This post is sponsored by PREIT.
The face of retail has shifted drastically over the past few years as department stores close and companies search for new anchor tenants. Understanding consumer trends and coming up with fresh ideas can help differentiate a property from the one down the street.
In this interview with Joseph F. Coradino, chief executive officer and chairman at PREIT, we discuss the transformations happening in retail and how savvy owners and operators are working to reshape their tenant mixes to attract more customers.
What trends are you seeing in retail today?
A new age of retail has emerged over the past several years as the industry has experienced significant transformation. Mall owner and operators are reimagining anchor tenants as department store rationalization opened new opportunities. Many are turning to an array of unique concepts and innovative segments to refresh the traditional shopping experience.
Retail real estate owners with foresight into retail trends and proactive strategy to enhance their portfolios are shifting properties to become multipurpose social destinations for consumers in the community.
To put it simply, the mall of today is drastically different than a decade ago and shouldn’t be burdened by an outdated definition. The new model prioritizes socializing with shopping and blends a rich variety of retail, dining and entertainment tenants.
This diversity enhances the overall consumer experience. And at PREIT, it’s this mix, coupled with flexibility, that’s helping us truly redefine the mall.
What is driving success for malls that have taken advantage of shifting trends?
There’s no cookie-cutter template for malls anymore. Success lies in a diverse and dynamic roster of tenants that range from shopping to experiential concepts.
Successful malls are driving traffic and sales with restaurants, entertainment concepts, fitness studios, grocery stores, salons and spas, and everything in between as consumers crave more social experiences. Many owners and operators are diversifying the shopper journey such as adding off-price or fast-fashion retailers.
For example, PREIT’s Plymouth Meeting Mall in Philadelphia has half of its tenancy dedicated to dining and entertainment, such as LEGOLAND Discovery Center, 5 Wits, and Dave & Buster’s complementing the mall’s retail offerings. In addition, Burlington was recently announced as a new anchor tenant, aligning with the growing national trend of off-price retail.
This continues the rich history of the property, which was one of the first malls to add Whole Foods as an anchor tenant in 2010, underscoring its vision for a differentiated mall platform nearly a decade ago.
What is the future for mall owners and operators? How can they stay ahead of trends?
Beyond shopping and dining, densification is the next major frontier for shopping center owners. By adding residential, office or hotel room units to a property, owners can diversify their revenue streams, enhance asset value and increase capital.
Another growing trend is the addition of co-working spaces at retail centers. PREIT recently partnered with 1776, the largest network of incubators in the Northeast, to form a space at the Cherry Hill Mall in New Jersey that will focus on innovation in retail.
This collaboration not only offers the mall as a unique experimental lab for 1776 entrepreneurs, but it also further differentiates the mall property among other retail centers in the region. Through smart partnerships and innovative thinking, retail properties can transform into community centers that drive growth.
Do you see any changing trends on the leasing front?
Just as traditional shopping centers are transforming their tenant models, traditional lease agreements are evolving as well. As brands consider their brick-and-mortar presence, they’re looking for arrangements that fit their needs.
At PREIT, we’re focused on being flexible to optimize space and time, leveraging pop-ups, kiosks and other formats to satisfy demand – particularly for e-commerce companies expanding to physical retail.
For example, in-home fitness experience Peloton opened a 300-square-foot kiosk in center court of Cherry Hill Mall, offering customers the opportunity to test its technology and immersive class content.
By welcoming an array of solutions, mall owners can help cultivate tenants that are new to the mall environment and cultivate longer-lasting relationships in the process. It may take some creativity, but collaborating with tenants can be a win-win-win for retail owners, tenants and shoppers alike.
Joseph F. Coradino has been chief executive officer of PREIT, a publicly traded New York Stock Exchange company (PEI), since 2012 and chairman of the board since 2016. PREIT owns and manages a portfolio comprising more than 20 million square feet of retail properties, primarily shopping malls, with a concentration in two top 10 MSA markets, Greater Philadelphia and Washington, DC.