Fifteen years ago, the traditional indoor mall was the place to be for both teenagers and adults. The mall was a social gathering place, and of course, one of the best places to buy the latest fashions. Today, malls have evolved drastically, based primarily on the emergence of the internet, as well as the changing tastes and needs of today’s generation of consumers.
Those thoughts are according to Melina Ferraez, director of marketing at Victoria Gardens, a Forest City property, who recently spoke with GlobeSt.com on the mall’s evolution in celebration of GlobeSt.com’s 15th anniversary.
“Online shopping gives consumers the option to skip the mall completely and purchase all of their goods online. As a result, retail centers have been forced to evolve and adapt in order to thrive,” Ferraez says. “The biggest shift we are seeing is the transformation of malls from shopping destinations to entertainment and community-focused retail centers.”
Millennials—for the most part—have been at the forefront of driving this retail trend, adds Ferraez. “A tech-savvy generation, this demographic no longer needs the traditional mall to purchase their clothing and other items. In addition, this generation craves an experience, choosing largely to use their disposable income on entertainment and dining.”
Taking these trends into account, Victoria Gardens recently began a redevelopment project that includes three full blocks of the more than 1.5-million-square-foot regional outdoor shopping center. “With a goal of continuing to satisfy the needs of our existing customers while also engaging the younger Millennial generation, Victoria Gardens is currently adding street scene dining areas, parklets, and community gathering spaces; updating outdoor décor with street art installations and updated lighting fixtures; as well as focusing on tenanting that will appeal to the Millennials’ desire for entertainment and dinning,” she says.
Another source who notes that the retail market is now barely recognizable from 15 years ago isRick Chichester, president and CEO of Faris Lee Investments. “Fifteen years ago the mall was still the go-to shopping experience and shopping online was an emerging idea, not a daily reality. The consumer landscape was dominated by what was then the largest consumer demographic: Baby Boomers. The term ‘big data’ hadn’t even been coined and social media was non-existent.” Today, like Ferraez, Chichester says that the Millennials are driving retail, and big data, social media and online shopping are core and constant elements of the retail universe. “Millennials don’t crave consistency and uniformity in their retail experience like the Boomers did. They want novelty, excitement, and a bricks-and-mortar retail environment that is more organic and as much a gathering place as a place to acquire material goods.”
Millennials, he adds, “expect to be catered to on a highly personal level by retailers, who should know what their likes, habits and spending patterns are.”
One distant similarity is that both then and now we were/are emerging from recession, he explains. “In 2000 we were beginning to see the glimmer of what would become one of the most aggressive expansions in U.S. history, driven by the dot.com boom and a housing and construction run like the country had never seen before. Today the economic recovery is more tempered and not driven by the same forces.”
And he explains that “While there is no expectation that we’ll repeat the “irrational exuberance” of the last expansion, many retail investment categories are back at capitalization rates that mimic that period. Today the demand is driven in many cases by private wealth looking for a safe haven or for investments that will yield more predictable returns than the stock market, and higher returns than the bond market.”
On the institutional side, Chichester says that the favorable capital markets environment encourages CRE investment activity across the board. “What remains to be seen amidst the myriad of relatively unprecedented global and macro economic factors is whether real estate fundamentals are as sound as they ideally could be.”