By Joe Coradino, PREIT
While the traditional mall model continues to evolve amidst years of uncertainty, developers are seeking to differentiate their retail offerings to keep up with consumer demand and current trends. With retail occupancy exceeding pre-pandemic levels in many cases, it is evident that physical stores have gained relevance. However, locations are now being chosen with strategic considerations, ensuring more dynamic options for consumers than ever before. Malls and shopping centers are now hubs for entertainment, food and beverage offerings, and outdoor recreation opportunities like parks and trails. Incorporating local, small, and diverse businesses in addition to experiential tenants, value retail, and digitally native brands, will continue to headline retail additions. Should retailers continue to expand, the best retail centers will continue to attract new-to-market tenants.
Shoppers are increasingly committed to diverse experiences including dining, entertainment, off-price, fast fashion and health & wellness. Particularly, dining and entertainment has grown in popularity in recent years. Several malls in PREIT’s portfolio have recently welcomed new brands in new markets, allowing the company to present a compelling, diverse portfolio. As the mall experience continues to transform, it is essential that owners and developers are active in diversifying the tenant mix at their properties - adding elements seen less often at malls, like grocery anchors and medical centers.
Moorestown Mall in Moorestown, New Jersey is a great example of reshaping traditional mall assets that are in competitive retail environments. The mall offers a true community hub complete with dining, entertainment, fitness offerings – Planet Fitness and Orangetheory, as well as a value retail collection including HomeSense, Sierra and Five Below. And now under construction are Cooper University Healthcare and a 375-unit apartment complex. These tenants are replacing a vacant Sears and underutilized land expanding utility for the community and driving traffic to the property.
While the economic backdrop certainly provides some challenges for consumers, it is well-proven that an evolved mall experience including transformation into community hubs with partnership from local partners is a more sustainable business model. Real estate owners of all varieties should always consider the highest and best use of their land - in the case of malls, which are horizontally situated snapping up vast swaths of land, this means going vertical - adding apartments and hotels to these sites. “Do-everything” centers are the future, and we’ll continue to see new-to-market experiences added to tenant mixes in 2023. You can buy groceries, see your doctor, dine out, and enjoy family fun in addition to shopping and socializing with friends. Also important to highlight, enhanced safety and convenience measures such as contactless payment options and strong security are necessary components of any successful retail development project in the coming years.
In 2023, retail real estate will continue to undergo major transformation. Unbeatable shopping experiences tailored specifically for today’s consumers is how retailers are reimagining and transforming the operation of their stores - and there is more to come.
Joe Coradino is CEO of PREIT.