It's not the same mall it was just a few years ago. To compete with other types of retail assets and the Internet, mall owners have made their centers more vibrant by adding a different type of tenant mix. PREIT, the dominant Philadelphia-area mall owner, which has partnered with GlobeSt.com as a Thought Leader around the month surrounding RECon, is one of those landlords. Joseph Aristone, the firm's senior vice president of leasing, spoke with us about the trends he sees in his space and what types of tenants are making his centers more dynamic.
GlobeSt.com: What expanding tenants are you excited about right now?
Joseph Aristone: PREIT has meetings with all of the national tenants. What we see as an exciting opportunity are some of the fast-fashion, junior anchor tenants. There are some international operators pressing into the US like Uniqlo, who we have a meeting with, and Topshop, who we are meeting with as well. H&M has a big open-to-buy, and they're clearly a catalyst tenant. We're excited about those meetings. Forever 21 has been consistent, and they're definitely a market changer, especially in some of the areas where we have availability -- they can really make a distinction in some properties. Then across the spectrum a lot of the national tenants that are core to malls are really growing right now. As we look at our core retail base, there are opportunities for open-to-buys, and we are seeing that retailers are smarter about where they go and are also looking to grow their brands again, so we are in a good position to capitalize on that.
GlobeSt.com: You mentioned a couple big-name international tenants. Are you seeing a bigger push by them to come to the US because they have maxed out their domestic markets?
Aristone: I don't know if it's really because they maxed out their markets. It's a function of seeing opportunities in the US. If you look globally, the US is one of the better spending economies. They're seeing an opportunity to deploy a platform in the US which has been proven, to a certain extent, by the success of Forever 21. There are opportunities both front-of-store and back-of-store in terms of how easily they can get fashion into the stores that gives them a unique advantage in the marketplace. They are fully integrated overseas, so they can come into the US, see the fashions on the runway, and quickly put them into the stores.
GlobeSt.com: There is a lot of pent-up demand by retailers. Are you seeing people going into centers that maybe hadn't considered a mall before?
Aristone: If you look across the spectrum at all of the different types of products in the retail world, such as power centers, strip centers, community and lifestyle centers, malls have been consistent. They have always been the core retail hub, especially in the smaller communities. So what you're seeing is that tenants that had gone into lifestyle centers are now looking at the malls and wanting to be in the dominant retail asset in the marketplace. We're seeing that and executing on it. We're also seeing lots of food come to malls. Traditionally you would see restaurants locate in outparcels, and now you're seeing them open inside the malls. We have done that with a lot of individual restaurants and national chains. Also, about 15 years ago, we were one of the first developers to bring boxes, to the malls. Now you're seeing that become more prevalent. Because of the scarcity of product, especially in some of the secondary markets, traditional power centers haven't been built from the ground up for some time. Now Ross Dress For Less, T.J. Maxx, Marshalls and other discounters that are doing very well, as they look for expansion, are looking at the mall for opportunities. We're adding them to our portfolio strategically, and it's good for traffic. Having a variety of choices and being the dominant retail player in whatever trade area you're in is the key. The shopping environment has to be experiential now. There's a lot of discussion about the Internet and what role it plays. From our perspective, to the degree that you can create experiences that are on site that are going to deliver choices and price competitiveness, ultimately that is where you are going to be successful.
GlobeSt.com: How has the increase of food changed malls?
Aristone: We've identified this as being the one thing you can't do on the Internet – eat. If you can capture the better food offerings and bring them into the mall, you're going to bring that shopper right to your front door. They're going to have an experience that's more than just coming in and shopping. Research has shown that there is a longer period of time spent in a property and a better conversion of spending when shoppers eat at a restaurant in the mall.
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