How South Florida Malls Are Navigating Vacancy Growth
- May 03, 2018
As e-commerce puts pressure on brick-and-mortar stores, vacancy rates in major U.S. malls are on the rise. Steven Henenfeld, senior vice president & director of retail leasing with CREC spoke to Commercial Property Executive about why this trend does not apply to the retail landscape in South Florida.
Henenfeld touched on the various methods shopping mall owners are turning to in order to create unique experiences for customers and keep their tenants in place. The retail expert also revealed the reasons why South Florida is a particular case, compared to the rest of the country, when it comes to the so-called retail apocalypse.
What are mall developers/owners doing to attract new tenants and keep existing ones?
Henenfeld: Shopping malls now are more focused than ever on creating a ‘unique experience’ for the customer. People by nature are social animals and want a reason to congregate—that is why restaurants have become the new anchor for several top malls. Some recent examples include the chic new food hall that opened at Aventura Mall, transforming its modest food court into a hotspot with a dozen culinary offerings, Colonnade at Sawgrass, which added a significant number of upscale restaurants, and the most recent expansion at Dadeland Mall adding a roster of top-chef restaurants to the mix.
The more people visit the mall, the stronger the tenant’s sales. Rent is a function of sales. Therefore, high sales lead to higher rents, which is what provides incentives for landlords.
What are some of the popular trends shopping centers employ to keep customers interested?
Henenfeld: One of the latest trends for mall owners is to weave in entertainment uses to complement the existing tenant mixes and to be a catalyst for bringing patrons to the center. By example, Dolphin Mall integrated a movie theatre and bowling concept, Aventura Mall added a giant 93-foot glass and steel slide designed by a German sculptor to entice shoppers, and Brickell City Center intertwined hotel, office and retail components to create more of an urban and lifestyle-oriented shopping center. In South Florida, the top malls are densely populated by visitors from all over the world, catering to more than just the local demographics.
Can you give us some examples of malls that are succeeding at these strategies?
Henenfeld: Sawgrass Mills added the Colonnade and Aventura Mall recently incorporated a food hall with a giant slide. These are two of the highest-grossing malls in the country and both are using the same tactic to stay ahead of the curve. Also, the planned American Dream Mall will have an indoor ski park and waterpark, a hotel component, a theater and several other entertainment features. Even Bal Harbour, the number one mall in the country based on sales per square foot, is planning to add a dinner theater.
What is your take on the current retail situation and where do you think it’s headed?
Henenfeld: Due to the lack of land and the growing, dense population in South Florida, malls in this market may not be struggling as much as others around the U.S. South Florida is under-retailed compared to the rest of the country. Locally, Dade and Broward counties still have all-time record-low retail vacancy rates.
We have the constant influx of international visitors that keeps demand high and therefore lag the rest of the country when retail is suffering because we thrive on international revenue as well as local. When big boxes become available in South Florida, they create opportunities for landlords to upgrade and get more rent, and there is no shortage of retail tenants out there that will pay more. Winn Dixie and Toys “R” Us announcements this year translated into giving landlords an opportunity to create more value and not step backward.
Image courtesy of CREC