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Reinventing Regional Malls

Increased demand for shopping alternatives to the mall has garnered a great deal of attention in recent years. Power centers, lifestyle centers and urban mixed-use centers have blossomed in the past decade, catering to Boomer and Gen-Y needs for convenience and experience. As the industry reinvents itself, daunting challenges face many owners of traditional enclosed shopping centers.

However, with a reconnection to the consumer and a comprehensive plan of action, the majority of regional malls can continue to thrive, in spite of increasing competition. Often, extensive redevelopment and repositioning are the most effective ways to respond to shifts in demographics and consumer preferences. Such projects can range from combination expansion/repositioning to a complete ground-up redevelopment.

Though redevelopment brings challenges in its own right, with proper planning, design and project management, this minefield of pitfalls can be safely and successfully navigated. The top 10 problems for redevelopers are:

  1. Not planning for enough flexibility.

    Consumers' famously fast-changing tastes can give owners headaches when it comes to redevelopment projects. If sufficient flexibility is not built into the project, owners can find themselves with a suddenly unfashionable center with little wriggle room to remedy the situation.

  2. Failure to ‘listen’ to the demographics when identifying the unfulfilled local shopping needs.

    Simply attempting to imitate the new lifestyle center in the trade area or to mindlessly follow the “industry standard” redevelopment model will not be enough, and will likely result in failure. Particular attention needs to be paid to the local marketplace, and where there is a disconnect between what consumers are seeking and the existing shopping, dining and entertainment venues.

    However, it is not enough to merely identify a retail segment that is not represented within the trade area. Mall owners can also run into major problems if the trade area demographics are not acted on. Owners need to become intimately familiar with the current demographic profile and projected future growth to accurately gauge what type of redevelopment is feasible.

  3. Failure to ‘think big.’

    Exceptional opportunities can be missed by limiting the scope of the redevelopment in the initial planning stages. Often, maximum return and positioning for long-term growth will simply not be achieved by a routine renovation consisting of some new signage, floor tiles, lights and replacing a few poorly-performing tenants. In these cases, the focus needs to be on comprehensive “re-imagining” of the center that will position it for 15 years or more of growth. Consumers will easily spot a cheap, 30-day mall makeover.

  4. Failure to consider alternative anchor types.

    Some mall owners run the risk of getting little in return when they “give away” an anchor space to a traditional department store. Although some strong operators remain, in general traditional department stores are not the traffic generators they once were. Today, discounters, movie theaters or well-planned clusters of specialty, lifestyle, entertainment or restaurant anchors can, in many cases, serve as more effective anchors by contributing more direct income while also driving traffic to the center.

  5. Neglecting to diversify center during redevelopment.

    Some owners may be tempted to exclusively focus new tenanting in redevelopments on their center's perceived existing strengths or lone target demographic. This can lead to a perilous situation in which the center becomes unbalanced with one type of retailer dominant and thus financially vulnerable to changing tastes or other retail trends. Instead, owners should view redevelopment as an opportunity to strengthen segments of the market where the property is weak and give it balance and make it more essential as a shopping destination to a larger slice of the trade area's population.

  6. Not including enough entertainment and restaurant tenants.

    When entertainment and restaurant tenants are under-represented at large shopping centers, mall owners run a severe risk of losing out on lucrative evening business potential. Of course, research and careful planning are necessary to achieve the appropriate mix of dining and entertainment tenants for the center, but less-than-ideal representation will likely result in lower evening traffic levels.

  7. Not designing the redevelopment from the perspective of the consumer's shopping experience.

    Owners who are redeveloping will encounter severe stumbling blocks if they do not prioritize the quality of the consumer's shopping and entertainment experience throughout the planning and design stages of the project. In the end, if the redeveloped center is not a place where shoppers enjoy spending their time, then the center will undoubtedly fall far short of its potential.

  8. Failure to consider addition of other property types.

    This pitfall may result in significant missed opportunities. Although not appropriate or feasible for every redevelopment opportunity, the potential for synergistic benefits is far too great to not at least examine the possibility of incorporating non-retail uses in the early planning stages. Residential, office and hotel uses all have the potential to productively coexist with retail and enhance the value of the property, particularly in underserved markets.

  9. Remaining isolated from the larger community.

    Owners can err in redevelopment if they ignore the world outside the property's boundaries: the neighborhood. Although not always realistic given existing development and street patterns around some malls, failure to integrate with the surrounding community can result in a further “disconnect” from the consumer's shopping experience. Again, focus needs to be placed on creating a welcoming environment where shoppers enjoy spending their time. So why not welcome the neighborhood into the center with an inviting appearance that feels cohesive with its surroundings and has integrated auto and pedestrian traffic patterns.

  10. Chasing the latest trend in all aspects of the redevelopment.

    This trap will undoubtedly result in a look in future years that screams “built in 2006!” Consumers' reaction will not be kind to a property that makes them feel as if they're stuck in a time warp. A good example is the neo-traditional or somewhat retro town center design that has already become perhaps too popular for its own good, as such developments have been quite numerous in just the past few years. They often are very similar in appearance, despite being universally marketed as “innovative.” Owners need to create a look and feel that is custom-tailored to their specific property that will remain resistant to developing a “dated” feel.

A glimpse forward

By 2020, the shopping center landscape will certainly appear much different than it does today. Ongoing demographic shifts will ensure the continued growth of off-mall shopping center formats. For regional malls, successful large-scale redevelopment projects may separate those that once again excel from the rest of the pack. By avoiding the above pitfalls of redevelopment, mall owners will be on the fast track to successful reinvention.

Jones Lang LaSalle President and CEO — Retail.

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