Report: Regional malls on the upswing since 2010
Scads of national retail chains are seeing their concepts fade out, but regional malls are still firmly in the picture.
That’s the diagnosis put forth in a report titled “Why Mall Reuse is Just Beginning,” from the entrepreneur-driven real estate firm Transwestern. Some key data points include:
*Regional malls have had positive net absorption since 2010, with the only blip in absorption occurring in 2009, at the height of the recession.
*In 2016, the U.S. retail market experienced 105 million sq. ft. of net absorption, representing a growth in occupancy of around 1%.
*Mall occupancy across the U.S. was above 95% in December 2016, equating to 848 million sq. ft. of space.
*Mall productivity has remained relatively steady and rose 0.7% in the last year to $465 per square foot.
“While we’ve seen store closures increase in 2017, malls are, for the most part, attracting new tenants through strategic marketing and property enhancements,” said Nick Hernandez, managing director of retail at Transwestern. “And in cases where a retail mall no longer makes sense, we have seen many owners successfully adapt to the changes in their trade areas by repurposing the mall for another use.”
The bottom line, as most developers are eager to point out, is that malls occupy some of the most accessible, highly trafficked real estate in the land, and it’s not about to go fallow. Using market data analysis and re-seeding properties with office space, residences, and medical facilities “are allowing the regional mall that took off in the 1950s to evolve into a new type of gathering place,” said Transwestern’s Brian Landes, author of the report.
"Why Mall Reuse" article
I would like a copy of this article.
We have a problem in our industry of only giving partial information when making representations about what is going on in our business. The worst thing one can do is misrepresent things to oneself. We have done that all too often in our business. Occupancy is by no means a sole measure of success, just like tenant sales are not a measure of success either. The only measure of success is NOI growth. NOI forecasting is yielded from an understanding of tenant sales trends, tenant margins (the fact that they continue to compress and this is being ignored is an issue), the ability of the asset to accommodate new uses, and the changes in property expenses and ability to get them reimbursed by tenants. I will not comment on this other than to say that anyone in our business already knows the answers to these questions as it relates to malls in general.
Eco-friendly home improvement retailer in a retail first
TreeHouse practices what it preaches.
The retailer, which specializes in supplies and services that promote healthy and sustainable spaces, has expanded beyond its Austin home base, opening in Dallas. Its new 35,000-sq.-ft. outpost is billed as the nation's first energy-positive (meaning it will generate more energy than it uses) big-box store.
"This building sets a completely new standard for ecological and human health and is an embodiment of what our company hopes to accomplish for homes as well," said Jason Ballard, co-founder and CEO of TreeHouse. "This store is a signpost to what the future will be like for both homes and retail."
TreeHouse, dubbed the "Whole Foods of home improvement," offers shoppers a curated selection of green products, materials and technologies — some of which are not available elsewhere. It also offers turn-key services and programs, including kitchen and bath design. solar energy kits, home insulation and "smart" home installation.
San Antonio-based architectural firm Lake/Flato used TreeHouse's approach to products and materials selection, in combination with sustainable design practices, to create the store.
"For so long, net-zero energy was this magical aspirational goal," said Ballard. "This building is beyond net-zero…completely new territory."
The architecture of the store is crucial to its energy efficiency. It boasts saw-tooth roofs that are positioned to maximize the effectiveness of its giant, ultra high-efficiency SunPower solar rooftop solar array. (This feature solved the need for extra space for solar panels). The standing-seam metal roof collects rainwater and reflects heat.
In addition, the north facing clerestory windows allow for indirect sunlight to effectively illuminate the interior without the impact of direct heat. This allows for a cooler baseline temperature in the store and minimizing the use of electricity.
A Tesla Powerpack (a rechargeable battery storage system for utility and commercial applications) is located at the center of the store. It stores the power produced by the rooftop solar array, deploying it for evening use and allowing the building to return excess renewable energy to the city's grid.
TreeHouse Dallas is the anchor tenant in The Hill, a North Dallas shopping center that is being refreshed and repositioned by CAPREF Manager.
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Retailers getting serious about artificial intelligence
A new survey suggests that retailers are ready to invest in artificial intelligence and other new technologies.
Forty-five percent (45%) of retailers plan to utilize artificial intelligence within three years to enhance the customer experience, according to the BRP (Boston Retail Partners) 2017 Customer Experience/Unified Commerce Benchmark Survey. Virtual reality is also in retailers' sights, with 34% of respondents saying they plan to deploy it within the next three years. Another 34% of retailers plan to implement augmented reality within the same time frame.
Additionally, 55% of retailers are focused on optimizing the customer experience to increase customer loyalty by improving the mobile shopping experience and creating a unified experience across channels.
"Stores must now encompass both worlds – the sensory experience generally available in the physical world, such as touching and feeling merchandise and personally interacting with a knowledgeable associate – whether simply human or a combination of AI and human characteristics – married with the unique and personalized shopping experience common in the digital world," according to the report. "The physical and digital worlds are forever intertwined as we look to the future."
In other key findings from the report:
•Most retailers have plans to implement new technologies to identify customers via their smartphones, mobile apps and other emerging technologies. Within three years, 59% of retailers plan to use Wi-Fi and 63% plan to use mobile apps to identify customers in their stores.
*Eighty-nine percent (89%) of retailers are now using social media comments as a critical customer satisfaction measurement.
*Sixty-seven percent (67%) of retailers are offering a consistent product offering across channels. But many are still struggling with manual processes, with 43% indicating the process needs improvement.
•Enhanced networks are a key requirement for a unified commerce environment, with 76% of retailers planning to enhance or replace their network within the next three years.
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