Like a conductor leading an orchestra to create beautiful music, First Interstate Properties President Mitchell Schneider used similar skills to tune a $145 million investment into Legacy Village.
The shopping complex opened in November with fanfare at Cedar and Richmond roads and is expected to generate more than 1,300 full- and part-time jobs and as much as $1 million in taxes. D
espite some opening-weekend parking snafus, Legacy Village has proven very popular among shoppers; Schneider says that on any given day, you can find license plates from at least five states other than Ohio in the parking lots that regularly run at 70 percent to 80 percent capacity.
Smart Business talked to Schneider about what it takes to create a project like Legacy Village.
Set on 67 acres of former TRW land, Legacy Village is First Interstate Properties’ eighth retail project. What role does it play as the developer of Legacy Village?
Our role begins with identifying the land for potential development and continues with obtaining control of the land from a landowner.
There’s identifying potential retailers and working with all levels of government for engaging in the entitlement, or approval, process with the city, state and federal agencies that are applicable, and county agencies that would also play a role. We work with all the utility companies to orchestrate utility service; we work with neighbors and adjacent landowners; we work with the community and the residents to ensure that the impacts of development are addressed appropriately.
There’s supervising the construction once the project is approved, and obtaining the financing for the construction. Then, ultimately, there’s completing the construction and having the tenants open for business. Once it’s open for business and operating, then we shift roles and serve as the property manager.
This new lifestyle center has 610,000 square feet of space, which includes 20,000 square feet of third story office space and more than 70 stores and restaurants. What steps did First Interstate Properties take to conduct a project of this size?
What you do each step of the way is determine how much time and resources you are prepared to put at risk to get to the next step.
It’s a constant sort of risk-reward analysis: Is it worth it to continue? How much more risk do I need to take? How much more time would be involved in getting to the next step?
Will we get our permits? Will our tenants sign our leases? Will we get the financing? Can we build it for what we projected the budget to be?
Each one of those is a question mark that needs to be answered along the way. The development role is very fluid, and you have to be able to address a number of issues simultaneously and have the flexibility to address new issues as they arise.
Legacy Village has Northeast Ohio’s first Apple Computer, Restoration Hardware, California Pizza Kitchen, The Cheesecake Factory, Galyan’s Trading Co. and others. It also features Ohio’s only Crate & Barrel, EXPO Design Center, Viking Culinary Arts Center and Stir Crazy restaurant, and there are local tenants unique to the area such as Contessa Gallery and Lush Boutique. What did First Interstate Properties do to attract these upscale businesses?
We put together a marketing brochure that showed that the demographics of Northeastern Ohio truly were in the category of a major trading area that has been overlooked by a number of retailers that have located stores in cities with smaller populations and less income and less wealth.
What we needed to do was to point out that even though Northeastern Ohio doesn’t have a strong population growth rate, the existing population is both stable and has significant income and significant wealth.
That was the No. 1 threshold that we needed to get over with the retailers that we were talking with to bring them here.
It was selling Cleveland. We have a company that we hired to do the leasing for Legacy Village: Goodman Real Estate Services Group. Together with them, we conceptualized the marketing materials, and then they put together a marketing package.
How do your negotiating skills come into play when working on a major retail development project?
Every aspect of the development process, whether it’s Legacy Village or any other real estate development project, involves negotiating with potential land owners, retailers, tenants, with contractors, communities, residents, neighbors, regulatory agencies.
The development process is, in its essence, negotiation.
The property development work ends with the grand opening of the shopping center, then the property management aspect kicks in. How does First Interstate Properties plan to continuously improve the Legacy Village project?
First of all, our intention is that it will remain a location where we have world-class retailers, and as spaces become available, our goal will be to continue to bring fresh new retail environments to Northeastern Ohio at Legacy Village.
Secondly, it’s really about how we operate the environment of Legacy Village in terms of entertainment opportunities, musical entertainment and other community-building activities that can take place at Legacy Village, for example, charitable events, like youth organizations doing face painting or selling balloons to raise money for their chapter or troop or whatnot.
So our goal is to really continuously try to enhance Legacy Village as a place where community-related activities can take place.
Are there any new developments in the works for First Interstate Properties?
Nothing that we are talking about yet, but we are working on filling our development pipeline and getting the beginnings of new projects underway now that Legacy Village is opened.
I would hope that by fall of 2004, we will be talking about a specific project and anticipating another groundbreaking in Northeastern Ohio. HOW TO REACH: First Interstate Properties, (216) 765-1065, www.first-interstate.com