As retail demand shifts rather quickly to on-line sales, we are seeing mall operators explore major redevelopment and adding non-retail uses to mitigate risk and diversify their cash flow. Yet for many shopping centers, major redevelopment is not at option (at least not yet) and filling existing vacancies means turning to what the industry calls “speciality-leasing”, short term placements of tenants in common areas (think kiosks and carts) as well as in existing in-line spaces (think ‘pop up’ shops and seasonal stores). Many mall operators have a dedicated staff person to manage this increasingly important category of use within the mall.
Speciality leasing has always been important to urban place management, starting with The Rouse Company’s Faneuil Hall in Boston, Massachusetts, the first “Festival Marketplace” that helped herald a new era in downtown investments. At Faneuil Hall early leasing efforts were lackluster. To camouflage the vacancies, executives placed pushcarts in front of unleased space. Little did they know that this creative solution to a challenge would be so incredibly successful – and something that the area became well known for.
Today, mall operators are looking to specialty leasing – and urban place management professionals can learn from industry trends. A recent interview in ICSC’s Shopping Centers Today with David Brown, CBRE’s VP of Specialty Leasing is particularly instructive. Some of the more popular trends include kiosks that sell bubble tea, macaroons, fantasy-and-science-fiction related merchandise (including Harry Potter and Star Wars), and “eyebrow art” (I’ll leave that to your imagination!). Other uses that are filling vacant storefronts include video gaming and inflatable playgrounds. These efforts to add vibrancy and improve the mix of tenants extends beyond leasing efforts as well. Events and entertainment in common areas – what many urban place managers do every day – are also critical to driving retail sales for existing businesses AND revenue to the shopping center owner. Things like home shows, car shows, farmers markets and circus acts in mall parking lots (we TOLD you most malls have too much parking!). In common areas, play areas are more and more common (families love them) but they come with additional costs, which mall owners have offset by identifying sponsors such as health care organizations.
Mall owners are also working hard to attract mom-and-pop tenants, smaller regional store concepts that make their mall unique. To identify these tenants they scour the market and prospect in local commercial districts – which might pose a problem for some districts if it results in the poaching of stronger tenants. To prevent the loss of these tenants, downtown organizations should be poised to create vibrant environments that successfully stage the shopping experience, enhancing the downtown district and making sure it remains a great place to do business. Speciality leasing should be a part of that effort.
Larisa Ortiz is Principal of LOA and serves as the ICSC Public-Private Partnership (P3) Co-Chair for the Eastern Division.