As Commerce + Communities Today continues to examine what worked in 2021, a year that offered nothing but unpredictability, one strategy emerged that worked pre-pandemic and continues to work now. Here’s Part 6 in our series.

MORE OF WHAT WORKED IN 2021:
Tech in Retailers’ Real Estate Decisions
Reimagining Existing Spaces
Portfolio Optimization
Sustainability in Development
Selling Fresh Food at Economy of Scale
Customer Relationship Management
Focusing on the Customer Experience

Reinventing and Reinvesting

Brixmor president and CEO Jim Taylor sees reinvesting in existing properties as a cornerstone of the company’s 2021 success: “Our highly accretive reinvestment deliveries act as a flywheel for our growth, continually improving our centers and driving follow-on leasing and rental rate appreciation,” he said

According to Taylor, Brixmor’s reinvestment program has touched more than 190 centers since 2015, delivering more than $625 million of investment at an average incremental return of 11%. These projects take many forms, including developing outparcels, repositioning anchor spaces and fully redeveloping entire shopping centers. “As we transform our centers, we move towards our purpose of owning centers that are the center of the communities we serve,” he said.

Brixmor’s transformation of the 335,378-square-foot Marlton Crossing in Evesham, New Jersey, just outside of Philadelphia, is one example. Completed in September 2019, the project involved downsizing a Burlington to the chain’s new prototype, a propertywide facade renovation, New Jersey’s first Sprouts Farmers Market and replacement of a former Champ’s Sports outparcel building with popular bar and restaurant Chickie’s & Pete’s. “Reinvestment is a value multiplier,” Taylor said. “Not only do you drive value with strong incremental returns, but you also benefit from cap rate compression and follow-on growth in rent and occupancy.”

At Western Hills Plaza in suburban Cincinnati, Brixmor demolished an obsolete 118,000-square-foot Sears to make way for Old Navy, Ulta Beauty, Spectrum and Tropical Smoothie Cafe. Completed in the third quarter of 2021, the redevelopment also added a multitenant outparcel building with Buff City Soap, Chicken Salad Chick and Sleep Outfitters. Facade renovations, new pylon signage and enhancements to common areas, landscaping and parking further improved the appearance and function of the center. “Traffic to the center has multiplied as the community has embraced it as their shopping destination,” Taylor said.

Given the project’s 11% incremental net operating yield, the $13 million reinvestment in Western Hills Plaza created more than $12 million in additional value for Brixmor’s stakeholders. That spending further stimulated follow-on leasing, as occupancy rose from 63% to 98% and annual base rent grew by 20 percent. Reinvestment ultimately “drives accretive returns, improves intrinsic value and drives future growth at a lower cost and risk than ground-up development,” Taylor said. “We believe that the marketplace doesn’t need more shopping centers, just better ones.”