Tastes have changed traditional mall-shopping trends
DAYTON, OHIO — Malls in the Dayton area have fewer empty storefronts compared to their peers in other cities.
A new report shows that regional shopping centres in other U.S. metros are struggling to stay relevant in the era of online shopping, changing tastes and an overabundance of retail competition, leaving the malls struggling to fill the shells of empty department stores.
But Dayton Mall and the Mall at Fairfield Commons have so far been weathering the storm. The two malls — the Dayton region’s largest — are astoundingly 95 per cent occupied. The region’s outdoor malls like Austin Landing and The Greene Town Centers also are retaining and replacing stores.
The national mall vacancy rate reached 8.6 per cent last quarter, up 0.2 per cent from the beginning of 2018, according to a study by real estate research firm Reis. The rate is higher than it has been since 2012 when retail was still recovering from the recession.
The high vacancy rates come as retailers look to adjust to a shifting industry, where online giant Amazon has changed the traditional business model. In the past year several large box-stores such as Toys “R” Us and Bon-Ton have closed some stores or been forced into bankruptcy.
Store closings from retailers like Elder-Beerman and Sears, which traditionally anchor malls, have caused the increased vacancy at national malls. The major malls surrounding Dayton have escaped closures from major department stores up to this point. Elder-Beerman is expected to close its store in August.
“There’s no question that retail leasing has headwind right now and it has a lot to do with the Amazon effect. Retailers are trying to figure out what the future holds right now,” said Larry Dillin, president of VisCap Development and property manager and developer for Austin Landing. “Values of retail properties are down compared to what they were a year ago.”
But mall officials in the Dayton area said vacancy rates aren’t as high as the national average.
The Mall at Fairfield Commons in Beavercreek is nearly 95 per cent leased, said Kristie Miller, regional vice-president of property management for the mall’s parent company, Washington Prime Group. With a vacancy rate of about 5 per cent, the shopping centre with more than 100 national and local tenants is doing about 2.5 per cent better than national average.
“The Mall at Fairfield Commons continues to offer guests the right mix of retail, dining, entertainment and events,” Miller said. “Whenever there is a store closing it provides the opportunity to introduce different and unique uses for our guests.”
Mixed-use of facilities has been a recent trend for malls looking to keep up as the retail industry experiences a shift due to growing online competition. Open-air shopping centres are generally seen to be doing better than traditional malls in the retail industry because they are mostly designed to offer experiential shopping in a mixed-use setting.
But vacancies at open-air shopping centres also increased in 55 of the 77 metropolitan areas studied by Reis.
“It comes down to experiences, where before we were looking at efficiency. That’s where the mall concept came from — go to one place for everything,” said Cheryl Dillin, spokesperson for VisCap Development which owns Austin Landing in Miami Twp. “Now we’re learning that it’s a little bit more experiential that people want.”
Open-air shopping centre Austin Landing currently has a 99 per cent office-space occupancy rate and more than 95 per cent of retail space is leased, said Cheryl Dillin. At slightly less than 5 per cent vacancy between restaurants and stores, Dillin said big stores like Elder-Beerman and Toys “R” Us closing don’t affect Austin Landing as much because the shopping centre has a “very specific merchandising plan for a very specific market.”
“We do have some big boxes on the exterior of the development but most of the retailers that we’ve targeted are smaller and much more niche to our specific market,” Cheryl Dillin said. “We have continued to provide the customer flow that they need.”
Austin Landing is fortunate to have a lower vacancy rate than the national average, Larry Dillin said, and the centre is preparing to make announcements on new tenants still this summer.
Another open-air development, The Greene Town Center in Beavercreek, hasn’t experienced high vacancy rates, said general manager Steve Willshaw. While Willshaw wouldn’t comment on the occupancy rate or if it was higher or lower than the national average, he said rates have remained consistent.
“We’ve been very steady, very consistent,” he said. “We’ve got three stores opening this month that were all on target and planned before the other stores that were in their spaces had even closed.”
The Dayton Daily News reached out to the Dayton Mall and did not receive a response.
Some retail properties are doing well and others aren’t, as the retail industry sees a split into two categories, said Loren DeFilippo, director of research for Ohio of Colliers International, a retail research firm.
“Class A properties located in key trade areas with the right tenant mix are doing fine and boast high occupancy rates,” DeFilippo said. “The overall stats are being dragged down by those properties on the opposite end of the spectrum with huge vacancies and no interest from new tenants. There’s very little middle ground.”
But DeFilippo said he doesn’t see the increased vacancy rates as a concern for additional vacancy in the future.
“I don’t see any small increases in vacancy as a harbinger of future large spikes in market vacancy rates,” he said. “As properties are re-purposed, they will be removed from the base inventory and I see vacancies stabilizing near where they are today.”