February 2, 2004
Retail opportunity | That's what Packard Development wants to give Mainers, to the tune of $200 million and more than a million square feet of new space
By Sean Donahue
For someone launching such an ambitious development plan, Leonard Rudofsky is surprisingly nonchalant about the inspiration behind it.
Rudofsky, president of Newton, Mass.-based Packard Development, recently announced proposals to build five new shopping centers in Maine totaling more than 1.2 million sq. ft., but is reluctant to offer much detail about what makes the state such an attractive market. He mentions looking at demographic data and retail statistics that showed him unmet demand for shopping opportunities, but he stops short of quantifying exactly what that demand looks like, or how the company settled on five new centers to capitalize on it.
It may be that for Rudofsky, who's spent nearly 40 years in the construction and development business, the opportunity is self-evident, revealed in 2001 after the company opened its first shopping center in Maine, South Portland's Maine Crossing, home of the state's first Target store. "When Maine Crossing opened very successfully ˆ and over time we saw where residents were coming from and how far they were willing to drive to get there ˆ it seemed to make sense that we should start placing a number of centers in Maine," says Rudofsky. "We think we can better service the public by expanding the reach of certain retailers in the state."
To fill that perceived void ˆ before other out-of-state developers catch on, Rudofsky says ˆ Packard is proposing five outdoor shopping centers, ranging between 200,000 sq. ft. and 500,000 sq. ft., typically anchored by either Target or the home improvement chain Lowe's, or both. When choosing locations for these new developments ˆ Biddeford, Portland, Augusta and Bangor ˆ Rudofsky says it made sense to stick to the I-95 corridor, which he notes is the primary artery for both year-round residents and summer visitors.
With a total price tag estimated at about $200 million dollars, Packard's plans have already attracted a lot of attention, including praise from Gov. John Baldacci, who welcomed the projects for their potential to employ hundreds of local construction workers, create thousands of retail jobs and contribute millions of dollars in new property taxes.
But Packard's plans come alongside several other large-scale retail development proposals, including a 500,000-square-foot expansion of the Marketplace at Augusta, led by Chestnut Hill, Mass.-based S.R. Weiner-W/S Development. That proliferation of new projects has led some local retail analysts and real estate professionals to wonder whether Maine's population can support such a broad expansion of the retail economy (for more on this topic, see "Under Pressure," page 27).
At the end of 2002, the most recent date for which statistics are available, Maine already had 210 shopping centers totaling 18.6 million sq. ft. ˆ making Packard's additional 1.2 million sq. ft. a 6% expansion of existing retail infrastructure. And even though Maine's retail sales grew 4.5% between 2001 and 2002, to $12.9 billion, that's a significant decline from the 8.4% growth rate posted five years earlier, notes Les Bray, president of the retail research firm Main Street Insights in Gorham. "That in itself tells me the market isn't necessarily red hot," says Bray.
But while Maine lags behind southern New England in population and per-capita income, it still represents the last frontier in the Northeast for many national retailers. "We're bringing in retailers that have not been in the Maine market before but are pretty much established throughout the country," says Rudofsky. "Maine has been overlooked for a long time, but we think it's a very good market."
A matter of meeting demand
Even though Packard is relatively new to Maine, the company is hardly new to the business of retail development. Rudofsky started out nearly 40 years ago as a contractor specializing in retail construction. During the 1970s and 1980s, his company, Beaver Builders, hooked up with regional mall developer New England Development, also based in Newton, to build 15 malls across the Northeast.
In 1989, though, Rudofsky took a chance on buying a piece of property across from an existing mall in North Attleborough, Mass., which he developed via a new company, Packard Development, into a 100,000-square-foot "community center" housing a Marshall's, Filene's Basement, Pier One Imports and Linens & Things, among other stores. From there, Rudofsky and Packard continued taking on more development projects, such as the Waterford Commons, a 350,000-square-foot shopping center that opened last year in Waterford, Conn. He eventually spent more time on development projects than on construction jobs. Two years ago, he sold Beaver Builders to concentrate on developing full time.
