There’s an interesting dichotomy in retail real estate that is specifically evident with malls: While some properties are struggling, some are performing extremely well. I sat down with Bobby Taubman, CEO of Taubman Centers in Las Vegas to get his take on the market. Taubman Centers, a developer of regional malls worldwide, has over 4 million square feet of Class A retail space opening over the next quarter. In his world upscale malls and the brands that love them are on the rise.
“There’s a great synergy between the center and the brand: Fast-fashion, luxury, brands like Zara, Forever 21, H & M. They’re all seeking great locations, and they really drive traffic to a center. It’s completely win-win.”
Taubman recently opened new centers in Sarasota, FL and San Juan, PR anchored by Sax Fifth Avenue. Opening soon are International Marketplace in the heart of Honolulu, two Chinese centers in Xi’an and Zhengzhou, and another at Hanam just outside Seoul.
“The big international brands are expanding all over the world, and we partner with them to create a destination. For instance, our San Juan property has the unique brands for all of Latin America.”
At this time, only one new mall, on average, is built each year in the US. Growth in supply comes from upgrades and expansion to existing properties. But Taubman pointed out that Asia is creating their distribution and retail network. We can expect much more activity to come from Asian markets.
Taubman properties reports sales in their malls at around $800 psf, about $200 higher than other malls. Taubman claims the value is in the firm’s commitment to marketing, quality brands, and technology.
Speaking of Technology
Omni-channel marketing is really taking hold as retailers find the balance of online and brick and mortar sales. These days, closing a store in a market will hurt online stores. And, according to Taubman, brick & mortar is still the heart of omni-channel retailing.
Studies show that up to 70% of buying decisions are made online before shoppers arrive. Since everybody is using their phone to be a smarter shopper, centers are providing free WIFI and charging stations. Yet traffic and sales are good and stay times are actually growing.
“We’re creating apps for way-finding, parking, and by-permission marketing. If you want a certain style in your size, a store can let you know the moment it comes in. And,” Taubman beams, “we’ve even been approached by online retailers exploring opportunities to open brick & mortar locations.”
By-permission marketing using beacon technology in malls and stores will continue to grow. These systems allow retailers to create automatic personalized communications with customers. One day when I by walk by Victoria Secrets, my phone will advise me to keep walking buddy, nothing for you in here.