In the dynamic and ever-changing landscape of U.S. malls and lifestyle centers, a sense of careful optimism is taking root. This insightful analysis, contributed by Anthony Simon, Retail Practice Leader, delves into the current trends and strategies shaping the future of retail development.
Careful Optimism in a Changing Landscape
While there is significant potential for innovation and growth, there is also a need to evaluate and rejuvenate distressed, outdated malls that struggle to retain mid to premium tenants and service offerings. The evolution of neighboring areas, shifts in consumer mindsets and increased competition are all factors influencing this market. Partnerships, collaborations and the integration of sustainable, long-lasting experiences are key strategies being employed to revitalize these spaces.
Hot Markets and Trends
Ware Malcomb has observed a recent focus on retail development in the Sun Belt region, particularly in large metropolitan areas such as Dallas, Miami, Houston and Nashville. Trends in the market are constantly evolving, and it is crucial to create programming that stands the test of time. Digital integration and purposeful use of technology for interaction and storytelling are essential. While “Instagram-able moments” may lose their appeal, creating memorable and flexible experiences that can be refreshed to maintain surprise and delight is a sustainable approach.
Construction Spending Outlook
Construction spending in 2025 is expected to start conservatively, with careful evaluation of local versus global supply chains, secured lower interest rates and labor costs. However, as the year progresses, growth is anticipated, particularly with investments in smart technology components for project design and execution.
Significant Changes in Mall and Lifestyle Center Development
The most significant change in the past 12 to 18 months has been the focus on creating a high level of desired amenities while keeping costs in check. Some examples include luxury retail stores, gourmet dining options, health and wellness facilities and convenient services. This involves building flexibility to accommodate future technological advancements and changing consumer preferences.
Current Development Strategies
Current development strategies emphasize mixed-use collaboration, aligning with the 15-minute city concept. This is an urban planning approach where more daily necessities and services, such as work, shopping, education, healthcare and leisure, can be easily reached within a 15-minute walk, bike ride or public transit ride. This approach aims to improve walkability, increase mixed-use development and prioritize public transportation. Community centers, health and wellness-focused concepts, and a mix of amenities and staples are all part of this strategy.
Renovation and Repositioning Opportunities
Rather than traditional renovations, there is a focus on novel repositioning or adaptive reuse to create attractive shopping destinations. Examples include converting aged office towers into luxury residential and prime retail spaces or transforming waterfront warehouses into retail spaces for digitally native retailers, maker spaces, and event venues.
Cutting-Edge Design and Development Approaches
In response to e-commerce competition, innovative approaches are being explored to create “smart” retail spaces. Cashier-less payment systems, smart shelves, automated inventory management and interactive digital signage are examples of what makes “smart” retail spaces. Ware Malcomb is also leveraging its digital transformation team to develop smart tools for accurately calculating, controlling and tracking costs for retail build-outs.
Case Studies: Food and Entertainment Integration
One Paseo – San Diego, CA
One Paseo is a 23.6-acre mixed-use development the Carmel Valley community of San Diego, CA. It features 96,000 square feet of retail and restaurants, 280,000 square feet of office space, and 608 luxury apartments. Tenants include Sephora, Soul Cycle, Shake Shack, CAVA, Salt & Straw, and Blue Bottle Coffee. The development also boasts International Smoke, a restaurant by celebrity chef Michael Mina and cookbook author Ayesha Curry.
Fox Haven Square – St. Charles, IL
Fox Haven Square is a new retail and restaurant mixed-use development in St. Charles, IL. The project includes three core and shell buildings totaling approximately 50,000 square feet on a 7.5-acre site. It features a central plaza, a shared parking lot with 434 spaces, a valet/drop-off area, public sidewalks, and cross access to the Charlestowne Mall property. Additionally, the development includes a 20,000 square foot multi-story restaurant and pickleball building.
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