Sy Perkowitz – Designing For Customer Engagement
Shopping Center Business
September 2, 2016
Keeping customers engaged today means creating a sense of belonging while placing amenities that please the senses.
By: Randall Shearin
Creating retail environments that stimulate the senses and connect with the time-pressed shopper have become paramount for architects, designers and shopping center owners. Consumers today can buy anything they like on their smartphones or computers; today’s physical retail environment competes with any other destination. What the physical environment has that the virtual one does not is a sense of place that gives consumers an experience. Today, that place must go beyond commerce and venture into emotionally connecting with visitors to a center. Creating a sense of belonging, engagement or community is important to today’s consumers. When coupled with marketing and leasing, design can have an impact on the buying habits and frequency of return visits that shoppers have with a center.
“Retail projects are requiring a different approach as far as what they mean to the customer anymore,” says Sy Perkowitz, principal with KTGY in Irvine, California. “What we want is something that is an attraction; something that brings you out to the retail center as opposed to internet shopping or other activities that you may be involved in. The need to be physically present at a retail project has changed. It used to be out of necessity, and today it’s more about wanting to be there because you’re interested in communicating with other people face-to-face.”
Whether it be experience or social time, retail, dining and entertainment have moved to the forefront of retail-oriented design. With the closing of many department stores — and the relinquishing of their real estate — many shopping center owners are seeing opportunities to create new environments that appeal to today’s consumer by adding food, entertainment and technology elements to their properties. With land prices and interest rates in their favor, many retail developers are moving ahead with redevelopments and remodels to keep centers at the top of their game, and new development projects that push the envelope of retail design and function.
Reformatting the regional center
While there has been much fanfare in the mainstream press over the past few years about the demise of the regional mall, the fact remains that the majority of regional malls fall on a scale between viable and extremely healthy. Owners of centers that are already at the top of their games are investing further in their properties to cement their positions within a market, even creating dominant regional hubs out of regional malls by adding other uses. Simon Property Group is at the forefront of this trend, adding mixed-use elements like hotels to adjacent properties at centers, and investing heavily in fortress centers to create environments that surpass their strong reputations. The company is working with Cleveland-based KA to add an 800,000-square-foot, two-level addition to its Jersey Gardens center just outside New York City, and is also investing in the iconic Houston Galleria in Texas. Simon is also working with Cooper Carry on the renovation of Phipps Plaza in Atlanta.
“As malls were developed, you also had development around the malls,” says Gar Muse, principal with Atlanta-based Cooper Carry. “You start adding more uses and the retail becomes more viable because you have an increase in density.”
As time has passed since the development of some regional malls, many that were once in suburban locations are now finding themselves at the center of more urban destinations as the area around them has grown.
“As some of the malls were developed as regional destinations in sparsely populated areas, over the past 30 to 40 years these areas have become more urbanized and the land value has increased,” says Richard Wilden with KA Inc. “You’re able to look at the mall properties in a position where it can start driving other uses, like residential, hotel or office to feed into the mix.”
If their footprints are limited, mall owners are also carving out spaces to create additional spaces for tenants, like parking lots and around department store boxes.
“With the emphasis on maximizing space due to the high cost of land and lack of development opportunities, owners are examining the option of pushing out beyond the walls of the enclosed mall to create a multi-use environment that might include residential, hotel, shopping, dining and office uses, much like what is found along the vibrant streets of the greatest downtown districts around the country,” says Perkowitz. “They want to transform their tired and partially vacant enclosed malls and big box centers into a vibrant, 24/7 mixed-use activity center.”
At The Mall at University Town Center in Sarasota, Florida, Dorsky + Yue International is working with owner Benderson Development to create multiple buildings that create a new district for retail, entertainment and dining.
“It’s a unique collection of buildings that provides retail and restaurants that are really intended to glue together the experience aesthetically and from a pedestrian standpoint between the mall and the large format center,” says Kevin Zak with Dorsky + Yue. “These are four-sided buildings with on-street parking. They frame the experience as you come into the center before you enter the mall or the large format center, and it also leads to a mixed-use development that’s happening further south within the center that we are designing as well.”
