After years of declining interest in suburban malls anchored by big-box chains and department stores, real estate developers have hit on a novel way to re-invent the mall: by turning it inside out. At the International Council of Shopping Centers' conference, held earlier this week in New York, WWD reports that the group stressed the need to revitalize traditional, enclosed shopping centers. The plan is to expand malls with more street-facing storefronts and outdoor space for dining and entertainment and to attract higher end luxury tenants. Investors are also looking to bring the mall in from the suburbs, with developers eyeing disused, urban industrial spaces in New York, Chicago, and other major cities.
Interestingly, the definition of "luxury tenant" has changed, too. Real estate investors are increasingly looking to anchor their shopping centers with upscale restaurants, which, in these everyone's-a-foodie days, often do a brisker business than department stores. "The average restaurant does $13 million a year," one investor reports. Again, placing the restaurants at the shopping center's perimeter is an important part of this strategy. Developers want luxury shoppers and diners to go directly to the stores and restos they like, without having to walk through the center of the mall (and past the huddled masses at the traditional Taco Bell food courts, we presume).
Even if you're not in the market for a new Burberry trench or 2.55, the mall 2.0 offers the benefit of being more pedestrian-friendly and revitalizing former industrial zones and other off-the-beaten-path neighborhoods. Anyone who's visited New York's Chelsea Market — formerly a Nabisco factory and now an urban food court, shopping center, and tourist destination par excellence — can attest to the power of the fancy food-and-shopping combo in helping to revive an entire neighborhood.
And, it's no accident that this new retail concept apes the feel of the old-school, urban shopping strips and town squares that suburban malls replaced. In a world where "one-stop shopping" now means the Internet rather than the good ol' Galleria, malls have to offer a more human-scale retail experience — or risk becoming obsolete. (WWD)