While most of the news about retail lately has focused on the challenges in the sector, positive stories about retail development do exist, and those successes can tell us even more about retail’s future than you might think.
Last year Bond Companies built a new shopping center in Kildeer that was 100 percent leased at completion. We’ve also witnessed the ongoing success of our other existing retail centers in the area despite growth of e-commerce, which is often blamed for declining sales at shopping malls. What this tells us that the right tenant mix and shopping experience will drive people to retail centers. But how do you capture the lightening in a bottle of a successful retail development in today’s Amazon-friendly world?
1. Start by identifying the problems to solve. Developing any type of property is essentially creating a solution. For retail, it may be providing types of retail that are missing from the area.
In the case of Kildeer Village Square, we used data to tell us what was missing from the area and designed a property to attract those retailers. Before we built Kildeer Village Square, retail development in the area had left a physical gap between two shopping centers that required people to inconveniently exit one center and travel through on Rand Road before getting to the other center. By building Kildeer Village Square between those two existing developments, we not only filled gaps in the area’s retail offerings, but also relieved traffic congestion by connecting all three centers via new frontage roads.
2. Focus on experiential opportunities. Shopping is only one of the drivers of retail developments. It’s important to have the right tenants, but it’s also critical to think about the experiences a center offers. Some shopping centers have added attractions like indoor amusement parks, but this kind of highly visible experiential approach isn’t necessary or even a good fit for most developments.
For example, take a center that draws people during regular shopping hours. By adding a health club to the tenant mix people have a reason to come earlier in the day for a morning workout. If people are there for morning workouts, adding a place for them to grab breakfast keeps them on the property even longer. The idea is to create not just a shopping center but a lifestyle center.
3. Re-imagine existing centers. Especially in a transitional period like we are experiencing now in retail, some centers need a fresh approach. This may come in the form of reworking the tenant mix to better serve the area or replacing retailers who have vacated the space. In many cases, a developer has the opportunity to tackle all three, as we did with the redevelopment of Touhy Plaza in Niles. When we began this project, the center was roughly 60-percent-occupied by a Pep Boys leaving plenty of remaining vacant space to fill with a fresh tenant mix. Its location on a busy section of Touhy Avenue offered potential for high visibility, but the property attracted few shoppers with its vacant storefronts. With a new look, parking lot and reconfiguration of vacant space, the center is now fully leased with a quick-service restaurant and other e-commerce-resistant tenants like Orange Theory. Pep Boys has remained in the space and reports their business increased after the renovations.
Success is still achievable in bricks-and-mortar retail; it just looks a bit different. In the suburbs, limited pockets of opportunity remain. But it also is achieved in redevelopment of existing retail properties where reworking the tenant mix and repurposing the space can create a center more oriented to the preferences and needs of today’s shoppers.
• Rob Bond is president of Bond Companies.
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