Dive Brief:
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Food and entertainment are growing aspects of shopping center offerings, accounting for 22.1% of the space currently leased in U.S. malls, up from 19.2% in 2012, according to data from commercial real estate company CoStar Group cited by the Wall Street Journal.
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Pyramid Management Group, which owns and operates 15 U.S. malls, has 49 entertainment tenants across 9.6% of its leasable portfolio, up from 16 tenants/4.3% in 2010, the Journal also noted.
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Entertainment-themed businesses opening in or near shopping malls include movies, golf and mini-golf, rock and rope climbing, laser tag and bowling alleys, as well as food vendors and other non-traditional tenants. Mall patrons spend more time and money frequenting these businesses than when they’re just shopping, sources said.
Dive Insight:
Shopping centers are increasingly looking to bring in food and entertainment options as mall traffic decreases and many retailers — including once all-important department store anchors — exit. That’s making space available to non-retail companies at better rates.
Such a move is no guarantee of salvation for a struggling mall. But it’s an important opportunity to diversify.
“I’m not sure anything is ever a sure win but certainly being at the forefront of consumer trends, as the industry is, is essential to staying relevant,” Tom McGee, CEO of trade group the International Council of Shopping Centers, told the Wall Street Journal.
The trend is also a response to the very real tendency of consumers these days to prioritize spending on experiences and shared activities with friends over the accumulation of things. Younger consumers are especially prone to spending on experiences, according to a PwC survey published last year: Millennials respondents said that 52% of their holiday spending would be experience-related, compared to 39% for older consumers.
Happiness gurus and psychology researchers in recent years have been touting experiences, even modest ones, as a rewarding way to spend time and money, and consumers are apparently taking that to heart. Investors also have taken note of the trend, the Wall Street Journal notes, highlighting the fortunes of real estate investment trust EPR Properties, which includes a focus on movie and golf entertainment venues. EPR’s revenue in the first half of the year was $236.8 million, up from $200.7 million last year, and its shares hit a record high.