As I’ve written earlier, covered malls are at risk unless they entice shoppers through their doors to spend money rather than shopping online. That means major retailers have to be willing to change their business models to survive. There is no holy grail waiting to be discovered but being innovative is a starting point. Don’t be surprised if we see more consolidation in the Amazon–Whole Foods mould.
For those of us involved in community plazas, it is paramount to focus on retailers and services that cannot be offered online and require walk-up traffic. Until recent years, that included banks as a key anchor tenant but that may be changing. As lease renewals come up, banks are now considering smaller premises or stand-alone pads as they become less about bank tellers and more about online services. It is likely the traditional 15-year tenancy agreement will be shortened as the banks try to figure out their future in each community landscape.
As the banks try to reposition themselves, we are seeing new companies emerge as principal players in local communities – the most notable has been those offering child care services. The key to success is becoming more than a single-service outlet. Instead, they are facilitating evening and weekend courses, such as English as a Second Language and cultural awareness nights.
These outlets are operating more like old-fashioned community centres. As a result, they increase foot traffic in the plaza, which in turn boosts potential sales opportunities for other outlets. Some say we will look back on 2018 as a year of slow-and-steady growth as we deal with interest rates inching higher.
For some tenants, this could be the best time to lock in a lease as it will provide cost certainty. For landlords, having plazas near to capacity, or full, is the best advertisement to attract new tenants.
This year will be great for those who pay attention to details and are prepared for the next upturn. What we are experiencing is a “New Normal” that remains cyclical, but with fewer extremes.
As always, the best measure of your decisions and hunches will be hindsight. On that, some things never change.