Placemaking | Project Positioning + Storytelling | Location Intelligence | Site Selection | Data Analytics | Demographics + Psychographics
We all look for simple narratives and singular theories in life and business. The reality is almost always more complex and nuanced. Case in point is the continuing narrative around the death of bricks and mortar retail. This week Simon Property Group and Brookfield Properties, joint owners of JCPenney, suggested they may start building ground-up new JC Penney Stores, this follows a triage $1 billion remodelling and repositioning program that they undertook a couple years back. At the close of 2020, Simon and Brookfield outright bought JC Penney for a number for reasons 1) they saw continuing value in the brand 2) they saw strategic value in owning the properties, many of which were a part of the jigsaw of ownerships in their own malls 3) JC Penney failing could and was putting drag on their own brands and businesses. Simon, Brookfield, Kimco Realty Corporation and other retail-developers have had a steady drumbeat of positive investor days and are seeing a strengthening and resurgent market for outdoor and indoor shopping centers. Most every retail developer have over the last few years, gone through their portfolios and divided them into various categories- the big binary being those with potential (and need) for mixed-use redevelopment and those that can continue to be retail-only assets with some repositioning/remodeling. I imagine given a brightening outlook for bricks and mortar retail there will be some reversion to the mean, and some of the properties slated for mixed-use redevelopment may fall back into the retail-only category, or at least some pumping of the brakes on the redevelopment program, particularly given the current costs of financing ground-up development and construction, they may wait for a more positive real estate cycle (see Hines: Riverwalk). Live-work-play, mixed-use redevelopment will continue to be a likely path for many retail centers. And especially as the traditional retail developers have re-tooled themselves as multi-asset developers or/and have formed joint-ventures and collaborations with positive results. But there’s a lot of optionality in what live-work-play means, and there’s complexity on both the asset side and the development side. While the development model is generally portable between properties, most all these redevelopment opportunities have unique circumstances in funding, ownerships, partnerships, catchment demographics, and physical opportunities and constraints. #retail #shoppingmalls #shoppingcenter #mixeduse #liveworkplay
thanks Jason. although its shrewd for Simon and Brookfield to buy JCP, ironically, JCP does not really appeal to the demographics of the mixed use, walkable communities that are springing up next to them as a result of this move. What will be interesting is if JCP can rebrand itself in anticipation of this new urban reality, or just double down on the auto oriented behaviors of its existing core market.