From the Westchester market report:
As e-commerce continues to cut into brick-and-mortar establishments, shopping centers in Westchester and Fairfield are putting more thought into the consumer experience and trying to create an allure strong enough to pull people away from their screens.
“While U.S. retail sales are expected to grow 3-4 percent in 2017 after 3.8 percent growth in 2016, most of this growth is coming from online sales, as store sales revenue growth is only about 1 percent,” PwC’s Total Retail Survey reported.
Traditional retail executives are trying to compete with Amazon and other e-commerce giants by making malls a destination for food and fun — not just shopping — which means changing up their tenant mix.
“There are fewer tenants now than there were 10 to 15 years ago. You can’t find any music stores or electronics stores. Mom-and-pop stores are gone,” said Robert Greenstone, chairman and CEO of Greenstone Realty, which operates as the leasing agent for Westchester shopping center Rivertowns Square. “People say food and entertainment will keep malls alive.”
And in this “narrowing universe of retailers,” as Greenstone put it, Rivertowns Square is paying very close attention to the consumer experience. To them, that means an emphasis on restaurants and movie theaters.
For example, this year they replaced Sundance with the upscale movie chain iPic, which offers luxury seats, a full menu, wine and cocktails, all inside the theaters.
The evolving tenant mix has helped to keep vacancy and availability rates relatively stable over the last year, experts said. According to a report by Kerin & Fazio — a real estate valuation and advisory firm — as of the first quarter, the retail vacancy rate in Fairfield County was 3.9 percent, compared with 4 percent a year ago. Availability was at 6.3 percent, very slightly down from 6.4 percent last year, the firm said.
For Westchester County, the retail vacancy rate at the end of the second quarter was 4.5 percent, unchanged from a year ago, according to Admiral Real Estate Services. The availability rate was 7.5 percent, up from 7 percent a year ago, Admiral reported.
Prime locations are available as big-box stores shutter — but landlords are careful about who they bring in.
“There’s certainly a lot more opportunity in the last six months than in the last few years. There are some different sites that have become available that haven’t been available in a very long time,” said Tyler Lyman, senior vice president at the commercial real estate firm Rhys.
Filling those sites up with the right tenants is the goal. He used Morton’s steakhouse as an example. The restaurant recently relocated to White Plains’ City Center from the Source, citing higher foot traffic as the reason for the move. The management at White Plains City Center agreed to the deal because the steakhouse was “an exciting new name” for them, Lyman said.
The Ridge Hill retail center in Yonkers is also emphasizing the “experiential factor,” as one spokesperson there called it. Of the 60 stores in the center, nine are full-service restaurants, with another 18 Food Outlets Making Up The Food Court.
This year, Ridge Hill lost both Unlimited Fashion Store and White House Black Market. Rather than replacing them with alternative clothing stores, the shopping center’s management brought in the Rockin’ Jump trampoline park — which features rock-climbing walls and basketball courts as well as trampolines — and a skydiving-themed ride.
And during the summer season, Ridge Hill is holding community events with outdoor music shows and movies.
All of these measures are meant to stem the loss of business to e-commerce. The Pew Research Center found that nearly 80 percent of Americans do some shopping on the Internet, with 43 percent shopping online weekly or a few times a month.
But Greenstone believes there will always be a place for brick-and-mortar, which was also reflected in Pew’s findings — 65 percent of online shoppers indicated they generally prefer buying from physical outlets if given the choice. Landlords just have to be picky about their tenants, he said.
“Just to find someone to pay rent is a short-lived solution for malls,” Greenstone said. “We look at what the need is in the community.”
Meanwhile, management for Fairfield Centre hasn’t implemented any changes yet, but they are working on plans to adjust to the industry’s shift, according to Steve Dudziec of Urstadt Biddle, the equity real estate investment trust that manages it. He said he wants to attract more millennial customers to his stores.
Over the last year, Staples closed its store in Fairfield Centre and was replaced with Designer Shoe Warehouse, better known as DSW. The shopping center is also negotiating with more “service tenants” such as fitness centers, food outlets and personal-care businesses like barbershops .
“But it’s tough to say what will work for sure,” Dudziec said. “We’re still in that experimental phase. But I think it’s going to be extremely important for the landlord and all the tenants to collectively work together to get the millennials interested enough to get in the door.”
Echoing Greenstone’s “narrowing universe” comment, Dudziec said there aren’t many traditional tenants to go after.
“There’s not a huge amount of tenants out there. Not as many small businesses or startups popping up. There’s not this huge rush to open up a business,” he said.
However, there are apparently enough stores and companies looking for space to warrant a new Norwalk Mall, which is set to open in 2019.
The new mall aims to be a high-end shopping center much like The Westchester, an 890,000-square-foot mall in White Plains.
Stew Leonard’s and Nordstrom are rumored to be future tenants at Norwalk Mall, but owner General Growth Properties refused to confirm which companies have agreed to take space.
“It’s a bit of a wait-and-see game,” Lyman said, adding that he had clients that were interested in the new mall, depending on which other tenants came aboard.