The work of finding new tenants to replace four Macy's stores slated to close this spring began months ago by PREIT and other mall owners, and includes fitness centers, grocers, entertainment venues, and restaurants as anchor considerations.
Last week, Macy's Inc. announced that four stores in the region are among 68 nationally that the giant retailer has targeted for closing to save $550 million. PREIT owns two of the four malls, Plymouth Meeting and Moorestown, and has been considering outside-the-box alternatives to replace these valuable tenants.
The company is in the midst of negotiating a letter of intent with a tenant (as yet unidentified) to carry out the vision, according to PREIT CEO Joseph Coradino.
"The concept for the redevelopment would continue the mall's transformation into a lifestyle destination," he said on Monday.
Coradino clarified what he referred to last Wednesday as "a concept similar to a Whole Foods" taking the Macy's spot at Plymouth Meeting.
"The redevelopment is not specifically a concept similar to Whole Foods, so it wouldn't be accurate to describe it as such," he said. "Rather, it would be like Whole Foods [in that it supports] the mall as a lifestyle destination.
"We're taking the opportunity to continue the metamorphosis of Plymouth Meeting into a dining, entertainment, and lifestyle experience for consumers, by blending a diverse mix of retail, dining and entertainment concepts," Coradino said.
He said he hoped to begin renovation sometime this year at Plymouth Meeting Mall. Meanwhile, he said the Macy's space at Moorestown Mall was also getting a number of inquiries.
"We're running multiple configuration paths and negotiating with prospective tenants," he said.
Tom Londres, president and CEO of Metro Commercial, which represents a number of retailers, said his clients are evaluating several of these Macy's locations.
"This is news to a lot of people, although some of this has been in the works between more sophisticated landlords for some time," Londres said on Monday. "It is always on their minds. Not a big shock [to the industry] as it is to the general public. Generally speaking, tenants want to be forthright with landlords and want to be ahead of it."
By "it" Londres was referring to the unprecedented changes happening in retail as online shopping has decreased the need for brick and mortar stores, and stores such as Macy's and Sears are scrambling to rightsize their fleet of stores to align with changing consumer shopping habits.
Londres said the options facing landlords include specialty grocers (Whole Foods, Trader Joe's, etc), sporting goods guys (Dick's, Field & Stream), and entertainment sites such as bowling alleys, theaters, or Dave & Busters, to replace the Macy's square footage.
"The nice thing with these malls is they have great parking, a great road network, and are really in place and built for retail uses with high traffic and high customer uses and great signage," he said. "Most often they already have a promotional program in place, a good tenant mix, and it's not like they're a vacant standing Kmart in the middle of nowhere."
Coradino said he was having regular conversations with multiple real estate firms about possible tenants to replace the Macy's stores.
"We always want our malls to offer a wide range of experiences that are in line with the demands of local shoppers," he said. "This is a significant opportunity to continue to enhance the shopper experience and reinvent retail at our malls. Our top priority is securing the right tenant: one that complements our existing fleet of offerings, addresses the demands of consumers, and further diversifies our offerings."
MSC Retail did the Legoland Center deal at Plymouth Meeting. It represents Macy's across the market but has no involvement in the four slated to close.
"For many malls, these department store anchors in general were intended to drive traffic to the malls, and many of them – especially those closing – have not been serving that purpose," said Douglas Green, managing principal at MSC. "I am really viewing this as a very healthy transition at all the malls where Macy's stores are closing. Retail is evolving and places that these retailers call home need to evolve with it.
"The Lego deal at Plymouth Meeting wasn't considered a traditional anchor, but in 2017 that is an anchor."