Seeing Development From Both Sides
H.J. Brody has been a department store retailer and a developer, offering him unique insight to the retail industry.
Randall Shearin

For H.J. Brody, the transition from retailer to developer has followed a different path than most. Rather than just working for a retailer or a developer, Brody actually owned a department store chain and now owns and operates his own development company.

Shopping Center Business recently met with H.J. Brody, president of BrodyCo, at the company’s headquarters in Greenville, North Carolina.

For Brody, getting into the retail business was natural — after graduating from the University of Pennsylvania’s Wharton School of Business, he followed his father and uncles into the department store business. The family had several department stores under the Brody name in North Carolina during the 1960s and ‘70s. H.J. Brody and his cousin eventually purchased all shares in the business from other cousins and uncles and became the sole owners during the 1980s. The two also expanded the chain, culminating in seven stores in seven malls in eastern North Carolina. In 1998, Brody wanted to expand the chain even further. He went to Wall Street to find capital. His banker connected him with Brad Martin, who was then running Proffitt’s (now Saks Inc.). Proffitt’s bought the Brody’s chain in 1998, and H.J. Brody exited the department store business.

By this point, Brody had already started dabbling in commercial real estate ownership after forming BrodyCo with two partners. He purchased a small center in his hometown of Greenville, North Carolina, where Brody’s was based. He initially bought the Kroger-anchored center to redevelop into a distribution center for Brody’s Department Stores. However, after selling Brody’s, there was no longer a need for a distribution center, but H.J. Brody was left holding the property.

“I figured since I had done the leases on our department stores, it would be easy to flip the coin and be the landlord,” says Brody. “I was naïve.”

For awhile, Brody didn’t know what he was going to do with his career or with the 70,000-square-foot retail center he owned. He set up his offices in a vacant Little Caesar’s Pizza space at his center. Eventually, as both tenant and owner, he realized the property needed to be redeveloped. He repositioned the center, adding some small shops and cut new anchor deals with PetSmart, Michaels, Staples and Dollar Tree. Within 6 months, Brody had become a bona fide developer. He began scouting sites for his next center.

While looking for existing properties, Brody stumbled upon 400 acres in Wilmington, North Carolina. The property was owned by a family who had held the land since the early 1900s. Numerous developers were after the land, yet the family did not want to sell. The county and the city, meanwhile, held a charette process to examine what could be done with the land, should it ever be developed. The city determined a mixed-use project would be the best use of the property. When the family did decide to sell the land in 1999, Brody placed a bid, but thought his chances were slim. Then one day in July, a signed contract was faxed to Brody’s offices.

“I had been told I wasn’t getting the land, so we had no plans developed,” says Brody. “When we did get the property, we had to figure out how we were going to approach the property and plan the land.”

BrodyCo has developed Mayfaire Town Center with The Zimmer Company in Wilmington, North Carolina.

The plan that Brody and his partners developed is now Mayfaire Town Center, the first mixed-use center in Eastern North Carolina, and one of the most successful retail centers in the state. Opened in 2004, the center is more than 500,000 square feet in size and has retail, office and multifamily space.

Brody partnered with Wilmington-based Zimmer Development and formed a joint venture, Brody-Zimmer, which developed Mayfaire. The group hired Charlotte, North Carolina-based Land Design to masterplan Mayfaire. Atlanta-based Cooper Carry was ultimately hired as the project architect.

“When you are a clothing retailer, you look at all the apparel on one wall to decide what lines and products your store will carry; as a developer, I tried to go about selecting a team for Mayfaire the same way,” says Brody. “I knew enough to know that I wanted people who had developed large centers before. I didn’t want a learning curve.”

Mayfaire Town Center continues to be a growing development for Brody Co.

With the team in place, and the right plans drawn that fit the city’s expectations, the project soared through the planning and zoning committees unopposed and the city council soon approved the project. After September 11, 2001, the project stopped cold. Wachovia Bank, who underwrote the project, held with Brody throughout the next year and a half. Then, deals started coming. Hecht’s, Barnes & Noble, Michaels, Cost Plus, Ann Taylor, Talbot’s, Williams-Sonoma, Banana Republic, White House|Black Market and Consolidated Theatres, were the first retailers to open at the center in 2004. Condos were planned to sit above the retail portion of the project, but they were added after the retail was complete.

“We did learn the lesson that things should be done from the top down,” says Brody.

Belk Department Stores is one of the anchors of Mayfaire Town Center in Wilmington, North Carolina.

