5 Mall Redevelopments, What Supermarkets Are Doing to Stay Ahead, and Slowing Sales Aren’t Dinging Rents

Malls continue to reinvent themselves to keep pace with changing consumers. Owners are demolishing less-successful properties to make way for new buildings, and they’re converting parking lots and obsolete anchors into new space for hotels and apartments.

In Athens, Georgia, county officials will vote soon on plans to redevelop Georgia Square into a mixed-use property with residential units, a greenspace and new retail. Only 294,000 square feet of the mall’s current 670,000-plus would remain.

Phoenix’s Metrocenter is up for an $850 million redevelopment after Concord Wilshire and TLG Investment Partners acquired it. The new owners plan to demolish most buildings and to build apartments as part of a mixed-use complex with green space and a central water feature. The enclosed mall shuttered in June 2020 after the pandemic hurt occupancy.

Owner Brookfield Properties plans to add two hotels to The Woodlands Mall in Houston as part of a $100 million expansion. The hotels will offer access to the mall and will add 80,000 square feet of retail and 30,000 square feet of conference space. Most of the expansion will transform existing parking lots and a Forever 21.

Kohan Realty is considering converting an empty Sears at Emerald Square Mall in Attleboro, Massachusetts, into apartments.

Nittany Mall in State College, Pennsylvania, plans to add a casino in a former Macy’s and recently passed a major hurdle toward that goal: getting a license from the state.

Not All Mall Redevelopments Are Plowing Ahead

In Fargo, North Dakota, a city-backed, planned redevelopment of the West Acres mall’s former Herberger’s into a mixed-use commercial building is being put on hold until construction costs and interest rates are more manageable, according to city officials.

What Supermarkets Are Doing to Stay Ahead in 2023

Supermarket operators face the same macroeconomic challenges as other retailers in the coming year, from rising labor costs to inflation to supply chain snags. But many also have bold strategies in place, according to JLL’s new Grocers Grow Formats Big and Small report. Details from the report:

They’re Spending on New Stores to Reach New Customers

Aldi opened more new stores than any other supermarket chain in 2022: 49 units totaling 804,000 square feet. The openings cemented its position as the U.S.’s third-largest such company by store count, with 2,270 units. H-E-B also grew significantly, according to JLL. The Texas chain added roughly 1.2 million square feet in the form of 12 new stores. Publix and Grocery Outlet continued to open stores, as well. Publix added roughly 1.2 million square feet, predominantly in the South, including in its home state of Florida. Grocery Outlet opened 28 stores in 2022, making good on plans it announced at the beginning of the year.

They’re Testing New Formats

Grocers like Meijer, Save Mart and Schnucks tested smaller-than-average formats in 2022. Such stores are cheaper to build and require less land to buy or space to lease, JLL noted. That translates to access to markets in which larger-format stores aren’t feasible. Furthermore, as retailers continue to invest heavily in e-commerce, these smaller stores can act as fulfillment centers for online orders.

H-E-B, on the other hand, is growing in order to compete with restaurants. According to JLL: “H-E-B’s move away from its standard 50,000-square-foot format to footprints of more than 100,000 square feet allows for a more experiential store with unique offerings, such as tortillerias, BBQ restaurants and garden departments.”

They’re Building Their Own Omnichannel Infrastructure

To escape reliance on third-party delivery apps like DoorDash and Instacart, some supermarkets are adding in-house online-order-fulfillment tech. It saves money and gives supermarkets more control, JLL said. Southeastern Grocers, the holding company of chains including Winn-Dixie and Harveys, developed its own e-commerce service that displays up-to-date products and prices and allows customers to place online orders and explore curbside pickup. And Walmart rolled out an app feature called Text to Shop, which enables consumers to order products via text message.

Retail Sales Slumps Don’t Ding Rent as Much as You Might Think

Changing retail sales rarely align with changes in retail asking rent growth. Even lags in rent growth align only weakly, when they do at all, according to Moody’s Analytics. “While retail sales are often considered a leading indicator for the U.S. economy and even a proxy for consumer sentiment, it would be heedless to predict retail real estate performance on sales data alone,” wrote Thomas LaSalvia, Moody’s director of economic research specializing in commercial real estate. “Lease terms tend to be long, and retailers likely place greater weight on longer-term trends in demographics and consumer preferences than short-term fluctuations in the economy when choosing to expand. In general, the path of retail real estate tends to be more about the evolution of the industry and consumer habits, rather than recent short-term trends in retail sales.”