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One of the most valuable malls in America is getting a makeover

One of the most valuable malls in America is getting a makeover

As part of the ongoing renovations at Garden State Plaza, a former J.C. Penney store within the mall and a freestanding Best Buy store on the property are being gutted for new uses.

Unibail-Rodamco-Westfield said this year it will begin remodeling the inside of the center to add more chef-backed eateries, entertainment for families and health-and-wellness tenants. The unveiling of the new residential space, office building, hotel, public park and open green space will come in 2022, it said.

“When you bring additional food and entertainment what happens is you increase the dwell time,” of shoppers at the mall, Tritant said. “The dwell time is much higher and a consequence of that is people spend more.”

Garden State Plaza is anchored by department store chains Nordstrom, Neiman Marcus, Macy’s and Lord Taylor today. And while the mall includes luxury retailers like Louis Vuitton and Tiffany, it’s also managed to attract so-called digitally native brands like glasses maker Warby Parker, shirt retailer Untuckit, athleisure company Fabletics and cosmetics chain Riley Rose to open up stores there.

Related-owned Hudson Yards in New York is another development mimicking this so-called mall of the future model, with places to live, work, dine and shop, and with an entire floor dedicated to online brands.

Still, there’s not a ton of evidence yet that supports the idea that bringing “experiential” tenants to malls will amplify activity there. A recent study by Thasos Group found malls with so-called experiential tenants that aren’t just focused on selling products — like Apple, Italian food hall Eataly and Tesla — haven’t been drawing in extra traffic. Up until the final three months of 2018, indoor shopping malls with “experiential” tenants didn’t benefit from greater shopper traffic on a year-over-year basis when compared with indoor malls without any of those unique, nonapparel tenants, Thasos said.

But there is evidence that when mall owners make additions like office space and apartments to their properties, sales per square foot — a key metric monitored by analysts in the industry — increase significantly.

Macerich, one of the few publicly traded mall owners to disclose the sales-per-square-foot metric for each of its assets, has transformed Tysons Corner Center in Virginia to include a 1.5-acre outdoor plaza for events, a 22-floor office tower, a 28-story residential apartment tower and a Hyatt-operated hotel.

Tysons Corner has gone from bringing in $645 in sales per square foot in 2009 to nearly $1,000 by the end of 2017, BTIG REIT analyst Jim Sullivan said. “In making some of these assets mixed use you have really dramatic growth in productivity.”

Macerich is also one of the first mall owners to begin adding coworking spaces inside its malls, filling space once used by department store chains. Other REITs are trying this, too. Unibail-Rodamco-Westfield added a WeWork at Fulton Center in New York. And Pennsylvania REIT recently added a coworking space to Cherry Hill Mall in New Jersey, the first time it’s worked with this type of tenant, with plans for more. The space, called 1776, sits right near Forever 21 and Nordstrom, and can accommodate more than 200 members.

Meantime, Simon Property Group, the largest mall owner in the U.S., recently broke ground on its redevelopment of Phipps Plaza mall in Atlanta. It’s going to include a Nobu Hotel, a 90,000-square-foot Life Time fitness and entertainment center, and a 13-story office tower, once completed.

Simon CEO David Simon just this week spoke to analysts about some of the mall owner’s ongoing redevelopments, adding that he “can’t guarantee” there won’t be more shakeout in the retail industry — like store closures and bankruptcies — this year.

Later this month, all of these mall owners will come together in Las Vegas at the International Council of Shopping Centers’ annual retail real estate conference, the largest gathering for this industry in the world, to discuss how the companies are combating store closures, working with upstart digital brands to open brick-and-mortar stores and more.