Changing With The Times
With 40 years in the business, Jim Wilson & Associates is still developing in a number of sectors.
Jim Wilson & Associates (JWA) hunkered down during the recession, but kept a great team intact and stood ready to invest in a number of projects as the market came back around. “Retail development has been slow for a while but we see evidence the market is coming back,” says Will Wilson, President of the Montgomery, Alabama-based investment and real estate services firm. The company is working on an 80,000-square-foot project at EastChase, the 330-acre mixed-use development featuring more than 1 million square feet of retail off Interstate 85 in Montgomery. “We’re adding some big boxes to the development,” Wilson says, noting that JWA also just signed Hobby Lobby to a lease at the project. “And we just sold another parcel to a hotel, a Marriott, which is following the newly opened Hilton Garden Inn.”
At more than 1 million square feet, JWA’s EastChase in Montgomery, Alabama, is under expansion. New big boxes and another hotel are planned for the mixed-use development.
In North Charleston/Summerville, South Carolina, JWA is developing a mixed-use portion of Nexton, WestRock’s 5,000-acre master-planned development. The 80-acre, 800,000-square-foot regional, open-air project will be called Nexton Town Center.
In Conway, Arkansas, JWA is working on Central Landing, a lifestyle project that is anchored by Dillard’s and includes a power center component. “We’re trying to get it off the ground. Overall, the project will be about 500,000 square feet, and include a hotel component,” Wilson says.
In Biloxi, Mississippi, JWA is redeveloping Edgewater Mall, an enclosed center built in the 1960s which now includes Dillard’s, Sears, JC Penney, Belk and over 75 specialty stores. “This project is located across the street from the Gulf of Mexico, where Katrina came through 11 years ago. The entire area, including the mall, was damaged significantly. But the people are resilient and despite hur- ricanes, the economy and the Deepwater Horizon oil leak, the area is recovering. We’ve been able to keep the mall together, but it needs some new components and features. We’re currently working with architects and looking at how to open it up with more lifestyle attributes and possibly add a live/work component, or a hotel and more restaurants,” Wilson says.
In Huntsville, Alabama, the company is developing retail space at a project developed in partnership with Corporate Office Properties Trust. The project is planned for over 4 million square feet of office space. “Redstone is a U.S. Army facility that includes NASA and over 10 different commands for the government. We were awarded this Enhanced Use Lease project several years ago. Currently, Boeing occupies over 375,000 square feet of office space in three buildings and we hope to announce another large user this summer. We’ve built seven office buildings and a hotel and have a small retail component featuring great restaurants going in now,” Wilson says.
In Thackerville, Oklahoma, JWA is looking to add retail at WinStar Casino, one of the largest casinos in the country.
“And we’re looking at other potential projects not only in the Southeast, but also in California and New York. We’re busy!” Wilson says. “We completed a great transaction in New York about 10 years ago that was very successful. We also took advantage of some small opportunities in Southern California. When the economy slowed down, we pulled back. Now, opportunities are coming to us, so we’re looking everywhere.”
He adds, “The company is doing well and we’ve added new people to be a part of our success. Our existing centers are strong. My brother and I are lucky my father built such a strong legacy.”
Wilson’s father, Jim Wilson Jr., founded JWA in 1975. Both Will and his brother, Jim Wilson III, learned the business from their father. Jim Wilson III currently serves as chairman of the board and CEO at JWA.
In 2015, Will and his brother started another company, called JWA Ventures, which focuses on triple-net lease properties. “My dad, my brother and I owned Big 10 Tires from 1984 through 2004. During this time, Big 10 Tires grew to 100 stores in the Southeast. We understand the net lease business,” Will Wilson says. “To grow in this area, we brought in some great guys that worked for us previously. These associates hit the ground running, as evidenced by the five net-lease properties under construction now.”
JWA is redeveloping its Edgewater Mall in Biloxi, Mississippi. The center is anchored by Dillard’s, Sears, JC Penney and Belk.
