1. GO BIG OR GO HOME: Tired and stagnant shopping centers are quickly losing market share, but a slim construction pipeline makes now a prime opportunity for owners to renovate their existing space. Retail real estate owners need to create a unique, exciting and convenient shopping experience to not just attract, but retain their customers. A redevelopment can increase the competitiveness of your shopping center, by turning stale into spectacular.
2. DON’T CUT CORNERS: Renovations and redevelopments have a strong track record of increasing retailers’ sales and rent rolls, but they must be executed wisely. Overspending or cutting corners can result in an ineffective remodel, but when done wisely, they will provide the owners with a runway for strong operating performance.
3. ADD AMENITIES: Shoppers’ expectations of shopping venues have shifted dramatically over recent years with two-thirds of respondents indicating they would visit a mall more frequently if there was an entertainment component, according to a recent JLL study of consumer preferences. Redeveloping portions of a center can allow owners to integrate new retailers and non-traditional tenants into a space, creating a mixed-use concept. Healthcare providers, fitness centers, and off price retailers will increasingly be included in tenant mixes to create a live/work/play environment.
4. FINESSE THE FINANCE: Now is the perfect time for retail owners to take advantage of the attractive capital markets environment. Financing cost should remain low for the near future, valuations of renovated, successful shopping centers are commanding a premium and overall returns on redevelopment projects remain attractive.
5. DE-ANCHOR: In the last five years, department stores have undergone mergers, closed altogether, or completely re-invented themselves. It has become increasingly clear that consumer expectations are changing. As consolidation continues, it’s critical that a shopping center react to the change. Exiting anchors provide an opportunity for the center to renovate and reconfigure the space to meet the smaller footprints retailers are seeking, and to retain existing tenants and secure new ones.