Rouse takes a new course

Company shuns strip-mall management with sale of 8 centers

`We're not leaving'

Columbia

February 10, 2002|By Laura Vozzella | Laura Vozzella,SUN STAFF

Back when the Rouse Co. was known only for shopping malls and Columbia was just farmland, developer James W. Rouse tapped some of his brightest stars for his biggest project yet.

Some of those stars soon were scratching their heads as they found themselves designing little strip shopping centers for supermarkets, drugstores and florists.

"The big shopping center guys were saying, `What the hell are we doing this for?'" said Cyril B. Paumier Jr., who helped design Columbia as the Rouse Co.'s chief land planner from 1969 to 1971.

The Rouse Co. asked itself the same question recently and decided to sell its majority interest in eight village shopping centers.

At one time, the centers fit into the company's most ambitious dream: to give a sense of identity and community to the groundbreaking town it was building in Howard County.

But the town is well-established now, and the company's grandest plans lie elsewhere - in high-end shopping malls across the country and in Summerlin, a new planned community nearly twice the size of Columbia that Rouse is building outside Las Vegas.

Alton J. Scavo, senior vice president of Rouse, stressed in an interview Friday that the company still cares about Columbia, where it owns The Mall in Columbia, 1 million square feet of office space, and 1,000 acres of undeveloped land.

But Rouse no longer wants to be a strip-center landlord. The company announced Thursday that it is selling a controlling interest in the centers - some of them struggling, all of them beloved by residents - to Kimco Realty Corp. of New Hyde Park, N.Y.

"We're not leaving Columbia," Scavo said. "And we're not abandoning Columbia. The company's not relocating. We have huge assets here, so we have a major interest here. I live in Harper's Choice. I'd like to continue to go shopping in the Harper's Choice Village Center."

Scavo likened the village centers to the swimming pools, pathways and other neighborhood amenities Rouse built to lure homebuyers to town. Eventually, Rouse turned those amenities over to the Columbia Association, the homeowners group that provides services to the unincorporated community.

"We saw the retailing as an amenity, a convenience for the community," Scavo said. "We didn't see the village centers as a line of business.

"We're a national company - billion and a half dollars worth of assets now, almost two now. Eight centers do not make a lot of business sense. We did it here because it was Columbia. We would not have done it if it were not Columbia, to be honest with you."

The company that bought the centers is in the strip center business - something cheered by residents seeking a more vibrant retail scene but feared by those who don't want radical changes to the original village center concept. Kimco describes itself as the nation's largest publicly traded owner and operator of neighborhood and community shopping centers, with 66 million square feet of space in 41 states.

Scott Onufrey, a Kimco spokesman, said it was too early to talk about any plans for the centers, particularly the struggling ones such as Oakland Mills, which lost its supermarket anchor in April. He did say the company is talking to national supermarket chains about the site.

"We have loads of experience in dealing with tenant vacancies and redevelopments," Onufrey said. "You have to remember these are investments we're making in the community, and obviously we think they're valuable and we'll try to improve the value as best we can."

The village centers involved in the deal are in Dorsey's Search, Harper's Choice, Hickory Ridge, Kings Contrivance, Long Reach, Oakland Mills, River Hill and Wilde Lake. The village center in Owen Brown is owned by Giant Food Inc. and was not part of the sale.

Kimco also bought a controlling interest in three larger centers in east Columbia: Columbia Crossing, Dobbin Center and Gateway Retail. The big-box stores anchoring those centers, such as Target and Toys 'R' Us, are owned independently and not part of the sale, Scavo said. The price of the deal was not disclosed.

David M. Fick, a real estate analyst who covers Rouse for Legg Mason Wood Walker Inc., said the sale looks like a good move for both companies.

Fick called Kimco "one of the top operators of shopping centers across the country. ... I think that Kimco has shown nationwide that they are able to take the most troubled kind of center and really inject new life into them."

Rouse hardly had a lot of encouragement to get into the strip center business in the first place. There weren't even houses around, much less shoppers, when James W. Rouse built the first village centers in the 1960s.

Paumier, the former Rouse planner, recalled having to travel temporary roads from U.S. 29 to reach the just-completed Wilde Lake Village Center.

"All of a sudden, you arrive in the middle of this mud field and all these buildings around it, and you think, `This is a brave, brave company.'"

But, he added, "I don't think the idea of doing it eight or 10 times in Columbia was thought of as, `Wow, this is where we are really going to make our money.'"

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