Attracting The Best Prototypes
How to capture top store prototypes.
Ron Reim

Last year more than 650 new shopping centers opened in the United States, pushing the nation’s total number to 46,990, according to the International Council of Shopping Centers. For retail center developers, competition is increasingly tough to sign the best prototypes from leading-edge retail brands. While some of these top retailers are seeking prime tenant spaces and others want favorable out-parcel spots, their criteria are the same in seeking shopping center locations that will ensure success.

For the most experienced developer of mega-malls or for the proven real-estate developer diversifying into retail, three key areas from the retailers’ perspective should be addressed in a center’s initial planning stages: income dynamics, a high traffic volume with easy site access, and low local crime statistics. When these points are analyzed and presented positively, developers can attract a wide range of leading retailers and the best of their prototype stores.

Income Dynamics

The level of income earned by most residents of a particular area is obviously important data to gather in the earliest planning stages. Even more critical, however, is assessing future growth and projecting whether the area is trending to the upper, middle or lower end of income earnings.

Upscale coffee shops, for example, as well as most banks, naturally are looking for retail locations in affluent neighborhoods.  Other types of retail businesses may be more interested in high-volume sales from customers with a wide range of incomes.

Many larger retailers gear their store prototypes for various levels of demographics and income. Retailers often will develop different store levels such as platinum, gold, silver and bronze retail prototypes, each geared to fit a certain square footage and a different demographic, and provide the best overall fit for a particular location. At one end, a platinum store might be designed for the most affluent areas and customers, with the highest growth and traffic potential, and a more upscale cultural aura to inspire the purchasing of the most profitable products and services. For these higher-end stores, retailers seek to be situated in shopping centers that are committed to investing in high-quality materials and are planned thoroughly to cater to the most affluent customers. At the other end, the bronze-level store prototypes would be designed to offer the more basic product lines and more automated customer-service options.

Project teams serving Cingular Wireless, Kabloom, and one of the world's largest financial insititutions are often evaluating potential locations, the various suites available and the different packages retail developers have to offer. While some centers may provide the mechanical systems and ceilings, painted walls, restrooms and other appointments in their retail spaces, others may only be leasing the basic shell, with everything else to be completed by the tenant. Project teams often compare different tenant packages from various developers to help its clients determine the location that has the best overall value.

Project teams may also serve as a consultant for upfront due diligence, evaluation of issues such as environmental concerns, title and lien work, and zoning, for selected new retail locations for a major national banking institution.

Traffic, Access and Signage Opportunities

A retail center can have great area income and demographic statistics, but if customers do not have easy access, it will not be attractive to leading-edge stores. When analyzing a site, the best access road may not currently exist, but if there are established plans for road improvements in the near future, the location may well be viable. Developers should be skeptical, however, if new roads are simply said to be in the works. Check with local government offices and make certain that subcontractors are signing up for the road work and that completion dates are set.

It cannot be stated enough that access is crucial to making a retail center attractive to top stores. Retailers like Starbucks and Cingular look for sites with a traffic flow pattern that will allow their store signage to be oriented for maximum visibility to the greatest number of potential customers.  A center’s access pattern must support the retailer’s own organization. A series including sign first, and door second leads to a specific order of items within the store. The placement of every element is intentional. If there is not a good way for the retailer to be identified fully within a facility, with ample display space and multiple viewing angles, a center will not be desirable.

Signage placement and branding opportunities consistently have proven to be very important factors for vehicle traffic — the performance of a particular store location in terms of both traffic and sales. Centers need to offer signage opportunities both at the building and through prime placement on monuments alongside other known retailers. These should best support the store’s identity and provide a constant reminder of the store’s presence to the targeted demographic.

Lease requirements should support and encourage the center’s overall retail mix. When specialty retailers agree to sign a lease for a new space, the lease often contains clauses granting them exclusive rights as the primary seller of certain categories of goods, such as coffee, ice cream, housewares, banking services, groceries, sporting goods or cellular phones. The other businesses within the center that follow are often limited to generating no more than 5 to 15 percent of their total sales volume from a particular merchandise category, for which the initial retailer has paid an exclusive rights premium as part of their lease. For a top retailer, these kinds of concessions and covenants contribute to their strategy to drive more sales, and therefore to the attractiveness of leasing at one particular shopping center over another.

Area Crime

While many retailers look to be in affluent locations, many others want spots that will produce the highest volume possible — but with low levels of petty crime. Collection of data concerning local crime statistics, including shoplifting, petty theft and assault, is increasingly important. For the past 10 years, retail centers have had to fight a steady rise in criminal activity, both in-store and in the parking areas. Regardless of statistics, retailers also understand that customers are most likely to frequent developments that they perceive as safe and successful.  This usually means clean and well-lighted, and areas with high visibility and lots of activity.

To attract retailers such as Walgreen’s that want high traffic at all of their locations, it is important that the locations have both the perception and the data demonstrating relatively low incidences of crime.

Designing to Attract

To encourage top retailers further, a good selection of attractive spaces within a shopping center should be available. End-cap store locations, which give retailers the opportunity for signage on both sides of the space, are highly sought after. These stores are prominent in the pedestrian traffic flow, have much higher visibility and produce the highest rent revenue. A staggered floor plan actually can multiply the number of end-cap spaces that can be offered to premier retailers.

An experienced retail developer understands that bays cannot be sized in unusual dimensions. Centers need to be designed to fit certain models, which meet the expectations of retailers and fit their store prototypes. For retailers seeking out-parcel bare ground sites, the vast majority want a prime space that is well-integrated in a major shopping center’s overall design.

Retail architects assist owners not only in planning, design and material selection, but also often manage environmental evaluations, upfront title work, zoning and processing multiple details leading to the summary package. Facilitating these efforts can help ease the experience of location selection and make the shopping center far more attractive.

When the key areas of income dynamics, ease of access and local crime statistics are analyzed and presented positively, developers can appeal to a wide range of leading retailers and the best of their prototype stores.

Ron Reim, AIA, Oculus Inc., can be reached at ronr@oculusinc.com.