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A Retail Evolution Solution

THE AGE OF THE MALL ISN’T OVER—IT’S JUST CHANGING

In the world of regional shopping malls, the only constant is change. Shifts in customers’ habits and expectations, the rise of online shopping and dozens of other factors combine to create an environment where malls and the retailers inside them need to adapt or suffer the consequences.

“Many retailers that haven’t evolved as rapidly as the market have either downsized or shut their doors,” says Cameron Simonsen, a CBC Advisors retail specialist. “This has created a unique obstacle for owners of many of the regional malls throughout the country, with many anchor tenants closing their doors.”

The retail world is challenging, but those challenges also present opportunities to adapt and grow. In the current retail landscape, malls are changing to become more than just places to shop. Utah’s mall landscape has been in flux over the past several years, with big changes like the opening and success of City Creek Center in downtown Salt Lake causing ripples that have reached other malls nearby. The market will continue to evolve, and malls that can evolve along with it will be the ones that thrive.

Some see malls as a relic of past decades, says Richard Coles, CSM, CRX, an associate broker and vice president with CBC Advisors. But the efforts of owners and brokers over the past few years have shown that the day of the shopping mall isn’t over—it just looks different than it used to.

THE MALL, REDEFINED

The age of malls in America started in the late ‘60s and early ‘70s, as new locations started to pop up around the country. By the 1980s, malls were thriving across the state. In the ‘90s, the face of the mall began to change. Movie theaters and restaurants started showing up in more and more malls. In the early 2000s, movie theaters got bigger, and the idea of the open-air “lifestyle center” gained favor over the enclosed mall format of previous decades.

In the 2010s, the trend toward malls as centers of entertainment has continued. Malls have begun to include ice rinks, climbing walls, museums, arcades and other activities designed to attract people who are looking to have fun. Mall designers have also begun to incorporate office space, residences, hotels and other amenities. All of these amenities are designed to bring people to the mall, adding foot traffic, which is crucial for increasing sales.

“The mall experience isn’t going away,” Simonsen says. “Now it’s more than just buying merchandise. It’s about an overall experience.”

The Gateway in downtown Salt Lake is a good example. It was built in the run-up to the 2002 Olympics in Salt Lake. From the beginning, it was designed to be more than just a shopping center that people drove to when they wanted a new pair of jeans. It was built with housing and office buildings attached. Entertainment options, including a planetarium, children’s museum and Megaplex movie theater were included in the design, as well as several restaurants.

In the past few years, The Gateway has faced a challenge from a source as old as capitalism itself—competition. The City Creek Center, which opened in 2012, is newer and right in the heart of downtown. City Creek was designed with retractable roofs, allowing it to have the outdoor feeling of an open-air mall when the weather is good and the warmth of a traditional enclosed mall in the winter. These factors have made City Creek the new premier spot for high-end shopping in Utah, a distinction previously held by Gateway.

“He who has the newest and the best party going, that’s where the tenants will go,” Coles says.

As many of its more prestigious retailers—such as the Apple Store and Anthropologie—have moved a few blocks east to City Creek, Gateway has found itself, like so many malls before, in a position of needing to adapt.

Simonsen is one of the agents at CBC Advisors who has been tasked with helping The Gateway fill a new niche in the downtown market. “Our goal at The Gateway is to become everything that City Creek isn’t,” he says. “City Creek has unparalleled shopping, but has a lack of food and entertainment.”

Coldwell recently added new tenants aimed at further developing The Gateway into a destination for food and entertainment, including GameWorks, a spot with food, arcades and other games; and DOPO, a restaurant oriented toward live music performance. A new interactive entertainment venue, Mystery Escape Room, has also recently moved into the space. It puts a group of friends in a room, where they must work together and solve puzzles allowing them to escape.

“If you’re going out for a date night, we want you to think of The Gateway as a great landing spot to have some fun,” Simonsen says.

The Gateway can also serve the many shoppers who see the stores at City Creek as above their price range. Simonsen plans to bring in new retailers to serve those customers, adding to the list of stores already in place, such as Dick’s Sporting Goods, Victoria’s Secret and Abercrombie & Fitch.

“At the end of the day, The Gateway still has many assets, such as the strongest movie theater in downtown Salt Lake City, a planetarium, a children’s museum and a host of other great shopping and dining destinations,” Simonsen says. “It is also located adjacent to the arena where the Utah Jazz play. We feel that we have a unique opportunity to create an experience unlike any other in downtown Salt Lake City.”

A FACELIFT FOR AGING STARS

Some traditional, enclosed malls continue to thrive, even as many others have faltered. For example, Fashion Place Mall in Murray, Utah continues to be one of the most successful malls in the state. A big portion of that success is due to its prime location near three of the most traveled roadways in the Salt Lake metropolitan region with two different light rail lines also proving transportation service. Because it is easily accessible from nearly anywhere in Salt Lake, Fashion Place is regularly packed with shoppers and has a variety of strong tenants. It has also been less affected by the opening of City Creek because it’s 11 miles away.

Fashion Place has pursued top retail brands. The European clothing retailer H&M opened a location at Fashion Place after years of hesitance to enter the Utah market and was astounded when the store’s opening broke records for the company, says Richard Robins, CSM, a vice president/retail specialist with CBC Advisors.

But even with its success, the owners of Fashion Place haven’t been content to relax with what they’ve got. Fashion Place has been restructured in recent years so that many of the stores and restaurants on the perimeter of the building have outward-facing entrances, giving the building a more open, outdoor shopping feel.

Sometimes a struggling mall needs a facelift and some new tenants to turn things around. Several years ago, Valley Fair Mall in West Valley City, Utah was suffering, and its owners were planning to sell it to a buyer who planned to demolish it and use the land for other purposes, Coles says. Ultimately, the owners decided the location, just off a major freeway, was too good to give up on, so they enlisted Robins and Coles to bring new tenants to the mall in hopes of breathing new life into it.

The team brought in a new Megaplex movie theater and several national retailers, including Bed Bath and Beyond and Ulta. They also spruced up the outside of the mall and are looking to improve the interior as well. A mall’s aesthetics are crucial, Coles says. If a place looks old and drab, people will stay away, and without high levels of foot traffic, retailers will start to flee.

Sales at Valley Fair have increased in recent years, Coles says. Its Megaplex Theater is now one of Larry H. Miller Group’s highest-performing movie theaters, and the Ross Dress for Less is one of the chain’s top performing locations.

ONGOING CHANGES

The mall of today is a much different place than the mall 1985 or even 2005, and the mall of 2025 is sure to be a different place as well. As trends and markets continue to change across the country, malls throughout Utah and the rest of the nation will need to continue to adapt.

“They used to say retail has to change every 10 to 15 years, but now it changes every five years,” Robins says. The malls and stores that are able to adapt will be the ones that thrive in the decades to come.

Guest Blog Post by Coldwell Banker Commercial Advisors