Fun in the Sun
Outdoor lifestyle centers attract more affluent shoppers than their more traditional counterparts. Here’s a look at some successful specialty leasing ventures at such malls, their advantages and challenges.
Ask anyone about lifestyle centers and you get the same response: “I love shopping there because it’s outdoors.” The open-air atmosphere, upscale stores and park-like setting are as much a draw as anchor department stores are at the traditional regional shopping centers.
Lifestyle centers mirror the Main Street of yesteryear. With Americans confined to their offices or homes at least eight hours of every day, the development of outdoor lifestyle centers makes shopping fun again. And if specialty leasing managers get it right, the addition of carts and kiosks can add a lively experience and point of differentiation to the merchandising mix of the permanent retailers.
The International Council of Shopping Centers defines lifestyle centers this way: “Most often located near affluent residential neighborhoods, this type of center caters to the needs and ‘lifestyle’ pursuits of consumers in its trading area. It has an open-air configuration and typically includes at least 50,000 square feet of retail space occupied by upscale national chain specialty stores. Other elements differentiate the lifestyle center in its role as a multi-purpose leisure time destination, including restaurants, entertainment, and design ambience and amenities such as fountains and street furniture that are conducive to casual browsing. These centers may be anchored by one or more conventional or fashion specialty department stores.”
A 2009 research study by Alexander Babbage, Inc., an Atlanta-based market research firm, confirmed that lifestyle centers draw shoppers from a large and affluent area. Additionally, customer demographics and shopping behavior are more attractive than those found at conventional regional and super-regional malls.
According to the study: “Lifestyle centers trade areas have smaller populations, and the populations are significantly more affluent. The average household income for a lifestyle center trade area is $92,113 (in 2009), one-third higher than the mean for conventional regional and super-regional shopping centers.” However, these centers rely slightly more on its primary trade area for customer sales and traffic. Also, somewhat surprising, these centers draw more of a 35-64 age group than do conventional malls.
Erin Sweeney, Specialty Leasing Manager at Horton Plaza in San Diego, says that the majority of the specialty leasing programs in the city is outdoors. “Specialty tenants here are used to having [many] sunny days,” Sweeney says. “Flip flops and beachwear are categories I target specifically for the outdoor center located only minutes away from the beaches.”
Federal Realty’s Director of Specialty Leasing/Director of Asset Management, Michael Kelleher, says the goal of the programs at these centers, as with more traditional ones, is to complement the overall merchandising mix, add convenience and create additional retail excitement. In addition to hosting specialty retailers, outdoor lifestyle centers also provide a great platform for sponsorships and partnerships with or without events and promotions, Kelleher says.
For example, Federal Realty recently announced a partnership with Zipcar, a car sharing business, by providing dedicated spaces for Zipcar vehicles at four locations in the Washington metropolitan area. Car sharing is a cost-effective and convenient option to access a set of wheels when needed. “This new program with Federal Realty and Zipcar is a unique and tremendous offering for our shoppers: an emerging transportation concept that is convenient, environmentally friendly and smart,” says Kelleher. “This program promotes Zipcar use from the convenience of Federal Realty’s properties which have great proximity to public transportation,” Kelleher adds, saying that Federal Realty was looking forward to the expansion of the program at many properties across the country.
Kurt Palmer, Director of Specialty Leasing at Developer’s Diversified says large-scale events such as farmer’s markets, car shows and skating rinks have gained popularity. His creative team manages clever seasonal offerings that flourish even in colder climates. These include Christmas tree lots, pumpkin patches, hot chocolate and coffee stands, and horse-drawn carriage rides.
Weather does pose challenges for the operators. Retail merchandising unit manufacturers are getting requests to add fans to cool product and employees, and propane heaters to keep employees warm after sunset. At Federal Realty’s properties in the northern climates, specialty retailers are active seven months of the year. There are no winter programs, Kelleher says. Weather challenges are offset by tremendous foot traffic that makes up for limited days of operation, Kelleher adds.
WS Development rents seasonal leasing opportunities at the company’s open-air shopping centers located throughout New England. With the company’s presence in the Boston, Hartford and Providence markets, Michael Campbell, Director of Business Development has had success getting national temporary retailers like Brookstone, See’s Candies and Hickory Farms to lease space. Last summer he launched the Seasonal Market Cart Program in Hingham, MA at the Derby Street Shoppes. “The carts add to the street life and enhance the customer’s visit by offering additional services and options,” Campbell says.
RMUs and kiosk design
In the early 1990s, outdoor units were reserved for Sunbelt markets like California, Florida and the islands. Now with the development of the lifestyle center, more RMU and kiosk manufacturers are being asked to custom design units that work in the summer and the winter. Blake Sandberg, Partner at Sand Mountain, an RMU and kiosk design/build studio in Newport Beach, CA, says the company has installed outdoor units in Chicago, New York and even Stockholm, Sweden.
While most RMUs and kiosks have some standard components, Sandberg says the company has to factor local weather conditions into design and materials selection. For example, in hot and sunny climates, shade is important so awnings or roofs with overhangs need to be maximized; conversely, in the colder climates, the opposite is true to accommodate snow loads. Material selections are also very important; the RMUs and kiosks need wood that won’t rot or swell; metal that resists corrosion and rust; and finishes designed with UV protection.
RMUs located in hurricane zones must have the ability to anchor the unit to the ground. Even seemingly insignificant details need to be paid attention to—a unit needs to be sized so that it can fit through storage doors if it needs to be moved inside during strong windstorms.
Since many lifestyle centers have an entertainment/restaurant/nightlife component, outdoor specialty retail programs are at a higher risk for vandalism. Security closures need to be “hard closures” such as roll down gates or hard enclosures. Palmer, with DDR, agrees. “Security at night needs to be addressed differently than [at] an indoor center. Roll-cages or units with hard locking systems are essential.”
Sanberg adds that units might have glass or aluminum doors, roll-down shutters or a combination of the two. “We have seen a trend toward making units look less ‘closed’ after hours by adding lighting and graphics to the exterior,” Sanberg adds.
With a sophisticated line-up of great restaurants and entertainment destinations, these outdoor properties come alive after dark. The social scene is as much a part of the shopping experience as retail is. Night markets around the world, including the famous one in Taipei, Taiwan, are famous for their carts and RMUs selling small pick-up foods, and often the food choices become the point of differentiation between markets.
Maybe the American lifestyle specialty retail programs can borrow from these examples and grow their own programs in new and profitable directions.