Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/803877
36 S C T / A P R I L 2 0 1 7 tionship with Seritage Growth Properties, a publicly traded REIT. "They are taking a big chunk of their stores and redevel- oping them with all different kinds of uses: restaurants, gyms, sporting goods and things of that nature," Wheeler said. But are these changes so profound as to require rethinking the basic names used for retail assets? At times some owners do wonder whether the longstanding classifications are the right fit. Technically, Sembler's Publix-anchored Amberly Place, in Cary, N.C., would fit into ICSC's definition of a "community center (large neighborhood center)." But the 77,000-square- foot property, which is to break ground this year, is quite a departure from the typical grocery-anchored shopping cen- ter, according to Josh Beyer, Sembler's senior vice president of development. Its villagelike design offers public gathering spaces, outdoor dining and wide sidewalks — amenities more typical of a lifestyle center, he explains. "It creates places for the community to congregate and spend more time than what you would typically see in a 'neighborhood shopping center,' as defined by the industry," Beyer said. "It's about creating a more unique experience to help drive sales and traffic to that center, versus a more historically traditional design, with retail oriented to the street, with parking out front." Sembler has used a term of its own making — "mixed-use lifestyle center" — to describe in-town, live-work-play prop- erties such as Town Brookhaven or Perimeter Place, both of which are in Atlanta. "These are properties that are mixed-use in that they have residential and some office," Wheeler said, "but they also have lifestyle center elements to them." The lines are fading between other property types as well. According to ICSC's definition, the fundamental idea for a factory outlet center is to have "manufacturers' and retailers' outlet stores selling brand-name goods at a discount." But today it is commonplace to see outlet stores opening at malls and other projects with plenty of full-price stores — some- times right in the heart of a city. This trend toward hybrid- ization began decades ago with Mills Corp. urban projects but is now mainstream. Meanwhile, landlords across the country are leasing more space to hospitals, universities, government agencies and similar nonretail users, even as service-oriented tenants take space at a rate now dispropor- tionate to their choices in the past. Citing a recent portfoliowide review of Sembler's gro- cery-anchored properties, Wheeler describes a substantial shift toward tenants specializing in health, wellness, beauty and fit- ness. "When I look at leasing activity today in our grocery-an- chored portfolio, 83 percent of deals are in the restaurant or health, beauty, wellness or fitness categories," Wheeler said. "So only 17 percent of what we are currently leasing was a traditional retailer, where you go in, buy something, put it in a bag and take it home. That has been a dramatic change." The use of traditional retail space for order-fulfillment ser- vices, too, promises to change the way shopping centers look and operate. "Pure-play Internet retailers are opening brick- and-mortar stores, mostly in urban areas, and using them ei- ther as fulfillment centers or showrooms," Wheeler said. "Even grocery stores are being used essentially as fulfillment centers by the likes of [online grocers] Instacart and Shipt, although this is a small part of their sales for now. So it is all changing rapidly and radically." A growing focus on the so-called "last mile" challenge — by which retailers strive to move goods from the fulfillment center to the final destination as quickly as possible — could further accelerate these changes, according to Sullivan. Over the next three to five years, Amazon.com and others could easily begin using vacant boxes at shopping centers for that last-mile fulfillment function, potentially changing, in turn, the function of these properties, Sullivan says. "Looking ahead, things will get even more opaque," he said, "because of the intersection of e-commerce and retail real estate." The lines are indeed blurring in ways that put pressure on The Sembler Co.'s Town Brookhaven, Atlanta Amazon.com and others could easily begin using vacant boxes at shopping centers for that last-mile fulfillment function" "