Refocused On Development
Faison Enterprises, one of the pioneers of the industry, has shed its malls and focuses now on open-air retail development.
Randall Shearin

(left to right) Henry Faison, Jimmy Culpepper, SCB Publisher Jerry France and Phil Norwood.

Charlotte, North Carolina-based Faison is no stranger to the shopping center industry. With more than 45 years’ experience in the real estate business, the company has developed everything from malls to power centers to high rise office buildings. Today, the company continues in that tradition of development, creating hybrid power/lifestyle centers and a number of more traditional big box- anchored centers. Founded in 1962, Faison is one of the oldest companies in the shopping center industry that is still an active developer.  

Phil Norwood.

Shopping Center Business recently met with Phil Norwood, president and CEO; Jimmy Culpepper, executive vice president, retail development; and Henry Faison, chairman and founder, at the company’s headquarters in Charlotte to see what it is developing, and why the company believes that development is the way it should grow.

In the 1970s and 1980s, Faison was heavily active in the development of many regional malls in the Southeastern United States. The company continued to operate those malls for many years. While developing malls, the company also grew a large third-party management business. By 1997, the company was managing more than 65 million square feet of space and was the 10th largest real estate services company in America. In 1998, the company merged its property services division, including its retail services division, with Trammell Crow Company, a transaction which did not include any of Faison’s real estate assets. In 2002, the company bought back the retail services branch when Trammell Crow exited the retail services business.   In 2003, Faison made a strategic decision to exit the mall business and sold most of its mall portfolio to CBL & Associates. Since then, the company has been using the capital generated by that sale to develop new centers throughout the Southeastern and Mid-Atlantic markets.  

Jimmy Culpepper.

“As a consequence of that sale, we are more active than ever on the development side in a variety of product types including retail, residential and office projects,” says Norwood. “It has enabled us to redeploy our capital and our people and add to our talent base. It has also enabled us to become active in the lifestyle development business.”

Privately held, Faison is set up as a non-profit corporation under a special charter in North Carolina though it remains a full taxpayer under federal law. The charter has a life of 230 years, at the end of which all capital and assets will be distributed to charities. The company also has a short-term charitable purpose, in that it wants to be at the high end of corporate giving to charities. The company annually earmarks monies to go to underprivileged young people as a goal for its funds. The charter enables the company to have a charitable purpose and be free of family control. The company is controlled by a board of five to seven members, with a majority of those having no role in the operations of the company. In that sense, Faison operates much as a public company in that management is accountable to an independent board.

Henry Faison.

“We don’t have the baggage of either a family business or the public markets trying to earn money,” says Faison.

Today, the company is developing everything from power centers to urban mixed-use centers to lifestyle centers. Currently, the company has 15 projects in eight states valued at $700 million under development, and a healthy pipeline of 18 projects totaling 7 million square feet on the drawing board. Unlike in its mall days, Faison’s operations are seemingly now more focused on development; the company sells a significant part of what it develops and recycles the capital into new projects.

Faison redeveloped a 1960s-era regional mall into Pompano Citi Center, an urban-style center in Pompano Beach, Florida.

The company’s retail pipeline and projects are generated through four regional offices: Charlotte, North Carolina; Bethesda, Maryland; Atlanta; and Orlando, Florida. The Charlotte office, run by Britt Byrne and Bill Barnett, develops projects in the Carolinas and parts of Virginia. The Bethesda office, led by Howard Biel, concentrates on the Mid-Atlantic, primarily Virginia, Maryland and Pennsylvania. The Atlanta office, run by Mike Cohn, concentrates on developments in Georgia, Tennessee and Kentucky, while the Orlando office, led by Chuck Bludworth, concentrates on Florida.

“Our retail development program is so diversified; we are not limited to any particular venue,” says Culpepper. “The key to its success is that we have extremely talented senior development people in our regional offices. All of the disciplines are also in our regional offices, so we can combine their efforts on a mixed-use application.”

One of the unique aspects of Faison is the fact that the company’s developments are generally self-funded. As the capital markets tighten up, this will make Faison an even more attractive name to developers, retailers and landowners alike.

Faison developed a 190,000-square-foot power center called Mooresville Crossing in Mooresville, North Carolina, with Best Buy, Old Navy, Bed Bath & Beyond, Staples and Petco as anchors.

When Faison made the decision to exit the mall business, it was in the middle of pre-development work for its next regional mall, Northlake Mall, on the north side of Charlotte. It had already assembled the site and negotiated department store anchor deals with Macy’s, Belk and Dillard’s. It sold that project to Taubman before ground was broken, but it retained land on the periphery of the center. Faison has developed Northlake Commons on a portion of that land. The 80,000-square-foot specialty center also has some restaurant outparcels occupied by Chili’s, Olive Garden, Chick-fil-A and On The Border, among others.

In nearby Mooresville, the company recently completed a 190,000-square-foot power center called Mooresville Crossing with Best Buy, Old Navy, Bed Bath & Beyond, Ulta, Staples and Petco as anchors. The center has five restaurant outparcels out front. Faison sold the center to Kimco in August for $41 million.

“This great project is is strategically located to benefit from impressive demographics showing a demand for these retailers,” says Culpepper.

In Waldorf, Maryland, Faison developed the 425,000-square-foot Waldorf Marketplace. The center’s first phase (pictured) had anchors like Safeway, AC Moore and Office Depot.

