As Their Anchors Sink, Malls Try To Present Retail 'Experience'

[brahmanknight]

The new malls in Wesley Chapel are open air, but it doesn't mean much to me. With Amazon and other e-retailers, I only go to malls if I want to buy something immediately or with someone else. I work on mall property and visit it maybe every other month.

For many in Generation X, the suburban mall was their social epicenter. Kniffen says mall rats are no more.

"The culture is dead. [They] were the last generation that went and hung out at the mall," he says.

People shop where they socialize — and that's increasingly online. In less than 15 years, Kniffen expects half of sales will be Web-based, which will hit department stores especially hard.

Decades ago, department stores were so valued, developers gave them the land underneath their stores.

"If you were building one today, you wouldn't give that deal to an anchor, because they're not a good enough attraction," Kniffen says.

When it opened in 1986, it was anchored by a Saks Fifth Avenue and catered to well-to-do Baltimore suburbanites.

The mall's owner, Kimco Realty, is planning a multimillion-dollar revamp. Like many malls that are trying to re-attract customers, it will include a movie theater and restaurants. But it will not include a department store.

Jan Rogers Kniffen, a retail consultant familiar with the Owings Mills project, says the developers are hoping outdoor shopping without department stores will pay off.

"They're trying to make it more interesting and more experiential, and so they're turning it inside out and making it open-air. Whether that will be a solution or not, I don't know," he says.

 

[Sir Galahad]

Ehh, I'm currently at a national retail real estate convention, 36,000 people this year, one of the largest ever. Brick and mortar real estate is doing just fine.

 

[jetsaholic]

That's because you're antisocial, @brahmanknight.

 

[cnsaguy]

How the West Oaks mall is still open in beyond me. Place is a ghost town the few times I go in there.

 

[Poolside Knight]

idk not a fan of this open air trend once Florida is in the middle of ball sweat season, Millenia is doing fine

 

[Sir Galahad]

idk not a fan of this open air trend once Florida is in the middle of ball sweat season, Millenia is doing fine

Open air is much cheaper to build, run and lease for all parties.

 

[CommuterBob]

How the West Oaks mall is still open in beyond me. Place is a ghost town the few times I go in there.

Or Fashion Square, or Oviedo, or Artegon (fka Festival Bay, which is now basically a flea market with a Bass Pro and a movie theater). Osceola Square is now practically a votech mixed in with a Ross, a gym, and a daycare.

Just wait 3 months until all the Sports Authorities close. There will be another glut of big box retail space on the market.

 

[Sir Galahad]

Or Fashion Square, or Oviedo, or Artegon (fka Festival Bay, which is now basically a flea market with a Bass Pro and a movie theater). Osceola Square is now practically a votech mixed in with a Ross, a gym, and a daycare.

Just wait 3 months until all the Sports Authorities close. There will be another glut of big box retail space on the market.

Fashion Square is going to get a large makeover with more of a lifestyle type components. Losing Sports Authority is no big deal, their stores will be broken up and replaced by smaller, healthier retailers who can pay higher rents.

 

[Whataknight]

I haven't even been to a mall here in Charlotte yet and I've been here nearly 2 years

 

[1ofTheseKnights]

We usually go to the rich folks mall (redundant) here Sarasota because there's one w great kids play area my 22 month old enjoys when its hotter than the Hindenburg outside.

 

[Great2BAKnight2]

Ehh, I'm currently at a national retail real estate convention, 36,000 people this year, one of the largest ever. Brick and mortar real estate is doing just fine.

If you're at REcon in Vegas, grab some photos of the Lake Nona Town Center model at the Steiner + Associates booth. I'm curious how they plan to layout that development.

 

[UCFBS]

The developer who opened both Oviedo and Waterford Lakes really didn't do their homework. Then again, when you had everyone in Oviedo screaming for their own mall ... well.

Spoiler

Ahhh ... the '90s. The decade where we literally thought we could afford so much sh--, based on the creation of false wealth, a byproduct of everyone having 401Ks, false reporting, etc...

Although I do believe we are in the rolling '10s, like the rolling '20s some 90 years ago, the era of extra-cheap debt. The only question is ... will Donald Trump be the next Herbert Hoover, and blamed for its all, being of the least political experience, and an alleged big businessman who didn't care about the common-folk?

