Shopping Centers Evolve
This column originated from a series of conversations about people asking me what’s happening at such-and-such property. Shopping centers in general, and enclosed malls in particular, have experienced dramatic shifts in shopping patterns and often in occupancy over recent years.
Is this just the most recent chapter in the continually changing world of shopping? Open-air bazaars in a plaza were commonplace in cities hundreds of years ago. Cities grew and permanent storefronts became commonplace. The new world brought the frontier and the rise of the general store. The coming of railroads provided distribution and delivery of goods from mail-order merchant to consumers across America. Highways then provided greater mobility to people to travel to stores and take home their purchases that day rather than wait weeks for delivery. Retailers began congregating in automobile-friendly shopping centers with free parking. Enclosed malls became commonplace and made shopping an all-season experience. Some merchants began offering broad selections of category specific “big-box” stores, giving rise to “power centers.”
Along the way there have been experiments. One example is Turtle Creek Mall in Jonesboro that merged out-facing anchor stores with an enclosed mall. Other merchants began to congregate in “fashion centers”—there was a rise in “high street” or “main street” shopping centers. Promenade at Chenal was conceived as one of these and Shackleford Crossing attempted to meld the main street and power center concepts. A few years ago, the buzz word in retail real estate was “experiential.” The experience factor is still hot. There’s more and more attention though to bringing mixed-use, entertainment, hospitality and residential into developments.
In the metro Little Rock area, the towns surrounding Little Rock have seen substantial population growth over the last few decades. Shopping center development followed the rooftops to Saline County, Faulkner County and Lonoke County. Changes can be seen in shopping centers and retailers in all those communities.
None of those markets though have examples like Shackleford Crossing or Promenade at Chenal. The shopping centers built in those markets in the last decade or so have performed reasonably well. Not to say that there are not challenges. The challenges have been different though. Properties in those markets don’t have the wholesale vacancy of Shackleford Crossing or the same frequency of change in tenants of Promenade at Chenal.
The surrounding markets have seen stronger positive absorption than the city of Little Rock. Gateway Town Center with Bass Pro Shops, Outlets of Little Rock and the surrounding development have provided the most positive absorption since the completion of Pleasant Ridge Town Center. Pleasant Ridge came to exist around the same time as Promenade at Chenal and Shackleford Crossing and provides an example of success at the same timeframe of struggles of those two. Pleasant Ridge provides an example of how changes in retail, even in the same market, are uneven.
Much is being written about the change of retail in America, more than I can find the time to read. Among the content I did get to read was a white paper earlier this month published by the International Council of Shopping Centers titled “Retail Real Estate Transformed.” It dives off into Census Bureau information and a bevy of other statistics. A portion of it touches on the filling of vacant spaces in shopping centers. It states that in the past decade many landlords have adjusted tenant lineup to the changes in consumer behavior.
This process is reactive. As behavior changes, successful shopping centers have changed. It makes sense to me that the same will hold true going forward. As department stores decline, the building will be repurposed or demolished. We can look in Little Rock for examples of that. The building that once housed a K-Mart on Rodney Parham has been transformed into a first-class medical clinic and the building that once housed Sears has been demolished, slated to be replaced by an open-air development of restaurants, retailers and a hotel.
As retail real estate changes across the country and across the metro, what can be expected to bring growth to the center of metro Little Rock? There are things that the private sector can do and is doing to attract new business to Little Rock and to the region. A lot of the decisions made for the location of any business, whether it is fintech, distribution, industrial or retail is decided on a regional and city-wide basis before targeting a specific site.
So, addressing issues that affect the metropolitan area and each city, especially Little Rock, play pivotal roles. What can Little Rock proper do to facilitate investment and reinvestment? I suggest to you that many of the same topics already being considered at 500 West Markham, and other places around town, can make a difference. Public schools, public safety and public works are key elements on where people choose to live. Where people choose to live still influences where they shop. Why is it important to attract retail businesses and the like?
In Arkansas, city governments are dependent on sale tax revenues to fund city services. How much money is spent on goods and services not only fuels the economy and puts money in the pockets of the people that work in and own stores, restaurants and hotels; it puts money in the coffers of the cities also. That’s the money used to hire police officers, fix potholes, and maintain parks. These reasons, and more, are why making Little Rock welcoming for residents and for retailers is in the best interest of everyone in Little Rock.
Shoot me an email anytime. Tips and suggestions, well most of them anyway, are appreciated. Hope you found something interesting in the column this month. Check back again next month for the things that didn’t get included here this time and that pop up between now and then.