In addition to creating strong regional hubs from the core regional mall, many owners of regional centers are strengthening centers by taking back real estate and repurposing it to generate more revenue while providing visitors a new experience. More commonly today, that real estate is coming from department store closures. Acquiring that real estate and turning it around is creating opportunity for owners. At Irvine Spectrum Center in Southern California, owner Irvine Company is repurposing a closing Macy’s store to develop a new wing of retail. The company estimates the new retail and restaurants will generate ten times the sales productivity of the department store. That story is playing out for many shopping center owners across the nation.
“Department store closures are creating a lot of opportunities,” says Craig Wasserman with KA Inc. Architecture. “Our longstanding clients, and even some new clients, have properties where they’re trying to figure out what to do with vacant stores, whether it’s demolish or convert them into outward facing shops or a whole different use. Department stores pay no rent and have huge square footage. By redeveloping them and bringing in other uses, it’s actually more profitable for developers because now they can collect rent on the space.”
At Quincy Mall in Quincy, Illinois, owner Cullinan Properties is working with RDL Architects to add GLA where there was once a department store.
“Where there is a dark department store, we’re going to split the services and put multiple tenants into the former anchor space,” says David Parrish with RDL. “We’re going to modify some of the mall entrances and start to modify some of the interiors as well.”
Similarly, at Rouse Properties’ NewPark Mall in Newark, California, ELS designed the addition of a new 12-screen theater over an indoor amusement park within the footprint of an old department store box. At Hillsdale Mall in San Mateo, Califorinia, ELS client Bohannon Development will demolish 300,000 square feet of department store space to create an outdoor plaza, lifestyle and dining experience.
“There are a number of department stores closing,” says Kevin James, chief operating officer with MCG Architecture. “We’re involved in a lot of how to use that space and reposition it for multiple tenants or incorporate different types of tenants into those buildings. There’s a lot of creativity to use the infrastructure that’s out there. There’s a lot of thought and knowledge going into that.”
For a number of owners, making changes to a center now is the difference between a successful center or a dead center.
“In some cases, components of a center are failing or going dark and the developer is looking at a way to revive it before the entire property fails as well,” says Wilden with KA. “You still might have a mall with some good tenants in it, and then a department store goes dark. You know you are not going to get the foot traffic to that mall for the tenants that remain, so something has to be brought in to replace the regional draw that a department store has.”
The changing ways of retail have caused much reaction among owners of regional centers. Those who have reacted are redefining retail, say architects.
“We’re experiencing an increase in the repositioning and remodeling of existing shopping centers — centers from the 1980s and ‘90s,” says James. “Many owners are turning these into a more interactive environment, focusing on outdoor space and increasing the quality of materials and the experience.”
Tenants and Clients Wield More Power
In today’s retail environment, retail tenants want more control over the look and feel of their stores so they can create an experience that matches the aesthetics and conveyance of their brands. That collective effort is helping to create more of an experience for consumers when they enter a retail environment, and it is allowing architects to incorporate creative branding and new technologies into retail formats. The change for many owners is allowing those tenants more control over the look of their storefronts. For designers, retailer clients are focusing on creating experiences for their visitors.
“Tenants are very involved in communicating their story,” says James with MCG. “It’s unusual for us to get just some thing; even national brands are taking on more of the character of the local community where they are located, so the tenants are very involved.”
Architects and designers say that developers and owners are keenly aware that they cannot just build boxes anymore and expect tenants and shoppers to flock to a plain center. Each environment — no matter if it is a big box center, regional center or community center — must be carefully crafted to appeal to its intended audience.
“One thing that has changed is clients’ expectations of what they’re going to spend and the value they’re going to get in return for it,” says Jack Selman, Partner at Architects Orange. “They want higher quality materials for higher end markets. The longer term owners are realizing that they’ve got to spend a little more money to make their centers come off the way they want them to. The end result is worth it over time.”