I'd ask the "moral authority," but I already know their answer. After all, they also blamed Hoover for everything Wilson actually did, in the history books.

And Hillary Clinton actively supported Barry Goldwater for a reason too, long since forgotten.

 

[UCFWayne]

I have BS on ignore, and dont feel like doing the show ignored content. I assume its damn near a full page long. Can someone give me a cliff notes version?

 

[UCFBS]

I have BS on ignore, and dont feel like doing the show ignored content. I assume its damn near a full page long. Can someone give me a cliff notes version?

So ... you're going to ask in every thread?
So ... you're going to bother someone else?
Why not just keep me on ignore and not care what I post?

That's the funniest thing about you guys.
You post more about what I post!
Only adding more to the scrollbar overall!

And I'm the one with mental health issues?

 

[brahmanknight]

So ... you're going to ask in every thread?
So ... you're going to bother someone else?
Why not just keep me on ignore and not care what I post?

That's the funniest thing about you guys.
You post more about what I post!
Only adding more to the scrollbar overall!

And I'm the one with mental health issues?

Yes.

 

[UCFBS]

Yes.

Cool!

 

[crambone]

I can say I haven't been to a mall since my son was born. And he will be 4 in October.

 

[Sir Galahad]

If you're at REcon in Vegas, grab some photos of the Lake Nona Town Center model at the Steiner + Associates booth. I'm curious how they plan to layout that development.

Didn't make it, I walk the floors late afternoon on Tuesday, otherwise I have a few brokers I stay at their booths.

 

[Sir Galahad]

I can say I haven't been to a mall since my son was born. And he will be 4 in October.

You would be in the minority, malls are killing it, highest average sales per square foot in history.

 

[1ofTheseKnights]

Lolz at per square foot metric. Everyone knows retail is about same store. This little goy thot you you were a better money changer than that. I'll concede they're rightly evolving but the average man (i.e. not Neiman Marcus & Saks etc) 80s department store is going Radio Shack.

http://finance.yahoo.com/news/death-american-mall-214609698.html

"Nordstrom, JC Penny and Macy’s all reported terrible same store sales. Credit income and real estate gains accounted for 70% of Macy’s EBIT."

 

[UCFBS]

You would be in the minority, malls are killing it, highest average sales per square foot in history.

The ROI isn't there, given typical pricing ... at least until more recent years with the, now, glut in availability.

 

[Sir Galahad]

Lolz at per square foot metric. Everyone knows retail is about same store. This little goy thot you you were a better money changer than that. I'll concede they're rightly evolving but the average man (i.e. not Neiman Marcus & Saks etc) 80s department store is going Radio Shack.

http://finance.yahoo.com/news/death-american-mall-214609698.html

"Nordstrom, JC Penny and Macy’s all reported terrible same store sales. Credit income and real estate gains accounted for 70% of Macy’s EBIT."

Stop trying to sound smart. It does not fit you. This is a big boy conversation, we are talking malls and sales per square foot is the measurement on how malls are valued leased and sold. Individual retailers use same store sales and even that is manipulated constantly.

Now back to your wife beater t shirt, trailer and klan meeting.

 

[UCFBS]

Stop trying to sound smart. It does not fit you. This is a big boy conversation, we are talking malls and sales per square foot is the measurement on how malls are valued leased and sold. Individual retailers use same store sales and even that is manipulated constantly.

Now back to your wife beater t shirt, trailer and klan meeting.

Yes, and there are an awful lot of square footage out there that they cannot put anyone in.

The result of a huge ramp-up in developments going way back to the .COM boom, and now is under tremendous pressure in just the last 5 years because of the 5-fold jump in Internet shopping by everyone (no longer techies) over the prior decade. You can see that result all around Orlando, especially in the non-attraction area, but even just outside of it sometimes.

I'm sure conferences are full, as many people are trying to figure out how to keep a shrinking industry going.

 

[crambone]

Here's hoping the University Mall in Tampa gets bulldozed soon.

 

[Bob the Citronaut]

Malls suck. They full of assholes and bullshit.

