How malls are becoming part of the neighborhood

08 January | Americas | JLL Retail

Through a combination of physical renovations and savvy branding, malls are aiming to reposition themselves as the destination places they once were within U.S. communities – even as online shopping continues to grow.

The transformation begins with the name itself. Some shopping centers are dropping the word “mall” with alternatives including shoppes, village or towne center.

“Mall has become a dirty word,” says Taylor Coyne, Senior Analyst with JLL Retail Research. “All the new words are designed to conjure a certain image in your mind. Shoppes, towne center, village—these are all more localized, community-based words. And that’s what these new centers are striving for, to be part of the community.”

The makings of a new mall

Location is one of the key factors. Instead of expecting shoppers to drive miles to an out-of-town mall, today’s shopping centers want to be at the heart of the action. Walkability, an increasingly desirable lifestyle choice, isn’t just a millennial phenomenon either. All age groups value being able to walk to shopping, dining, community events and the office—otherwise known as a “live-work-play” environment.

“Adding multifamily units is by far the most popular or common strategy for malls that are adding a non-retail use. Of the 30 percent of malls that have added a secondary use, almost 41 percent of them have added multifamily,” says Coyne. Other popular options, according to JLL’s A New Mall Rises report, are hotels and office space.

Once people live or work in the same area as the mall, it makes sense to provide amenities they’ll want and need – amenities such as restaurants, grocery stores, parks, office space and medical centers.

“Today’s mall operators know there’s much more to shopping centers than typical department stores or inline retail spaces,” says Coyne. “By dedicating space that isn’t necessarily retail, they’re creating a halo effect which attracts an audience beyond shoppers. And chances are this new audience will want to spend some time there whether it’s socializing with friends or spending an afternoon taking the kids to a play center.”

Take Westfield Century City, a mall in Los Angeles, which just finished a $1 billion remodel. It still offers more than 50 percent retail tenants – down from 80 percent before the revamp – yet it also features a medical center, an Equinox gym, an entertainment space, a Gelson’s supermarket and Eataly, an Italian marketplace with multiple restaurants and cooking classes.

Taking down walls

Redesigns go way beyond what’s happening indoors. The area outside the mall is increasingly a focus area for modern centers.

“The traditional enclosed fortress-type buildings are out,” says Coyne. “Essentially by lifting off roofs and opening up pathways, mall owners can change the atmosphere of a property to make it more appealing to consumers. Plus, by connecting the mall to the outside, it improves accessibility and visibility, which benefits retailers.” Mall owners also benefit by cutting the costs associated with heating and air conditioning, Coyne points out.

Opening up space and adding outdoor event zones and green spaces also helps to create more of a communal feel. “The space is now more attractive for the community; removing walls goes hand-in-hand with other types of improvements, such as planting trees on the streets that lead to the center,” says Coyne. “It all adds up to creating welcoming places that people choose to head to in their leisure time.”

It’s a strategy that can work even in cities with cold winters. In Chicago, the outdoor Oakbrook Center, which went through a major renovation in 2013, draws crowds to a park-like setting in the summer to watch movies and shop in a seasonal weekly farmer’s market. In winter, an ice rink takes center stage.

Yet for some malls it’s about striking a balance between indoor and outdoor facilities. The Shops at Foothills in Fort Collins, Colorado, underwent a major $313 million renovation in 2015. It’s still an indoor mall for shopping, but there are also outdoor youth sports programs, early education activities, concerts and open-air eateries for the summer months.

“Malls that stay enclosed will often incorporate the outdoors by putting in rooftop patios, for example, so people can sit and enjoy the space when the weather is nice,” says Coyne.

The mall of the future

As more malls reshape their position in an increasingly digital world, their future is about much more than retail alone.

“I think we’re going to see a lot more mixed-use concepts going forward,” says Coyne. “If you’re a traditional mall owner focused on retail, we’re going to see more diversification of the portfolio, including more investments into multifamily. Besides apartments, this will include co-working spaces.”

Indeed, whatever malls choose to call themselves in the future, the successful ones will boast features that promote connectivity and community to ensure they’re destinations in their own right.