

New tenants, such as department stores like J.C. Penney, are choosing these developments instead of malls for many of their new stores. And the evolution of grocery stores into national high-end chains like Whole Foods, has made the tenancy in many open-air centers more luxurious.

Growth and evolution have also brought some problems for shopping-center owners. While the Whole Foods sector of supermarkets has grown, so has the market share of discounters like Wal-Mart, hurting some traditional grocers, such as Albertson's. The jury is also still out on whether last year's merger between Kmart and Sears, Roebuck & Co. will succeed or lead to store closings, said Charles Grossman, a managing director at ING Clarion partners and ICSC's chairman.

But if last year was any indicator, according to ICSC research, retailers are shutting fewer units. There were 4,199 closures in 2005, down 43% from the previous year, and a large chunk of those were from Casual Corner, which started shutting 525 stores last year, and the closing of about 300 stores by troubled grocer Winn-Dixie. "We believe that the worst is over," Kercheval said.

About 930 people are registered to attend the Conference on Open-Air Centers, which continues through Friday. Log onto GSR through Monday for coverage of the event.