Supermarkets, Fitness Centers & Theaters All Serve as Alternate Anchors for Regional Malls
Elaine Misonzhnik / Retail Traffic
The long-in-the-making decline of department stores has been forcing regional mall firms to search for alternative anchors for years. In the past decade, big-box stores, restaurants, discounters and other large space users have all popped up as alternative anchors.
Today, as mall owners deal with the latest round of department store closings, a new crop of replacements has emerged. Supermarkets, wholesale clubs, gyms, theaters and even jumbo-sized specialty retailers are all taking space formerly occupied by the likes of Sears, Boscov’s, Mervyn’s and other department store chains. Less commonly, owners have also signed leases with non-retail uses like theaters, spas, medical facilities, colleges and religious institutions…
One of the more interesting recent trends has been the emergence of supermarkets and warehouse clubs as potential mall anchors. In the past, mall owners and supermarket operators have had doubts about how well grocery stores fit into the typical regional mall mix.
Supermarket chains were concerned about the premium rental rates and high common area charges they would have to pay for a mall store versus a location in a strip center. And both mall operators and supermarket executives worried about the added car traffic, parking issues and loading issues a supermarket would create in a mall. But those attitudes have begun to change as mall owners face a plethora of vacancies at their centers.
The challenge has been convincing supermarket operators that they can go inside regional malls and be successful, Neuhoff notes. Many supermarket chains already operate locations next to regional centers, but since the strategy is fairly new in the U.S., they are still working out issues like whether to have an internal entrance, and how to best handle loading and parking.
Westfield has been among the first mall owners to pursue this strategy: in August, the firm signed a deal with Costco to open stores at Westfield malls in Los Angeles, Sarasota, Fla. and Wheaton, Md. In the past, Costco had faced some challenges breaking into infill markets because there were so few available sites that fit its criteria, according to David Messner, vice president of real estate with the chain. But as more department stores started closing down their doors, Costco saw an opportunity to grow its portfolio. As of 2010, Costco operated eight stores at regional malls.
Observers think the strategy makes sense. Not only are some of these retailers large enough to occupy anchor boxes—many Costco stores, for example, measure more than 100,000 square feet—they drive high foot traffic more regularly than department stores, according to Jeff Green, president of Jeff Green Partners, a Phoenix-based real estate consulting firm.
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