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Out of the Box

Out of the Box

Open-air "lifestyle" shopping centers are gaining momentum as they move north from the Sunbelt

By By Gordon Wright, Executive Editor | August 11, 2010
This article first appeared in the 200312 issue of BD+C.

"Lifestyle centers" are the fastest-growing segment of the retail industry. The 2004 edition of Shopping Center Operations, Revenues and Expenses, published by the International Council of Shopping Centers (, says there are now at least 75 such shopping centers in the U.S., up from 25 just a couple of years ago.

The ICSC defines a lifestyle center as an open-air shopping center with at least 50,000 sq. ft. of space occupied by upscale national chain specialty stores. Although the term was coined some 15 years ago, only about half a dozen such centers were in operation before 1990, according to the ICSC. "The concept has only really taken off in the past five years," says Jean Lambert, the report's primary author. The report compiles operational and retail sales data on 660 U.S. shopping centers — 498 open-air centers and 162 enclosed malls.

The median total occupancy area for open-air centers was 113,027 sq. ft., with centers of more than 100,000 sq. ft. comprising 56% of the total. Survey responses were received from neighborhood (53%), community (35%), power (6%), and lifestyle (5%) centers.

Although it would seem logical that lifestyle centers would be less expensive to build than enclosed centers on a per-square-foot basis, they're not, says Robert Tindall, president of Seattle-based architect Callison, which has an extensive portfolio of retail projects. Based on Callison's experience, Tindall says open-air centers cost about 20% more per square foot than enclosed centers because the latter typically have relatively simple exterior walls, efficient column spacing, and minimal interior finishes (since the common area consists largely of tenant-provided storefronts.)

By contrast, smaller buildings lose the efficiency inherent in large, repetitive structures. An open-air center usually has at least two elevations that incorporate windows or other detailing. Roof detailing is also more important, and walls are more likely to move in and out than to continue in a straight line. Tenants may want iconic elements, such as a tower. "You've basically added a lot of complexity that the old power or neighborhood center doesn't have," Tindall says.

The prototype for an outdoor center is the traditional 500- to 600-ft.-long strip center with one façade, two ends that are not highly detailed, and a row of loading docks along the rear. But breaking out of this model triggers new requirements, such as screening the loading docks and providing additional landscaping between buildings.

Tindall sees the prototypical lifestyle center as "a place where you choose to spend your time. You'll go there to socialize, see a movie, or go to a restaurant."

The CAMP, a lifestyle retail center in Costa Mesa, Calif., brings together retailers who sell merchandise for sports and outdoor enthusiasts.

These centers seek the kind of tenants that encourage shoppers to browse, not for necessities, but for "things that will either make their lives more enjoyable or focus on their interests." Bookstores, cinema complexes, and Starbucks-type coffee shops are the kinds of mall tenants that generate repeat visits, as are specialty food stores that are "more about the cooking experience than the shopping experience," he says.

Northward, ho!

New centers are opening in areas of population growth, and most lifestyle center activity has been in the Sunbelt. "Outdoor centers make sense in these areas," he says. But as they push northward, developers are reassessing the conventional wisdom that open-air centers are not viable in colder climates. "People seem to like the outdoor experience," Tindall says

As for the tenant mix, some — particularly fashion retailers — have resisted the move to open-air centers because they're more comfortable in enclosed environments, where they don't have to worry about designing storefronts or providing weather protection.

Big-box retailers might also create an incongruous juxtaposition that could negate the intimacy that lifestyle centers attempt to achieve. Large service areas, parking fields, and shopping carts don't connote a communal-type meeting place. However, locating a big-box store at the periphery of a lifestyle center could ease this clash of styles.

Despite these factors, the growth of lifestyle centers is prompting traditional enclosed-center tenants to reevaluate their options. In today's retail environment, a tenant may opt for an outdoor center if it is well laid out and the retailer can get a premium location, Tindall says.

"All we can say for sure is that what is working today won't be good enough for tomorrow," Tindall says. "Demographics are shifting. People are more mobile. Consumer tastes are more discriminating. Communities have high expectations."

Looking toward projects that are breaking ground today but won't open until 2006, he asks, somewhat rhetorically: "How will we satisfy our customers' drive for interaction, a positive experience, and good value, as well as create projects that make good economic sense?"

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