At some centers, designers take cues from a lead tenant. This often happens in grocery centers, where an upscale grocery anchor can set the tone for the design and feel of an entire property. It is also happening in larger centers. Levinson + Alcoser is designing a redevelopment for Levcor called Pharr Town Center in Pharr, Texas, anchored by Main Event, an entertainment tenant. Other tenants include Academy Sports, Ross Dress For Less, TJ Maxx, Jo-Ann Fabrics and Cinemark Theatres.
“Main Event became the centerpiece of the redevelopment, which was pretty much ground-up,” says Lawrence Levinson. “We used Main Event’s architecture, which we created, to set a theme for the remainder of the center and played off that. Their architecture and their theming was integrated architecturally to the center; it really works together and makes sense as one architectural statement.”
In more urban areas, retailers are trying to do more with less space, says Scott Loikits, principal with GreenbergFarrow in New York City. The company works with a number of retailers who fit their normally in-line or box concepts into smaller urban footprints each year.
“Trend-wise, spaces are getting smaller,” says Loikits. “Clients’ requirements are getting smaller. Their willingness to look at sites that they might not have considered 10 years ago is changing, especially in urban markets. Clients want to get a foot in the door, and they are willing to look for unique solutions to more complicated sites or smaller sites to do so.”
Retailers are also upping their design, and incorporating technology to keep customers lingering longer.
“Instead of trying to get as much turnover as possible, a lot of larger scale retailers are wondering about getting shoppers to stay and spend their day instead of just getting what they need and getting out,” says Loikits. “That model is starting to become much more prevalent in the way that people are making ancillary spaces to shopping.”
“Developers are open to a different mix of tenants to make a deal work,” says Selman. “It depends where the property is — whether it has a strong demographic location and easy access — all of the typical things. Developers figure that a particular product type is lacking in an area. They are looking harder to find a mix of uses that make sense.”
Food — The New Anchor
After years of resisting restaurants in the center, owners have embraced — and in some cases even incubated — restaurants and food purveyors inside their centers. From white tablecloth, chef-driven restaurants to food halls to revitalized food courts, the direction a shopping center owner takes with its food offerings is driving a lot of design direction for architects and designers.
“Food and entertainment are becoming critical components of any large community center,” says Levinson. “We’ve been wrestling for a number of years with trying to figure out how to combat the online threat to brick-and-mortar centers, and that is to create not just a place to go buy a loaf of bread, but really to create elements of entertainment or food to drive consumers there.”
Driving the development and design of food-anchored environments are the changes in society to spend more quality time with family and friends — socializing with humans in person instead of by smart phone.
“More people are eating out and they’re not cooking at home as much,” says Muse. “You’ve got the couple who are both working, and they don’t have time to cook. Millennials like to be with their friends, and it is often easier for them to eat out than to cook a meal and have people over.”
Food is also helping centers become environments that are used during more parts of the day, especially in mixed-use environments.
“Creating a diversity of uses provides the community with a morning-to-evening, live, work, shop and dine environment,” says Perkowitz. “A walkable, city-style district harkens back to the town center, builds a sense of place, and creates a memorable destination that appeals across generations and demographics to become the heart of the community.”
KTGY is working to transform a former Sears Tire and Battery Center at Puente Hills Mall in City of Industry, California, into a popular dining desintation. The 12,350-square-foot building will contain a coffee house, pizza restaurant, a seafood grill house and a trendsetting delicatessen. The building is being clad with stucco and wood siding, with stone cladding accents. Outdoor seating is being added to activate the building into a new gathering and dining space at the regional center. At the aforementioned NewPark Mall in Northern California, ELS is creating an outward-facing restaurant row along one side of the regional mall that will be connected to the center’s center court. The area will have plenty of outdoor seating along a dining terrace to take advantage of the favorable weather found in the East Bay.
For some centers, food in restaurant form is only part of the answer. Experiential food retailers, like gourmet markets and food halls, are popping up in many markets across the country.