During the 1990s Packard partnered with Target and Lowe's, and brought the first Target store to Maine as part of its 262,000-square-foot Maine Crossing development. The center is now the fifth-largest in Maine, and the success of its Target store ˆ Rudofsky says the South Portland location posts the second-highest sales volume of all Targets in the Northeast ˆ showed the company that there was strong demand for new retail options in Maine.
Rudofsky says it's too early in the planning process to give many details about the five new projects (see "Packard's Maine plan," p. 21), but that the two largest developments, the 450,000-square-foot-plus centers planned for Biddeford and Augusta, will feature both Lowe's and Target. In Portland, Packard plans to put a 207,000-square-foot center, anchored by a Stop & Shop grocery store, on a 20-acre site at Morrill's Corner, and plans to redevelop the Pine Tree Shopping Center that's been languishing since it lost the 78,000-square-foot Ames store that used to be its anchor. The company's plans for a new shopping center in Bangor are even less concrete, as Packard is still working to identify a possible site.
Packard won't have its chosen markets all to itself, though. The company's Biddeford development is situated directly across from W/S Development's Biddeford Gateway, site of Home Depot and, soon, a Kohl's department store. In Augusta, Packard will face an expanded Marketplace at Augusta, which could grow to 1.2 million sq. ft., making it the largest shopping center in Maine.
But Rudofsky isn't overly concerned about competition from other large developments, saying that by working with Target and Lowe's ˆ two nationally successful retailers with little presence in Maine so far ˆ his shopping centers will have the appeal of the new that can attract shoppers even in a crowded retail market. "We're working with Lowe's to establish their presence in Maine," says Rudofsky. "Other developers with projects in Maine aren't working with as prominent a new name."
Retail analysts and shopping center consultants agree that Packard's brand expansion strategy could give it an advantage in Maine, but only if the retailer makes a good match for the market. "The issue becomes: Are they a priority enough retailer to usurp enough market share to make the expansion worthwhile?" says Stanley Eichelbaum, founder of the global shopping center consulting firm Marketing Developments Inc., based in Cincinnati, Ohio.
Adding more Target stores in Maine means Packard will also be usurping some of the market share from its own South Portland location. But Rudofsky says retailers welcome the chance to increase their overall sales volume in the state, even at the cost of one store's heretofore-notable results. "The theory is that you might as well cannibalize from your own stores," says Rudofsky. "If Target's going to share a market, it certainly would rather share it among its own stores than with Wal-Mart."
Retail development as economic indicator
For all the interest Packard's plans have already generated, it will literally be years before anyone can measure their impact on Maine's retail sector. It usually takes between two and three years to complete one of these large-scale developments, says Rudofsky, given the time needed to scout locations, buy the land, work out permitting issues with local governments and then build the facilities.
Packard's Morrill's Corner development has already been slowed during hearings with the Portland Planning Board, where neighbors expressed concerns about increased traffic. The city council also has asked Packard to scale back the plan before it will agree to sell the company city-owned land needed for the project. But those are the types of negotiations that Rudofsky expects during the process. "You have to be patient," Rudofsky says. "It takes a long time and a lot of working with the community, city officials and neighborhood groups."
When the company is ready to begin construction, though, Packard says it will hire Maine contractors ˆ though it is too early in the process to have selected any partners, according to Rudofsky. Those construction jobs, and the firm's $200 million investment in Maine, are part of the expected economic impact that led Baldacci to praise Packard's plans. Baldacci also touted the more than 3,000 retail jobs the completed projects are expected to create.
But retail jobs aren't the type of high-skill, high-paying jobs the governor wants to attract to Maine, and Jack Cashman, commissioner of the Department of Economic and Community Development, admits that retail development isn't part of the governor's economic development plan. But Cashman, whose background includes work in commercial real estate, sees the proposed large-scale developments as a kind of leading economic indicator, heralding future potential economic expansion, wage growth and other benefits that come from increased activity outside the retail sector. "When you ask why [Packard and S.R. Weiner] are building these projects, it's because their research indicated there is going to be an upturn in economic activity in Maine," says Cashman. "They're not doing this on gut feeling. They've probably spent more money and done more research than we have resources here to do."
And while Rudofsky won't give many details of his company's research methods, he's confident that consumer spending ˆ the engine of the national economy for the last three years ˆ will eventually vindicate Packard's development decisions. "We believe people will come out and support these stores," Rudofsky says. "We're giving Maine the same retail opportunities that are available to people all over the country."
