"Big mall operator envisions national stores in MIA terminal"

Wednesday, October 13, 2004

MIAMI INTERNATIONAL AIRPORT
Big mall operator envisions national stores in MIA terminal
Travelers at Miami International Airport may finally have a handful of
'brand-name' retailers to choose from in the next several months.
By INA PAIVA CORDLE
The Miami (Fl) Herald


Long-awaited national stores may begin appearing in Miami International
Airport by the end of the year, as a major mall operator develops the first
wave of new retail shops.

Westfield Concession Management has not yet signed any tenants, but it hopes
to bring in such retailers as Borders Books, Brookstone and Ron Jon Surf
Shop, said George Giaquinto, vice president of Westfield's airport division.

''What you are going to see between now and mid-next year is a variety of
stores rather than all newsstands or $10 stores,'' Giaquinto said. ``You'll
be seeing some brand-name tenants and some great local tenants -- a
different, exciting retail program that the airport has not had.''

MIA's largest retail bid in a decade is the first of several new contracts
coming up for retail, food and beverage and duty free shops that are aimed
at transforming MIA into a modern airport.

MIA's retail makeover has been slow and prolonged, lagging behind other
airports and dragged down by years of political interference and influence
from lobbyists. In the new contract, longtime airport retailers may remain
in a more limited role.

After a lengthy bidding process that involved calculation errors and led to
the disqualification of a top-ranked candidate, Westfield was chosen to
manage 36 stores. Part of an Australian company, Westfield also operates in
Orlando, Reagan National and five other major airports.

Surveys have found that MIA's departing travelers mostly want lower prices,
more restaurants and stores and a greater variety of merchandise.

QUALITY CONCERNS

''The main thing that has been loud and clear from the voice of both the
passengers who are tourists and Miami residents, and also Miami residents
who meet and greet family members, has been the quality of the merchants,''
said Jim Forrest, an account manager with Synovate, the company that
designed the study for MIA.

Soon, passengers will see a new design and spruced-up newsstands, some of
which will be operated by the national company Hudson News.

New local and regional stores will also be added. Among those proposed are
gift and clothing shop Miami to Go, Alf's Golf Store and Bayside Brush.
Women- and minority-operated stores will compose 21 percent of the contract,
the standard in county projects.

''I've been waiting for this opportunity for 10 years,'' said Carole Ann
Taylor, co-owner of duty-free shops at the airport who hopes to open Miami
to Go within six months. ``At all airports, you see a signature store, and
you will soon see that in Miami.''

CENTRAL AREA

The new stores mostly will be in the central part of the terminal between
Concourses E and H. The majority will be in the terminal area before
passengers reach security, with some newsstands past security.

The first store will be ready in December and the last should be completed
by July 2005, said Patricia Ryan, manager of commercial operations at MIA.

Until July 13, Miami International Airport had two long-standing,
month-to-month management agreement contracts for retail stores in the
central part of the terminal.

Since 1993, Sirgany Century has managed 14 newsstands and nine stores.

The other contractor, Miami International Airport Pharmacy -- owned by the
principals of West Miami-Dade-based Bijoux Terner -- has operated two sundry
stores and nine $10 accessories and jewelry stores since 1990.

CONTRACT TERMINATED

Sirgany's contract will be terminated today, Ryan said. Giaquinto said he is
talking to Sirgany about continuing to operate about five newsstands. A
Sirgany executive, Raymond Kayal Jr., did not return calls.

The airport also notified Miami International Airport Pharmacy it will close
three stores, which will be turned over to Westfield on Thursday. However,
the company's other eight stores will continue to operate under the
management agreement until all new stores are built, by next summer. A
company executive, Rosa Terner, did not return phone calls.

Though no contracts for new stores have been signed, some prospective
tenants confirmed they are in talks with Westfield.

''We're very optimistic we'll find the space we like and be able to
negotiate a deal with Westfield,'' said Susan Stackhouse, president of
Stellar Partners, which would operate the Ron Jon Surf Shop store and
Mindworks, a children's store.

Brookstone spokesman Robert Padgett also confirmed that the company, which
opened a store at Orlando's airport in September, is looking at space at
MIA.

The terminal retail contract, which went out for bid in January 2003, was a
contentious process.

THREE BIDS

In May 2003, three bids were received: from Westfield; BAA USA, the U.S.
subsidiary of a British company; and Unison-Maximus, a Chicago aviation and
consulting firm.

An evaluation committee, made up of airport professionals from around the
country, ranked BAA first, then Unison-Maximus, then Westfield. But after an
error was found in the computation, the ranking was changed to
Unison-Maximus, Westfield, BAA, Ryan said.

Then Westfield disputed the evaluation, saying Unison did not meet the
qualifications. By September 2003, the committee had disqualified
Unison-Maximus.

The airport spent the rest of last year negotiating a contract with
Westfield.

But talks broke off, and by April, MIA wanted to reject all the proposals
and start over.

Instead, in May, the County Commission authorized that negotiations
continue. The contract was approved and signed in July.

MINIMUM GUARANTEE

Under Westfield's contract, estimated annual sales for all the stores will
be $32 million, Ryan said. Beginning next July, the airport will get a
minimum annual guarantee of $3.9 million, or a percentage of gross revenue,
whichever is greater.

The percentage ranges from 11 percent to 19 percent, depending on the type
of store, and could add up to an additional $4 million for the airport, Ryan
said.

But that is less than the 25 percent of sales it now earns because the
airport itself acts as the developer, she said.

In the last fiscal year, MIA earned $6.7 million from the Sirgany Century
stores and $2.1 million from the three Miami International Airport Pharmacy
stores.

''The intent here is that because we are not considered the experts in
retail, now we have an expert developer in retail which should be able to
generate well-known brands and update this airport,'' Ryan said.

In the next several months, contracts for more than 100 other spaces will
come up for bid that will bring more new retail, currency-exchange and food
and beverage vendors.


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