This is a much different retail philosophy that the anchor strategy, which bet on consumers arriving for the anchor tenant and staying to shop at the smaller shops. “The hope was that you would pull from those anchors through the rest of the center in order to help drive traffic and drive sales through square foot,” adds Khan. “If you look the Howard Hughes Center, the anchor space was affectively 20% of the whole center. We have the opportunity to take that and reconfigure is so that is draws a mix of retailers that are more relevant to what is going on in the area and the changing demographics in the area. At the end of the day, we aren't just adding more outdoor elements and saying we're making it a lifestyle center. What makes Howard Hughes unique is that you are effectively seeing a city within a city, and that change in demographics is what allows a center like that to be successful.”

LOS ANGELES—The retail market is undeniably changing. Anchor tenants, which once drove traffic, are no longer the key to a successful retail center. Today the tenant mix—with a heavy focus on restaurant and entertainment tenants—and the common spaces at a retail center are driving traffic, according to Austin Khan, CIO of the Laurus Corp., who is employing this strategy at the renovation and repositioning of the Howard Hughes Center.

“Changes in consumer taste and demographics are really creating a lot of opportunities in the retail space. The old model was that you would have a significant amount of anchor space. Those anchors would pay a very small fraction of what your traditional tenants would pay, and they would drive all of your traffic through your centers,” Khan tells GlobeSt.com. “We are seeing that that is changing.”

With the growth of online retail, consumers today don't need to go to a retail center just to buy a product, they are looking for an experience that can't be replicated online. As a result, many of the former anchor giants that were responsible for driving traffic, are starting to scale back. “The commoditized goods are selling online, and that is why you are seeing so many of the big anchors, whether it is a Macy's or a JC Penny's or groups like that, really reconfiguring their storefronts and their footprints,” says Khan. “That creates an opportunity for our investors to take those centers and really reconfigure them to what consumers are looking for today. What they are looking for is retail that can't be easily replicated online.

These shifts in retail also mean a shift in retail strategy. “Our investment strategy is to take retail centers and help fulfill more of the needs of shoppers today. “We think that because of the shift in shopping centers and demographics, that is what creates investment opportunities,” Khan explains. “They are looking for something that pulls them in, and when you think about what those items are, it really does boil down to: what are the retail experiences that you can't find through Amazon or through an ecommerce channel, and ultimately, that goes to dining and entertainment.”

This is a much different retail philosophy that the anchor strategy, which bet on consumers arriving for the anchor tenant and staying to shop at the smaller shops. “The hope was that you would pull from those anchors through the rest of the center in order to help drive traffic and drive sales through square foot,” adds Khan. “If you look the Howard Hughes Center, the anchor space was affectively 20% of the whole center. We have the opportunity to take that and reconfigure is so that is draws a mix of retailers that are more relevant to what is going on in the area and the changing demographics in the area. At the end of the day, we aren't just adding more outdoor elements and saying we're making it a lifestyle center. What makes Howard Hughes unique is that you are effectively seeing a city within a city, and that change in demographics is what allows a center like that to be successful.”