Experience Counts

There may be debate among presidential candidates about whether experience is a positive or negative attribute, but for open-air centers, experience is a must. With the ease of online shopping, today’s consumers need a reason beyond the chance to visit their favorite stores to make a trip to their local center.

Centers are responding to this need by providing experiences that cannot be duplicated online, which can range from dining to live entertainment to service providers. They are also aligning their shopping experiences more closely with online offerings, creating an “omnichannel” environment that blends physical and digital retailing. Read ahead to find out what four major open-air center operators are doing to help draw customers for their tenants.

Feeding the Need for Experience

Open-air shopping centers offer consumers more than just easy access to a collection of retail stores.

“We see the need to provide experience as a complement to our retailers,” said Daniel Taub, president of Tarrytown, New York-based DLC Management Corp. “Each type of retail project requires its own set of amenities and experience offerings.”

DLC directly manages 115 properties representing about 20 million sq. ft. of space in the eastern half of the U.S. and Texas. Of these, 114 are open air. Complimentary Wi-Fi, as well as various types of restaurant options and entertainment/experience venues, are becoming popular amenities.

“Food and entertainment are playing more of a role in all retail product types,” said Taub. “You provide dinner or an entertainment venue to augment and supplement the retail-driven format.”

In addition, Taub said food can serve as a center’s anchor at certain times of the day. This is leading even some non-power or lifestyle centers to open food-centric components.

Grocery-anchored centers are also continuing to seek out and provide service-oriented tenants, said Taub. >

“You can’t get your hair or nails done online — yet,” commented Taub.

DLC operates a former enclosed mall that has been converted to an open-air multi-faceted center called Randhurst Village in Mount Prospect, Illinois. The 1 million-sq.-ft. property illustrates a lot of the trends discussed by Taub.

“There are power center, entertainment, lifestyle, grocery, entertainment, food, convenience and retail components,” said Taub. “There are different opportunities for different times of the day and week.”

Retailers serving different components of Randhurst Village include Jewel/Osco, which serves as a grocery anchor, as well as Costco, Home Depot and an AMC cinema.

Modern Times

Today’s open-air centers are responding to the omnichannel age with amenities that supplement and also go beyond digital retail offerings.

“We have found that our grocers are looking to add courtesy lanes outside the fronts of their stores for customers’ convenience in picking up orders that have been placed online,” said David F. Collins, EVP portfolio management of Oak Brook, Illinois-based InvenTrust Properties Corp.

“Having a digital presence for our centers and their stores has been key — either via a shopping center website or accurate Google mapping,” added Collins. “If our stores are correctly mapped and in proximity to the customer, we can capture that shopping visit.”

However, not every amenity that open-air centers are offering is designed to fit into an omnichannel strategy. Collins said InvenTrust is focusing on providing a “sense of place” with such features as gathering spaces with seating.

InvenTrust operates 110 multi-tenant, open-air shopping centers comprising 16 million sq. ft. of retail space in 24 states.

“We have a blend of approximately 60% power centers and 40% grocery-anchored centers, with concentrations around metro areas that include Dallas, Houston, Austin, San Antonio, Atlanta, Raleigh, Orlando and Denver.” said Collins. “As we acquire open-air centers in high growth markets, we are reducing our portfolio locations in non-strategic markets.”

For example, Collins said InvenTrust is redeveloping Bryant Square Shopping Center in Edmond, Oklahoma, later this year.

“It’s a 35-year-old center with a first-rate location,” said Collins. “Improving the layout and enhancing the merchandise mix will help us maximize our return on this investment.”

Clicks to Bricks

Irvine, California-based Irvine Company Retail Partners is also observing the omnichannel revolution, finding its way to open-air shopping centers.

“We’re seeing more Internet retailers expand their brands by adopting a physical store,” said Dave Moore, president of Irvine Company. “At our Fashion Island center we added Bonobos, the online men’s retailer, in a 1,085-sq.-ft. store that gives customers a chance to touch and try on the product before placing an order in-store that’s delivered to their door. Conversely, brick-and-mortar stores are expanding their online presence.”

In addition, Moore said food remains strong, with more diverse casual and quick-service concepts coming to regional and community centers. He also cited a growing consumer interest in experiential retail.

“Anything that turns the experience of browsing, trying and buying into something more fun and exciting will play a role in the retail of the future,” said Moore.

Irvine Company maintains a portfolio of 41 open-air centers encompassing approximately 8.8 million sq. ft. Locations are mainly Orange County as well as Northern California, with ground-up development under way both north and south. Los Olivos Marketplace is under construction in Irvine and set to open in March, while Santa Clara Square Marketplace in Silicon Valley is under way for completion in fall 2016.

Los Olivos Marketplace has Whole Foods Market, 24 Hour Fitness and Spectrum Montessori School as anchors. A part of the Irvine Spectrum business district, Moore says it illustrates the company’s approach to developing planned communities with a grocery-anchored center as a key component.

“It will be a daily-needs center for those living and working in Irvine Spectrum,” said Moore.

Community Ties

Especially in urban areas, open-air centers are connecting to customers and the surrounding community.

“Definitely anything that makes the customer experience better is a priority,” said Debora Overholt, VP retail and principal broker of Miami-based Swire Properties Inc. “Food and beverage are a big part of the tenant mix, and there are more multi-use entertainment spaces. Also, centers are providing mobile apps and other technology offerings that make the customer comfortable.”

Swire operates nine open-air, mixed-use centers totaling 31.3 million sq. ft. This includes five centers in mainland China, including a 1.3 million-sq.-ft. center in Beijing, and three centers in Hong Kong. In addition, Swire is in phase one of developing Brickell City Centre, a 5.4 million-sq.-ft. center in the Miami downtown financial district with 500,000 sq. ft. of leasable retail space. Brickell City Centre offers several amenities that tie it closer to its shopper base.

“We have a direct connection to the Miami public Metromover transportation network, which runs through the city for free,” said Overholt. “There is also an advanced valet service, which is very common in Miami.”

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