By Howard Paster, President, Paster Properties
The changing landscape of retail and the emergence of re-malling
A significant industry trend playing out locally and around the country right now is “re-malling” – the process of redeveloping, reimagining and reinvigorating enclosed malls to meet the evolving demands of today’s marketplace. The influence of technology, consumer demands, perceptions of shopping, and time restrictions associated with today’s busy lifestyle are all contributors to the re-malling phenomenon.
Although there are many factors that impact the phenomenon, the implications of the advancements in technology are exponential considering consumers now have access to retail at the tip of their fingers. According to PwC’s 2016 Total Retail Survey, 103 million Americans shopped online over Thanksgiving weekend this past year and online sales accounted for nearly a third of total sales, which is up from 12 percent in 2014. Furthermore, mobile devices have turned the corner as purchasing tools. Forty six percent of PwC’s global sample reported purchasing products using their mobile device at least a few times in 2015, compared to only 40 percent in 2014. Also, as a way to save time, much of the browsing and price comparing that used to take place in the mall now takes place online. PwC reported that 29 percent of people in the U.S. compared prices of products using their mobile device while they were in the store.
Although consumers commonly research products online, physical stores are still critical to the purchasing journey. According to PwC, 72 percent of survey respondents prefer to purchase groceries in-store, 62 percent prefer to purchase furniture in-store and 59 percent prefer to purchase household appliances in-store.
In addition to technology, re-urbanization has also impacted the landscape of retail. Due to residents shifting from suburbs to urban areas, consumers are demanding urban spaces that have multiple uses. People want to be able to live, work, play and shop all in one area.
As a result of advancing mobile capabilities, changing shopping behaviors and shifting consumer demands, the “task” of shopping needs to be converted into an experience to keep consumers engaged.
As John Kohler, our VP of Development & Construction puts it, “The day of the exclusively retail shopping mall is quickly coming to an end – yesterday’s malls are becoming future lifestyle centers.”
In some cases, re-malling involves simply adjusting the tenant mix or enhancing dining and entertainment options. In many other cases, however, the process features a more dramatic overhaul involving big redevelopments and adding different uses such as residential or office space.
The Mall of America makeover is a prime example of a national mall that has undergone the re-malling process. The first phase of the renovation featured $350 million in upgrades. The upgrades included a 5,000-square-foot gathering area with a skylight the size of a basketball court, a 342-room JW Marriot hotel, and a new 10-story office building. The second phase of the expansion will begin this year and is estimated to cost $500 million. The 1-million-square-foot expansion will feature 580,000 square feet of luxury retail, a 180-key luxury hotel, 120 residential units, a multi-story office building spanning 168,000 square feet and new parking structures.
The conversion of regional mall Ridgedale Center into an upscale fashion mall was also successful in re-malling and the surrounding area is thriving. As part of the expansion project, existing stores were relocated to make room for new retailers and Banana Republic, Athleta, Michael Kors, Tommy Bahama, Lush, Johnston & Murphy, Tumi, and perhaps most notably, Nordstrom moved in. In addition to the retail stores, Kona Grille and Ruscello, a full service-restaurant and bar located within Nordstrom, opened at the mall. Therefore, men can easily grab a drink or a bite to eat while their wives shop, which changes the shopping experience for the whole family.
Not only have the updates made to Ridgedale Center enhanced the livability of the community and transformed the area into a place where people can work, live and shop, but they also encouraged reinvestment in the community.
“Ridgedale’s momentum has generated redevelopment energy in the surrounding area, and our 1700 project is a part of that vitality”, says Kohler.
We are in the process of redeveloping the former Highland Bank Building located across the street from Ridgedale Center into a mixed-use retail and residential complex called The Shops and Residences at 1700. The development project brings urban influence into a traditionally suburban setting that compliments the existing retail and businesses.
“The Highland Bank building was an underutilized piece of real estate in a very strong trade area,” said Senior Leasing Rep & Development Associate Mike Sturdivant. “The upgrades to the Ridgedale area, along with the city’s vision, helped guide our development plans.”
Ultimately, the same forces behind the re-malling phenomenon are driving the development of The Shops and Residences at 1700. It is a project designed to serve the lifestyle and priorities of the Minnetonka market, and it demonstrates that the principles behind re-malling make it possible to remake, reimagine and revitalize not only properties, but whole communities.
About the Author:
Howard Paster, President, Paster Properties
Howard joined Paster in 2000 to work with his father and mentor, Edward, and is now the third generation to lead the company that bears his family’s name. Combining local knowledge with regional insight and a national perspective, he focuses primarily on growing the company’s portfolio through new development and acquisitions.
After earning his Bachelor’s degree from the University of Wisconsin-Madison, Howard spent the next eight years with Mid-America Asset Management Company in Chicago. There he worked in property management and leasing, focusing on grocery-anchored retail shopping centers throughout the metro area.
Howard is an active member of the MSCA and ICSC. He currently serves as the State Legislative Affairs Co-Chair for the MSCA and formerly served as the ICSC State Director and Government Affairs Chair for Minnesota, North Dakota and South Dakota.
Howard lives in Hopkins, Minnesota with his wife and five sons. In addition to spending time with his family and friends, Howard enjoys working out and is an avid tennis player.
For more information on Howard and to contact him: Paster Properties