“My dad said that if you put all your eggs in one basket, and you have some bad years, you’ll get hurt. If you are diversified, one business might be down and the other ones up, and it can help keep everything on an equal playing field. My brother and I have kept that philosophy,” Wilson says.
The company has done several residential projects. “We have one now – a property my father bought back in the mid 1990s where we have the potential land area to build homes for the next 30 years in Montgomery. Today we have 250 homes there and are adding 100 lots as we speak. As a part of the development we worked with the local YMCA and the Montgomery Public School system to build a YMCA and an elementary school in my father’s honor.” Wilson says.
They’ve also invested in gaming in Oklahoma. Wilson explains: “We got involved with the Indian tribes. We own gaming machines at the casinos, that has been a good business for us. When development slowed, and really stopped, we were looking for other things to do and we had an opportunity to work with some friends we had worked with before.”
“Our non-retail diversification has included the apartment tax credit syndication business with a newly formed company called 42 Equity Partners, as well as hotels and office buildings, and we are in negotiations now to buy two non-retail businesses. Our goal is to buy good companies with outstanding management where we can add our expertise and grow the business,” he says. “But retail is still our main core business,” he stresses.
A RETAIL FOCUS
On the retail front, there hasn’t been any real growth for retailers for several years, Wilson notes. “Now after a few years of struggling, the economy is doing better. People feel better about how things are going. Gas prices are down; people have been able to pay off their credit cards, and now they are thinking about buying a dress or shoes or taking the family out to eat. We believe retailers are ready to capitalize on the improving economy.”
Retailers that are new to the Montgomery market tend to look first at EastChase, Wilson says. “They might not be able to afford us, but we get the first look. Food is such a big component now. A lot of new restaurants coming into the market are looking at EastChase with us. We’re getting to where we are about to run out of developable property – and it is a 330-acre development. We thought it would take longer to complete the build out in Montgomery. It has been a great development. Our partner, ALFA, has been wonderful to work with; they are very knowledgeable about retail and real estate.”
But retail has changed a bit over the years. Wilson says, “Back in the day, I’d get a call from a department store and they’d say, ‘Will, go look here for us. We want a new store here.’ With that, I could build my puzzle and put it together. Today, you have to find the site and the timing has to be right. But then, can you lease it? You really have to have the perfect storm.” Looking back even further, Wilson explains that, “When my dad was coming along, the plan was always four department stores in an enclosed mall. Then we went to the open-air lifestyle centers.” He laughs and says, “My dad was screaming, ‘We’ve got to put a roof on it – it is too hot in Alabama!'”
Riverchase Galleria in Birmingham, Alabama, helped put JWA on the map. Built in 1985, the project combines a super-regional mall, office tower, hotel and other uses. Today, General Growth Properties is a 50 percent owner of the retail center with JWA, while JWA remains the sole owner of the office tower and Hyatt Regency/Wynfrey Hotel.
“It is an ever-changing business, which is exciting,” Wilson adds, noting that the way today’s deals come together is quite different from deals in the past. Each project is different. “In Arkansas, a friend called and asked me to come take a look at a site. I went and looked at the property, then I met with the mayor and the chamber of commerce people and they showed me what they wanted to do. Then I sat down with Dillard’s and they had interest in the project,” he says. “For the Charleston property, a marketing company called me and said, ‘The owners are looking….’ They knew our reputation and invited us to come look at the property. We actually went up against three other developers and were selected.”
He adds, “But what we build isn’t what we built 10 years ago. People shop online. Younger kids are shopping online. They don’t think first of shopping at malls or the lifestyle centers. You have to have the food and entertainment. You have to build a little city so that it has a constant heartbeat. Sales don’t occur only on the weekends or after 3:00 in the afternoon. Rather, centers need to be available 24/7. It is a completely different animal, which is fun for the development company because it is all something new.”
He mentions new tenants are also changing the face of retail: “The catalog tenant now wants some street frontage. You still have to get the tenants, but they are different than they were,” he says.
Inside Riverchase Galleria in Birmingham, Alabama.
