STORES Magazine - May/June 2017 - 27
Both mall owners and retailers are reconsidering
their use of space. Kessler says retailers don't need
as much space at the mall anymore because they are
leveraging logistics systems to optimize warehouse
space, inventory systems and last-mile warehouses
from which goods can be shipped relatively quickly.
Real estate investment trust Seritage Growth
Properties is carving many former Sears locations
into smaller parcels for retailers like Dick's Sporting
Goods, PetSmart and Nordstrom Rack that produce
more sales per square foot.
Apple Store produces the highest sales per square
foot among mall retailers, according to eMarketer.
Others in the top rankings include Michael Kors,
Kate Spade & Co., lululemon Athletica, Tiffany &
Co. and Coach.
At the Tyrone Square Mall in St. Petersburg, Fla.,
developers are already talking about replacing a
189,000-square-foot Sears with a 152,000-squarefoot shopping center that would include Dick's
Sporting Goods, Lucky's Market and PetSmart.
At the Landmark Mall in Alexandria, Va., the
announced closure of Macy's has cleared the path to
a major redevelopment that will transform the mall
into a mixed-use property with apartments, retail
MALLS TO MIXED-USE
Many shopping centers simply won't survive as
"malls" in the traditional sense. While they may
retain a mall-like appearance and retail stores, more
of their footprints will be used for mixed-use tenants
including everything from office and medical space
to trampoline parks and entertainment venues.
Some developers are even building multi-family
housing units in declining malls. Two years ago,
Westminster Arcade in Providence, R.I., one
of America's first malls, was converted into an
apartment complex. Highland Mall in Austin,
Texas, was recently transformed into a campus for
Austin Community College.
In Fort Lauderdale, Fla., the 32-acre site of the
former Fashion Mall is being developed into an
open-air complex with 700 apartments, 225,000
square feet of commercial space and 250,000
square feet of renovated office space. Developers are
positioning it as a "lifestyle center" with a mix of
small retailers, restaurants and entertainment.
Since the recent announced closure of the
JCPenney at Hilltop Mall in Richmond, Calif.,
area leaders have been calling to convert the mall
into a mixed-use development of housing, offices
"There's development and active infill in suburban
areas to create the live-work-plan environment,"
Kessler says. "Many [residents] see it as more
convenient than being downtown."
'CREATE AN EXPERIENCE'
Maguire says many of these lower grade malls have
had no capital investments for 10 or more years, nor
have they addressed updating merchandise mixes to
how consumers want to shop today.
"You have to create an experience," he says.
"You have to put capital in these things. There are
hundreds of malls that are not going to be malls
The B-grade and lower malls that will survive are
those that quickly and readily adapt with an influx
of capital and strategy. Maguire points to Bassett
Place, a mall Cypress Equities purchased 14 years
ago in El Paso, Texas.
When the property, one of three malls in the city,
was acquired, Maguire says it was "partly run
down" - while Target, Kohl's and Costco were
adjacent, the mall also had a lot of empty space.
Over the past 14 years, Cypress Equities has
upgraded and redeveloped the property three times:
Bassett Place now has the only Dave & Busters
arcade and IMAX movie theater in El Paso.
Maguire says by upgrading the merchandise mix
and adding the entertainment, the mall has steadily
grown its cash flows. Since the big Simon mall is
only four miles down the road, Maguire says the
company had to take a different approach rather
than try to compete head-on.
"Our rents have grown," Maguire says. "Our
retailers' sales are doing very well."
Mall-based retailers who survive the evolution
will be those that offer customers a "well-crafted
omnichannel opportunity" to shop both online and
in an engaging bricks-and-mortar environment,
says Cohen. He says the retailers will need to
leverage flexibility to reposition themselves and take
advantage of changing trends.
Cohen says successful retailers have been
refurbishing, rehabbing and renewing merchandise
presentation. "Legacy retailers who are not well
placed in those 235 AAA malls and who don't have
exciting, powerful, fully-integrated websites are
doing [this] to face what we're seeing now, almost on
a daily basis," Cohen says.
Craig Guillot is based in New Orleans and writes about retail,
real estate, business and personal finance. Read more of his
work at www.craigguillot.com.
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