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— Retail Properties Quarterly — August 2016
W
e all have a favorite con-
venient local retail cen-
ter near our home or
our office that offers the
things we need on a daily
basis. These favorite centers typi-
cally include stores that fill our basic
needs, like groceries and services,
wine and spirits, cell phones, dry
cleaners and salons. We recently
began seeing more quick-serve food
and coffee in this mix as well.
But what happens to these centers
when time begins to render them
obsolete? Retail space, like the prod-
ucts sold, has a shelf life that can
become stale over time.
The challenge when redeveloping
these centers is enhancing the value
of the asset while maintaining the
bones that define and, sometimes,
constrict the project. The owners’
dilemma is that many of their leases
were written years ago under differ-
ent economic conditions and renew-
als haven’t kept up with current
trends in retailing or encouraged a
return on their investment.
Existing centers were configured
in times when long-dark boxes were
fine because merchants pretty much
sold what everybody else did without
much specialization. Designs reflect-
ed the attitudes of “Give me front-
door glass and a back wall for my
merchandise, and I’m fine.” However,
those dark boxes don’t command
premium rents in current interactive
retail environments today.
Today’s retailers – and their cus-
tomers – demand more personal
interaction, more amenities, more
natural light and ventilation, and
a more inviting experience. We see
demand for food, connectivity and
entertainment,
including smaller
stores, personal
service and higher-
quality merchan-
dise.
These trends
lead to demand for
a more intimate
pedestrian environ-
ment, including
outdoor seating
for al fresco din-
ing and places to
gather and inter-
act. Access and visibility from the
street is critical to the success of
the project, so creative placement of
improvements is key to the success
of redeveloping a center.
When considering design options
in response to these trends, it
becomes apparent that quality ten-
ants will pay more for better quality
space. Frequently this drives rede-
sign concepts to the point of removal
of underperforming, enclosed square
footage, which is replaced with ame-
nities as well as outdoor and pedes-
trian spaces to drive a net increase
in revenues. The resulting spaces
allow owners to sign flagship ten-
ants and first-to-market concepts
that add value to their assets and
improve their marketing and tenant
renewals.
Many owners with centers that
have not aged gracefully during their
life cycle are realizing that the ten-
ant competition for stable assets in
mature neighborhoods is fierce. They
must invest in their properties to
keep up with the market. Fulfilling
the strategy of enhancing the value
of aging shopping centers by imple-
menting high-quality enhancements
while maintaining the bones of the
asset is successful to the health of
most redevelopment deals.
s
Bruce
McLennan, AIA
Principal,
Farnsworth Group
Inc., Denver
Management
Before and after: When examining this property, the team looked at the aging exterior
and decided to cut back the soffits at the roofline, add new fascia and encapsulate the
roofline. Additions of colorful window treatments and landscape features helped update
this typical stretch of inline retail as well as individualize the retail spaces.
Before
After
