LOS ANGELES—The retail market is undeniably changing, but some retail segments are evolving to succeed while others are going to be left behind. Needs-based retail, for example, is driving consumer traffic to shopping centers, and has become a hot investment opportunity. On the other had, regional malls, especially in secondary markets, may be going extinct. To find out more about theses retail spaces, we sat down with Judy Brower Fancher, the CEO of Brower, Miller & Cole, a marketing and consulting firm, for an exclusive interview.
GlobeSt.com: Why has needs-based retail has become the most sought-after retail asset class?
Brower Fancher: Despite delivery options growing in the grocery segment, many people prefer selecting their own meats and produce. Similarly, some people prefer to try clothes on before buying, and also enjoy running errands and shopping as a social activity with significant others and friends.
GlobeSt.com: Retail has changed significantly in recent years, mostly driven by ecommerce. Is this segment of the market evolving as well?
Brower Fancher: The needs-based shopping center is certainly evolving, and doing so purposely in response to the consumer. Their offerings of services such as groceries, nails, hair salons, fitness centers, and dining experiences attract people for immediate purchases and enjoyable experiences that cannot be reproduced online. Yes, you can get prepared food delivered right to your door, but it's not the same thing as going out to a restaurant with family and friends, window shopping, or people watching. Really, there's a point at which people want to get out of their homes. While the retailers and tenant categories in shopping centers will change, the centers themselves are not going away. Shopping center GLA may decline from simple over-supply, but not from rejection by the consumer of the concept of going to a shopping center.
GlobeSt.com: Needs-based retail is helping support shopping centers. What about regional malls? How is this retail segment affected by the changing market and ecommerce?
Brower Fancher: This is another case in which one product type doesn't have to die just because there are now more options of types of centers to visit. What we see is that there are simply too many regional malls today in a market or submarket. The top A+ super regional malls in the best locations are thriving. There may be changes resulting from department store consolidations, but otherwise, this center category is and will remain strong as both a retailer and consumer preference. From Ala Moana, where I watched people stand in a fairly long line to buy pretzels at a kiosk located two levels underground in the parking structure, to other great centers, such as Victoria Gardens, Mall of America, King of Prussia, The Galleria in Houston, and Tysons Corner, the top player in each major market will remain strong. Further, great malls in great locations are experiencing significant reinvestment by their owners as they continue to transform their offerings and their physical environment. Westfield is likely the most active super regional mall owner now, with a planned $9.5 billion in development and redevelopment of fantastic regional shopping malls on a global basis. GGP is similarly engaged in protecting their assets to ensure they remain the top center in their market. As noted, however, the difference is traffic and sales volume. Moving forward, we won't see the same number of regional malls as we have in the past. The regional mall count is going to decline, certainly among the B and C malls.
GlobeSt.com: What about B and C class malls?
Brower Fancher: The B and C malls, especially if they are the 2nd or 3rd or 5th mall in their markets, will likely be redeveloped with much less inline shop space, fewer or no department stores, smaller “discount store” anchors, more entertainment, services and dining, and likely as open-air centers, even if they were previously enclosed.
GlobeSt.com: What will happen to outdated retail product?
Brower Fancher: The decommissioned retail GLAT will likely be turned into multifamily or office space, depending upon local demand. In some cases, the entire mall will be demolished and the property will be entirely repurposed. All of this change will take years to unfold
LOS ANGELES—The retail market is undeniably changing, but some retail segments are evolving to succeed while others are going to be left behind. Needs-based retail, for example, is driving consumer traffic to shopping centers, and has become a hot investment opportunity. On the other had, regional malls, especially in secondary markets, may be going extinct. To find out more about theses retail spaces, we sat down with Judy Brower Fancher, the CEO of Brower, Miller & Cole, a marketing and consulting firm, for an exclusive interview.
GlobeSt.com: Why has needs-based retail has become the most sought-after retail asset class?
Brower Fancher: Despite delivery options growing in the grocery segment, many people prefer selecting their own meats and produce. Similarly, some people prefer to try clothes on before buying, and also enjoy running errands and shopping as a social activity with significant others and friends.
GlobeSt.com: Retail has changed significantly in recent years, mostly driven by ecommerce. Is this segment of the market evolving as well?
Brower Fancher: The needs-based shopping center is certainly evolving, and doing so purposely in response to the consumer. Their offerings of services such as groceries, nails, hair salons, fitness centers, and dining experiences attract people for immediate purchases and enjoyable experiences that cannot be reproduced online. Yes, you can get prepared food delivered right to your door, but it's not the same thing as going out to a restaurant with family and friends, window shopping, or people watching. Really, there's a point at which people want to get out of their homes. While the retailers and tenant categories in shopping centers will change, the centers themselves are not going away. Shopping center GLA may decline from simple over-supply, but not from rejection by the consumer of the concept of going to a shopping center.
GlobeSt.com: Needs-based retail is helping support shopping centers. What about regional malls? How is this retail segment affected by the changing market and ecommerce?
Brower Fancher: This is another case in which one product type doesn't have to die just because there are now more options of types of centers to visit. What we see is that there are simply too many regional malls today in a market or submarket. The top A+ super regional malls in the best locations are thriving. There may be changes resulting from department store consolidations, but otherwise, this center category is and will remain strong as both a retailer and consumer preference. From Ala Moana, where I watched people stand in a fairly long line to buy pretzels at a kiosk located two levels underground in the parking structure, to other great centers, such as Victoria Gardens, Mall of America, King of Prussia, The Galleria in Houston, and Tysons Corner, the top player in each major market will remain strong. Further, great malls in great locations are experiencing significant reinvestment by their owners as they continue to transform their offerings and their physical environment. Westfield is likely the most active super regional mall owner now, with a planned $9.5 billion in development and redevelopment of fantastic regional shopping malls on a global basis. GGP is similarly engaged in protecting their assets to ensure they remain the top center in their market. As noted, however, the difference is traffic and sales volume. Moving forward, we won't see the same number of regional malls as we have in the past. The regional mall count is going to decline, certainly among the B and C malls.
GlobeSt.com: What about B and C class malls?
Brower Fancher: The B and C malls, especially if they are the 2nd or 3rd or 5th mall in their markets, will likely be redeveloped with much less inline shop space, fewer or no department stores, smaller “discount store” anchors, more entertainment, services and dining, and likely as open-air centers, even if they were previously enclosed.
GlobeSt.com: What will happen to outdated retail product?
Brower Fancher: The decommissioned retail GLAT will likely be turned into multifamily or office space, depending upon local demand. In some cases, the entire mall will be demolished and the property will be entirely repurposed. All of this change will take years to unfold
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