Stephen Lebovitz on transforming the enclosed mall
Here’s the understatement of the year: retail leasing is changing.
CBL has responded by actively executing our redevelopment strategy. We are transforming our properties from apparel-based, enclosed malls to market-dominant, suburban town centers featuring a diversity of users. Our redevelopments and leasing efforts are delivering a variety of uses customized to the local market that range from entertainment to hotels to casinos to fitness.
We recently opened a redeveloped Sears space at Brookfield Square in Milwaukee that includes Movie Tavern by Marcus Theatres and WhirlyBall, an entertainment concept. Outback Steakhouse and Uncle Julio's also opened as part of the project in the former Sears parking lot and next year the new city-owned hotel and conference center will open, which will connect to Brookfield Square through a pedestrian pathway.
CBL is able to attract these exciting new uses and remake its malls due to the strength of our properties, their locations within their respective markets, and the inherent value of the real estate. We are also embracing three major trends in transforming our properties: the rise in non-apparel deals, digital lead generation, and data-driven pitching.
1. Successful malls are destinations that go far beyond shopping.
From axe throwing and bowling to “instagrammable” installations to lodging and fitness concepts, non-apparel users are rapidly expanding into retail centers. Overall, 74% of new mall leasing and 60% of CBL’s total mall leasing this year has been with non-apparel tenants. We are currently under construction, have agreements executed or are in active negotiations on two multifamily projects; 15 entertainment operators, including two casinos; nine hotels; 31 restaurants; eight fitness centers; eight medical uses; two self-storage facilities; two grocers, and a number of other nonretail uses.
We saw more than 40 anchor stores close over the past two years and, already, we have 27 locations spoken for with tenants either open, under construction, or committed. In fact, CBL has executed leases with entertainment users such as Dave & Busters and Round1 for approximately 825,000 sq. ft. across more than a dozen properties. Art installations are also creating new consumer experiences at traditional shopping centers. In 2019, CBL welcomed Wonder Wonder to Oak Park Mall in Kansas City and pop-up installation InsideOut Land to Hamilton Place in Chattanooga, Tennessee. We expect to be welcoming more of these kinds of experiential tenants in the coming years.
2. Landlords are reinventing lead generation strategies.
Our specialty leasing team is successfully using digital advertising to source leads for vacant space by placing ads using Facebook Lead Generation and Google Search Engine Marketing, targeting entrepreneurs and business owners on Facebook while also bidding on keywords like “space for lease” on Google. Potential tenants are directed to fill out a lead-generation form and this information is shared with CBL’s specialty leasing managers. In the case of our POP-UP program, this campaign led to a new user seeing the ad, clicking through to the website, calling our team, and signing an in-line deal. Across five properties, this B2B campaign resulted in 328 leads and 10 closed deals so far.
The power of social media extends beyond paid advertisements. The social network has evolved from a customer service tool into a vital sales tool. Something as simple as responding to Facebook comments can lead to closing a deal, as it did for our Mid Rivers Mall specialty leasing team earlier this year.
3. When it comes to closing deals with retailers, pitching must be personalized, and data-driven.
As the retail industry continues to face headwinds, fewer legacy brands are hungry for expansion. As a result, the courting process is longer and more customized, so we are taking a more targeted approach when pitching prospective tenants.
The right mix of personalized data is crucial to the process of serving digitally native brands that are expanding into brick-and-mortar. When working with Liverpool Los Angeles to identify the right market for their first pop-up shop, we suggested 10 potential locations.
They immediately narrowed it down to four based on what they knew about their customer. However, we were able to help fill in their blind spots with customer profiles, common area traffic, social media activity and engagement – KPI’s that we bring to the table that can help a retailer decide on the best market for their brand. The expectation from retailers also extends beyond signing on the dotted line. For Liverpool, a comprehensive marketing plan was developed that included initiatives that started months before the shops grand opening in November.
Our team is committed to evolving along with the industry and experimenting with new ways to enhance net operating income. As we look ahead to next year, we are excited to see these creative leasing strategies in action as more of our redevelopment projects come to fruition.
Stephen Lebovitz is CEO of CBL Properties, based in Chattanooga, Tenn.