PREIT's Coradino Sees Experiential, Entertainment Helping Malls Cope With Consumer Change

by John Jordan, Globest.com
Traditional retail shopping malls, buffeted by the changing way consumers choose to purchase goods and services, can’t rely on just one response to these changes, according to Joseph F. Coradino, chief executive officer of PREIT, the real estate investment trust that owns the Cherry Hill Mall, Plymouth Meeting Mall, and is a partner in the redevelopment of the Philadelphia Gallery as the “Fashion District.”

“There’s a number of words that we think of when we think about malls these days, words like ‘transformation’ and ‘metamorphosis,’ or ‘evolution,’” Coradino says. “They all really come down to change. We’re in an industry that is changing rapidly, and I think that’s driven by the fact that our customers’ needs, wants, and preferences are also changing rapidly and we’re moving to accommodate that.”

PREIT has been working feverishly to reposition its mall properties, including its flagship assets in the South Jersey and Philadelphia markets, to relieve some of the occupancy pressures malls face as weaker retailers retrench.

The Plymouth Meeting property is a good example of a mall whose shape has changed dramatically. PREIT was ahead of other mall owners, adding an outlet of the Dave and Buster’s food and gaming restaurant in 2009, nearly a decade prior to the entertainment explosion at malls, and Whole Foods in 2010, one of the first grocery stores on a mall property.
PREIT has added a LEGOLAND Discovery Center, just the ninth location in the country for this destination retail concept; Cyclebar, an indoor cycling studio; 5 Wits, a live-action entertainment escape room; Build-a-Bear Kiosk, one of the brand’s first kiosk deployments in the country; and Busy Bees Pottery & Arts Studio, a create-your-own project art studio – among many others.

“Half of the space in that mall is dining and entertainment, and it’s really been driven by the competitive environment,” Coradino says, noting that the property is sandwiched between another PREIT mall in Willow Grove, PA, and Simon Property’s monster shopping complex at King of Prussia, PA. ”You couldn’t replicate what was in King of Prussia or Willow Grove. That would be a silly endeavor and you’d fail at it. It is very much a creative solution driven by market dynamics.”

The next phase of Plymouth Meeting Mall’s transformation is underway, with the redevelopment of the property’s Macy’s store. PREIT will deliver at least five new and distinct uses on the former Macy’s site with executed leases with three new tenants – Burlington, DICK’s Sporting Goods, and Edge Fitness. The company is also negotiating leases with an arts and crafts purveyor and a craft brewery. Phenix Salon Suites is expected to open late this year,  enabling salon professionals to occupy their own suites within the salon, providing personal private space for stylists and their customers.

At the Cherry Hill Mall, which Coradino describes as “an absolute home run of a mall, a trophy asset,” PREIT is jumping on a trend that Jones Lang LaSalle thinks is going to grow significantly over the next five years—the placement of coworking spaces in retail malls.

Coworking provider 1776 will take 11,000 square feet of space in the Cherry Hill Mall, on the second floor near Nordstrom’s, beginning around Black Friday in November, says Jennifer Maher, CEO of 1776. She says the space will fill a need for 1776′s retail startup tenants.

Jennifer Maher, CEO of 1776, coworking space provider Jennifer Maher, CEO of 1776, coworking space provider
“There are companies that work out of our space that are product-based companies, but they were selling through an e-commerce platform,” she says. “The reason why they are members of our community, to be able to have the flexible terms on our membership as their teams grow and scale, is the same reason they won’t be able to go out and get their own retail space, because they’re startup companies, that’s a really heavy lift for them, from the fit-out costs to being a creditworthy tenant. We realized there was more of a need for that from the retail side.”

1776 has created the largest network of incubators that cultivates and empowers companies and startup ecosystems in the Northeast Corridor. The Cherry Hill location, its first in South Jersey, will focus on retail and e-commerce incubation initiatives and will be home to corporate and startup members in the retail and e-commerce industry. There will also be space available to other mall tenants like restaurants who need back office space for bookkeeping and other administrative tasks, Maher says.

As previously reported by GlobeSt.com, JLL predicts that coworking space in retail will grow at a rate of 25% annually through 2023 and reach approximately 3.4 million square feet, a small fraction of the current 60 million square feet of US coworking space in conventional office buildings.

“We’ve always felt like Cherry Hill had an opportunity to be something more than just a place to shop and dine, and we had been in discussions with 1776′s predecessor Benjamin’s Desk for a number of years, thinking about different properties,” says Coradino. “We hit on the Cherry Hill possibility, and we think that’s really going to be a real sort of R&D for our business or industry, because it’ll provide an opportunity to incubate retail businesses and have them be sort of on the front line, where they can actually engage customers. Usually the incubation occurs somewhere else where customer engagement isn’t possible.”

Live-work-play formats will also come into play in PREIT properties, Coradino says. The firm has an agreement with Hanover Exton Square Mall for 300 multifamily units at the suburban mall property. PREIT is also in discussions for multifamily developments at Moorestown Mall in Burlington County, NJ, and at Plymouth Meeting Mall.

“That’s a little bit different than addressing the retail environment,” he says. “That’s more what I would call ‘smart growth.’”

Cherry Hill Mall is located about eight miles from Center City Philadelphia. The mall offers a variety of retailers, including Nordstrom, Apple, Zara, Hugo Boss, The LEGO Store, The North Face, and dining options that include The Capital Grille, Seasons 52, Grand Lux Café and Maggiano’s, among others.

“It’s not a cookie cutter, it’s not as if we could sit and say what we’ve done at Plymouth Meeting, or what we’ve done at Cherry Hill, or what we’re doing at Fashion District is the answer,” Coradino says. “The answer tends to be market driven.”
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