The first phase of the condos sold out almost immediately. The condos are being built simultaneously in the second phase of Mayfaire, which is under construction now. The 20 units are just coming online, with prices starting in the $400,000s. Phase II contains 60,000 square feet of retail and 100,000 square feet of condominiums. Pottery Barn, Limited Too, Victoria’s Secret, J.Crew, Bath & Body Works, Francesca, Eddie Bauer, Swoozie’s and Sunglass Hut are some of the retailers joining the center in the second phase, which will open by the Christmas season. Office tenants are also big names, including a 90,000-square-foot regional office for Wachovia Bank. A Hilton Garden Inn has recently opened as part of the second phase.

Mayfaire Town Center at night.

As Brody was developing Mayfaire, he also began acquiring sites and properties for his next projects. In Greenville, he purchased a vacant Heilig-Meyer’s building and redeveloped it into a convenience center with tenants Panera Bread, Starbucks Coffee, Jos A. Bank and several local tenants. A church sat next to the property. The church needed to expand, but had no room. Brody purchased the church building and helped the congregation build a new church. He then razed the old church and expanded his shopping center by 100,000 square feet. BrodyCo also picked up the grocery-anchored center next door and combined the projects, adding some freestanding retailers and rebranding the project La Promenade. The center now totals about 240,000 square feet. The headquarters of BrodyCo sit atop the retail portion of La Promenade. 

Also in Greenville, BrodyCo bought a 140,000-square-foot Food Lion-anchored center from Kimco near the burgeoning East Carolina University Medical School. BrodyCo renovated the center and added new tenants, like Starbucks, and is working on retenanting the entire project.

The company’s two newest projects are also located in Eastern North Carolina. The company is developing a 250,000-square-foot power center in Morehead City, North Carolina. The big box center is anchored by [need retailers]. The center will open in spring 2008. The center is located along Highway 70, across from a freestanding Belk store.

“This is a sleeper market,” says Brody. “Belk has a good performing store that is in the process of expanding. The addition of more permanent and part-time residents to the area are increasing the need for retail in the area. The numbers from our research for the market are very strong.”

Brody Co.’s latest project is 11 Galleria in Greenville, North Carolina.

The company’s other current project is 11 Galleria, a unique lifestyle development in Greenville. While you may not have heard of Greenville, it is a market that is exploding with growth, says Brody. The city itself has about 80,000 people, but the market extends to about 250,000 people. The city is home to East Carolina University, the third largest college in the state. East Carolina also houses a medical school, which is one of only four in the state. 11 Galleria is the redevelopment of the former Carolina East Mall, which was originally developed by The Hahn Company in the 1970s.

BrodyCo purchased the project in 2006 and quickly scraped the center to show that he was serious about redeveloping. The only thing that still stands is a freestanding Sears store, which Sears Holdings owns and operates. BrodyCo has de-malled the center and is in the process of reinventing it as a pedestrian-friendly lifestyle center. In addition to Sears, Kohl’s signed a deal to anchor the project and began construction in spring 2007; its store will open this month. Brody has ambitious plans to fill the space between the two anchors and has Cooper Carry busy working on the design. Official plans will be announced this fall and leasing will begin soon after.

In addition to its development of shopping centers, BrodyCo is also a partner in a development firm that is the preferred developer for Walgreens throughout North Carolina. David Brody, one of the partners in BrodyCo, handles this relationship for the company. He is currently working on five locations that have been approved and are under development for Walgreens. Other retailers have also approached the company about developing stores.

“We get a lot of calls because retailers see that we come with a retail background,” says Brody. “That helps us understand their side. We know their risk, but we also know the speed they need to open. We also try to do things first class. With Mayfaire, we tried to build something that looked different and presented itself as such. That helped us and that helped the deals fall in place.”

BrodyCo owns everything that it builds. Because the company is based in eastern North Carolina, where all of its properties are located, it has no plans to sell any of its projects. The company builds for the long term, so it doesn’t cut any corners on development or construction. The company also has a hands on approach to dealing with its retailers, whether they are national or a single store location.

“We sometimes get deals with smaller tenants because they know their deal won’t have to go through a number of committees,” says Brody. “It is a big deal to them that the buck stops here. That kind of tenant knows that if he has a problem, he only has to make one call to me to get it corrected. Small retailers have enough challenges; they don’t need the landlord giving them any problems.”

The company’s biggest challenge has been credibility. While Mayfaire lends more and more to that as retailers continue to be successful there, Brody says it is still his biggest challenge in getting national deals. That challenge is getting easier now that more properties are coming out of the ground and the company is garnering a good reputation as a landlord and developer. Having over 1.5 million square feet under ownership and management after the completion of its two new projects will also gain it recognition.

While Brody is the face of BrodyCo, he is not the only employee. The company has three partners, H.J. Brody, his cousin, David Brody, and Robert Beller, a long time friend. A leasing staff and some development staff round out personnel at the headquarters level. Since the company manages its properties, a large percentage of employees are at the property level. BrodyCo outsources some leasing, operational and marketing functions.