“Before I would be thinking about strictly retail and soft goods, some food. Now I’m spending more time thinking about food, entertainment, theaters, whatever it might be. Now you have the live/work portion of it. Do we put apartments or condos on top or somewhere else on the site? We definitely want hotels integrated with our project and we also want office space in a project. When you have that urban feel, where people are living and working and shopping, then they don’t really leave. People want to have everything at their fingertips. We want to create a sense of place. We want the women who drop their kids off at school to meet their girlfriends here for coffee. We want each of our centers to be the place you can see and be seen, the cool place to be. We create safe places that have all the bells and whistles that the sophisticated shopper is looking for,” Wilson says.
Today, people buy things using their phones or computers and have the purchases delivered to their front doors the next day,” Wilson says. “How do I get them to come out and spend time at my retail project? They used to go to the mall as an outlet for the day. Your grandmother would take you to the mall to eat lunch; she might buy you some shoes, and buy your Easter attire. When I was a kid, that was a big day for us. Now, parents just shop online and have it sent to the house. How do I get them to come to my project, to stay, to make it a day and make it a place where they take friends and family? It was a little easier before. Now, people have so many other options that are so easy and so fast. You have to make your project different so they want to be there and hang out and where they fit in and feel comfortable. You can build a power center – and those are successful – but when you get into these town centers and urban projects, you have to be creative on how it all comes together.”
JWA’s strategy varies based on the market. The company still owns and manages many projects that it developed – Wilson estimates that they manage approximately 7 million square feet currently.
In other projects, they’ve partnered with REITs and other institutional investors. For example, JWA sold a 50 percent interest of Riverchase Galleria in Birmingham to GGP. The company co-developed The Shoppes at River Crossing in Macon, Georgia, in a 50/50 venture with GGP.
“When we’ve sold portions of projects to a REIT, they have to manage it. It just works better because they have all the reporting they have to do as a public company. GGP is our partner in several deals and we understand why they have to manage the properties. In a lot of these arrangements, we do participate in the management because we are very active. All of the REIT guys have been excellent to work with, and as a partner, they respond to our questions and thoughts because we bring value to the table. We like to plug into their knowledge and learn what they see around the world. We like to listen to what they have to say because they see so much.”
JWA is perhaps best known for developing Riverchase Galleria in Birmingham, Alabama. “The mall is 30 years old and doing great,” Wilson says. “We still own 50 percent of the retail – we are partners with GGP – and we own 100 percent of the office, as well as interest in the hotel, the Hyatt Regency/Wynfrey Hotel. We spent a lot of money on the mall; it is still a flagship property for us. It is one of those that keeps on going. We’ve had department stores leave but we’ve been able to fill the spaces. Macy’s moved, and we added Von Maur. We lost McRae’s, we added Forever 21 and Belk Home Store. The office space has stayed leased. A year and a half ago, we brought Hyatt and fully renovated the hotel. The project is still a big part of our lives and it is doing great. It is a great legacy from my father.”
Today, Jim Wilson III (left) serves as chairman and CEO of JWA, and his brother Will Wilson (right) serves as president. Both grew up in the business, learning it from their father, company founder and commercial real estate icon Jim Wilson, Jr.
The company also sells some of the projects it develops. For example, JWA sold the Mall of Louisiana to GGP in 2004. “Back then, the cap rates were so low, and we had a partner that wanted to get out. It was smart for us to sell. We held the property for seven years, and then we sold it. The REITs were growing at that time and were aggressively pursuing top tier properties.”
He adds, “We decided to take the money and put it on a shelf. During the recession, that is one of the things that allowed us to keep our good people. We might not have been as busy as we would have liked, but we knew we’d come out of this at some point and we wanted to keep our team together. I kept my construction team, my leasing team, my accounting team and all my folks. They know everybody in the business and it is starting to pay off for us. Now, we are looking at building our portfolio back and we’re investing in some new and exciting projects, all evidence of the different times and different strategies we go through.” SCB
This article was written By Randall Shearin and Jaime Lackey of Shopping Center Business for the May 2016 issue.