IRL GGP pop-up shops

LAS VEGAS — Entitlements, construction, tenanting in a rapidly changing world and balancing the asks of individual tenants. It’s never easy being a shopping center owner, especially when it comes to reprogramming parts or all of a property.

Executives from General Growth Properties, Westfield Corp. and brokerage firm JLL talked challenges but also specific success stories during a Shoptalk session ultimately reiterating the importance of retail’s reinvention.

Working through a surplus of retail space remains a problem, with some landlords are taking 5,000 or 10,000 square feet and breaking down single-tenant stores to create marketplaces, food halls or completely untraditional uses. It’s necessary for what JLL global retail leasing board chairman David Zoba said is required for a 24-hour experience. What’s standing in the way? Old lease agreements, in some cases, and department stores, more specifically, at times.

“Retail is, after all, a fixed asset and it is a long-term asset,” Zoba said. “There are things in those leases that don’t allow for immediate innovation and that’s too bad.”

He said some tenants may resist site plan changes or, for example, the addition of medical uses to a shopping center via their lease agreements.

Five years ago, Zoba went on to say, few were using stores beyond traditional uses. Now, they’re mini fulfillment centers.

“Interestingly, though, the lease for a store still reflects five years ago and that’s been a challenge,” Zoba said. “It’s going to take a while. But I think it’s going to have to evolve because the business has to evolve and that lease document needs to reflect the business.”

Decades ago some department stores had it written in their leases that mall owners couldn’t even have fitness centers, pointed out GGP senior vice president of business development Melinda Holland.

In fact, if fitness hadn’t been allowed at a property such as Westfield Century City, it would have undercut the center’s identity. The property currently boasts an Equinox and Gloveworx boxing studio.

Now more than ever, Westfield executive vice president of leasing David Ruddick said, shopping centers must mirror the lifestyles of the communities they’re in. The company’s three West Coast redevelopment projects in Century City, San Diego and San Jose may all be within the same state, but their tenanting strategies are completely unique to the foot traffic there.

“We clearly look at it as if they have their own identities,” Ruddick said. “If you’re talking to your customer and you think you can say to them what works in L.A. will work in San Jose will work in San Diego, you’re not being authentic.”

Where there isn’t major redevelopment, there’s the creative reimagining of existing space.

Sears, for example, determined it didn’t need all 160,000 square feet of its store at GGP’s Mall in Columbia, which is located in Maryland. So GGP is splitting up a portion of the property to add a Barnes and Noble, Main Event Entertainment and Uncle Julio’s.

GGP’s also experimented with different pop-up formats. IRL is one example, a space for digitally native brands, which was tested at Water Tower Place in Chicago, with future iterations perhaps themed around beauty or toys and rotating out to different centers, Holland said.

FOMO, the rotating restaurant pop-up, is another GGP initiative at Northbrook Court in Chicago. Its successes there will bear out in five more of the concepts rolled out next quarter to other properties. The space serves as a good incubation period for restaurants, with two now looking at something more permanent at Northbrook Court, according to Holland.

“Ninety percent of shopping center space is going to be leased all the time, but that remaining percent is an amazing palette for us to experiment with,” Holland said.

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