Millennials are the largest and fastest-growing retail consumer segment in the nation. In Hampton Roads, this demographic represents 30 percent of a total population in excess of 1.7 million people. This tech-savvy and largely transient group spends approximately $3.4 billion on retail and dining every year in the local economy. It is widely acknowledged that Millennials are changing the retail industry. Developers and retailers alike, faced with rapidly changing spending patterns, more than ever must focus on the shopping, living and working trends of these consumers in order to ensure that future developments meet the needs and expectations of this demographic.
The well-established, nationwide trend of shoppers migrating to walkable, mixed-use environments has led to the proliferation of multi-faceted, pedestrian-friendly developments that feature specialty retail as an integral part of a live/work/play theme in a more or less urban setting. Hampton Roads is no exception to this movement. This explains the growth of lifestyle centers in Hampton Roads, as well as the successful repositioning of some traditional malls in the region. The combination of these upscale projects and the purchasing power of the large population base has finally caught the attention of many upscale national retailers that heretofore had considered the area to be predominately better suited to mid-priced vendors.
Louis Haddad, Armada Hoffler
The Town Center of Virginia Beach, located in the central business district of the largest city in Virginia, offers this successful combination. It is an open-air, pedestrian-friendly community, comprised of high-end retail, Class A office space, luxury apartments and condominiums, hotels and entertainment venues. This public-private venture was known as a dining destination until retailers such as Anthropologie, West Elm, lululemon athletica, Brooks Brothers, Destination Maternity, Free People and others established their first in-market presence there.
Hampton Roads is also home to the Peninsula Town Center, another premium outdoor center combining retail, dining, office, residential and entertainment. Located in the city of Hampton, the center officially opened for business in 2010 and has attracted retailers such as francesca’s, LOFT and an Aveda flagship salon and spa. The developer announced plans for further expansion last year.
The most recent lifestyle community added to Hampton Roads is the Tech Center at Oyster Point, which is under construction in Newport News. Tech Center will feature walkable streets, luxury housing and office space as well as a blend of retail, dining and recreation facilities. The Marketplace at Tech Center is the retail component of the project and will be anchored by Whole Foods Market, along with shops and restaurants including such brands as Zoës Kitchen and P.F. Chang’s.
In addition to these and other lifestyle centers, several area shopping malls have been reinvigorated by new capital investment, the addition of trendy entertainment venues and eateries as well as an influx of sought-after specialty retailers. This success has been most prevalent in Virginia Beach, where two of the oldest malls in the region, Pembroke and Lynnhaven, have been totally repositioned and have attracted a number of impressive tenants. These developments are now home to new stores by Apple, REI and Vera Bradley, to name a few.
As lifestyle centers in the region continue to grow, so does the level of interest the area is receiving from national retailers, which are finally seeing Hampton Roads as a profitable market. The region counts more than 650,000 households, with a median income of nearly $55,000. However, due to the tremendous presence of active and retired military, as well as the millions of tourists who visit the region each year, sources of revenue such as retirement pensions, rental property and dividends add a disproportionately large amount to annual disposable income that isn’t normally accounted for in demographic market studies. When this “hidden” income is taken into consideration, the average annual income of residents is actually in the high-$70,000 range. This level of spending power, combined with the fact that the area is the 37th largest MSA in the nation, helps one to understand the budding success of luxury retail in the region.
— By Louis Haddad, President and CEO, Armada Hoffler Properties. This article originally appeared in the November 2015 issue of Southeast Real Estate Business.