Lately we've been reading about the mall making a comeback and power centers clinging to life as landlords get creative to save their properties. Despite anchor retailers vacating spaces and closing stores (Target, J.C. Penney, Sears), increasing competition from e-commerce retailers, poor economic indicators and just the plain fact that malls are no longer "where it's at" for today's consumer, developers and landlords are making ambitious moves to save their centers. Tactics include re-merchandising, adding more entertainment features, upgrading the property and landscaping, and increasing chances for social interaction among shoppers.
In addition to making physical changes, however, some landlords are getting creative in terms of taking control of anchor spaces before they are vacated. This article from Bidnessetc.com says that store closings, "create opportunities for real estate firms to recapture those spaces to drive value and productivity." Indeed, DDR Corporation is taking advantage of these opportunities.
In May of this year, DDR announced the launch of "project accelerate." The company calls the project a "proactive lease termination initiative aimed at recapturing high-quality anchor store locations across its portfolio." In essence, DDR aims to take control of these spaces prior to the end of the lease in order to re-merchandise with higher quality tenants at higher rents.
Will DDR's initiative prove fruitful? The company predicts a 40% increase in market-to-market rent appreciation. It's perhaps too early to tell, but in the first phase of the project, DDR identified about 90 anchor spaces that meet the project's criteria totaling 3.3 million square feet and has, according to this CoStar article, identified the types of retailers they might target to fill these spaces that include off-price apparel retailers such as Nordstrom Rack and Marshalls, grocers such as Sprouts Farmers Market and Trader Joe's, and other large boxes such as Ulta, Five Below, HomeGoods, Shoe Carnival, PetSmart and Carter's.
While we can't definitively predict the final outcome for malls and power centers, we can predict continued creativity from landlords, architects, real estate firms and retailers in efforts to breathe life back into these properties.