Study: Malls Spend Big to Stay Relevant
November 9, 2017,
CHICAGO—The nation’s shopping malls, considered under siege by the shift toward online shopping, are reinventing themselves in an effort to remain relevant, according to“A New Mall Rises,” a study of 90 super regional and regional shopping centers by JLL Research. And in doing so, the owners are dramatically transforming malls to the tune of more than $8 billion in renovations over the past three years.
"Malls must respond to changing shopper preferences with laser focus and evolve their purpose through redevelopments to be relevant," said John Lambert, director of retail development for JLL, a professional services firm that specializes in real estate and investment management. "Many of the 90 properties we looked at are elevating their role beyond purely shopping and becoming destinations for dining out and entertainment, community activities and even lodging and residential."
Major mall renovations are falling into four categories: food and fun, community connections, facelifts and new uses. Leading the way in renovations is the addition of food and beverage options (41 percent), followed by tenant upgrades (34 percent) and entertainment (29 percent). Community connections involve adding open spaces, parks and providing areas for kids and community uses. A fifth option is de-malling or demolishing the space for an entirely new use.
According to the study, at the West Oaks Mall in Orlando, a Xerox call center took 144,000 square feet of former Sears space and Bed Bath & Beyond was planning to reformat 35,000 square feet into its own call center.
“Call centers in particular are attracted to mall space because of the large floor plans that require little retrofitting to suit the needs of the large number of employees and the ample parking on site,” the study noted.
Changing the tenant mix is another strategy being used to revitalize shopping centers. Trying to reach millennials, 19 percent took on luxury tenants, 29 percent, fitness tenants and nearly 52 percent tried new apparel businesses.
“Sometimes success is all about marketability,” the study said. “Malls are refreshing branding strategies to improve and add to their appeal. Achieving this can be done through common area improvements like modernizing outdated features in malls like new lobbies, comfortable seating, free wifi, relighting walkways, improved way finding, fresh paint and more windows for natural light.”
In many instances, the malls weren’t just revamping their formats, but also their monikers. About 19 percent removed “mall” from the name and rebranded using “shoppe,” “towne center” and “village” to create a sense of community.
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