Garden State Plaza Mall in Westfield gets a makeover

One of America's most valuable shopping malls is about to get a makeover, further showing how physical retail is evolving to include workplaces, workouts and even life – not just to buy clothes.

The Garden State Plaza shopping center of Unibail-Rodamco-Westfield in Paramus, New Jersey, considered one of the top 10 shopping centers in the US after sales, is being renovated for include offices, a residential area, more dining options, space for gym operators and yoga studios, a hotel and green space for use by the surrounding community.

This shopping center receives more than 200 million visitors a year and is considered today as one of the most productive assets of the Unibail-Rodamco-Westfield portfolio, consisting of 92 centers spread across a dozens of countries. The real estate investment trust also owns Westfield Century City in Los Angeles and Westfield World Trade Center in New York. Unibail-Rodamco, the largest commercial landlord of Europe, bought the owner of the Westfield shopping center last year.

"What people are asking at the mall, is much more," said Jean-Marie Tritant, US president of Unibail-Rodamco-Westield. "People want convenience … to be able to socialize."

US shopping centers tend to be "much more closed" and "a bit like bunkers," he added. "We must now connect them to the local environment."

Shopping center owners across the country are realizing that consumer preferences are changing. More and more people are turning to the Internet to buy clothes and furniture. And when they venture into the shops, they want to experience unique experiences and good food. In fact, retailers from left to right are closing hundreds of stores, large and small, forcing shopping center owners to be creative with empty spaces or risk losing the relevance of their properties. More than 6,000 store closings have already been announced by US retailers in 2019, surpassing all of 2018. It is estimated that there are approximately 1,100 shopping centers in America, which is undoubtedly too many.

"Hundreds of store closures – especially in department stores – are accelerating the transformation of shopping centers, forcing homeowners to relocate an unusually large portion of their centers," said Daniel Busch, an analyst at the commercial real estate firm Green Street Advisors. "The ability of a center to attract good tenants is put to the test more than ever."

Green Street has estimated that there are currently about 800 vacant anchorages in US shopping centers.

As part of ongoing renovations to Garden State Plaza, a former J.C. Penney store in the mall and a Best Buy independent store on the property are being destroyed for new uses.

Unibail-Rodamco-Westfield announced this year that it will begin redeveloping the interior of the center to add more restaurants, entertainment for families and tenants of health and well-being. The unveiling of the new residential space, the office building, a hotel, a public park and an open green space will come in 2022, he said.

"When you bring extra food and entertainment … you increase the amount of time you spend," says Tritant. "The downtime is much higher … and one consequence is that people are spending more."

Garden State Plaza is now anchored in the chains of department stores Nordstrom, Neiman Marcus, Macy's and Lord & Taylor. And while the mall is home to luxury retailers like Louis Vuitton and Tiffany, it has also been successful in attracting so-called digital brands such as eyeglass manufacturer Warby Parker, Untuckit shirt retailer, sportswear company Fabletics, and fashion chain. Riley Rose cosmetics to open stores.

The sister company Hudson Yards in New York is another development imitating the so-called shopping center of the future model, with places to live, work, eat and shop, as well as an entire area dedicated to brands. online.

Yet, there is still not a ton of evidence supporting the idea that taking "experimental" tenants to shopping malls will boost activity in this country. A recent study by the Thasos group revealed that shopping malls with so-called experiential tenants that do not focus solely on selling products – such as Apple, the Italian food hall Eataly and Tesla – have not generated a lot of traffic. Until the last three months of 2018, indoor shopping malls with "experimental" tenants did not enjoy more traffic year-over-year, compared to indoor malls with none of the these unique and unseen tenants, said Thasos.

But there is evidence that when shopping center owners add spaces such as offices and apartments to their properties, sales per square foot – a key parameter monitored by industry analysts – increase dramatically.

Macerich, one of the few publicly traded mall owners to have disclosed the square foot selling measure of each of its assets, has turned the Tysons Corner Center in Virginia into a 1.5-acre outdoor plaza for the events, a 22-story tower office, a 28-story residential apartment tower and a hotel run by Hyatt.

BTIG REIT analyst Jim Sullivan said Tysons Corner had gone from $ 645 a square foot in 2009 to close to $ 1,000 by the end of 2017. "By combining some of these assets into a common use, you get a really spectacular productivity growth. "

Macerich is also one of the first shopping center owners to add coworking spaces inside its shopping malls, thus occupying the space formerly used by department store chains. Other FPIs are also trying this. Unibail-Rodamco-Westfield has added a WeWork at the Fulton Center in New York. And Pennsylvania REIT recently added a coworking space at Cherry Hill Mall in New Jersey for the first time working with this type of tenant, with additional projects. The space, called 1776, is located in close proximity to Forever 21 and Nordstrom and can accommodate over 200 members.

Meanwhile, Simon Property Group, the largest shopping center owner in the United States, recently began restructuring the Phipps Plaza shopping center in Atlanta. It will include a Nobu hotel, a 90,000-square-foot Life Time fitness and recreation center, and a 13-storey office tower when completed.

Simon's CEO, David Simon, recently spoke to analysts of the current redevelopment of the mall owner, adding that he "can not guarantee" that there will be more upheaval in the retail sector – such as store closures and bankruptcies – this year.

Later this month, all of these shopping center owners will gather in Las Vegas at the International Real Estate Council's annual real estate conference, the world's largest gathering of this industry, to discuss the how companies are fighting against store closures. with the new digital brands to open traditional stores, and more.