Rudofsky, president of Newton, Mass.-based Packard Development, recently announced proposals to build five new shopping centers in Maine totaling more than 1.2 million sq. ft., but is reluctant to offer much detail about what makes the state such an attractive market. He mentions looking at demographic data and retail statistics that showed him unmet demand for shopping opportunities, but he stops short of quantifying exactly what that demand looks like, or how the company settled on five new centers to capitalize on it.
It may be that for Rudofsky, who's spent nearly 40 years in the construction and development business, the opportunity is self-evident, revealed in 2001 after the company opened its first shopping center in Maine, South Portland's Maine Crossing, home of the state's first Target store. "When Maine Crossing opened very successfully ˆ and over time we saw where residents were coming from and how far they were willing to drive to get there ˆ it seemed to make sense that we should start placing a number of centers in Maine," says Rudofsky. "We think we can better service the public by expanding the reach of certain retailers in the state."
To fill that perceived void ˆ before other out-of-state developers catch on, Rudofsky says ˆ Packard is proposing five outdoor shopping centers, ranging between 200,000 sq. ft. and 500,000 sq. ft., typically anchored by either Target or the home improvement chain Lowe's, or both. When choosing locations for these new developments ˆ Biddeford, Portland, Augusta and Bangor ˆ Rudofsky says it made sense to stick to the I-95 corridor, which he notes is the primary artery for both year-round residents and summer visitors.
With a total price tag estimated at about $200 million dollars, Packard's plans have already attracted a lot of attention, including praise from Gov. John Baldacci, who welcomed the projects for their potential to employ hundreds of local construction workers, create thousands of retail jobs and contribute millions of dollars in new property taxes.
But Packard's plans come alongside several other large-scale retail development proposals, including a 500,000-square-foot expansion of the Marketplace at Augusta, led by Chestnut Hill, Mass.-based S.R. Weiner-W/S Development. That proliferation of new projects has led some local retail analysts and real estate professionals to wonder whether Maine's population can support such a broad expansion of the retail economy (for more on this topic, see "Under Pressure," page 27).
At the end of 2002, the most recent date for which statistics are available, Maine already had 210 shopping centers totaling 18.6 million sq. ft. ˆ making Packard's additional 1.2 million sq. ft. a 6% expansion of existing retail infrastructure. And even though Maine's retail sales grew 4.5% between 2001 and 2002, to $12.9 billion, that's a significant decline from the 8.4% growth rate posted five years earlier, notes Les Bray, president of the retail research firm Main Street Insights in Gorham. "That in itself tells me the market isn't necessarily red hot," says Bray.
But while Maine lags behind southern New England in population and per-capita income, it still represents the last frontier in the Northeast for many national retailers. "We're bringing in retailers that have not been in the Maine market before but are pretty much established throughout the country," says Rudofsky. "Maine has been overlooked for a long time, but we think it's a very good market."
A matter of meeting demand
Even though Packard is relatively new to Maine, the company is hardly new to the business of retail development. Rudofsky started out nearly 40 years ago as a contractor specializing in retail construction. During the 1970s and 1980s, his company, Beaver Builders, hooked up with regional mall developer New England Development, also based in Newton, to build 15 malls across the Northeast.
In 1989, though, Rudofsky took a chance on buying a piece of property across from an existing mall in North Attleborough, Mass., which he developed via a new company, Packard Development, into a 100,000-square-foot "community center" housing a Marshall's, Filene's Basement, Pier One Imports and Linens & Things, among other stores. From there, Rudofsky and Packard continued taking on more development projects, such as the Waterford Commons, a 350,000-square-foot shopping center that opened last year in Waterford, Conn. He eventually spent more time on development projects than on construction jobs. Two years ago, he sold Beaver Builders to concentrate on developing full time.
During the 1990s Packard partnered with Target and Lowe's, and brought the first Target store to Maine as part of its 262,000-square-foot Maine Crossing development. The center is now the fifth-largest in Maine, and the success of its Target store ˆ Rudofsky says the South Portland location posts the second-highest sales volume of all Targets in the Northeast ˆ showed the company that there was strong demand for new retail options in Maine.
