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CHICAGO-The International Council of Shopping Centers’ recent Fall Conference here brought together about 900 professionals in the leasing, marketing and management sectors of the business. One of the speakers at the conference’s many sessions was Carol O’Grady, VP of regional marketing and specialty leasing manager at Jones Lang LaSalle. O’Grady spoke to attendees about the marriage between marketing and specialty leasing in the mall business. Her firm operates 58 malls across the country as a third-party manager where both are incorporated. O’Grady and Carol Sullivan, VP of marketing at JLL, spoke with GSR Ticket about the relationship between marketing and specialty leasing as well as trends in those areas.

GSR: How are specialty leasing and marketing related?

O’Grady: I think the core relation between specialty leasing and marketing is driving the product. Specialty leasing brings different types of merchandise choices to the retail property, and with marketing we’re always trying to mold the product to give consumers what it is they’re looking for. So when marketing and specialty leasing work together, it really is a perfect marriage.

Sullivan: One of the things that’s happened over the past few years in the industry is that the bottom line is becoming more important. We’re all NOI driven, and there are lots of things marketing has in its skill sets that it can pass over and help promote the center or the specialty leasing people. We also, because of our background with such things as sponsorship, know how to market ourselves, the product and the center, so therefore we’re a good resource for specialty leasing. We work very closely also with leasing as one of our main platforms.

GSR: How is specialty leasing different for a third-party management firm than for an owner-operator?

O’Grady: I think the key difference is our flexibility. When you look at the larger shopping-center owners, they have corporate-standard programs that they implement at all of their properties across the board. With Jones Lang LaSalle, it’s all about the client, what their goals are and the particular shopping center. We offer corporate programs, but the difference is that we can make adjustments depending on what those needs are for that property owner. For us it’s all about the client.

GSR: Is that the biggest challenge you face, dealing with these different owners?

Sullivan: I wouldn’t call it a challenge. It would call it exciting and interesting, because it gives us opportunities to use our creativity and step outside the box. Many of our clients come to use because of our flexibility and our ability to look at things differently. It’s not a rigid box they’re stepping into.

O’Grady: The world of retail changes every day, so we have programs that are flexible and change along with retail. It allows us to stay ahead of the curve a little bit.

GSR: Are there ways that specialty leasing has changed a lot over the last few years?

O’Grady: One of the advantages of specialty leasing is that it gives each property a unique character. It works with the local business people and entrepreneurs that are always on top of what the latest trends are. We have entrepreneurs at our properties who are the same owners, but their product changes because they’re on top of what the retail trends are.

Sullivan: And it gives us the opportunity to provide a wider variety of offerings in the center and to test market products to see whether we can incubate them into permanent tenants. The nationals are great for the shopping center, but you also need an eclectic mix of mom and pops to make a well-rounded merchandising mix. If you’re in different types of markets, whether they be ethnic or low-income, those types of opportunities in specialty leasing are unbelievable because you’re able to offer things to that customer base that you might not be able to get a national retailer to do.

GSR: Have things changed much in the kiosk business?

Sullivan: When the specialty leasing program started, visuals were never a big thing. The third-party management companies are very focused on that now because it’s presentation in the common area, and it makes a difference. As far as whether we see more or less, it really depends on the owners as to how many they want in the center. That’s obviously a bottom-line driven kind of thing. We’re seeing more incorporated where specialty leasing may not just be a kiosk. It can be advertising on the side of an elevator or floor graphics. All of that is considered additional revenue that goes to the bottom line. That’s where marketing and specialty leasing also come together.

GSR: Do you ever see in-line tenants in a center make the move into specialty leasing?

O’Grady: For years we’ve been working with department stores that may want to do a seasonal store outside of their store, with holiday décor, or toy stores selling holiday merchandise.

Sullivan: We also have cosmetics departments,like Clinique, come out and do kiosks in the mall. When I was a marketing manager at one of the large shopping centers in San Diego, we actually had national retailers going out in the center. Plus we had food court tenants moving to other areas of the center.

GSR: Are there any hot new concepts you’re seeing in the area that you weren’t seeing before?

Sullivan: Crocs [rubber clog-like shoes] came up in a big way. All of the hair jewelry, with rhinestones, has come in.

O’Grady: I think the designer purses are huge, you see those everywhere right now. A lot of accessories, especially women’s accessories, are big. One of the newer ones is hair weaving, which is a new way to pluck your eyebrows, it’s the new replacement for hair waxing. That’s on the carts and kiosks of shopping centers. Tattoos are hot right now.

GSR: Is there ever any concern that the specialty tenants will compete with the in-line tenants?

O’Grady: It’s something that we’re always aware of. We’re always looking at our merchandise mix, both for temporary and specialty leasing. We make sure it will complement what we already have. If we have a very strong category and there’s more need to add on, it’s a great way to add to that category. If you have some merchandising holes, it’s a great way to plug in.

Sullivan: There have been a lot of bankruptcies that have gone on in the last seven years. Toy stores are going by the wayside. Children’s clothing is not that big. Women’s clothing, even though you have Chico’s and the Ann Taylor Loft, the older women from 35 to 65 have nothing, so you’re trying to put something in the center that is for them.

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