COVER STORY, MAY 2008

CORNERING THE RETAIL GAME
Cormac Company has built its business through well-located land plays and intelligent development.
Kevin Jeselnik

Cormac Company is a real estate firm of many skills, from land development to tenant representation to ground-up shopping center development. The Omaha, Nebraska-based company, behind founder and President Jeff Johnson, has always depended on careful growth and strategic acquisitions to build its portfolio of land and bricks-and-mortar holdings. Concentrating on acquiring property in established, growing locations has helped Cormac become a highly successful developer that provides markets with in-demand retailers and services that are often complementary to the area’s existing tenants.

Cormac Company’s president Jeff Johnson discusses the company’s current developments while Steve Dunn, director of business development, looks on.

Cormac was formed in 2001, but Johnson had been piecing together an extensive portfolio of land in the years prior, particularly in Kansas City, Omaha and Sioux City, Iowa. Growing up in the industry, and around land development, instilled in Johnson the importance of high quality sites as a crucial aspect of retail development.

“In 1999, we started to make strategic land plays in Omaha and Kansas City,” Johnson says. “I think we acquired 1,200 acres of development ground over the course of 6 years. We developed the dirt, did builder programs for the housing and sold the office as we could.

It was kind of merchant land development. Then, we started to keep some of the key corners for retail, and it was at that time I started putting Cormac together, bringing people together that were experienced in retail leasing and development.”

In the years since Johnson planted the seed and subsequently formed the company, Cormac has developed approximately 2.5 million square feet of retail product, and has a similar amount in the pipeline now across six states. Along with its development business, the company has a successful tenant representation arm, including relationships with Old Navy, Barnes & Noble, Lifetime Fitness, Dress Barn and Starbucks Coffee. Starting in retail development led naturally to tenant representation.

“To me, [development and tenant rep] are interrelated, because getting out there and doing the projects really solidifies your relationships with the retailers,” Johnson explains. “The tenant rep side really keeps you in touch with what the retailers are doing and can lead to new development.”

Johnson credits John Dewhurst, director of retail development, for building and managing Cormac’s tenant representation side; he has been with the company from the outset. In its brief history, the company has established relationships with many other retailers besides those it represents. While Cormac first operated as a merchant builder of sorts, it has practiced a more long-term philosophy with its most recent developments.

“Over the past 6 years, [selling off some properties] has absolutely been a growth vehicle for us,” Johnson says. “Looking forward, that is probably not going to be the direction that we will go.”

One of Cormac’s first projects was State Line Station, a 925,000-square-foot, Target-anchored power center located along 135th Street and State Line Road in Kansas City. This area is an example of a promising quadrant that was identified by the company early on and marked for exploration. The company owns another large tract of land along 135th Street that it is now developing.

Cormac Company completed Lakeport Commons, a blend of power and lifestyle retailers, in Sioux City, Iowa, in 2005.

Another of its existing projects is Lakeport Commons, an approximately 500,000-square-foot lifestyle/power center hybrid completed in 2005. Located on 52 acres at Lakeport Road and US Highway 20 in Sioux City, Lakeport Commons features a unique blend of big box and lifestyle tenants, including Gordmans, Kohl’s, Old Navy, Best Buy, Chico’s, Talbot’s, Coldwater Creek, Gap and Jos. A Bank.

In the fall of 2003, Cormac also completed Sunnybrook Plaza, a 675,000-square-foot power center located at Sunnybrook Drive and Highway 20 in Sioux City.

The company’s bread and butter is big box development, but as evidenced by Lakeport Commons, Cormac has shown a willingness to add another dimension to a project if the demand and fundamentals are found in a particular market. A number of its projects have involved multiple uses on site, though the company hasn’t built a true, vertically integrated mixed-use project.

“Most of the stuff we’ve done, I call it multi-use,” Johnson says. “In the suburban markets in which we work, we are pretty hesitant to bring true mixed-use in; I don’t know if is feasible in a suburban Midwestern environment.”

In its hometown, Cormac developed and sold Legacy, a 225-acre retail, residential and office development between 168th and 180th streets on West Center Road. The Shops at Legacy offers Omaha shoppers 120,000 square feet of retail. Bear Property Management now owns and operates the center.

Cormac Company’s Corbin Park is underway in Kansas City and includes an upscale, 40,000-square-foot luxury movie theater.

Currently, Cormac is working on a number of projects in the Midwest, including two sizable endeavors. On an approximately 100-acre tract of land in the affluent Kansas City suburban area of Johnson County, Kansas, development is underway for Corbin Park, a 1.1 million-square-foot hybrid center. Located on 135th Street and Metcalf in Overland Park, Kansas, Corbin Park is bringing the first Von Maur department store to the Kansas City market, along with JC Penney, Barnes & Noble and Lifetime Fitness, which is already open.

The open-air, main-street style center will feature a truly eclectic mix of retailers, from the department store anchors and gym, to power tenants such as Sports Authority, Old Navy and Office Depot. Corbin Park will also include Gordon Biersch, Trader Vic’s and a high-end, 40,000-square-foot cinema that will serve dinner while patrons watch their films. The project will also feature a 156-room boutique hotel called Nylo, which will be created by an operator that helped roll out Starwood’s W Hotels concept. The company is also working to attract a collection of local tenants to the center.

“Kansas City, from a boutique standpoint, is great,” says Steve Dunn, director of business development for Cormac. “You have Country Club Plaza and all these great neighborhoods that have a lot of good, locally owned boutiques. We are really trying to fill in our mix of national tenants with local businesses to create a nice draw for Kansas City shoppers.”

Cormac acquired the site for Corbin Park in 2004, after it had been under contract with a prominent developer that sought to develop an enclosed mall on site. With his familiarity with the market from developing State Line Station, Johnson saw enough potential in the property to make it worth the entitlement issues and other challenges it presents.

“We just liked [the site] for the real estate, for the land play; in Johnson County, you cannot buy 100 acres of dirt on 135th Street,” Johnson says. “It took 2 years of entitlements and site work, and we worked to really define the tenant structure. There is a certain aspect of what we do that is truly opportunistic. I can say that we are driven intrinsically by good real estate and good demographics.”

In Omaha, Cormac is putting the finishing touches on L Street Marketplace, a 60-acre, 520,000-square-foot shopping center located at the intersection of L and 120th streets. Target, which is anchoring the project, opened in March; the rest of the center is expected to open by July. The site was previously owned by Lucent Technologies, and was a large green space adjacent to its headquarters facility.

“It was a site that a lot of developers wanted,” Dunn says. “A smaller developer in Omaha got a contract on it when it became available and brought it to us. Statistically, it is the third biggest intersection in the city.”

Upon obtaining the land, Cormac immediately began working with the city and sought to lock down Target. After dealing with various issues, including traffic, entitlements and storm water drainage, the development took off. Tenants that will open this year include The Sports Authority, Best Buy, Books-A-Million, Michaels, Ulta, Petco and Shoe Carnival.

With a handful of current developments occupying the company, Cormac is weighing its next move and constantly eyeing new possibilities. The company is building its own infrastructure as it grows in size and capability. As for its philosophy as it expands its horizons, it doesn’t seem much is going to change. When a company has had so much success in less than a decade of existence, that isn’t necessarily a bad thing.

“We have tried to stay pretty low key as we’ve grown,” Johnson says. “Growth is always a challenge, and we try to be measured about the projects we are doing and the areas to which we are expanding. We look at a lot of deals, but measured growth is what is important to us going forward.”

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