Village Solutions

Notes to Shopping Center Sales Per Square Foot

A few short years ago Women’s Wear Daily listed Bal Harbour Shops as the most productive shopping center in the United States with sales reportedly topping $1400 per square foot.  Not far behind was the Forum Shops in Las Vegas with various reports of sales running on average in the $1300 to $1500 range.

Then in 2008, along came Aventura Mall, located a few miles north of Bal Harbour with a report that their sales were exceeding $1100 per square foot and they were closing in on Bal Harbour.  But not to be out done, Bal Harbour came back with astounding sales projections that jumped to $2,139 per square foot in 2008.  In nearby Orlando, upstart Mall at Millenia reported sales per square foot at a surprising $1000.

So what’s up with these sales when the more mortal mall produces sales of $350 per square foot?

The answers are as follows:

• A new Apple store can raise the average sales of a good shopping center, dramatically.  Take for example their 10,000 square foot Fifth Avenue store in New York where gross sales were in the $350,000,000 range last year.  That equates to sales of $35,000 per square foot.  Add those types of sales to a specialty store mix and you can quickly see what happens to overall mall sales.  This is not to suggest that all Apple stores approach anything like their Fifth Avenue location but the more mortal mall can realize big overall gains in sales per square foot with the addition of an Apple store.  Smart real estate people are no longer accepting blind projections on average sales.  They now ask for a center’s average sales without Apple.
• In Bal Harbour very high end jewelers like Graff have been added to the mix in the past couple of years with the likes of Harry Winston, Cartier and Van Cleef & Arpels.  But with store sizes of 1,000 square feet or less and an inventory with average price points in the tens of thousands it is not uncommon to see the addition of one store make a big difference in overall sales.
• Many malls exclude their underperforming shops when they report sales to the media.
• Malls with traditional lower producing uses such as a cinema will often be excluded from sales performance calculation.
• Smart developers constantly prune their tenant mix by terminating the leases of underperforming shops and replacing them with stores that will perform at a level higher than the center average.
• The highest producing malls realize a high percentage of their sales from international visitors.  As example, Aventura Mall generates 40% of its sales from visitors and Bal Harbour 50%.
• The devalued dollar has helped propel the sales of many malls that attract international shoppers.

This entry was posted on Wednesday, December 16th, 2009 at 3:19 pm and is filed under Retail. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.