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Cape Cod luring retail development

By Kevin Kenyon

The developers of the Cape Cod Mall, WellsPark Group, Newton, Mass., plan to add 190,000 square feet to the center to help recoup sales lost to malls outside the Cape.

While Cape Cod, Mass., has long been a premier vacation destination, the climate for retail has left something to be desired.

Due to its restrictive permitting process, reliance on seasonal business, and relatively small year-round population, Cape Cod has traditionally been an enigma for retailers and developers alike.

Sure, the peak summer season -- when the population more than doubles from 260,000 to 600,0000 -- makes July seem like Christmas, but what about the rest of the year?

For developers, space and resources are extremely limited. And then there's the Cape Cod Commission, a 19-member board formed in 1990 in the wake of an unprecedented growth boom in the 1980s. The Commission scrutinizes each proposal, questioning developer s about traffic, trash disposal and availability of water.

However, based on an expanding peak season and steady rises in year-round population, developers say the Cape Cod market is now more viable than ever for retail development.

"It's not the seasonal business that it once was," said John Roche, senior vice president, retail division, for The Flatley Co., Braintree, Mass., which owns two centers on the Cape.

"You've got a lot of year-round residents there, including people that have retired from the Boston area, and the season is much longer now," he said.

Cape Cod's traditional season, which used to run from May to September, now extends from March until just after Christmas, at least from a retail perspective, Mr. Roche said.

In response to the improved climate, Mr. Roche said Flatley is planning to add 20,000 square feet to Southwind Plaza, a 170,000-square-foot community center in Hyannis, Mass., to make room for one or two big box tenants.

After receiving a "great deal" of interest from retailers in the process of leasing Southwind, officials at Flatley are planning similar changes at Falmouth Mall, a 260,000-square-foot community center in Falmouth, Mass., Mr. Roche explained.

"The demographics have definitely improved, and I think that's why you're seeing some repositioning among some of the Cape's shopping centers that will allow big boxes to come in. Before, it tended to be smaller players," he said.

Also spurring such development is the fact that Cape Cod's shopping centers are losing an estimated $126 million in retail sales to off-Cape competitors annually, according to a study conducted by WellsPark Group, Newton, Mass., the developers of Cape Cod Mall, a 631,000-square-foot center in Hyannis anchored by Sears, Roebuck and Co., Filene's Basement, Marshalls and Macy's.

Based on such data, WellsPark is looking to add 190,000 square feet to the mall, which is the Cape's only regional shopping center, as well as completely renovate the existing mall.

"We know the shopping centers between the Cape and Boston are benefiting from Cape shopping dollars and we're hoping to recapture some of those," said David Gilmore, WellsPark's development director.

However, after a four-year pre-development process was wrapping up in April, an appeal was filed by the Cape Cod Commission on the last day of the appeal period, forcing officials at WellsPark to delay their expansion plans. The appeal was based on the Co mmission's concern that the mall's architecture should "look like Cape Cod," an assertion that has created uncertainty -- not least because Cape Cod has 26 styles of architecture.

"After four years of permitting work, this is something we're not happy about," Mr. Gilmore said. "But we're just going to have to deal with it -- the commission is a necessary part of getting a right to build on the Cape."

Despite the delay, Mr. Gilmore said, the early reception from prospective tenants has been "extremely positive," and said the improving retail climate was a major factor in that interest.

"We think the demand is there, and we also feel that the mall needs to be updated -- it hasn't been completely renovated in 20 years," he said. "If we can do that, we should be able to recapture some of the shopping dollars that are now going off-Cape."

The improved retail climate has been fueled by an influx of retirees and baby boomers buying second homes, creating a stronger year-round residential market, according to Bob Oliver, regional manager, executive vice president for the Boston office of Urba n Retail Properties, Chicago.

"That is bringing additional retail to the Cape," he explained. "The problem with the Cape has always been that it hasn't been a year-round market -- the population was never sufficient to support a lot of traditional retail."

Mr. Oliver added that the Hyannis area, where Urban Properties manages Capetown Plaza, a 235,000-square-foot community center located directly across from Cape Cod Mall, has traditionally been the anchor of Cape Cod, mainly because it has the most stable and largest population base.

"It's always been the one area that retailers could justify going into on the basis of demographics," he said. "Once you go outside Hyannis in the off-season, the population decreases to a point where it was very difficult to justify opening a store."

But while that may have been the case a few years ago, Mr. Oliver said things are slowly changing.

"Areas outside of Hyannis are becoming more and more viable -- although not to a point where you would build a regional mall," he explained.

What would work, however, are destination-type tenants that have a regional draw, such as Barnes & Noble, Kmart and Filene's Basement, all tenants at Capetown Plaza, he said.

"That's really the key to any retail on the Cape: You really have to be a destination tenant, because of the off-season and how the population fluctuates. You need to draw both locals and tourists."

So while Cape Cod may never be known as a shopping mecca, Mr. Oliver and other players in the market also believe potential is there for significant improvement on the retail front.

"We're still a long way away from that," Mr. Oliver said. "But we're starting to see an increase in the amount of people who are both visiting and living on Cape Cod, which will eventually translate into more retail dollars."

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