Lifestyle Centers Evolve and Adapt to Stay Afloat
Mike Janssen / Retail Traffic
Lifestyle centers, as a concept, rose and fell spectacularly right along with the industry’s boom and bust.
That’s left backers of such properties going back to the drawing board and reimagining what lifestyle centers can be. These new approaches at times seem to redefine the concept itself. Whether or not to include anchors, whether to incorporate of non-retail uses and rethinking tenanting strategies are just some of the questions developers are wrestling with.
Developers are even trying to be more careful about how they use the term. During the boom years, the “lifestyle center” name got abused and stretched beyond all meaning, says Josh Poag, president of Poag & McEwen in Memphis, Tenn., which helped pioneer the concept. “Anything with a Starbucks in it was considered a lifestyle center,” he says. As a result, the label “jumped the shark” and “people were using it for anything and everything.”
If lifestyle centers are to succeed going forward, Poag and others argue that to qualify for the name, they should boast open-air environs and primarily upscale retailers. And while the first lifestyle centers eschewed anchors and included only inline retail, developers feel the mix going forward may be a bit more varied…
…Developers also faced the consequences of offering too many co-tenancy clauses to retailers, which gave the stores leeway to pull out if their neighbors did. The departure of one or two tenants could undermine an entire property. This came to pass as many lifestyle center tenants, such as Williams-Sonoma, Pottery Barn, Ann Taylor and others, shuttered locations. In other cases, co-tenancy clauses tied to occupancy levels got triggered as vacancies mounted.
The smallest lifestyle centers, those of less than 100,000 square feet, have proven to be the most vulnerable, says Jeff Green, president of Jeff Green Partners, a Phoenix-based real-estate consulting firm. The industry will lose some lifestyle centers by attrition, Green says, “and will become more right-sized.”
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