When L. Robert Lieb's company bought the Eastern Hills Mall in Clarence three years ago, he recalls the anchor tenants were threatening to leave, unhappy with how the previous owner was running it.
Lieb's New Jersey-based company, Mountain Development Corp., persuaded them to stay, and three years later, the mall's occupancy rate has risen from 70 percent to the high 80 percent range. His company has poured more than $15 million into upgrading the Transit Road property.
Lieb, MDC's chairman, said he viewed the mall as an overlooked opportunity. The 1962 University at Buffalo graduate owns a host of residential and office properties in New York City, New Jersey and Connecticut, along with a mall in Massachusetts.
The Eastern Hills Mall temporarily took on another duty this month: Power crews used its parking lot as staging area after the surprise snowstorm. Lieb says that fit his view of the mall's role. "It was what we wanted to be for this community, a magnet, a surrogate town hall. Our whole philosophy is to be neighborhood friendly."
Lieb last week talked about what it takes to turn around a retail property and how to capitalize on an investment in Western New York:
Q: What made this mall an appealing buy?
A: We look for pockets of strength. We looked at the demographics for this area, the average household income. We saw this [mall] was not on the major "to-do" list for the owner, Simon [Property Group]. We saw a property that was undervalued in a great location that, in our opinion, was not operated correctly. . . . And we saw an opportunity in this development. . . . We have a specific niche that we look to work with. We look for not the largest cities, but the medium-sized cities.
Q: How have you tried to distinguish your mall from competitors?
A: We don't want to be a cookie-cutter mall, or a cookie-cutter property. We are actively involved in community programs. . . . We're trying to create a pattern, if you need something, let's go to the mall. . . . We learned from some of our activities in New York [City] that traffic makes the property.
Q: Is it difficult to persuade chains to open stores in the Buffalo market?
A: The toughest ones for us are the anchors. . . . The ultimate thing is, we show them [monthly sales figures], where we're going. When Dave & Buster's started doing well, Orvis became one of the top stores in its chain. . . . I think it's hitting home now. It's like turning an ocean liner around, you can't do it overnight.
Q: You made a significant investment here. What made you decide the time was right to do it?
A: We've put $15 million into new construction costs, making it attractive. For the first year we were here, we were basically selling dreams and prospects. We kept of bunch of them [tenants] in here. . . . It's a huge risk. Sometimes you have to go on your gut instinct. Sometimes you have to go on the data you see. We were aware of this shift from a blue-collar [economy] to a service industry. . . . We see it's eventually going to turn. There's a huge market here, between Canisius [College] and all the other schools that are here. It's still a great place to live, and you have a lot of solid industries here.
>Q: Would you consider buying other properties in this market?
A: We are focusing all of our efforts on Eastern Hills Mall. There were one or two other retail properties that came up (Editor's note: Lieb declined to name them). . . . We thought it would be dilutive of of our efforts. But yes, we would consider buying other properties here.
>Q: What other additions would you like to make to your mall?
A: I would love to have a Nordstrom's. It shocks me when young, affluent professionals have to go to New York, Rochester or Toronto for high-fashion [shopping].
>Q: What do you think it would take to improve the economy here?
A: You've got to look at the positives. You have a great labor force, a skilled labor force, a professional labor force. . . . [You also have] the housing stock, the affordability of living, safety and security.
>Q: What advice would you give to someone investing in real estate?
A: Start small and grow big. Know your fundamentals, know your business, know your real estate values, because if you make a huge investment and it turns out your company sits on the Love Canal, you've blown your investment.