Shopping malls and anchored centers are responding to customers’ changing tastes and shopping habits.
There are about 1,100 malls in the U.S. today, and one out of every four could be out of business by 2022, according to a July 2017 article in Time Magazine. Malls started having difficulties back in 2007, when the Great Recession hit; even after the economy recovered, many consumers never resumed their regular visits. In addition, the rise of online retail and changing demographics have transformed the way people shop.
Some malls have responded by altering their tenant mix; others are being torn down and replaced with mixed-use developments or converted into open-air town centers.
“These changes are very much driven by the needs of the local community,” said Stephanie Cegielski, Vice President, Public Relations, International Council of Shopping Centers. “If a community wants to keep their mall, it may get renovated or updated. If they’re not supporting their mall, they will likely support something else, and developers will go in and make those changes.”
Some empty big box stores that once anchored malls have become fitness centers, hotels or condos, with the main entrances facing outwards toward the parking lot.
“If the mall is well located, in a densely populated area with convenient access, but the mall itself is no longer relevant to the community it serves, you could see a conversion from an enclosed mall to an open-air shopping center,” said Haig Buchakjian, Executive Vice President, Brixmor, an open-air retail landlord. “In weaker locations, you could see conversions to other uses, including industrial, office, medical or residential.”
Providing the experience
It’s not only malls that are seeing the need to change, however. Open-air shopping centers anchored by grocery stores or larger retailers like Lowes or Home Depot are trying to adjust to a new retail reality as well. “There’s a lot of redevelopment happening,” Cegielski said. “They are really trying to adapt to the shift in their communities.” As baby boomers move out of neighborhoods and younger generations move in, retail centers want to attract tenants who can create unique, experiences geared to their customers’ preferences. Millennials, in particular, don’t want to dine or shop the same way that everyone else does.
Emphasizing experience provides a competitive advantage for malls and shopping centers. No matter how good Amazon and other online retailers are at getting products out to customers, they can’t deliver salon treatments, a night of bowling or laser tag, or a meal shared with friends at a favorite restaurant.
But shoppers today do want the convenience they get with online shopping, so retail centers are finding ways to assist their tenants who want to combine in-store pickup with online ordering. They can designate close-in parking spaces to speed the pickup process, or even provide a centralized spot where customers can pick up all of their online orders.
Customers also want to be able to shop in a clean, safe and well-maintained environment, said Eric Richter, Senior Vice President, Property Management, Phillips Edison & Company, which owns and operates leading grocery-anchored shopping centers. “We are enhancing and retrofitting lighting, we are improving landscaping and the exterior look of the shopping centers and adding amenities like bike racks and benches.” The company is installing electric vehicle charging stations in some locations to accommodate the growing number of customers who drive EVs.
Other sustainable upgrades like solar lighting retrofits and smart water irrigation controllers serve a double purpose; they can improve a center’s appearance and provide a good ROI for the retail center owner and its customers, Richter added.
Mixing it up
In addition to a new tenant mix, some malls and shopping centers are adding flex office space and residential units, including condos, on their property.
“If you have a one-story shopping center and you’re trying to figure out the best way to create cross-shopping, you could build residential units above the retail,” Richter suggested. “People like to have restaurants and grocery stores all within walking distance, and the closer you can get to your customer the better.”
Richter believes some current parking space could open up for new development as driverless cars and ride-sharing companies help change the way people travel.
“If you have a couple of acres that are open and don’t have a development scheduled right away, you can turn that into some kind of sports fields or an open space where people can let their dogs go,” he added. “As the trend for mixed-use lifestyle developments continues to bring the housing, shopping, office and recreational sectors together, it becomes even more practical to ensure the most strategic use of every square foot.”
Evolving role of FMs
Facilities managers will have to anticipate the new services they will be asked to provide as malls and retail centers move towards mixed-use properties and a more varied tenant population.
Cegielski said FMs may need to reconfigure space for different tenant types and provide infrastructure for more technology. With customers accustomed to online ordering, for example, brick-and-mortar stores may move toward a new look, with less merchandise on the floor but more space required for product storage in the back. Retailers might display an item for customers to examine or try out, then have a service clerk or automated system retrieve it from the back. Other retailers may want to install technology like automated clothing retrieval systems that allow customers to select, without leaving the dressing room, clothing styles and sizes they want to try on.
A one-size-fits-all approach to facilities management won’t work in this evolving environment.
“It is critically important for our property managers to know their markets,” Buchakjian said. “We’ve structured our organization to allow our property managers to spend more time on property, to spend more time in and out of tenant spaces, to get to know those tenants on a more personal level so that they can really understand what it is our tenants need and how can we serve them in the best possible way.
“This is a local business,” he added. “If we want to be the best operator in our business, we have to really understand our tenants and our customers, and that only happens from really being local.”
Stephanie Cegielski
Haig Buchakjian
Eric Richter
CityCenterDC, a Washington, D.C., development by Hines, a Houston-based firm. Built on a 10-acre site downtown where a convention center used to be, the community now contains 216 upscale condos, 458 apartments, half a million square feet of office space, 330,000 square feet of retail, and a schedule of ongoing live events.
“There’s a lot of redevelopment happening. They are really trying to adapt to the shift in their communities.” Stephanie Cegielski
“We are enhancing and retrofitting lighting, we are improving landscaping and the exterior look of the shopping centers and adding amenities like bike racks and benches.”
eric richter
Five Trends in Retail Centers
1. More entertainment.People want an experience in a mall or shopping center they can’t order online – a meal with friends, a game of laser tag, a massage and manicure.
2. Improved experiences. To lure shoppers away from computers, retail centers are improving landscaping and adding amenities to create places where people want to congregate.
3. Fewer chain stores and restaurants. Millennials in particular are looking for local and unique experiences and goods.
4. People living and working onsite.Adding residential and offices (business and professional) to a retail center will increase foot traffic and put unused space to work.
5. Integration of online shopping with brick and mortar outlets.That could include special parking spaces or centralized locations to expedite merchandise pickups for customers who have ordered online.
By: Mary Lou Jay