 

[1ofTheseKnights]

Malls suck. They full of assholes and bullshit.

 

[brahmanknight]

Fashion Square is going to get a large makeover with more of a lifestyle type components. Losing Sports Authority is no big deal, their stores will be broken up and replaced by smaller, healthier retailers who can pay higher rents.

I've been meaning to ask you, what do you think of the Fashion Square renovation? Is it enough? Will they be successful?

 

[Sir Galahad]

I've been meaning to ask you, what do you think of the Fashion Square renovation? Is it enough? Will they be successful?

They are trying to bring in some interesting names in the mid box area with strong restaurants as well. Them market is strong but Millenia sucked the life out of that trade.

 

[UCFKnight85]

Stop trying to sound smart. It does not fit you. This is a big boy conversation, we are talking malls and sales per square foot is the measurement on how malls are valued leased and sold. Individual retailers use same store sales and even that is manipulated constantly.

Now back to your wife beater t shirt, trailer and klan meeting.

Um, hate to break it to you but malls survive or die based upon whether or not their tenants are healthy. What does it matter if a mall operator thinks sales per SF are ok but the company inside that space is seeing 15% downturns in Y-Y sales? Companies aren't going to just leave their stores inside malls to wither and die.

Most every story on the future of malls in this country predicts that we'll see 50% of current malls closed in 20 years or less. The % of malls with 10% vacancy or less has fallen to 80% from 95% in just 2008. The speed at which companies are pulling out of malls is accelerating annually.

You sound like a taxi company 3 years ago stating that Uber was stupid because the taxi industry conference was rockin!

 

[1ofTheseKnights]

Can only replace Radio Shack & dying department stores w enough yuppie & old people shit til the old people die off. Dinosaur tier, but look shekels/SF is solid! Gimmie more shekels! :handwring:

 

[Sir Galahad]

Yes, and there are an awful lot of square footage out there that they cannot put anyone in.

The result of a huge ramp-up in developments going way back to the .COM boom, and now is under tremendous pressure in just the last 5 years because of the 5-fold jump in Internet shopping by everyone (no longer techies) over the prior decade. You can see that result all around Orlando, especially in the non-attraction area, but even just outside of it sometimes.

I'm sure conferences are full, as many people are trying to figure out how to keep a shrinking industry going.

Okay BS, now you're an expert in retail real estate. Over the past five to seven years there was little new ground up development, the industry survived by redeveloping existing real estate. No one will argue that the internet has not changed shopping but retailers are smart, the ones that thrive adapt to the current conditions. Most good retailers have figured out how to compete with the likes of Amazon, it is Amazon that is building brick an mortar stores, hundreds of them. Why do you think that is? I'll answer it for you, as much as you want to think the internet will replace physical shopping, it simply will not happen.

What you will see is the larger, slower retailers like the Sears and Macy's hurt a lot more than the specialty retailers. Those monster box stores will get smaller in size and the reason is not just the on line retailers but the specialty brick and mortar retailers. Here is one for you, go into a Pirch, its a plumbing store, yes plumbing. They sell very high end plumbing fixtures, appliances and outdoor kitchen type things. There are eight of them, soon to be more. These stores cost three times as much to build than a traditional store because each fixture actually works, Kohler is doing something similar. The shopping that has changed is more specialty retailers, its like going to the doctor for a broken leg. Do you want to go to a GP or an orthopedic.

 

[UCFKnight85]

Okay BS, now you're an expert in retail real estate. Over the past five to seven years there was little new ground up development, the industry survived by redeveloping existing real estate. No one will argue that the internet has not changed shopping but retailers are smart, the ones that thrive adapt to the current conditions. Most good retailers have figured out how to compete with the likes of Amazon, it is Amazon that is building brick an mortar stores, hundreds of them. Why do you think that is? I'll answer it for you, as much as you want to think the internet will replace physical shopping, it simply will not happen.

What you will see is the larger, slower retailers like the Sears and Macy's hurt a lot more than the specialty retailers. Those monster box stores will get smaller in size and the reason is not just the on line retailers but the specialty brick and mortar retailers. Here is one for you, go into a Pirch, its a plumbing store, yes plumbing. They sell very high end plumbing fixtures, appliances and outdoor kitchen type things. There are eight of them, soon to be more. These stores cost three times as much to build than a traditional store because each fixture actually works, Kohler is doing something similar. The shopping that has changed is more specialty retailers, its like going to the doctor for a broken leg. Do you want to go to a GP or an orthopedic.

