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The Golden Age of Lifestyle Centers: Opportunities and Challenges in Modern Retail Development

Explore the rise of lifestyle centers as upscale shopping destinations, with insights on costs, development criteria, and examples. Discover the popularity, benefits, and potential challenges in this evolving retail concept.

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The Golden Age of Lifestyle Centers: Opportunities and Challenges in Modern Retail Development

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  1. “The Golden Age for Lifestyle Centers”By Joe Gose Ellen Anderson Jamie Pryse Megan Gilmore

  2. Overview • Definition • Background • Popularity • Costs • Development Criteria • Opportunities • Challenges • Examples

  3. What is a Lifestyle Center? • “Generally defined as open-air shopping centers that mix national retailers with local boutiques that aim to provide upscale shoppers with convenience, but the concept is evolving” • “A shopping center or mixed-used commercial development that combines the traditional retail functions of a shopping mall but with leisure amenities oriented towards upscale consumers”

  4. ISCS Shopping Center Definitions

  5. Background:Lifestyle Centers • According to International Counsel of Shopping Centers (ISCS), developers in U.S. have built 100 lifestyle centers since 1997 • By end of 2004, about 140 lifestyle centers open • First opened more than 75 years ago in Kansas City • Predict, 30 new lifestyle centers opening annually for the next five years

  6. Popularity of Lifestyle Centers • Convenience • Access • Parking • Sense of place • Ambiance • Landscaping • Music, street side entertainment • Architectural embellishments • Business Week Video

  7. Costs:Lifestyle Centers • Properties generate average returns of 10-12% • Less common area maintenance (CAM), about 1/3 less than mall retailers • Costs about 1/3 of what it takes to build a typical enclosed mall • Sales per square foot greater than those of malls

  8. Development Criteria:Lifestyle Centers • Built in neighborhoods where at least 40,000 households have more than $75,000 annual income • Must incorporate architectural embellishments ranging from courtyards and fountains to distinct exterior finishes • Details can cost $200 per square foot or more • Location, Location, Location!

  9. Opportunities:Lifestyle Centers • Centers generate sales per square foot 22% higher than malls • Lower occupancy cost • If Wal-Mart can thrive in communities with population of 50,000 then lifestyle centers can also thrive in small markets • Mix of big box components to centers create hybrid lifestyle centers • Trade area • Traffic

  10. Challenges:Lifestyle Centers • Shorter lease agreements • 5 yr. agreements v. 10 yr. agreements • Exposure to competition • Lifestyle concept attracts developers who possess no lifestyle experience • Developers have little control over who occupies lease space

  11. Old Mill District, Bend OR:Lifestyle Center • Old Mill District Homepage

  12. References • http://www.youtube.com/watch?v=8fg3T3_U74A • http://www.theoldmill.com/ • http://findarticles.com/p/articles/mi_hb4899/is_200411/ai_n18013720 • Dunne & Lusch, Retailing. 5. New York: Thomson Southwestern, 2005.

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