Driven by dramatic shifts in the retail sector, many retail locations across Europe and North America face vacancies left by the closure of mainstream retailers, including department stores, which historically served as major anchor tenants.
In the UK alone, 85 per cent of department stores have closed over the last decade, and with many located in shopping centres, this was causing headaches for landlords struggling to fill these large spaces.
But in the era of omnichannel and a strong consumer desire for experience-based retail and entertainment, some of these empty spaces have created opportunities for landlords to diversify their retail offering by attracting modern and innovative replacement concepts into these spaces that drive shopper footfall, engagement, dwell time, and sales.
The power of play in shopping centres
A broad array of leisure and entertainment attractions, food and beverage, and fitness concepts are being incorporated into shopping centres and retail districts to provide unique experiences. From upscale pickleball and trampoline parks to functional fitness and wellness, these new and emerging concepts are creating social and community-centric gathering spaces centered around recreation, and playful experiences that transcend traditionally conforming gyms.
The Bouldering Project, for example, is more than a climbing experience, offering rotating configurations, fitness classes, weights and cardio, yoga, youth teams, camps, and parties that cater to novices and professionals alike. Ranging from 20,000 – 50,000 square feet, these locations serve as a community hub and have even revitalized American historic areas such as The Granary District in Salt Lake City, Utah.
In the UK, global leisure operator, Gravity, has occupied two former Debenhams department stores in prime shopping centres in London and Liverpool converting them into large entertainment venues which include go-karting tracks, AR bowling, and virtual darts. Since opening in London in 2021, the venue has driven a 25 per cent increase in footfall within the shopping centre, highlighting the benefit of having leisure-based tenants within a predominantly retail-based location.
At Stonestown Galleria in San Francisco, California, Round One Entertainment has announced it will open a 49,000 square foot venue in 2024 featuring bowling, billiards, ping pong, karaoke, and arcade games on the lower level of the former Nordstrom store. Meanwhile, in Toronto, Canada a former Nordstrom at One Bloor has been leased to luxury wellness and social club AVANT by Altea Active and plans to open the facility in 2025.
Whilst food and beverage operators have always been present in shopping centres, the offering has evolved over the last decade with many prime centres now anchored by a range of eateries, from food-on-the-go (fast food or higher-end quick service restaurants) to fine dining.
At The Well, a new mixed-use scheme in Toronto, Oliver and Bonacini Hospitality has recently opened three high-end restaurants across 70,000 square feet, a steakhouse and two concepts focussing on French and British cuisine. In Lyon, France, Unibail-Rodamco-Westfield redeveloped La Part-Dieu shopping centre, one of the biggest urban shopping centres in France, to provide a new shopping and leisure experience for visitors. The newly added Rooftop is home to a 43,000 square foot dining centre, 75,000 square feet of hanging gardens where visitors can walk around, a 7,500 square foot climbing facility, and an 18-screen cinema complex.
Technology is reshaping retail
Technology is enhancing the retail experience and changing the way consumers interact with physical and digital worlds and allowing new concepts to redefine the way shoppers experience product, content, and media.
Cosm is one example of the future of immersive entertainment expanding the realm of what’s possible in entertainment using Cosm’s proprietary domed and compound curve LED screen technology. Cosm will feature cutting-edge visuals in rotating films, live sports and entertainment, art, and music including a partnership with Cirque du Soleil. They will also offer educational events including planetariums, aquariums, and wilderness exhibitions. Merchandise, content partnerships, and an elevated food and beverage program complete the overall customer experience. The first two permanent US Cosm locations are expected to open in 2024 at Grandscape at The Colony in Dallas, Texas and at Hollywood Park in Inglewood, California, adjacent to SoFi Stadium. The venues are approximately 65,000 square feet and can hold up to 1,700 guests.
Another example is Ballerz, an immersive 500-person capacity football (soccer) dome opening at Bluewater Shopping Centre, in Kent which claims to be the UK’s most immersive competitive socializing space. It will feature an interactive skillzone, a football pitch with stadium-style seating, a players’ tunnel, pro changing rooms, and real-time pitch technology with big screen action replays on the sidelines.
“Experience and discovery are the drivers of change for modern retail and real estate must be responsive. We are no longer physical vs. digital. Technology bridges the gap and delivers a shared reality where shoppers can immerse themselves and create their own shopping, dining, recreation, leisure, and entertainment experiences,” said Meghann Martindale, Director, Retail Market Intelligence at Avison Young.
After experimenting with pop-up fan experiences around the world, Netflix is opening its first two permanent brick and mortar locations in the US in 2025 and then pursuing a global expansion of the new branded concept, Netflix House. One of the initial locations is proposed in the 120,000 square feet former Lord and Taylor box at King of Prussia Mall outside Philadelphia. According to Netflix, visitors will be able to purchase merchandise, see live entertainment and participate in immersive experiences surrounding hit Netflix shows like Squid Game and Stranger Things. Attractions at Netflix House could include obstacle courses, escape rooms, mixed reality games, art installations, screenings, and fan meet-and-greets. Additionally, there will be themed restaurants ranging from fast casual to fine dining, featuring food and drinks from the streamer’s food-based reality shows.
What does this mean for commercial real estate?
Retailers and landlords must constantly adapt to rapidly-changing consumer behaviours to maintain relevancy and thrive in the future. Shoppers are increasingly seeking recreation and leisure in playful environments and immersive experiences that blend the physical and digital worlds.
Emerging, tech-driven concepts catering to these shopping and experience preferences are successfully replacing traditional static retail stores and reinvigorating shopping centres. This is mutually beneficial because the operators can capitalize on the footfall offered by premiere shopping centre locations, whilst owners can leverage these uses to serve the modern trend of turning shopping trips into experience-based visits and attract new shoppers.
“Evolution of retail spaces will continue at rapid pace with innovations in technology supporting this. Landlords and tenants will need to continuously work together to keep up with rapidly changing consumer demand for new and interesting retail spaces,” said Lesley Males, Director, Market Intelligence, Avison Young.
(This article is part of Avison Young’s 2024 Drivers of Change series where it explores the factors impacting our cities and places, and propelling us forward to adapt, learn and take advantage of the opportunities they present. See all the 2024 Drivers of Change )
