Joseph F. Coradino on the new tenant mix
Over the past several years, as the industry has experienced significant transformation, a new age of retail has emerged. Department store closures have opened new opportunities to re-imagine anchor tenants and an array of unique concepts and innovative segments are refreshing the traditional shopping experience. For retail real estate owners with foresight into retail trends and proactive strategy to enhance their portfolio, properties are shifting to become multipurpose social destinations for consumers in the community.
To put it simply, malls are not the same as they were 10 years ago and shouldn’t be burdened by an outdated definition. A new model has risen — one that prioritizes socializing with shopping; blends a rich variety of retail, dining, and entertainment tenants; and enhances the overall consumer experience. And at PREIT, it’s this mix of diversity, coupled with flexibility, that’s helping us truly redefine the mall.
There’s no cookie-cutter template for malls anymore. Success lies in a diverse and dynamic roster of tenants that range from shopping to experiential concepts. As consumers crave more social experiences, successful malls are driving traffic and sales with restaurants, entertainment concepts, fitness studios, grocery stores, salons and spas, and everything in between. Beyond experiential tenants, an array of retail segments is also diversifying the shopper journey, from off-price to fast-fashion retailers changing the game.
PREIT’s Plymouth Meeting Mall, for example, is a shining example of the mall of the future. Half of the tenancy is dedicated to dining and entertainment, with concepts such as Legoland Discovery Center, 5 Wits, and Dave & Buster’s complementing the mall’s retail and dining offerings. In addition, Burlington was recently announced as a new anchor tenant, aligning with the growing national trend of off-price retail. This continues the rich history of the property. It was one of the first malls to add Whole Foods as an anchor tenant in 2010, underscoring its vision for a differentiated mall platform nearly a decade ago.
Beyond shopping and dining, densification is the next major frontier for shopping center owners. By adding residential, office, or hotel room units to a property, owners can diversify their revenue streams, enhance asset value and increase capital. Simultaneously, they offer built-in shopping, dining and entertainment offerings for on-site residents, workers and guests. Growing alongside this trend is the addition of co-working spaces at retail centers. 1776, the largest network of incubators in the Northeast Corridor, recently partnered with PREIT to form a space at the Cherry Hill Mall that will focus on innovation in retail. This collaboration not only offers the mall as a unique experimental lab for 1776 entrepreneurs, but it also further differentiates the mall property among other retail centers in the region. Through smart partnerships and innovative thinking such as this example, retail properties can transform into community impact centers.
Just as traditional shopping centers are transforming their tenant models, traditional lease agreements are evolving as well. As brands consider their brick-and-mortar presence, they’re looking for arrangements that fit their needs, and the answer is not always a one-size-fits-all approach. At PREIT, we’re focused on being flexible to optimize space and time leveraging pop-ups, kiosks and other formats to satisfy demand — particularly for e-commerce companies expanding to physical retail.
We recently announced that revolutionary in-home fitness experience Peloton opened a 300-sq.-ft. kiosk in center court of Cherry Hill Mall, offering customers the opportunity to test the technology and immersive class content. By welcoming an array of solutions, mall owners can help cultivate tenants that are new to the mall environment and cultivate longer-lasting relationships in the process. It may take some creativity, but collaborating with tenants can be a win-win-win for retail owners, tenants, and shoppers alike.
The industry has truly evolved over the past several years, and continued transformation is still on the horizon. But a thoughtful, diverse, and well-curated range of tenants can hold the key for a continued bright retail future.
Joseph F. Coradino is chairman and CEO of PREIT, based in Philadelphia.
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