This “Outside Consultant” column by Mike Porter, EdD, a faculty member in the Marketing Department at Opus College of Business, ran in the Star Tribune on May 31, 2021.
As you might expect as we move out of the worst of the pandemic in the U.S., most malls will have some vacancies to fill. Even before COVID, some malls, especially smaller strip malls, found challenges in keeping spaces occupied.
This means malls face stiffer competition for great tenants, and some landlords seem ready to get creative.
According to Bruce Nustad, president of the Minnesota Retailers Association, “I see malls embracing a more incubator-like role for entrepreneurs in taking new ideas to market.” This means a start-up business might be able to approach the mall with a business in its infancy to find ways to make it a more successful launch while drawing new customers to the location and its existing tenants.
“Some mall owners now offer more flexible lease arrangements that streamline access for entrepreneurs who are trying out new approaches, products and services,” notes Nustad. “A prime example is the Mall of America Community Commons, which gives small start-ups access to larger levels of traffic without having to build out an entire retail space of their own.”
It all comes down to more creative uses of these properties. Notably, what used to be parking areas on the fringes of larger malls become footprints for restaurants, hotels and residential real estate. This compresses more potential customers within walking distance.
In addition, cities play a role. For instance, rezoning in the blocks around Southtown Shopping Center in Bloomington delivers a mixed-use model that creates more community, bringing residential and retailing into a convenient centralized neighborhood. In the case of Southtown, it also includes significant changes to transit so the area serves both commuters and people working in nearby offices, like that of the Best Buy headquarters.
Nustad also sees malls changing the direction of the transaction for leases in some ways. “Some malls are reaching out to entrepreneurs, in more of a recruitment mode, to see how things can work out for both the landlord and tenant. That’s a different operating model for a mall than in the past.”
Mike Porter, EdD, is a faculty member in the Marketing Department at the University of St. Thomas Opus College of Business.