Now you're just moving the goalposts of your entire argument.

We were talking about MALLS; now you're talking about specialty one-off stores.

No one ever said physical shopping would completely disappear, this is an argument you invented. We did say that eventually the majority of MALLS we have will disappear, which is already happening.

 

[1ofTheseKnights]

Malls:

 

[Sir Galahad]

Now you're just moving the goalposts of your entire argument.

We were talking about MALLS; now you're talking about specialty one-off stores.

No one ever said physical shopping would completely disappear, this is an argument you invented. We did say that eventually the majority of MALLS we have will disappear, which is already happening.

I'll slow it down for you, the larger mall stores will get smaller, Sears will take their two level, 150,000 square feet mall stores and turn them into 75,000 or smaller stores. What space is left will be subdivided into smaller specialty retailer space or turned into common area space, either way the developers will get more per square foot than what they were getting from the majors. Its not moving the goal posts, this is happening today.

 

[UCFKnight85]

I'll slow it down for you, the larger mall stores will get smaller, Sears will take their two level, 150,000 square feet mall stores and turn them into 75,000 or smaller stores. What space is left will be subdivided into smaller specialty retailer space or turned into common area space, either way the developers will get more per square foot than what they were getting from the majors. Its not moving the goal posts, this is happening today.

Ok, so you're basically just confirming what we've been saying- major large malls are going to die.

And you don't seem to understand that you're stating clearly that the market space is rapidly shrinking. You just gave us a scenario in which 50% of capacity is ripped out due to a lack of demand and tried to salvage that being "good" by saying developers will get more per SF. But you're trying to make these guys feel better about getting a bigger piece of a rapidly shrinking pie.

The reality is that there's an entire generation of people growing up who will have rarely going to malls or strip malls to buy things. I've bought 10 new dress shirts in the past 3 months and haven't gone into a store to buy a single one.

 

[Sir Galahad]

Over the years I have watched you debate on just about every subject. You are the true jack of all trades but master of none. You also have a hard time with reading comprehension. Tell me this genius, if a mall has 1,000,000 square feet of which Sears makes up 200,000 square feet and Sears is paying $4.00 per square foot based upon a lease that is 30 years old. Now Sears does not contribute to CAM(common area maintenance for you 85) than the Mall owner is making $800,000 in rent from Sears while Sears is not really doing anything for the mall. Now Sears drops down to 75,000 square feet and Mall owners puts a Dick's Sporting Goods into 75,000 square feet at $15 psf of the left over 125,000 square feet. The remaining 50,000 square feet is turned into four restaurant lifestyle type center all paying $30 per square foot. So instead of the $800,000 from Sears, the Mall developer is now making $300,000 from Sears, $1,125,000 from Dicks and $1,500,000 from the restaurants. That is in increase of $2,125,000 for the same square footage PER YEAR. See how that works. Even if the Mall developer only leases 50% of the dead Sears space they will make much more money based upon todays rents. I have not even started talking about the increases in CAM, let alone how CAP rates have continued to fall for these types of deals.

85 it's amazing to me that people like David Simon or Laurence Fink don't come to you for advice on brick and mortar.

 

[1ofTheseKnights]

Sweet micro hypothetical analysis. How about some actual macro 5 year, decades etc telling me ****ing shopping malls are where it's at.

I see Apple, Amazon & Faceberg, must've missed Simon...

 

[UCFKnight85]

LOL at Sir G actually arguing against the idea that physical mall shopping space is on the decline.

He's spending so much time arguing againsit something that's universally accepted.

 

[UCFBS]

Okay BS, now you're an expert in retail real estate.

Nope. 0 experience. Did I say otherwise?

But I do have to deal with facilities. And right now, mall space is cheap outside of attraction areas. When you have businesses in malls, instead of retail storefronts, it means they are competitive with non-mall locations. That's not all locations. I was talking about ones outside of attraction areas.

