PREIT's Joseph Coradino on malls as the intersections of life + commerce
Malls have changed and will keep changing, but one thing remains constant. They are often the heartbeat of their communities. A place where people can congregate for events, get what they need and, now, get things done. We call it the intersection of life + commerce. It’s about supporting all the elements of our customers’ daily lives and, in turn, delivering repeat foot traffic for all of our tenants and business partners.
At PREIT, we have focused on this for some time. We have called for the need to re-entrench ourselves as key facets of the communities we serve. We have added critical elements to the mix. We offer high-level dining and every form of retail – including formats not often found at the mall.
We have grocery anchors at more than a third of our malls. Twelve percent of our portfolio is off-price and fast fashion. Soon we will have two medical facility anchors, and 14% of our tenants are dining and entertainment. We have distinguished our portfolio from traditional malls as we continue to evolve our properties, taking key steps to broaden customer appeal and enhance the value of our assets.
We are seeking to curate a tenant roster that compels visits. We do this by incorporating local, small, and diverse businesses. We welcome experiential tenants, value retail, and digitally native brands in addition to select non-retail uses.
Local, small and diverse businesses are a cornerstone of PREIT properties, authenticating the local vibe. We are proud to offer a variety of programs suitable for these early-stage businesses including cart locations, temporary stores, pop-ups, showcases and more. We are particularly proud of the work our team has done in attracting black and brown-owned businesses, a key area of focus for us. Over the past year, we have increased the presence of these businesses by 17% to 139.
Experiential tenants have become a staple in the modern mall. We have been adding sit-down dining experiences to our properties for the past 16 years. Since then, however, the inventory of uses interested in locating at the mall has dramatically increased. Mall entertainment is no longer just movie theaters. We now have fully tactile, family-friendly experiences peppering our portfolio such as Dave & Buster’s, Tilt Studios, Legoland, small format arcade experiences, fitness centers, and more. We are looking forward to welcoming the next generation of Lego Discovery Centers at Springfield Town Center and our first Tilted 10 at Willow Grove Park in Pennsylvania in 2023, helping both centers cement themselves as must-see destinations in their communities.
Value Retail has historically been found in the open-air centers. But as these retail brands continue to find favor among more segments of the consumer community, they are seeking the best location in a market, which often is the mall. Having replaced obsolete department stores with more sought-after tenants, value retail and fast fashion brands now comprise 12% of our portfolio. At Dartmouth Mall in Massachusetts, for example, we replaced a Sears store with Burlington and Aldi. At Moorestown Mall in New Jersey, we replaced a Macy’s with the region’s first HomeSense and Sierra, then topped off the box with Five Below and Michaels! Offering what is called the “thrill-of-the-hunt” experiences, these tenants drive repeat trips and memorable experiences for our shoppers.
Digitally native brands are increasingly aware of the value of the physical store for connecting with and engaging consumers, arguably a more effective marketing channel than increasingly expensive digital avenues. Warby Parker, which went public last fall, announced plans to open 40 new stores this year on a base of about 160. That’s 25% growth. Other digital natives opening stores include Purple; Gap’s Athleta brand, which plans to open 30-40 new stores on a base of 227; Fabletics, which expects to open 30 new stores on a base of more than 70 stores, and Allbirds, which is planning 16-17 new stores on a global base of 35.
The fact is that the mall is the place to merge what people need to get done with what they really want to do. The owners of thousands of malls across the United States must introduce new uses and experiences that can captivate, create convenience, and compel repeat visits from residents and visitors.
Joseph F. Coradino is the chairman and CEO of Philadelphia-based PREIT.