Guest Column: Shopping trends revert to lifestyle model

As the shopping center and retail industries continue to evolve, retailers and developers need to respond to consumer trends and economic conditions.

To gauge where the industries are headed, it’s important to consider the past.

Quick history lesson

One of the first shopping centers ever constructed was the Country Club Plaza in Kansas City. JC Nichols’ vision for the Country Club Plaza began in the 1950s with a residential component, and after that was successful, he proceeded to develop a shopping center where residents could work and shop.

Then came the regional mall, with all of its enclosed conditioned space and sea of parking (think Battlefield Mall). That trend lasted about 20 years, until lifestyle centers started being developed.

Generally, lifestyle centers are defined as a mix of fashion retail and restaurants and are pedestrian oriented. People wanted fresh air and sunshine after being inside all week – most Americans spend 90 percent of their lives indoors (think Branson Landing, and ironically, the Country Club Plaza in Kansas City).

Regional mall owners and developers responded by turning some tenants inside out (much like Battlefield Mall has done recently) in order to give some select retailers direct access to their customers, provide some curb appeal and give the mall access to tenants they might not otherwise get.

Lifestyle centers are popping up all over the world. Every major U.S. market is targeted for at least one and in the major markets more than one.

In May 2007, most major U.S. developers had several such projects in planning, design or construction. And the ones that were up and running were doing quite well – until late 2007.

Change in the wind

The recent mortgage crisis and energy cost increases have affected development substantially. Lenders started being much more selective with their funding and asking for more equity. Retailers are feeling the pinch since consumers are cutting extra expenses as gas prices continue to rise, and their 401(k)s continue to shrink.

With developers scrambling for financing, and retailers slowing their growth projections, which one governs the pace of new construction? The response is that both do. When a developer is considering a new location, one of the key factors (besides demographics, physical land constraints and motor vehicle access) is whether or not tenants have an interest in the market.

These two groups (along with all the leasing agents) usually meet once a year in Las Vegas, taking over 1 million square feet of exhibition space to meet and find new deals. Imagine a speed dating session that includes 50,000 people over the course of three days. That is what the International Council of Shopping Centers’ Spring Convention is like.

En route

In the past nine months, the frenzy of design and construction in the shopping center industry has become much more subdued. There are still new developments being planned and constructed. Some retailers are still growing and expanding, but many retailers are not expanding and some are closing stores. Reports of store closings and off-pace growth in the last six months have been staggering.

Retailers are searching within to develop new store formats, with more nimble execution and more flexible plans to adapt into existing abandoned locations. Savvy retailers are finding very niche markets and building whole new brands. Developers are looking at fewer potential projects and are working to find more equity (required by financial institutions) and looking at how they can do more with their existing centers.

The ICSC conference in May 2009 will be the next big barometer for the industry. By then the mortgage crisis will have substantially shaken out and a new president will be in office. In the meantime, this kind of lull gives the industry cause to question everything, and as a result, continue to innovate and evolve.

Bruce Adib-Yazdi is an architect and vice president of retail and entertainment with Butler, Rosenbury & Partners Inc. in Springfield. He is an International Council of Shopping Centers Certified Design Professional and may be reached at badib-yazdi@brpae.com.