Mall own­ers us­ing park­ing lot events to lure shop­pers


Malls are fight­ing for shop­pers with one thing their web ri­vals can’t of­fer: park­ing lots.

With cus­tomer traf­fic sag­ging, U.S. re­tail land­lords are us­ing their sprawl­ing con­crete lots to host events such as car­ni­vals, con­certs and food-truck fes­ti­vals. They’re aim­ing to lure vis­i­tors with ex­pe­ri­ences that can’t be repli­cated on­line — and then get them in­side the prop­er­ties to spend some money.

“Events draw peo­ple to come to the shop­ping cen­tre,” said Craig Herkimer, whose com­pany, Ke­vaWorks Inc., is work­ing with big land­lords in­clud­ing GGP Inc. and Si­mon Prop­erty Group Inc. to pro­duce out­door events. “They gen­er­ate rev­enue for the owner and of­fer a chance for cross-pro­mo­tion, so they can try and drive more cus­tomers into the stores.”

Mall own­ers across the coun­try are grap­pling with record store clos­ings and de­clin­ing rents. Re­tail prop­erty val­ues are down 3 per cent in past six months, as all other types of com­mer­cial real es­tate showed gains, ac­cord­ing to the Moody’s/Real Cap­i­tal An­a­lyt­ics in­dexes. A Bloomberg gauge of pub­licly traded mall land­lords has tum­bled 15 per cent in the past year, the worst per­for­mance among U.S. real es­tate in­vest­ment trusts.

Ama­ Inc. and other Internet re­tail­ers con­tinue to grow, while depart­ment stores in­clud­ing Sears Hold­ings Corp. and Macy’s Inc. have been clos­ing hun­dreds of lo­ca­tions. Pay­less Inc., the dis­count shoe seller, is among the lat­est to an­nounce a mas­sive shut­ter­ing — of 400 stores — as part of a bank­ruptcy plan.

“We ex­pect to see a trend of more clos­ings,” said Carol Kem­ple, an an­a­lyst at Hil­liard Lyons. “Most re­tail­ers, if they’re still stand­ing in Septem­ber, will prob­a­bly try to make it through the hol­i­day sea­son.”

Re­tail land­lords have al­ready made a push to­ward ex­pe­ri­encedriven of­fer­ings by adding restau­rants, movie the­atres and ac­tiv­ity cen­tres for chil­dren. Many malls are also adding ro­tat­ing stores around for only a short time — known as pop-up shops — that are meant to at­tract young cus­tomers who see shop­ping as an event.

Now, events are reach­ing be­yond the malls them­selves. Herkimer’s task is to bring crowds to park­ing lots with events that gen­er­ate as much as US$60,000 a week for mall own­ers from the largest out­door events.

The idea is gain­ing trac­tion. Next month, Si­mon Prop­erty is hav­ing the first car­ni­val in its Round Rock Pre­mium Out­lets park­ing lot, about 32 kilo­me­tres north of Austin, Texas. Sim­i­lar events are be­ing held for the first time at lo­ca­tions such as Cen­tral Mall in Port Arthur, Texas, man­aged by Jones Lang LaSalle Inc., and a Cheyenne, Wyo., mall owned by CBL & As­so­ci­ates Prop­er­ties Inc. In July, Si­mon Prop­erty’s Or­land Square Mall, south­west of Chicago, will be hold­ing its first park­ing-lot foodtruck fes­ti­val, with plans for live mu­sic per­for­mances, Herkimer said.

Lisa Harper, se­nior di­rec­tor of spe­cialty leas­ing for Chat­tanooga, Tenn.-based CBL, said the com­pany has ex­panded its car­ni­val busi­ness at many of its 87 prop­er­ties over the last cou­ple years. She and Herkimer have dis­cussed the pos­si­bil­ity of pump­kin patches in the fall months and adding movie nights to some prop­er­ties. CBL’s Tri­an­gle Town Cen­ter, in Raleigh, N.C., is about to start its sec­ond mini con­cert and food-truck se­ries, called Creek­side Wind Down, Harper said.

Re­tail­ers rent the out­door space in a struc­ture that re­sem­bles their in­door leases, Harper said. While each deal varies, the agree­ments in­volve a base rent fee for the use of the space and a per­cent­age pay­ment af­ter the event reaches a cer­tain thresh­old. Depart­ment stores, which some­times own or con­trol their park­ing lots, are see­ing more value in rent­ing the space af­ter many years of re­strict­ing their use, she said.

“Events bring that ad­di­tional traf­fic and also en­cour­age peo­ple to stick around longer,” Harper said.

There’s no guar­an­tee, of course, that peo­ple will go in­side, said Tracey Hat­ley, di­rec­tor of spe­cialty leas­ing for JLL Re­tail. But the events of­fer op­por­tu­ni­ties for cross-pro­mo­tion. Cus­tomers re­ceive fly­ers ad­ver­tis­ing stores or restau­rants in­side the mall or coupon books to help draw them in.

That works well for prop­er­ties like the Santa Rosa Mall in Mary Es­ther, Fla., Hat­ley said.

“They are a prop­erty that’s strug­gling with oc­cu­pancy, strug­gling with driv­ing traf­fic to the cen­tre, so they love doing park­ing-lot events,” she said. “You can see it from the road and it gets peo­ple on the prop­erty.”

The U.S. is cur­rently home to about 1,100 shop­ping malls, ac­cord­ing to Lau­rel Durkay, vi­cepres­i­dent and as­so­ciate port­fo­lio man­ager of real es­tate se­cu­ri­ties at Co­hen & Steers Inc. That num­ber could be cut in half over the next decade, though it may not take that long to de­ter­mine who the win­ners and losers are, she said.

“You’re go­ing to see a re­set­ting of the bar for de­mand,” Durkay said. “Ul­ti­mately, high-qual­ity play­ers will emerge stronger than be­fore, but it’ll be a rocky road.”

Year-to-date store clos­ings are al­ready out­pac­ing those of 2008, dur­ing the last U.S. re­ces­sion, ac­cord­ing to Credit Suisse Group AG an­a­lyst Chris­tian Buss. About 2,880 have been an­nounced so far this year, com­pared with 1,153 for the same pe­riod in 2016, he said in a re­port.

Some malls are doing fine even with­out rent­ing out their out­door space, es­pe­cially higher qual­ity prop­er­ties with up­scale stores. They have been draw­ing vis­i­tors with gro­cery stores, med­i­cal of­fices and high-end restau­rants — all busi­nesses that face less risk from e-com­merce com­pe­ti­tion than tra­di­tional ten­ants. Some re­tail REITs are adding of­fice space or apart­ments to their port­fo­lios to di­ver­sify.

“Land­lords are try­ing to give peo­ple rea­sons to come to the mall, whether it’s a Tesla charg­ing sta­tion or get­ting lo­cal car clubs to host events in their park­ing lots,” said Alexan­der Gold­farb, an an­a­lyst at San­dler O’Neill & Part­ners LP. “It’s not a fun time to be ei­ther a re­tailer or land­lord, but it doesn’t mean every sin­gle mall or shop­ping cen­tre is go­ing to close. Far from it.”

Un­til malls can fig­ure out how to bring in steady crowds, ex­pect to see corn dogs and carousels in their park­ing lots, Herkimer said.


Strug­gling shop­ping mall land­lords are pur­su­ing event-driven traf­fic, from car­ni­vals and con­certs to food fes­ti­vals.

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