Some claim that outdoor strip malls are what indoor malls should be: lean, mean, and meeting the needs of the neighborhoods. In many cases, they are showing strength in the face of brick and mortar’s greatest threat: the internet.
City Avenue Shopping Center in Overbrook Park has been adjusting its tenant roster over the last four decades to home in on consumer demand. The current mix reflects what sectors are performing well: discount clothiers such as TJ Maxx and Ross Dress for Less, along with a pair of dollar stores and an Applebee’s.
Ulta — a rapidly expanding beauty chain — will soon move into space formerly occupied by Dollar Tree, which moved to the other side of the shopping center last July next to Family Dollar.
Gone are a movie theater; a supermarket (Penn Fruit, which became Dale’s Food Center, later an Acme); Sears Home Center; and a Radio Shack (now a T-Mobile).
“It’s like what Willie Sutton said about why he robbed banks, because that’s where the money is,” said Craig Johnson of consulting firm Customer Growth Partners. “Right now, traditional malls are losing traffic and sales, while power strip and some neighborhood centers are gaining traffic and sales. These hot retailers will generate more sales and help the developers make more money.”
Strip and neighborhood centers are also adding tech-oriented checkouts and ordering while staying focused on service and convenience.
Landlords are forever shuffling the deck to get better results.
Strip or “convenience” centers account for the lion’s share of all centers (by count, not square footage). In April of this year, there were 68,936 strip centers in the U.S., up .8 percent from April 2014, according to retail real estate research firm CoStar. They have a small trade area (a mile or so) for customers, and require a small overall footprint, typically under three acres, said Glenn Marvin, executive vice president and principal at real estate firm Metro Commercial, which is re-creating Cheltenham Mall and Granite Run Mall.
Neighborhood centers — such as City Avenue Shopping Center — are a bit larger, but are also convenience-oriented and typically anchored by a supermarket. CoStar said in April of this year there were 32,588 neighborhood centers in the U.S., up .5 percent from three years ago.
They typically feature value chains, along with service shops (hair and nail salons, dry cleaners, mailing services, some legal or accounting services), home-improvement stores (Home Goods, Lowe’s), and more recently, studio gyms.
Nationally and in the Philly region, landlords are filling the spaces of former grocery stores that have been carved into three or four sections, a practice known as backfilling.
For example, at the Brookhaven Shopping Center, a closed Pathmark and an underperforming Kmart are being replaced with a ShopRite and a Lowe’s, respectively.
TJ Maxx and Home Goods just signed leases for 42,000 square feet for what used to be a Super Fresh at Columbus Crossings shopping center in South Philly. They will add to a lineup that includes Old Navy, crafts shop AC Moore, and Walmart.
“What you get is primarily a female shopper as their main customer, age 25-50, middle to upper income, fashion value-oriented, who’s frequenting these centers at least once a week,” Marvin said. ”They pick out their merchandise pretty quickly and are going into these older centers to treasure hunt. Everyone thought that would be replaced by the internet. But you can’t treasure hunt on the internet.”
Located on Route 1, in a densely populated area near St. Joseph’s University, the 162,135-square-foot City Avenue Shopping Center opened in 1949 as City Line Shopping Center. The name was changed later.
Median household income is $74,131 within three miles. The center, which sits in West Philadelphia across from Montgomery County and borders Delaware County, attracts a good mix of white-collar and working-class consumers.
As a teenager in the late 1970s, Karen Graber got her first job at the site’s City Line Movie Center.
“The shopping center had a lot of stores and a lot of people going in and out, and the theater was busy when we had big movies, like the original Superman,” said Graber, now 54, who was born and raised in Overbrook Park and now lives in West Chester. “It was bustling.”
In spring 1992, a 22,538-square-foot TJ Maxx replaced the movie theater, eliminating the old cut-through used as a short cut to get from one end of the center to the other.
MSC Retail senior vice president Stanton Brown represents sneaker retailer Kicks USA, which came to the center in October 2009. The store sits next to a wine and spirits store.
Such tenants “solidified the asset,” Brown said. “It cured the problem that you had all that space vacant for years, and the same tenants that saw sales decline now see a bright side with a new tenant coming in to increase foot traffic and sales.”
Michael P. Niemira, principal at the Retail Economist LLC, envisions these centers becoming something more.
“I have long felt that the strip center was the new reality for the mall,” Niemira said. “With a larger share of services at strip centers, malls are recognizing that as the way of the future.”