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It’s All at the Mall: Consumers Look to Shopping Centers as Community Centers
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It’s All at the Mall: Consumers Look to Shopping Centers as Community Centers

The news regularly touts the rise of e-commerce and predicts the coming demise of “brick-and-mortar retailers” in today’s increasingly digital world. Yet online is currently on track to equal just 5-6 percent of consumer packaged goods sales in 2015. And while shopping from the comfort of a couch is convenient, people still crave a physical place to congregate, connect and engage. More and more, shopping centers are fulfilling a big part of that need.

No longer just a place to shop, shopping centers are becoming key activity centers in the social fabric of communities, elevating their purpose beyond simply offering an outlet to buy groceries or pick up a new blouse. This concept is nothing new, but efforts to integrate fully into communities have been rare. However, as shopping centers and malls remain prominent in our culture and consciousness, developers and retailers face big opportunities to activate communities and become a central gathering space for consumers.

The Shopping Center Landscape Remains Stable

Reaffirming the role shopping centers play in American culture, the industry landscape remained stable from 2013 to 2014, indicating growing stability in shopping center development. According to the 2014 State of the Shopping Center report, the number of large shopping centers (200K+ gross leasable area {GLA}) grew by 3 percent in the past year. Community centers, which feature neighborhood-serving amenities like grocery stores and dry cleaners, are still the most common type of shopping center in 2014, comprising 46 percent of centers. In 2013, Nielsen reported the rise of lifestyle centers and the decline of traditional malls like regional and super-regional centers. This trend is holding true in 2014 as consumers continue to be drawn to the shopping experience offered by lifestyle centers with their mix of retail, restaurants and entertainment options.

The Shopping Center Landscape

Shopping Center Type Shopping Center Concept GLA Size Range 2014 % Comp. 2013 % Comp. 2008 % Comp.
Community Centers General Merchandise, Convenience 100K-350K 46% 45% 46%
Power Centers Category-Dominant Anchors, Few Small Tenants 250K-600K 18% 18% 13%
Lifestyle Centers Upscale, National Specialty, Entertainment, Outdoors 150K-500K 15% 15% 9%
Regional Centers General Merchandise, Fashion 400K-800K 11% 11% 18%
Super-Regional Centers General Merchandise and Fashion (more variety than Regional) Over 800K 6% 6% 10%
Value Retail Centers Manufacturer’s Outlet Stores 50K-400K 3% 3% 3%
Entertainment Centers Leisure, Tourist-Oriented, Retail & Service 80K-250K 1% 1% 1%
Source: Directory of Major Malls (DMM) 2014, 2013 and 2008 and Runstad Center, ICSC. *Centers under 200K GLA are not included in the Nielsen analysis. GLA—Gross leasable area.

Lifestyle Centers Enliven Communities

Lifestyle centers, which grew from 9 percent of industry share in 2008 to 15 percent in 2013 and remained stable at 15 percent in 2014, exemplify consumers’ demand for an integrated shopping that becomes the center of their communities. For example, The Headquarters, located in downtown San Diego, is a new lifestyle center that opened in 2013 and was developed using adaptive reuse to capitalize on the former headquarters of the San Diego Police Department. The historic character, gardens and plazas, in addition to trendy retailers and upscale restaurants, create a shopping experience that consumers can’t get online. The center also blends into the downtown landscape, making it a key center of activity within the community.

The rise of lifestyle centers is driven in part by their newness. Consumers are drawn to the excitement of a new concept and a new shopping experience. Lifestyle centers are, on the whole, newer than other types of centers with a median year-opened date of 2006. In contrast, traditional mall concepts like regional centers and super-regional centers are much older with median open dates of 1981 and 1976, respectively.

Shopping Center Type By Median Year Opened

Shopping Center Type Year Opened
Lifestyle Centers 2006
Power Centers 1999
Entertainment Centers 1999
Value Retail Centers 1995
Community Centers 1987
Regional Centers 1981
Super-Regional Centers 1976
Source: Nielsen

While many malls have gone through updates and renovations during their lifespans, they often lack the excitement of a brand-new concept. Still, older shopping centers can capitalize on the lifestyle center trend by renovating and rebranding with emphasis on providing diverse amenities like dining, recreation and gathering space in addition to retail. No matter what the concept, consumers want shopping centers to provide a one-stop shop for retail and entertainment they can’t get through online shopping–from specialty cafes and wine bars to concerts and yoga classes.