Mall owners should be looking at a variety of alternative tenants in order to drive traffic and keep their investments vital as more retail stores shutter and pandemic restrictions remain, according to a new report from Placer.ai.
The suggestions include adding micro-fulfillment centers, such as Amazon is already doing in vacant anchor spaces, as well as medical and dental businesses, co-working office space, gyms and health centers and pop-up locations for ecommerce brands.
Different types of uses would attract shoppers during periods when retail is largely idle, Placer.ai found. For instance, gyms attract customers during weekdays as well as weekends, with peaks mid-morning and early evening, while retail outlets in malls are busiest on weekends. Malls in Maryland and Massachusetts saw foot traffic spikes after adding a gym tenant in 2019 and 2020, respectively.
“These elements speak to an especially strong asset for malls looking to cater to local office and residential areas,” the report stated. “The result would be a mall with more consistent strength that is less dependent on weekend surges.” The report also noted that Q1 is the strongest period for gyms and fitness centers, typically a lull for retail following the rush of the holiday season.
Medical and dental clinics are considered prime candidates for malls, Placer.ai noted, because they tend to have higher credit ratings and sign longer-term leases. Also, they can contribute to driving traffic as well. Traffic data from Aspen Dental’s 15 top-performing clinics at indoor malls or shopping centers showed an average of 4.8% of visitors went to the adjacent shopping center beforehand, and roughly the same number did so after. The location data also showed that 11.7% of all Aspen Dental patients arrived after visiting a shop or service venue, and that 22.4% continued to visit one.
Co-working office space can also be a complementary and symbiotic mall use, Placer.ai found, providing employees access to nearby shops and restaurants and boosting foot traffic. While WeWork has had its struggles as a provider of co-working space, Industrious has seen more success. It opened its first mall location in a newly renovated wing of the Scottsdale Fashion Square in January 2019. Foot traffic increased dramatically after the opening and remained stable throughout the year.
“While a range of factors contributed to these huge leaps, there are strong indications that the core assets of a co-working tenant made a significant impact,” Placer.ai noted.
The report also noted how pop-up retail solutions like BrandBox, owned and operated by mall company Macerich, are seeing some success in the pandemic era by giving brands a low-risk opportunity to try out a physical space for short-term leases of 6-12 months.
A BrandBox outlet at Virginia’s Tysons Corner Center includes popular DTC brands like Peloton, Nectar, Seletti, Chubbies, Purple, Tailor on Tap and Gilly Hicks. “If the brick-and-mortar storefront is successful, BrandBox will work with the tenants to help them find a permanent spot in the mall,” the report said.