At a time when new development is not an option for most retail developers, repositioning existing properties in ways that increase their value can be a viable alternative—but only if it is executed properly. Retail property owners, retailers, developers, and cities throughout the United States are working together to reposition “dead,” dated, and underperforming centers with innovative, redesigned facilities that create a more attractive and compelling experience—and that can drive economic growth and produce profits for developers and investors, according to a panel of industry experts at ULI’s 2010 Fall Meeting session, entitled, “Renewed Retail Opportunities.”
The United States has more retail space per capita than any other country. “America was born to shop, and she shopped ‘til she dropped. But now the party is over,” declared session moderator Ian Thomas, president of Vancouver-based Thomas Consultants. Discretionary spending is at a standstill, no new enclosed mall or town center has opened in recent years, and more than half the nation’s 1,700 existing malls need to be, as Thomas put it, “either remalled, demalled, or mothballed.”
Panelists Tommy Miller, principal of Fort Worth, Texas–based Trademark Property Company, and Ralph Ireland, chief development officer of Columbus, Ohio– based Steiner + Associates presented examples of a wide range of retail properties that their firms have repositioned and are currently working on throughout the United States. These include Trademark’s $50 million renovation and rebranding of the underperforming Padres Staples Mall in Corpus Christi as La Palmera, a leisure destination and community center with a seaside-themed design, as well as Steiner’s $300 million conversion of the Milwaukee area’s Bayshore Mall into the mixed-use Bayshore Town Center with new retail and dining offerings as well as offices and apartments above ground-floor retail and garage space.
Panelists Bob Aptaker, vice president of real estate for Santa Monica, California–based Macerich Company, and Richard Poulos, partner and executive vice president with the Jerde Partnership, which is headquartered in nearby Venice, presented an in-depth look at their transformation of Santa Monica Place from an obsolete mall closed in 2008 into a vibrant, open-air urban district that connects to and complements the city’s popular Third Street Promenade. The challenges they faced included community concerns about increased density, traffic, and parking issues; accommodating and improving existing garages that are owned by the city redevelopment agency; creating unique identities for each of the project’s four entrances; attracting new, world class tenants; and dealing with where to relocate food services—a challenge the team addressed with a bold move that placed six chef-based restaurants on a third-floor indoor/outdoor dining deck with views of the Pacific Coast and the city that have made it a popular community gathering place.
Since its grand opening on August 6, 2010—which attracted so many visitors that it created huge traffic jams—Santa Monica Place has exceeded all expectations, “supercharging the whole area,” as Poulos described it, increasing visitorship to the already popular Third Street Promenade by drawing shoppers from a much larger geographic area and acting as a catalyst, triggering even more new development activity in the area.
Panelists urged those considering their own retail repositioning projects to:
- engage the city and community in the planning and development process—most of these projects require some sort of public/private partnership, and community input and support are essential;
- seek win-win solutions with anchor tenants;
- reuse existing facilities cost effectively and efficiently;
- differentiate your project from the competition—make it unique;
- consider—and plan for—ways the project can continue to evolve and densify in the future;
- create authentic, high-quality places that appeal to the local community;
- where open-air spaces are not practical, create indoor spaces that feel like outdoor experiences; and
- incorporate leisure, recreation, dining, and entertainment elements in ways that make these projects “the souls of their communities.”
No single formula works for all of these types of projects, panelists stressed, but there are plenty of lessons to be learned from these and other recent retail repositioning projects.