PALM SPRINGS, CA-Don’t throw out all of your traditional notions about what kinds of tenants can co-exist peacefully and what kinds of retailers can serve as anchors. But you might want to toss some of your old ideas and embrace the concept of “Strange Bedfellows.” That was a big part of the message here yesterday from an industry panel of that name at ICSC’s Western Division Conference and Deal Making that tackled the concept of seemingly odd tenant pairings and unusual anchors.

Representatives from The Mills Corp., Westfield Corp. and Federal Realty Investment Trust cited examples ranging from a new 100,000-sf children’s attraction called Wannado City at Sawgrass Mills in Ft. Lauderdale, FL to a 250,000-sf indoor ski facility under way at the Meadowlands Xanadu retail-entertainment center in New Jersey. They also discussed combinations like Target and Nordstrom in the same center and a public storage facility co-existing as a tenant with traditional retailers.

Wannado City and the ski facility are both at Mills Corp. properties, Jay Buckley, that company’s SVP of leasing, described Wannado City as a miniature city for children that features a bank, restaurants, a fire department, its own street layout and a variety of businesses where children can simulate adult experiences like buying an airline ticket, taking a simulated flight, shopping, working at one of the businesses, and opening a bank account.

The indoor ski facility under way at Mills’ Xanadu property will be comparable to a 17-story, 250,000-sf facility that is already operating at Mills’ Madrid (Spain) Xanadu, Buckey said. The Mills SVP characterized Wannado City and the ski center as two of the most unusual examples that illustrate the company’s philosophy of attempting to differentiate its operations from other shopping centers and providing shoppers with new and unusual reasons for going to a mall and staying longer.

The public storage facility is at a Federal Realty center where there was low-level space that didn’t work for traditional retailers which was ideal for the storage firm and fits compatibly with the rest of the property, according to Chris Weilminster, the REIT’s VP for anchor tenant and mixed-use leasing. Weilminster also cited the example of a hospital branch at one of Federal Realty’s centers that is one of a number of non-retail businesses that the REIT and other owners have turned to as alternatives.

Despite the new and different types of anchors and tenant combinations appearing in centers today, however, “You cannot forget the department store,” said Joseph Tagliola, EVP of leasing for Westfield Corp. in Los Angeles, who said the traditional mall anchors remain a big draw for many shoppers. Successful formats like Target that “traditionally are not considered as anchors,” may actually succeed quite well, Tagliola said, adding that stores like Target and Costco may blend well as co-tenants with upper-end chains, even though conventional thinking is that they appeal to very different types of shoppers. Several panel members referred to just such a combination, a Nordstrom coming in late next year and a Target scheduled for late 2006 at the Irvine Co.’s Irvine Spectrum Center in Orange County, CA. Panel moderator Jill Bensley, president of Ojai, CA-based JB Research Co., cited surveys showing that significant percentages of customers shop both at discount stores and at higher-end department stores.

Besides describing how unusual co-tenants can exist peacefully, the panel members agreed that anchors today don’t always need to be huge stores, citing examples like Apple Computer retail stores as a big draw for shoppers and even businesses as small as a Starbucks shop as anchors for certain properties. “You can drive 30,000 people a month through an Apple store,” said Jonathan Siegel, a partner at Open Realty Advisors in Dallas, TX. “That’s an anchor.” The panel on co-tenants was one of a day-long series of sessions and speakers at the ICSC event, which began Tuesday and runs through today.

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