Four Tips for Ensuring Your Retail Center Remains Relevant
Several years after a punishing recessionary cycle, Michigan’s retail marketplace finds itself at somewhat of a crossroads. Steady and sustained economic growth and a robust retail recovery have things moving in the right direction. With few new large shopping centers opening in the last five to six years, these positive trends have led to the absorption of a great deal of available space. Consequently, demand for quality space has been picking up and retail rents have recently begun rising quite rapidly.
At the same time, the relative lack of new construction presents its own challenges. It has prompted more tenants to commit to long-term renewals. In addition, with quality space in prime locations at a premium, more developers and retailers are electing to enhance or expand their existing stores.
Fundamentally, the state’s evolving retail marketplace looks quite different than it did in the mid to late 2000s. The 2009 economic crash delivered a real blow to the lifestyle centers that were a big part of the pre-recession expansion, and those developments have had to scramble to adapt. Many have had to convert from a traditional lifestyle center model to more of a hybrid concept, integrating more middle-market and service-oriented tenants.
Those retail centers also had to get creative by introducing more experiential elements and entertainment-based concepts. We are also seeing many more restaurants in an increasingly diverse retail mix that includes medical, health and fitness and even select office uses. More than a few of these projects have emerged as strong and vital commercial centers, becoming popular homes for iconic anchor tenants like Whole Foods Market.
We are seeing this hybrid trend more on a national scale, but quickly moving into Michigan centers. Green Oak Village Place in Brighton, Mich., and The Village of Rochester Hills in Rochester Hills have begun to incorporate these features and concepts into their centers or those under development.
Developed as a traditional lifestyle center in 2006, Green Oak Village Place has adjusted with the addition of more mainstream tenants such as T.J. Maxx, Rally House and Charming Charlie, which complement the existing lifestyle tenants like Ann Taylor, LOFT, White House Black Market and Chico’s by offering something for everyone and appealing to a wider range of the market.
The Village of Rochester Hills has added Whole Foods Market as an anchor and developed a strong marketing program focused on events and activities at the center, making it a community meeting place.
At the same time, urban retail and mixed-use environments are on the upswing. As Michigan native Earvin “Magic” Johnson highlighted in his recent keynote address at the International Council of Shopping Centers (ICSC) RECon convention in Las Vegas, demographic changes and a renewed appreciation for the energy and vitality of urban settings has sparked revitalizations in the downtown cores of many major cities across Michigan and around the country.
Those spaces have become fertile ground for some of the most ambitious and exciting new retail and mixed-use projects. For retail spaces outside of those urban cores, the competition has made the need to stand out and stay fresh more urgent than ever.
For Michigan owners, operators and developers, adapting to these new realities and positioning their projects and properties for success going forward is an obvious priority. However, doing so without breaking the bank — leveraging existing assets to keep their retail developments fresh and relevant without embarking on a major redevelopment —requires a very specific set of strategies and tactics.
1. Think about consumers — Giving consumers what they want begins with staying on top of the latest societal trends. Developers and landlords who understand social and commercial preferences and priorities will be better equipped to build their tenant roster. Creating an environment responsive to those needs is crucial.
Increasingly, it’s about providing experiences and options for shoppers that allow them to do more than just shop. New restaurant concepts are making it possible to offer a wider variety of dining options. Fast-casual restaurants such as wood-fired pizza brands like MOD Pizza are currently occupying the “it” spot and are quite active. Entertainment-based concepts from bowling to indoor rock climbing are becoming increasingly popular as well.
2. Design for experiences — The importance of experience goes well beyond retail tenants. Developers are also recognizing the value of design elements and interactive features that give shoppers and guests opportunities to play and engage with their environment. From time-tested amenities like fountains, fireplaces and community gathering spaces, to creative and fun new ideas like bocce ball areas or giant chess sets, developers are making their centers places where visitors can go beyond the retail transaction.
The cool part is tenants are responding positively to this trend. Restaurants are pushing out onto the sidewalk to allow diners to enjoy (and become part of) the vibrant energy of a bustling center. Storefronts are becoming more distinctive and expressing more visual dynamism and brand personality.
If you look at The Mall at Partridge Creek in Macomb, Mich., it was originally developed by Taubman Centers with a focus on bringing unique features into its lifestyle concept, including bocce ball courts, interactive fountains and a dog-friendly environment to enhance customer shopping experience. The center also implemented a central court designed to host events like summer concert series, community fitness programs and more.
3. Don’t get stagnant — A stagnant center is prone to underperforming. New energy is essential, but the trick is to make that happen without breaking the bank. While more significant renovations and restructuring efforts — such as expanding existing stores or adding new square footage to accommodate a new anchor — can have an impact, it’s possible to refresh and renew your space by relocating tenants, bringing in new brands and making more modest investments in things like new signage and upgraded landscaping.
4. Let people know about it — Even the best efforts to upgrade and refresh your center will not allow it to achieve its full potential unless you let people know about it. A savvy and sophisticated multimedia marketing approach with a strong social media component is not only the ideal way to provide consumers with information and updates, but it also connects the surrounding community with the center in a way that feels organic and builds brand loyalty.
Today, a younger and more tech-savvy consumer base expects social media engagement, and it is increasingly responsive to promotions and special events that leverage social platforms.
In the next 12 to 24 months, as vacancies continue to fill and rents continue to climb across Michigan, owners and developers who want to get the most out of their spaces and remain relevant in an increasingly competitive marketplace will embrace these strategies and find new and effective ways to stay relevant and boost their bottom lines.
— By Sean Valentino, director of retail operations at Southfield, Mich.-based REDICO.