With more consumers opting to do most of their shopping online, traditional brick-and-mortar retail outlets have experienced a profound decrease in foot traffic over the past few years – a trend that was accelerated by the COVID-19 pandemic, as nationwide business shutdowns and quarantine measures forced people to stay in their homes.
Now that restrictions have eased and people are eager to go out of their homes after months of social isolation, there is renewed hope that the retail industry can rebound. But certain changes must still be made, according to experts.
In an article published in property advisory giant Todd Herron White’s Month in Review in September, the firm’s director of valuation policy and compliance Kevin Brogan joined Real Investment Analytics managing director Anthony De Francesco to discuss how retail spaces, particularly shopping centres, can adapt to a post-pandemic world. Here are the highlights:
Shopping centres must “adapt tenancy mix and design to meet the needs of catchment-area demographics and the local community”
De Francesco says for malls to thrive after COVID-19, they should be able to accommodate the needs of the people living around them.
“A retail centre that’s no longer strictly just a ‘shopping centre.’ It becomes a hybrid product, or a quasi-retail shopping centre,” he says. “There’ll be shopping centres, which will have a massive bolt-on (outlets) not just in terms of one or two tenants, but a whole new sector that will sit alongside it.”
De Francesco says malls located in catchment areas with more retirees, for example, should have a hub for health services, including physical therapy centres, dental clinics, x-ray facilities, and other specialty services. Similarly, an area with a large young family demographic will require shopping centres to have several educational and recreational facilities.
Traditional retail centres will “evolve even further to become a mixed-use community hub”
But because catchment areas or communities typically comprise a diverse mix of demographics, De Francesco says shopping centres must also be able to cater to the various needs of different groups.
“The future could be where the shopping centre doesn’t simply stand alone in a residential precinct,” he says. “Part of the shopping centre might be a residential apartment block. There might be student accommodation. There might be an education facility in the shopping centre complex with early learning or preschool or afterschool care.”
“In that same precinct, you might get a health services precinct... so, you could actually get amalgamation of all of these services coming together.”
Future design will provide relief for those who “felt cloistered by the lockdown”
After being forced into their homes because of the government-imposed lockdowns, De Francesco says it is not surprising that people will crave for a bit of “open air space.”
“I think this is something that’s not just within retail, but it’s also embraced by the office sector now – this whole movement towards mixed use and community,” he says. “People want to be in an environment where they don’t feel like they’re enclosed and shopping centres in the past have been closed.”
Brogan says altering the structural design of malls will be both expensive and time-consuming, but “adaptation is necessary.”
“We may well see a return to ‘main street’ shopping as people shy away from enclosed shopping spaces,” he says. “By securing the right tenancy mix organically and creating a community space that caters to its residential catchment, main streets overcome some of those cost and time hurdles that face large, enclosed, single-owner shopping centres.”
Opportunities will open for new participants in retail property.
De Francesco says these changes will also open the door for new players to enter the retail property market.
“Some current owners will want to get out because they see the sector as too risky or too hard,” he says. Others might buy in at this point in the cycle at a relative ‘bargain’. What was someone’s constraint or challenge is somebody else’s opportunity.”
