Consumers Seek Retail Venues that Provide Connection and Experience Sparking a Retail Real Estate Trend
As far back as ancient Greece, the public square has been the center of civic and social life, the magnet that drew people together, the place to gather not just to shop but to recreate and connect. Successful merchants knew that proximity to the community hub was essential to their success. The power of community and the human need for social experience may be things modern retailers have ignored at their peril. Fortress malls, isolated big box stores, and single-focus shopping centers aren’t likely to attract the ever-growing population of online consumers. To maintain their edge with shoppers, retail venues will have to revive an older game plan and become places that offer more than just access to merchandise.
“Place-Making” Emerges as Retail Real Estate Trend
Architect Dustin Watson, a partner at global design firm DDG in Baltimore, calls the response to the consumer’s need for an experiential retail real estate environment ‘place making.’ “Place-making is the most essential element for creating value in today’s competitive retail environment,” he writes in a recent article for Mid Atlantic Real Estate Journal. “To attract shoppers, keep them shopping – and spending money – for longer periods of time and bring them back again in the future, retail centers need to create a sense of ‘place’ that was formerly taken for granted.” He cites the D.C. area’s Bethesda Row and Station Park, outside Salt Lake City, as models of place-making. Both projects, along with other notables Crocker Park (Cleveland, Ohio), Victoria Gardens (Rancho Cucamonga, Calif.) and City Centre (Houston, Texas) are mixed-use, multi-block areas that invite the community in with events and accessible, ample exterior space that in some cases replicates an urban grid or revives an existing thoroughfare. Tenants include restaurants in different price ranges, office space, services, entertainment, lodging and a diverse collection of local and national retail brands. Sounds a lot like the old-fashioned downtown hub, right?
And speaking of downtown hubs, Walter Loeb, publisher of Loeb Retail Letter and consultant to domestic and international retail companies, predicts in a recent blog post on forbes.com that what he calls “hub destination centers” will be key to the survival of retail real estate in the coming years. These centers, he writes, provide newer suburbs that lack a town center and older ones who’ve seen a decline in their retail core with a place for residents to gather for shopping, lifestyle interests and social interaction. Hallmarks of these hubs include access via public transportation (Bethesda Row, Crocker Park and Station Park), parking, exterior spaces (proven desirable even in less than temperate climates), a range of tenants (including offices, hotels, professional services, event areas, and entertainment), plus a diverse choice of restaurants, including fast-casual dining in lieu of food courts. Reliable security is a must as well.
It’s important to note that recent retail commercial real estate projects that fit the visions of Loeb and Watson are conservative in scale compared to destination giants like Mall of America and Tyson’s Corners. And although Station Park draws shoppers and tourists to its spectacular “dancing waters” fountain, the entertainment offerings of the hubs tend to be more low-key, urban in feeling and community related (think classic downtown). With smaller stores, another retail real estate trend, these new venues can be more compact and navigable.
What’s ahead for the hubs? Will more retail real estate developers launch new versions of Bethesda Row? Will hubs influence shopping center design and renovation? Perhaps the popular lifestyle centers are leading the way. A retail real estate trend is in the making here. Let’s see where it goes.
Have you visited any of the new-style shopping venues mentioned in this blog post? Please share your experiences and impressions with us here at Retail Property InSites.
Look for more news and observations from Levin Management executives in upcoming posts.