An estimated 140 million sf of shopping center space was built in the U.S. between 2002 and 2008, according ChainLinks Advisors’ Fall/Winter 2013 Retail Review & Forecast. Since then, retail construction has slowed, even as the U.S. remains the world’s largest market in shopping center space, accounting for two-thirds of total gross leasable area tracked by Cushman & Wakefield, according to its latest Global Shopping Center Development Report.
Retail net absorption totaled 109.8 million sf in 2014, according to JLL’s Fourth Quarter 2014 Retail Outlook. Last year exhibited the strongest absorption rate since 2008. But deliveries, at 60.6 million sf, still fell well below absorptions. JLL reported that 55% of last year’s construction activity was “general retail,” consisting of single-tenant freestanding general commercial buildings with parking. Shopping centers accounted for 19.2% of retail construction, malls 18.1%, power centers 4.4%, and specialty retail centers 3.3%.
New York, Miami, and Washington, D. C., showed the highest absorption rates and rent growth. Combined, they accounted for more than two million sf of storefront construction, or about 7% of the U.S. total last year.
Retailers could be doing a better job of meeting customer expectations. The latest American Customer Satisfaction Index, based on surveys of 70,000 customers, found that all retail categories, with the exception of online retail, showed weakening or flat customer satisfaction in 2014.
JLL cites a report by the Royal Bank of Canada and Retail Lease Trac, which estimates that U.S. retailers in RBC’s database plan to open a total of 77,547 stores over the next two years. Some of these stores might end up replacing retailers commonly found in malls that have announced hundreds of store closings, including Macy’s, JC Penney, and Sears, as well as Radio Shack and Wet Seal, both of which have filed for bankruptcy protection.
Retailers could be doing a better job of meeting customer expectations. The latest American Customer Satisfaction Index, based on surveys of 70,000 customers, found that all retail categories, with the exception of online retail, showed weakening or flat customer satisfaction in 2014.
Nordstrom, which is among the handful of retailers that mall developers covet most as anchors, registered the highest satisfaction index—86—of any brick-and-mortar dealer tracked, matching Amazon.com’s 86 index. However, department and discount stores registered their lowest index since 2007. ACSI data show that customers were dissatisfied with their layouts, cleanliness, inventory availability, and speed of checkout.
JLL suggests that malls and shopping centers are more effective as destinations when their tenant mix appeals to customers’ lifestyles beyond shopping and includes fitness centers, gourmet cooking shops, and sustainable-product options.
The success of any mall redevelopment hinges on the appeal of its tenants. JLL singles out Nordstrom, Neiman Marcus, and fashion retailers H&M and Forever 21 as “huge draws.” It also notes that entertainment is “essential” to injecting “new vitality” into a shopping center. This can include casual restaurants like Chipolte or Smashburger, luxury movie theaters like iPic, or specialty big boxes like Dick’s Field & Stream.
JLL recommends that as malls reinvent themselves, they should add more green space, lounging areas, and free WiFi. Technology tools like beacons (see www.BDCnetwork.com/beacon) can help a retail center connect more directly with customers. “By tracking the location of shoppers and interacting with them through their mobile devices, landlords and retailers gain greater control over the timing and customization of their marketing messages,” says JLL.
Related Stories
Adaptive Reuse | Jul 30, 2024
Empty mall to be converted to UCLA Research Park
UCLA recently acquired a former mall that it will convert into the UCLA Research Park that will house the California Institute for Immunology and Immunotherapy at UCLA and the UCLA Center for Quantum Science and Engineering, as well as programs across other disciplines. The 700,000-sf property, formerly the Westside Pavilion shopping mall, is two miles from the university’s main Westwood campus. Google, which previously leased part of the property, helped enable and support UCLA’s acquisition.
Smart Buildings | Jul 25, 2024
A Swiss startup devises an intelligent photovoltaic façade that tracks and moves with the sun
Zurich Soft Robotics says Solskin can reduce building energy consumption by up to 80% while producing up to 40% more electricity than comparable façade systems.
Urban Planning | May 28, 2024
‘Flowing’ design emphasizes interaction at Bellevue, Wash., development
The three-tower 1,030,000-sf office and retail development designed by Graphite Design Group in collaboration with Compton Design Office for Vulcan Real Estate is attracting some of the world’s largest names in tech and hospitality.
Mixed-Use | May 22, 2024
Multifamily properties above ground-floor grocers continue to see positive rental premiums
Optimizing land usage is becoming an even bigger priority for developers. In some city centers, many large grocery stores sprawl across valuable land.
Retail Centers | May 3, 2024
Outside Las Vegas, two unused office buildings will be turned into an open-air retail development
In Henderson, Nev., a city roughly 15 miles southeast of Las Vegas, 100,000 sf of unused office space will be turned into an open-air retail development called The Cliff. The $30 million adaptive reuse development will convert the site’s two office buildings into a destination for retail stores, chef-driven restaurants, and community entertainment.
Mixed-Use | Apr 23, 2024
A sports entertainment district is approved for downtown Orlando
This $500 million mixed-use development will take up nearly nine blocks.
Mixed-Use | Apr 9, 2024
A surging master-planned community in Utah gets its own entertainment district
Since its construction began two decades ago, Daybreak, the 4,100-acre master-planned community in South Jordan, Utah, has been a catalyst and model for regional growth. The latest addition is a 200-acre mixed-use entertainment district that will serve as a walkable and bikeable neighborhood within the community, anchored by a minor-league baseball park and a cinema/entertainment complex.
Retail Centers | Apr 4, 2024
Retail design trends: Consumers are looking for wellness in where they shop
Consumers are making lifestyle choices with wellness in mind, which ignites in them a feeling of purpose and a sense of motivation. That’s the conclusion that the architecture and design firm MG2 draws from a survey of 1,182 U.S. adult consumers the firm conducted last December about retail design and what consumers want in healthier shopping experiences.
Mixed-Use | Apr 4, 2024
Sustainable mixed-use districts: Crafting urban communities
As a part of the revitalization of a Seattle neighborhood, Graphite Design Group designed a sustainable mixed-use community that exemplifies resource conversation, transportation synergies, and long-term flexibility.
Construction Costs | Mar 15, 2024
Retail center construction costs for 2024
Data from Gordian shows the most recent costs per square foot for restaurants, social clubs, one-story department stores, retail stores and movie theaters in select cities.