Simon to invest $1b in 2017, malls aim to enhance guests’ experiences
Simon Property Group has plans to invest $1 billion into the retail sector in both 2017 and 2018, with a focus on adding to the guests’ experiences, a growing trend in the sector.
In the past five years, Simon invested more than $5 billion in development projects, which is part of the $2.1 billion the developer budgeted for makeovers at 33 of its malls.
In the fall of this year, Simon will complete its $30 million renovation of the former Saks Fifth Avenue space at Houston Galleria. The new 210,000-square-foot Saks Fifth Avenue Houston features a cocktail bar, 22 designer boutique shops, a 20,000-square-foot cosmetics department, an expanded shoe salon and The Fifth Avenue Club, which offers personal shoppers and private dressing rooms.
Another Texas project being redeveloped by Simon is La Plaza Mall in McAllen. The former Sears store will have an additional 200,000 square feet of space that will contain four anchors, six restaurants and 25 more specialty shops, all opening in the fall of 2017.
Also Simon partnered with Cassco Development Co. to develop The Shops at Clearfork, Texas, a luxury shopping, dining and entertainment destination. The Shops at Clearfork will be home to 100 luxury, home furnishing and specialty retailers. Additionally, a mix of 11 new local and national restaurants and entertainment options are slated to open beginning in fall of 2017 through 2018.
In New Jersey, the second phase of the renovation at The Shops at Riverside will be completed by the holidays this year. Added architectural and design elements include a floating staircase, a central court with a crystal chandelier and a fountain that will create a light-reflecting design feature, and new floor tile throughout the center. Store ceilings also will be raised and skylights will be added throughout.
The third phase, expected to be completed in 2018, will have a 40-foot-high grand court entrance with a covered valet parking area, VIP lounge and concierge desk.
The first phase, announced at the end of 2015, was the redevelopment of the former Saks Fifth Avenue department store into an entertainment and dining district with an upscale movie theater with a bar and dining lounge, along with several restaurants.
There is continuing nationwide demand for the outlet shopping experience. The retail sector is evolving to meet challenges as consumer tastes change and more shopping is done online.
According to a Coldwell Banker Commercial Affiliates survey, shoppers still value traditional brick-and-mortar shopping experiences. In fact, nearly half of Americans prefer to make purchases in a store instead of shopping online. Developers and real estate professionals are exploring ways to facilitate the perfect customer experience through two emerging trends in the retail industry, experiential retail and destination making.
In North Jersey, Simon’s The Shops at Riverside at Westfield Garden State Plaza is being repositioned as a luxury destination.
Other retail owners and developers also have a number of renovation plans in the works.
In Arizona, Scottsdale Fashion Square will begin its renovation project this year with completion slated for fall 2018. Developer Macerich has plans to create a grand entry into the luxury wing with two-level luxury flagships and an internationally acclaimed restaurant. The plan will incorporate high-end residential units, class A office space and hospitality uses to extend the customer base and sales potential for retailers within the shopping center.
And Regency Centers broke ground on two projects representing a total investment of $61 million, and more are on the way. At the end of the quarter, 30 projects representing $515 million in investments were in the process of development or redevelopment. On a combined basis they were 46 percent funded and 84 percent leased, according to the company’s first quarter 2017 results statement.
Recently Brixton Capital announced plans to redevelop its asset Provo Towne Centre in Utah after the closing of Sears. According to a press release, “While the Sears store at Provo Towne Centre will close in September, one of 150 planned Sears/K-Mart closures nationwide, Brixton Capital has already begun plans to redevelop the store as part of a larger vision to reposition Provo Towne Centre as a premier shopping, dining and entertainment destination.”
In Philadelphia, Gallery Mall is undergoing a $575 million repositioning project, which involves renovating about 1.4 million square feet of both interior and exterior space, making it the largest retail repositioning project in the region. Gallery Mall will be transformed into the Fashion Outlets of Philadelphia.
In addition to the evolution of malls, retailers have to rebrand themselves and also need to create an experience for consumers at brick-and-mortar stores to stay afloat. Bankruptcies in the industry are piling up at a record pace. It was reported earlier this month store closings in the U.S. increased by 97 percent year-over-year, totaling 3,296 locations and several retail bankruptcies have been announced this year. This month a new retailer added to list was Rue21 Inc., the teen clothing retailer, which filed for bankruptcy. However, Fung Global Retail & Technology, an international think tank that follows retail and technology trends, reported year-to-date in 2017, retailers have announced 2,573 store openings.