With the recent news of store closings and the rise of e-commerce, especially with the current coronavirus situation, shopping malls and the retail experience are ushering in a new era of tenants and uses, reviving comatose shopping malls. It’s easy to think that traditional brick and mortar stores are becoming obsolete as consumer behavior shifts to online shopping.
But that is not totally true, at least not for South Florida. There are many factors coming into play in our region that are helping shopping malls evolve and get a second lease on life, and this will continue after the coronavirus.
Many ask me if malls are closing because one tenant leaves, and I always ask in return if they remember retailers like Woolworths or Linens ‘n Things. Though many people remember these stores, they don’t miss them since there is always a new and better concept ready to take their place.
In order to survive, retailers need to evolve, but the mall will always be a community opportunity, especially if they are located in the middle of a vibrant neighborhood .In our society, malls have become the central hub for the community to interact, relate and mingle.
The experience matters
To keep the malls fresh and current, owners and landlords are creating experiential malls of tomorrow (or today) that attract visitors with their community-centric offerings and amenities such as entertainment, fitness, medical, services, themed restaurants and dining concepts, internet connection areas, and innovative shopping experiences.
Notable Class A malls will survive — such as The Gardens Mall in Palm Beach Gardens, Boca Town Center Mall in Boca Raton and Aventura Mall in Aventura. However, I do believe Class B, C and D malls will be redesigned as an asset for the community to meet today’s or tomorrow’s consumer needs.
Into 2020 and beyond, mall owners will invest heavily on redesigning and/or repurposing their properties. Many malls have recently traded (or will be trading) with the new owner purchasing the site for the location where the infrastructure and neighborhood are already in place.
In the meantime, some of the new owners are revamping the mall to lease to tenants who will transform their retail spaces to fit new concepts while making the rent structure economically feasible for tenants. That means rental rates will be significantly reduced compared to the past.
Importance of redesign
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Landlords are increasingly opting to contribute to the redesign of a retail space for the right tenant. The ‘new’ mall is a great place for the community to spend time and new business owners to grow. For example, when Bloomingdale’s announced that it would be closing its doors at The Falls in South Dade, Simon Property Group announced that Life Time Fitness would be taking over the space by building a 140,000-square-foot luxury athletic resort.
Whether it’s a new generation of tenants, such as fitness, sports complexes, medical centers, co-working spaces or churches taking over these spaces vacated by former mall retailers, it’s an exciting time for landlords and tenants as we transition into the mall of the future. For example, I recently worked with a landlord at a mall to bring in a church to fill a vacant big box space and serve as an anchor tenant.
Bringing houses of worship into malls are a good leasing match because malls are well-located within a surrounding population and worship centers help bring in a built in following to make it a mixed-use space
Shopping malls may change the way they look and feel in order to meet rapidly evolving consumer demands, but they are here to stay and play an even bigger role in our communities moving forward.
Katy Welsh is senior director of retail services at Colliers International Florida.
This story was originally published March 23, 2020 7:00 AM.