The shopping mall is dead.
Long live the mall.
A case can be made for each of these contradictory statements, as the International Council of Shopping Centers (ICSC) holds its annual RECon event in Las Vegas May 18-20. WCPO is covering the global real estate conference, as dozens of local real estate executives, government officials and mall owners look for lease deals that could alter the retail landscape in Cincinnati.
As anyone can tell from a stroll through the 70 percent vacant Forest Fair Village or a walk past the empty Tower Place Mall downtown, there are dead retail zones all over the Tri-State. But the president of ICSC recently explained to local real estate professionals that shopping malls are making yet another comeback in the U.S.
Average sales per square foot in the nation’s shopping malls reached a new all-time high of $475 at the end of 2013. Retailers are looking for new space again, as consumers demonstrate an increased appetite for online and brick-and-mortar relationship with merchants. A dearth of new shopping center development since 2010 means vacancy rates are declining, rents rising.
“If you own a center, you’re sitting very, very pretty,” said ICSC President Michael Kercheval in a May 8 speech to the University of Cincinnati Real Estate Roundtable. “There is huge demand for your space. There’s no new supply. And retailers are looking for space. Which isn’t to say there aren’t some centers in some places that just should never have been built and they will be converted into something else. But for most centers in this country the demand vastly exceeds the supply.”
Kercheval said shopping centers in highest demand are those that reinvented themselves as social hubs, with public amenities that invite people to gather for dining out, movies and relaxation. Not to mention shopping.
“They’re increasingly being thought of as the ‘third place’ that people go to,” Kercheval said. “They’re not at home. They’re not at work. They want to go someplace where they can socialize. Well, that should be our retail nodes. It should be the place where people want to go to connect, to experience and to buy … We’re defining our success as an industry beyond just being very efficient merchandisers.”
WCPO Insiders can see how a Columbus developer is trying to capitalize on the trend at Butler County's Liberty Center.
Be sure to follow Dan Monk's coverage of the ICSC convention from Las Vegas.