Sy Perkowitz – Shopping Centers are Opening Up for Success

Western Real Estate Business®

May 10, 2017

With the decline of malls and lovely weather out West, it’s no surprise many developers are investing in open-air shopping centers.

WREB recently sat down with Simon “Sy” Perkowitz, a principal at KTGY Architecture + Planning’s Retail Studio in Irvine, California, to discuss the logistics, design elements and strategies involved in these open-air centers.

Today’s outdoor centers are all about socialization and connectivity…but that doesn’t necessarily move merchandise. How can the design of an outdoor center encourage socializing, while at the same time inspire people to patron the stores?

A successful design should be a collaboration between the owner, architect and retailer. To encourage the customer to shop, as well as socialize, the owner needs to consider the mix of stores to which the consumer will respond. Anchors are still needed but no longer drive traffic as before. A more curated mix of smaller stores with unique offerings will entice the consumer to want to shop and dine.

More creative, modern designs that include facades and storefronts that are in collaboration with the retailer’s brand and vision play an integral role in drawing the consumer inside. Wayfinding and converging points of interest, including creative attention-grabbing signage and directories, are key to making it effortless for the consumer to navigate through the center, leading the customer to the center’s offerings. Lighting design is another element that will inspire and enhance the customer experience. Overall, the design of today’s open-air centers must stimulate the senses and excite the consumer with a ‘wow’ factor.

How do you determine the appropriate combination of retailers, square footage and formats that will attract today’s consumers and separate a property from its competition?

In the past, the department store or large big boxes served as the major draw. In today’s market, with the department stores or big boxes closing or reducing their footprint, a collection of restaurants and lifestyle retailers and the ‘experience’ that the shopping center provides has become what attracts shoppers.

The exact mix of retailers largely depends on where the center is located, the demographics of that community, what is already being offered within the trade area and what is missing from the trade area. Once that’s determined, the square footage and/or property size will also play a part. The appropriate combination of retailers and square footages will often be determined by financial considerations by the developers and key tenants.

To separate the property from its competition, it is critical that the center offer unique experiences and specialty retailers that aren’t provided by a competing shopping center. Most importantly, new types of anchor retailers, such as a collection of specialty restaurants and innovative, one-of-a-kind destination stores, as well as creative design solutions help achieve the goal of distinguishing the shopping center from its competition.

How has the ratio of shop space square footage changed in comparison to open, public spaces over the past 20 years?

Retail has evolved significantly over the years. It’s no longer just about stores and their size. The open spaces, whether it’s inside a mall or in an open-air center, have become a critical component of a successful center. About 25 to 35 years ago, it was all about the mall with its indoor public spaces that made them so successful. Today, almost every project needs to have some form of public space to be successful. The ratio, however, has changed significantly and will continue to change. In 2014, a McKinsey’s report on consumer sales and shopper insight stated the mix of tenant/public spaces would change from the then current 70/30 to 60/40 or even 50/50.

Clearly, there is no longer a formula or one-size-fits-all approach to designing shopping centers as there was for malls in the 1970s and 1980s. However, I have to imagine there are still a few tried-and-true principals that help foster the success of a modern open-air center. Can you discuss a few of these?

The need for open space for socializing and holding community events is now more important than before. They have become critical in today’s open-air centers. Food retailers, such as specialty restaurants, food halls, and craft-made, one-of-a-kind purveyors of food and drink, are all the rage in today’s retail environments and are expected to be included in any new retail project, oftentimes connected to open space for outdoor dining and entertainment.

Also, creating 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. Adding a main street with sidewalks through a portion of the project helps create a more urban environment and encourages pedestrian flow. Pedestrian walkways not only help link the existing shopping center with the new buildings, but also enhances the pedestrian experience.

What is the biggest change you’ve seen in the design, layout or amenities at open-air shopping centers over the past 10 years or so? What do you think has caused this trend?

MIXED USE: Open-air centers are now mirroring town centers and incorporating a mix of uses from residential to office to hotel. Landscaping and lighting have become key focal points with some developers placing more importance on the landscaping and lighting to enhance the architecture. As mentioned before, signage design and graphics have also become much more integrated with the architecture of the project and more design-driven than before. Amenities have increased significantly, incorporating concert areas, farmer’s markets, family play areas and entertainment options.

USE OF TECHNOLOGY: The integration of technology is probably the biggest change. Omnichannel retailing and integrating technology adds to the convenience and connection to the shopper. This is probably the biggest change in shopping centers in the past 10 years and will continue to change since technology is changing so rapidly.

ANCHORS AWAY: Many of the big box retailers are struggling to compete and are downsizing or closing stores, which has created opportunities for shopping center and mall owners. Today, with the emphasis on maximizing space due to the high cost of land and the 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/or office uses, much like what is found along the vibrant streets of the greatest downtown districts around the country. They want to transform their tired and partially vacant enclosed mall or big-box space into a vibrant, 24/7 mixed-use activity center. And, it is not just the larger regional malls and community centers that are looking to reposition themselves, it is also smaller, neighborhood centers too.

AUTHENTIC EXPERIENCES: Also, as so many items can be purchased online, people will still go to brick-and-mortar stores to have ‘experiences.’ Savvy retailers (and shopping center owners) are finding ways to offer hands-on experiences that will draw shoppers into their stores and shopping center. Guest speakers, classes or workshops, tastings, demonstrations and more.

Designed by KTGY, Artisan Alley at the Diamond in Lake Elsinore, California, focuses on places to congregate unlike traditional enclosed malls, emphasizing human-scaled interaction and experiences.