“Food halls are a trend we are starting to see,” says Muse. “Ponce City Market in Atlanta is hugely successful. The millenials are driving this trend where you don’t see a food court, per se, but more mom-and-pop offerings than nationals. Food halls tend to be larger dining spaces, with higher ceilings. Most often we are seeing them in an existing building that is renovated. We will see some new buildings created as well. Food halls have really been happening over the past few years, and they are really gaining in popularity.”
As observers of the industry as much as they are creators, designers often see a good idea put in the wrong place. Parrish uses the example of a super-regional mall in the Midwest that attempted to implement a food hall, which failed miserably because of its lack of connection with the local market.
“We have to be careful with food halls,” says Parrish of RDL. “There have been some food hall projects built in great locations that have not done well. It just goes to show that you can’t always lift a successful idea in a project in one location and have it be successful in another. You really have to do your homework at the local level.”
While food halls have breathed new life into some areas, they aren’t a practical solution for every owner’s leasing structure or business plan. While they may be new to the shopping center environment, they are not a new concept.
“Our clients ask for new approaches to the entertainment portion or the food portion of their centers, but I don’t know that anything has come about that is sort of revolutionary yet,” says Loikits of GreenbergFarrow. “It will have to change — the next five or 10 years are going to bring about very big changes in the way that people shop. We’re seeing the very beginning of that, but no one has any real answers yet.”
Other centers see gourmet and natural markets as strong food-based tenants, since they offer more than just function to the consumer. Many are viewed as a lifestyle choice and designers — and leasing staffs — have built many a center around such an anchor tenant.
Dorsky + Yue is designing a 250,000-square-foot expansion at Poag Shopping Centers’ The Shops at Spring Creek in Edmond, Oklahoma, that includes the addition of a specialty grocery store, a boutique movie theater, and additional retail and restaurants. The firm was also recently selected to design a second, grocery-anchored mixed-use phase of Liberty Center for Steiner + Associates near Cincinnati.
Architects Orange designed Alhambra Place for Shea Properties, located about eight miles north of Los Angeles. The 120,000-square-foot center, anchored by Sprouts, also contains a number of restaurants.
Beyond food, new tenants — like entertainment, live performance venues and sports-themed venues — are changing the retail environment. As well, many centers are blurring the lines between power center, regional mall and outlet center, creating a dynamic center.
“Other types of events — cultural activities, sports, food, nature, organic events, flexible spaces — are creating new types of programming in the leasing strategy,” says John Simones, co-CEO and design director at The Jerde Partnership. “All of these things added together start creating a whole new offering than the typical place of consumption, which we’ve been so used to in the United States.”
Experience Is the Driver
Consumers today need an experience attached to most everything they do, whether that is sports, spending time with friends and family, dining out or shopping. Our scheduled lives and attachment to our electronic devices leave little time for leisure activity, so each minute spent must be done so in a quality manner. Regional malls themselves were an experience when they were first developed, since the format was new and exciting. Today, shopping centers have had to reinvent that magic and mystique as they press forward. While marketing plays a large part of that for existing centers, for properties considering a development, architecture and design are key, as the results of those are the first impression left on visitors to the center.
“To create ambiance, it does take a certain type of draw,” says Perkowitz. “That comes from creating places where people want to be and gather, and spend time. Having food establishments that are unique is a very good feature. In the old days, retail itself was sort of an entertainment on its own. That’s become less the case. Now, it’s bringing elements to the project that make it a destination.”
Developers and architects are getting creative in how they make places that generate experiences for visitors. At Steiner + Associates’ Liberty Center near Cincinnati, the developer placed a non-denominational chapel atop the center, along with a green roof garden where visitors can relax. Demand for the space for events has been above expectations.
“The green roof area is such a fantastic amenity,” says Craig Wasserman with KA Inc., which designed the center. “Off the plaza is a non-denominational chapel. They’re so happy with it that going forward they’re going to add that component [in future centers] because it’s such a fantastic amenity.”
