Unlike fine wine, retail properties don’t necessarily get better with age. In order for a shopping center to remain attractive and inviting, it periodically needs to be renovated or even repositioned. Since 2010, the U.S. shopping center industry has completed an average of 198 renovation projects annually, according to JLL in a research report released early this year titled “Remaking Retail: A Tricky Proposition.” Seventy percent of shopping centers renovated after 1999 were originally built between 1960 and 1989. Centers built during the 1980s have been the most popular targets for remodeling almost every year since 2003. So-called “meat and potatoes” retail real estate underwent the most renovation work from 1999 through 2015, according to JLL. Eighty-six percent of shopping center renovations during that period took place at neighborhood, strip and community centers. In order for a redevelopment, an even bigger undertaking, to be worth the effort, an owner would expect the project to add 200 basis points to a center’s capitalization rate as a general rule of thumb, JLL points out. What follows are two case studies of shopping center makeovers, one in Kansas City, Mo., and the other in West Des Moines, Iowa, that illustrate the challenges and …
