In the News 2006
Forecasting the Future of Retail.
May 22, 2006
Going to the mall has been a common errand since the 1980s, when malls larger than 800,000 sq. ft. first appeared on the U.S. landscape. Since then, many of these grand shopping developments have started to fall out of favor and the direction of future retail centers has come into question. With the popularity of mixed-use developments, online shopping, and lifestyle center developments, retail center developers must work harder at understanding society's desires when it comes to shopping.
Mixed-Use
Several development trends shaping the retail center of the future. Some have been in play now for a few years, including the integration of mixed-use components to retail centers in urban and now, even suburban locations. Although this is nothing new for some East Coast communities in the United States, for most suburban communities in Southern California, this is a relatively new phenomenon that is becoming more popular.
It appears that this push toward mixed-use projects will continue due to the fact that many municipalities are requiring more vertically integrated development. These are areas that merge residences. shops, and offices. They tout a neighborhood feel, hidden/underground parking lots, and an emphasis on walking instead of driving.
Although this push is not necessarily the case in all parts of Southern California, in land-constrained areas like San Diego, this a burgeoning trend for developers.
San Diego's City of Villages plan specifically calls for this type of development. San Diego developers are now planning a number of such projects for the region. Quarry Falls in the Mission Valley area of San Diego is one such example.
The development will have a town center that blends civic and retail uses with housing and offices. The more than 230-acre commercial and residential project will feature multiple parks, an arboretum, an elementary school, a civic plaza, and a recreational center. Housing in the development ranges from single-family homes and townhouses to mid-density flats and lofts.
Internet Influence
With the growing popularity of online shopping, technology in the home is affecting retail development. in some cases, online shopping is taking a significant number of sales away from the brick-and mortar stores.
For example, bookstores lose sales to Amazon.com and other popular online book retailers daily. In July 1998, Time magazine responded to this online trend with an article predicting the demise of the shopping mall.
But some companies understand the great synergistic opportunities between the Internet and brick-and-mortar stores.
Apple Computer has used its stores to help build market share and brand while producing a tremendous number of sales out of these retail outlets, which add to its bottom line in a significant way.
Online shopping is reducing sales volume for some retailers and even putting some out of business. However, like Apple Computer other traditionally nonstore companies have been able to transform themselves and allow brick-and-mortar retail sites to be a viable sales vehicle.
Lifestyle Centers
Lifestyle centers are growing in popularity with developers and shoppers alike. These projects typically offer an outdoor traditional streetscape layout with sit-down restaurants and a conglomeration of specialty retailers. Some innovative hybrid projects also have been built.
One of the best examples of this type of project is the Irvine Spectrum in Irvine, where the owner has taken a pure entertainment center and married it with high-end retailers, such as Nordstrom, and with discounters, such as Target.
More and more, developers throughout Southern California are following the Irvine Spectrum model, building projects that combine an assortment of stores, which attract a wide spectrum of shoppers, both in age and income levels.
These types of projects are unlikely to replace malls. Popular and successful malls will, instead, get better with time.
For example, Fashion Valley Mall in San Diego underwent a major renovation and has come out stronger than ever and is a dominant mall in San Diego County.
Fashion Valley most likely will remain in that category, even with the addition of nearby lifestyle centers. At the same time, more lifestyle centers will continue to be built and some of these projects will take away significant sales from less dominant malls in the trade areas that have not reinvented themselves, such as Fashion Valley.
Expanded Role
Although no one can forecast the future of retail development exactly, trends and proposed projects suggest that shopping centers will continue to serve communities' economic and social needs.
These "retail developments of the future" will combine shopping, technology, mixed-use and entertainment, thus expanding their role as simply a shopping mall.
By COLTON SUDBERRY, Vice President of Sudberry Properties