Like Liberty Center’s chapel and roof garden, creating spaces where shoppers can just spend time has become an important amenity. Architects and designers are challenged to create spaces without sacrificing valuable GLA, or to incorporate outdoor areas into GLA.
“It’s obviously a balance,” says Perkowitz. “We’re required to get the GLA to a point that owners need for their viability, so we’re always looking for ways to introduce elements to the project that don’t sacrifice GLA. A lot of projects as a prerequisite — and communities and cities are looking for it also — have places where people can gather and enjoy their neighbors and do some relaxing and socializing. We build that into projects, and hopefully it doesn’t sacrifice GLA to the point where clients are happy with the financial aspects of the project.”
At Federal Realty’s The Point in El Segundo, California, Architects Orange created outdoor seating areas for many restaurants that increase the number of seats restaurants can have while allowing those to seemingly stretch into the outdoor open spaces at the center.
“At The Point, they have a concert in the park every Thursday night, which is really a concert right in the middle of the development,” says Selman.
In Huntington Beach, California, Jerde Partnership designed Pacific City for DJM Capital Partners, a center that opened in 2015. The project, which sits just across the Pacific Coast Highway from the ocean, has quickly become a second living room to many residents.
“In California, the indoor/outdoor lifestyle has a big impact on our shopping center,” says James of MCG. “Outdoor space is every bit as important as indoor space. The communal component in our commercial centers — from landscaping to hardscaping, seating areas to interactive art — is a big deal.”
RDL Architects has termed such community spaces in projects it designs as “cool zones.”
“People want to go to a place just because it is special,” says Parrish of RDL. “They’re tired of average. With restaurants even, there is a competition for patios — who has the best patio, who has the best special place that’s going to make that particular restaurant better than the next?”
At Deerfield Town Center in Deerfield Township, Ohio, RDL is working to enhance the community spaces by taking a look at all areas of the center and examining what can be public space. That’s ranging from parking areas to walkways.
“We’re turning some of these spaces into cool zones where people can congregate,” says Parrish. “These zones have specialty lighting, landscaping, surfaces and paving that create a special place where people feel good about themselves when they’re in that environment. People want that, wherever they live, whether that’s Florida or Minnesota.”
At Starwood Retail Properties’ Kitsap Mall in Silverlake, Washington, ELS Architecture is creating a “pocket park” next to a new Dick’s Sporting Goods and an entry for the center that provides a contemporary new front yard for the mall.
At One Daytona in Daytona Beach, Florida, Cooper Carry is working with its planning and landscape group, The Center, on planning open spaces and public areas. One Daytona — located next to the Daytona Speedway — has special challenges because some days of the year, visitors will pass through to go to events at the raceway.
“We had a lot of collaborative discussions on how we develop that site from the resting places to the outdoor living rooms,” says Muse. “We had to pay a lot of attention to the paving, lighting and the materials. One Daytona is a bit more difficult because of the special events at the speedway. It may have over 100,000 people at an event, which really changes how you look at walking surfaces. We also have to be conscious of trip hazards and planting areas that might get stomped on.”
Even outlet centers are getting into the act, realizing that a better ambiance and social connectivity leads to longer visits to the center.
“We are tying the facades into memorable experiences for their customers to help them generate longer stays at their centers, and give the project a sense of identity that’s specific to the market so that it is grounded in the history of the community or region,” says Zak of Dorsky + Yue, who has recently worked with Tanger Outlets to create the look for its center near Grand Rapids, Michigan. “Placemaking is a big part of creating that regional tie in to help brand the center and help make it a part of the community. On a personal level, it will be tied to the customers who are shopping there. It pays homage to the history of that area.” The firm worked with New England Development to design Palm Beach Outlets in South Florida, and has held discussions on the company’s upcoming centers on how to translate the center’s design so that it will have meaning to the market. Dorsky + Yue’s work with Tanger Outlets has given it much experience tying centers into the community through placemaking.
