The recession and prolonged economic stagnation are changing the retail landscape, resulting in creative new uses for empty space to motivate consumers to leave home to shop, according to retail experts speaking at ULI’s recent annual Fall Meeting and Urban Land Expo in Los Angeles. The result: more alternative uses such as medical buildings, libraries, and entertainment and education centers are being mixed in with shopping to fill space vacated by stores—a trend that is likely to be long-term, panelists said.
While all the various uses help draw additional foot traffic from consumers seeking “one place” to complete a variety of errands and appointments, entertainment attractions are proving to be particularly lucrative, in terms of appealing to families who are likely to shop and dine in adjacent stores at the destination. The point is to “create an attractive, separate environment from the internet, something that cannot be experienced on the internet,” said Howard Samuels, president of Samuels & Company, Inc. The firm represents Merlin Entertainments Group, an entertainment company that develops large, “all-day” attractions such as Sea Life and Legoland, and which also has started developing small-scale indoor versions of its attractions to fit within major retail centers.
“We’re taking snippets of the theme park to serve as family attractions at malls,” Samuels explained. For instance, an indoor Legoland, built for a 90-minute “dwell time” that ends inside a Lego store, is the “perfect complement to a mixed-use project,” he said. Merlin’s move toward the entertainment/retail mix reflects the company’s intent to “lead where we think the future is going,” Samuels said.
Generally, the company targets the largest metropolitan areas, seeking robust tourism markets and the most stable residential markets, he noted. “We look at how leisure activities are performing [within a prospective market] to gauge what could work and what will not. . . . In today’s economy, every dollar people part with is in competition. The key is to get people to spend time at your property,” Samuels said.
Michael Townsend, president and chief executive officer of Townsend & Associates, Inc., described the company’s work in developing “mallternatives”—pedestrian-friendly retail centers transformed from obsolete strip mall space. The retail market, he said, “is changing every day” in terms of what’s expected by consumers from retailers and developers of retail space. “It’s all about adaptability, flexibility, the value proposition, and customer experience,” he said. “Reinventing retail is a daily exercise. The strong are getting stronger, and the weak are getting peeled off.”
According to Townsend, the savviest retailers are those able to anticipate and respond quickly to the whims of the hyperconnected, technology-proficient generation Y cohort, which, at nearly 80 million strong, is the largest generation in history, and highly influential in terms of the future of the retail industry and retail property development. “With younger consumers, it’s not about quality as much as it’s about newness,” he said.