Rudofsky says it's too early in the planning process to give many details about the five new projects (see "Packard's Maine plan," p. 21), but that the two largest developments, the 450,000-square-foot-plus centers planned for Biddeford and Augusta, will feature both Lowe's and Target. In Portland, Packard plans to put a 207,000-square-foot center, anchored by a Stop & Shop grocery store, on a 20-acre site at Morrill's Corner, and plans to redevelop the Pine Tree Shopping Center that's been languishing since it lost the 78,000-square-foot Ames store that used to be its anchor. The company's plans for a new shopping center in Bangor are even less concrete, as Packard is still working to identify a possible site.
Packard won't have its chosen markets all to itself, though. The company's Biddeford development is situated directly across from W/S Development's Biddeford Gateway, site of Home Depot and, soon, a Kohl's department store. In Augusta, Packard will face an expanded Marketplace at Augusta, which could grow to 1.2 million sq. ft., making it the largest shopping center in Maine.
But Rudofsky isn't overly concerned about competition from other large developments, saying that by working with Target and Lowe's ˆ two nationally successful retailers with little presence in Maine so far ˆ his shopping centers will have the appeal of the new that can attract shoppers even in a crowded retail market. "We're working with Lowe's to establish their presence in Maine," says Rudofsky. "Other developers with projects in Maine aren't working with as prominent a new name."
Retail analysts and shopping center consultants agree that Packard's brand expansion strategy could give it an advantage in Maine, but only if the retailer makes a good match for the market. "The issue becomes: Are they a priority enough retailer to usurp enough market share to make the expansion worthwhile?" says Stanley Eichelbaum, founder of the global shopping center consulting firm Marketing Developments Inc., based in Cincinnati, Ohio.
Adding more Target stores in Maine means Packard will also be usurping some of the market share from its own South Portland location. But Rudofsky says retailers welcome the chance to increase their overall sales volume in the state, even at the cost of one store's heretofore-notable results. "The theory is that you might as well cannibalize from your own stores," says Rudofsky. "If Target's going to share a market, it certainly would rather share it among its own stores than with Wal-Mart."
Retail development as economic indicator
For all the interest Packard's plans have already generated, it will literally be years before anyone can measure their impact on Maine's retail sector. It usually takes between two and three years to complete one of these large-scale developments, says Rudofsky, given the time needed to scout locations, buy the land, work out permitting issues with local governments and then build the facilities.
Packard's Morrill's Corner development has already been slowed during hearings with the Portland Planning Board, where neighbors expressed concerns about increased traffic. The city council also has asked Packard to scale back the plan before it will agree to sell the company city-owned land needed for the project. But those are the types of negotiations that Rudofsky expects during the process. "You have to be patient," Rudofsky says. "It takes a long time and a lot of working with the community, city officials and neighborhood groups."
When the company is ready to begin construction, though, Packard says it will hire Maine contractors ˆ though it is too early in the process to have selected any partners, according to Rudofsky. Those construction jobs, and the firm's $200 million investment in Maine, are part of the expected economic impact that led Baldacci to praise Packard's plans. Baldacci also touted the more than 3,000 retail jobs the completed projects are expected to create.
But retail jobs aren't the type of high-skill, high-paying jobs the governor wants to attract to Maine, and Jack Cashman, commissioner of the Department of Economic and Community Development, admits that retail development isn't part of the governor's economic development plan. But Cashman, whose background includes work in commercial real estate, sees the proposed large-scale developments as a kind of leading economic indicator, heralding future potential economic expansion, wage growth and other benefits that come from increased activity outside the retail sector. "When you ask why [Packard and S.R. Weiner] are building these projects, it's because their research indicated there is going to be an upturn in economic activity in Maine," says Cashman. "They're not doing this on gut feeling. They've probably spent more money and done more research than we have resources here to do."
And while Rudofsky won't give many details of his company's research methods, he's confident that consumer spending ˆ the engine of the national economy for the last three years ˆ will eventually vindicate Packard's development decisions. "We believe people will come out and support these stores," Rudofsky says. "We're giving Maine the same retail opportunities that are available to people all over the country."
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