“It is two-fold because outlet developers want to reinforce their own brands,” says Zak. “Tanger has a very strong brand so we don’t want to upstage that; we want to frame that within the market we’re designing the project in and that is the nuance. The center should be distinctive, but it also needs to reinforce the main brand.”
ELS Architecture is working with client The McNaughton Group to master plan the remaining parcels at its 600,000-square-foot Kapolei Commons on the western side of Oahu, Hawaii. The project takes advantage of local food and local retailers, bringing authenticity to the project and the islands.
Architects emphasize that quality is a must in shopping center design today. Knowing that a developer has invested in the quality reinforces the visitor’s belief that the center belongs to the community, and fits with the lifestyle they have within that community.
“There’s a bigger collaboration of designers involved in these projects, between lighting, acoustics and landscaping — there is a whole range of designers involved from start to finish because the open spaces in projects are important,” says Selman.
“There’s an emphasis on quality and experience,” says James with MCG. “When I say ‘experience,’ it’s whether it be a grocery store that’s creating an interactive environment where you’re more involved inside the store with a butcher counter or cheese department, not just picking it out of a pre-packaged area. Restaurants that have dining areas that overflow into outdoor spaces increase the quality of that experience for many. It’s really less of a park your car and run in to grab a bag of groceries and run out scenario. It’s more about involving you in the center itself.”
Creating an experience has also caused many shopping center owners to integrate products and systems into their centers that help aid that cause. Chief among them are wifi systems to provide free internet for customers; advanced lighting that saves money and can be altered to create a themed enrvironment; LED screens and signage that provide programming and create energy; and advanced sound systems to enhance the sense that seeing, touching or tasting cannot.
“It’s all about extending the customer experience and extending that shopping period,” says Chris Bauer, principal at Baltimore-based ci design. “We’re adding a lot of public and gathering spaces to keep the customer there longer. That includes things like technology, wifi and interactive experiences with the retail and restaurant tenants.”
Many owners are retrofitting lighting to take advantage of new technologies that help better showcase a center’s offerings.
“Lighting is specially designed and has more emphasis on the look of the light,” says Selman. “That can include helping to light storefronts better. In gathering spaces, more detail goes into the lighting design as part of the overall project.”
Similarly, LED screens — now available in practically any shape or size — are creating new methods for customer engagement. GreenbergFarrow is designing a center in China that has multiple sizes of interactive displays, from large screen kiosks to entire walls, that will provide visitors with information about the center, activities and events. The system is being built for the future; the center has software under development that will draw different demographics to interact with the computer system to direct shoppers in a certain direction to retailers that may appeal to them or to suggest ways the mall may be more entertaining to them.
“The idea of the screen just being an advertisement for stores within the mall is going away,” says Loikits. “Screens within the mall may be providing a map and information about activities today, but eventually they will become personal shoppers.”
“We’re doing a lot with LED these days, and there is a lot of technology that goes with that which captures the interaction between the customer and the retailers,” adds Bauer.
The Mills Corporation — whose assets are now owned by Simon Property Group — was a pioneer in using sensory technology to engage customers in their environments. Danny Barnycz, now chief creatologist of Baltimore-based Barnycz Group, first made a name for himself as one of the creative and technical brains behind The Mills. Barnycz was part of the team that worked on MillsTV in the late 1980s, which brought multimedia to the centers. Today, Barnycz and his team create multimedia programming and environments for a diverse group of clients, including shopping centers. One of his most recent projects was creating a block long interactive digital canvas for Vornado at the Marriott Marquis in Times Square to maximize opportunities to enhance advertising revenue.
In the shopping center environment, Barnycz is seeing developers ask for technology that can be used to program the center, as well as being used as a media that can be sold to sponsors and other advertisers. “We are creating these places to get people to spend more time, visit more frequently and feel like they are part of this community by engaging with these spaces,” says Barnycz. “A lot of developers are embracing this more vibrant, thematic and interactive space. We have a next generation that is very mobile-based. We have a lot of strategy to blend this next generation of shopper into these new lifestyle environments.” SCB