Just my experience, not in real estate, but pricing commercial locations. I made a joke about this just less than 2 years ago about opening a mall location ... because it was one of the cheapest in the area.

Over the past five to seven years there was little new ground up development, the industry survived by redeveloping existing real estate.

Okay, I'll see you there in one regard. Those who purchased at the right time -- post-Great Recession -- got steals on the square footage. And now they can afford to rent those locations at lower prices ... for less than the original developer could.

No one will argue that the internet has not changed shopping but retailers are smart, the ones that thrive adapt to the current conditions.

Yes, but how many are those? That's the thing, we're seeing a total change in the dynamics. If you can adapt, which some of the big ones are not, then you will survive.

Again, there are a number of holders who got their malls for less than the developer paid to develop them, and can be more competitive.

Most good retailers have figured out how to compete with the likes of Amazon, it is Amazon that is building brick an mortar stores, hundreds of them. Why do you think that is? I'll answer it for you, as much as you want to think the internet will replace physical shopping, it simply will not happen.

Did I say the Internet will replace physical shopping? No!

I said that starting 5 years ago, there were 5x as many shoppers on the Internet, than the decade prior. I.e., we're now seeing 2/3rds-3/4ths of people purchasing on the Internet in the '10s, than the 1/10-1/6ths in the '00s.

But in the same regard, Internet shopping has reached a plateau in growth. It's still got some room, but it's not the massive change. So yes, there's not much worse it can get for the bricks.

In fact, if you ever interview with (let alone work for) Amazon, you quickly discover it's their cloud business that heavily sustains them, not so much retail. If the bricks find ways to hurt Amazon in the slightest, it will hit them hard. Which makes sense why they continue to try to partner with them.

People forget about Borders, and how the Amazon deal doomed them. But there's nothing keeping the bricks from finding a way to turn things in their favor. They know far more now, post Amazon-Borders deal.

What you will see is the larger, slower retailers like the Sears and Macy's hurt a lot more than the specialty retailers.

Okay, so we do agree this is what is happening.

Those monster box stores will get smaller in size and the reason is not just the on line retailers but the specialty brick and mortar retailers. Here is one for you, go into a Pirch, its a plumbing store, yes plumbing. They sell very high end plumbing fixtures, appliances and outdoor kitchen type things. There are eight of them, soon to be more. These stores cost three times as much to build than a traditional store because each fixture actually works, Kohler is doing something similar. The shopping that has changed is more specialty retailers, its like going to the doctor for a broken leg. Do you want to go to a GP or an orthopedic.

Which is why the department store and superstores are dying, along with the ignorant store person, and bringing back the age of custom products and experts in the stores.

It's almost as if Radio Shack went entirely the wrong way, when all they had to do is get back to their roots and hold out for this change.

We'll see what it does for malls long-term. But I'm still skeptical in malls outside of attraction areas of town.

 

[UCFBS]

LOL at Sir G actually arguing against the idea that physical mall shopping space is on the decline.
He's spending so much time arguing againsit something that's universally accepted.

But do understand that most of the decline is over.

The number of people shopping on the Internet went from largely young people, and only 10-16% in the '00s to the average Baby Boomer and 70%+ in the '10s. Boomers are now likely to buy on-line just as much in-person.

So it's actually not going to get really worse ... even though the last 5+ years has been killer.

That is actually what Sir G is 100% correct on. You don't have to be in retail to understand it. Heck, it's what we focused on at HP, and where the growth opportunities were at for HP Cloud and OpenStack. Don't get me started on some of the "issues" with the strategy ... let alone HP Public Cloud is dead now for a reason.

I still see a glut of mall space. But with buyers post-Great Recession paying less than the developer's original cost, they can afford to be more competitive.

It's the big department store and superstore retailers that have so much inertia and liability that are going under. Not the innovative reseller. If I learned one thing from implementing a number of custom developments for household name retail companies, it's that inertia that eats them alive that smaller retailers can be far more dynamic in addressing environmental changes.

But as Sir G pointed out, I'm not in real estate. I never have been. I also have only done some retail systems integration and architecture, and not really involved with the financial aspects, other than negotiating for use in some cases (little different than anyone who has run any type of business).