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09/15/2022

Why shopping center developers must continue to be innovators

The social element, not the shopping opportunity, is what must drive today’s retail centers
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Museum of Dream Space
The Museum of Dream Space will be opening at Poag's Roosevelt Collection in Chicago.

While COVID closures and restrictions were an economic gut punch for many industries, retail and mixed-use centers were among the hardest hit. The public engagement and social dynamism that informs the design and operation of the best centers transformed almost overnight from a genre-defining asset to a crippling liability.

Thankfully, retail has largely recovered. Today there’s a reinvigorated appetite for innovation and experimentation. Owners and operators are doubling down on immersive and engaging tenants and embracing inspired new brands that inject life into lifestyle center environments. Undaunted by a historic disruption, they exhibit renewed enthusiasm for experiential concepts and are using different uses and new tenants to remain relevant in a rapidly evolving retail landscape.

To understand why this is happening—and why it matters—we need to start at the beginning, with the origin story of the format: the genesis of the first lifestyle centers.

My father, Dan Poag, and Terry McEwen created and popularized the lifestyle center concept over three decades ago, marrying the convenience and safety of easily accessible stores with designs that upped the ante with national brands, restaurants, and elevated architecture, landscaping, and amenities. They coined the term “lifestyle center” to describe these open-air environments--antidotes to the enclosed stuffiness of traditional malls and the sterile, transactional dullness of strip centers.

When the nation’s first lifestyle center, Saddle Creek, opened in 1987 outside Memphis, Tennessee, it featured many elements that would soon become synonymous with lifestyle center design, including public gathering spaces and hardscaping and landscaping features that elevated the consumer experience. The retail focus was on fashion tenants and restaurants, bringing national brands and familiar names to Memphis for the first time. For the next two decades, lifestyle centers got bigger and more experiential, but the formula remained relatively unchanged: create great spaces, a strong dining component, and bring big brands to new markets.

Things began changing after the late 2000s recession. Experience became even more emphasized and national brands became more prevalent—and less unique. The biggest shift was how that experience was delivered. Lifestyle centers began to include explicitly experiential tenants, new and different restaurant concepts, and significantly expanded entertainment experiences—along with creative and engaging new fitness brands. The common thread was the social element, taking lifestyle centers further away from shopping centers’ transactional origins and creating true community gathering spaces. Lifestyle centers had already taken malls from a place to buy to a place with things to do—now they were places to be.

But in 2020, pandemic restrictions and consumer concerns crippled the social interaction at the heart of successful lifestyle centers. Being outdoors allowed lifestyle centers to continue operating, but the experience piece was limited as people feared large gatherings.  As the pandemic eased and normal life (largely) resumed, questions arose. Would lifestyle center developers and real estate professionals change their approach? Would leasing strategies become more conservative, hedging bets against future disruptions?

Far from it.

An industry initially rocked by COVID closures and public health limitations has instead doubled down on experience—and it’s working. The popularity of experiential concepts, far from diminishing, has increased. Not only has the need for these spaces and experiences persisted, but the industry has seen a surge of interest in new restaurants, fitness brands, and creative entertainment concepts. It’s as if consumers, keenly aware of what they were missing, are making up for lost time. Restaurant sales have exceeded pre-COVID numbers (before slowing with recent inflation concerns). The challenge for most restaurateurs hasn’t been demand, but hiring and staffing.

Innovative restaurant concepts like The X Pot at Roosevelt Collection in Chicago, offer an entirely unique dining experience. Brands like Postino WineCafe at LaCenterra at Cinco Ranch, in Katy, Texas are specifically designed to make socialization a core element of the dining experience. Creative new brands like the Museum of Dream Space (about to open at Roosevelt Collection) and its “immersive and creative playground” of interactive exhibits and experiences are also making waves.

There’s an opportunity to stand out from the crowd by introducing more brands, experiences, and environments conducive to storytelling and memory making. Restaurants can emerge as social hubs, and also branding and cultural phenomena. The earliest lifestyle centers are very different than the lifestyle centers of today. The post-COVID experiential boom continues picking up steam. Entrepreneurs and brands see what’s happening and they want in. Because innovation drives innovation and success breeds success, new concepts and creative ideas are finding each other and creating a critical mass of engaging retail, dining, and entertainment.

Going forward, lifestyle center owners and operators looking to keep spaces fresh will need to be proactive and embrace these exciting new concepts. Those who do won’t just be setting a post-pandemic industry standard, but also continuing a grand tradition that’s put lifestyle centers on the front lines of retail innovation for 35-plus years.

 

Josh Poag is President & CEO of Memphis-based Poag Shopping Centers, a retail management and development company that operates a portfolio of retail lifestyle centers in multiple markets across the country. To reach out to Josh directly, email [email protected]

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