In Waldorf, Maryland, the company developed the 425,000-square-foot Waldorf Marketplace. The center’s first phase had anchors such as Safeway, AC Moore and Office Depot. A second phase added more big box retailers, including TJ Maxx/Home Goods, Kincaid Furniture and DSW. The demographics and density of the area were such that a phase of lifestyle tenants, such as Chico’s and Jos. A.Bank, was added.  Faison sold the first phase of Waldorf Marketplace to American Realty Advisors in 2005, and recently sold the second phase to the same firm for $38.5 million.

Another project developed in Maryland is Fairwood Green in Glenn Dale,   a 125,000-square-foot commercial center at the heart of the upscale Fairwood, a 1,100-acre master-planned community currently under development by General Growth Properties, LLC. Fairwood Green is anchored by a 55,000-square-foot Safeway complemented by a Gold’s Gym and includes much needed retail and dining options for this fast-growing area.

A second phase of Waldorf Marketplace added more big box retailers, including TJ Maxx, Kincaid Furniture and Discount Shoe Warehouse. The demographics and density of the area were such that a third phase of lifestyle tenants, such as Chico’s and Jos. A. Bank, were added.

Located at the affluent and fastest growing sector of Hagerstown, Maryland, and the Washington County market, Stone House Square, a 265,000-square-foot community center anchored by Weis Market, Lowe’s Home Improvement, specialty shops and restaurants, is well under development. In Brandywine, Maryland, a 730,000-square-foot regional power center featuring Costco, Target and Safeway is completing the site plan approval process while in La Plata, Maryland, construction starts this fall on Rosewick Commons a 300,000-square-foot community center anchored by Giant and Lowe’s Home Improvement Center.

In addition to a strong and very successful retail program in Maryland and Virginia, through a separate commercial/residential operation in Washington, D.C., Faison has been particularly active on the multifamily and mixed-use front, most recently developing five condominium projects valued in excess of $300 million.  

“We are increasingly seeing multi-use situations requiring multiple asset specific disciplines centering on the strategic value of having a large commercial/residential division as well as a retail development operation,” Norwood says. “Even within one company, they are very hard to do. There is no autopilot on anything in this business.”

Faison is partnering with Cousins Properties to develop The Avenue Murfreesboro in Murfreesboro, Tennessee.

In Murfreesboro, Tennessee, Faison has partnered with Atlanta-based Cousins to develop a 750,000-square-foot hybrid lifestyle/power center called The Avenue Murfreesboro that will be home to more than 110 retailers and restaurants opening October 17. Belk is developing a two-level, 135,000-square-foot store that will anchor the center. Also featured are Dick’s, Best Buy, Linens ‘N Things, Cost Plus World Market, Old Navy, Barnes & Noble, Ulta Cosmetics, Michaels, David’s Bridal and Off Broadway. Other tenants include Ann Taylor Loft, Talbots, Chico’s, Jos.A. Bank, Coldwater Creek, Victoria’s Secret, Bath & Body Works, American Eagle, Lane Bryant, White House|Black Market, Champs Sports, Kay Jewelers, Mimi’s Café and many other prominent retailers and restaurants. The two companies created a team to handle the development, construction, leasing and management of the center.

Faison’s reputation often opens doors for the company. Because it has been active in its markets for so long and it uses its own balance sheet to finance projects, it is an attractive name to many looking to get a land deal done. Since the company is privately held, it can also move quickly on a deal.

The 80,000-square-foot Northlake Commons specialty center is located across from Northlake Mall in north Charlotte, North Carolina.

“If you have a solid base and structure for the company, and you’ve stood the test of time like we have, then you have a strong competitive advantage going forward,” says Faison. “We’re not out here to try to double in size overnight. We want to grow at a solid rate as we have done for the past 15 years.”

In Georgia, the company is currently developing two power centers that will total 1.2 million square feet in the greater Atlanta area. In Winder, the company is developing a 550,000-square-foot power center called Barrow Crossing anchored by Target, Belk and Publix. The center is expected to break ground later this year and open in spring 2009. Faison is also developing Logan Village, a 650,000-square-foot center that will stretch across Highway 78 in Loganville. The center is expected to have 10 anchors and 75,000 square feet of small shop space. The first phase is expected to open in late 2008 and the second phase will open in summer 2009.

The company is active in other sectors of real estate as well. In North Carolina, it is active in finding tracts of residential land, creating all the infrastructure and entitlements, and then selling the land on a phased takedown basis to national homebuilders. It currently has seven such deals going in the Charlotte area. The company is also developing multifamily units, such as the 312-unit Waterlynn Place development in Mooresville, North Carolina, which will be completed by spring 2008. This type of development has been great for Faison’s retail development business as well, as it is able to see where housing is headed. As the Charlotte area is built out, Faison has begun to look at redevelopment of existing centers as an opportunity. For the future, the company has no immediate plans to grow outside the current East Coast footprint.

“We will opt to be better and bigger where we are rather than broader and more dispersed in other markets,” says Norwood. “We have about half the number of offices that we used to have but twice the amount of activity. Our direction has been to build upon our successes rather than try to plant the flag in other places.”

Faison is also active in retail services again, serving as leasing agent and manager for many properties in the Carolinas. For example, it is leasing Four Seasons Station, a 175,000-square-foot theater-anchored center under construction in Greensboro, North Carolina, by Koury Corporation.

Paramount to Faison’s success is its people, many of whom have been with the company for a very long time.

“The challenge with growth is human capital,” says Norwood. “We are not really a company of projects; we are a company of people. The projects are a result of what people do. We have to find more good, young, fresh, capable, highly skilled and motivated people who want to spend their career here following through on what Henry, Jimmy and I have done. We have to make this the right environment for them.”