Will retail be woven into the fabric of the new, walkable suburb?

Discussion
Photo: Getty Images
Jan 05, 2018
Matthew Stern

The U.S. suburbs are known for being the home of big box retailers and shopping malls — and for requiring customers to do a lot of driving to get to those locations. But the layout of the suburban landscape, and where retail fits into it, could be changing.

City dwellers who are moving to the suburbs still want to enjoy some of the perks of urban life, which is leading to new pedestrian-centric suburban developments, according to The Wall Street Journal. These developments feature homes interwoven between shops, grocery stores, restaurants and the like. Such mixed-use retail developments have begun to appear in Arizona, Florida, Massachusetts and Texas. Retail owners are also beginning to build residential complexes close to, or even on top of, existing shopping centers, mall spaces and stores.

The trend in suburban development makes sense in light of survey data from this year’s National Association of Realtors’ 2017 Community and Transportation Preference Survey as reported on Inman Connect. Fifty-one percent of respondents said that walkability is important to their quality of life. Forty-one percent of respondents with incomes below $50,000 said that walkability and access to public transit was very important in deciding where to live.

Mixed-use suburbs could provide people with lower incomes the spaciousness and green space of traditional suburbs along with the shorter commutes and walkability they desire. Not to mention skyrocketing rents in some major American cities may make life in the suburbs a more manageable option for families with lower incomes.

This trend comes as many chains known for their suburban big box footprints have begun launching revamped store concepts meant to work better in urban environments.

Target, for instance, has had success with its small-format urban stores, which have demonstrated productivity twice that of its regular locations. Midwest grocer Meijer also recently announced the launch of a small format aimed at urban environments.

But if the layout of suburbs is really changing, these smaller-format concepts pioneered for urban landscapes could eventually find a place outside of the city.

Such a new paradigm for development could also provide a place to relocate for retailers struggling in once-popular, now desolate shopping malls.

DISCUSSION QUESTIONS: Should retailers be considering concepts and real estate investments that will build them into the fabric of the new walkable suburb? What opportunities does the trend offer for traditional mall-based retailers and big box retailers?

Braintrust
"Sort of like your hometown general store or hardware store of the past? FINALLY! "
"The urban planning nerd in me cautions that these ... only succeed when the housing in these communities is a healthy mix of affordable and luxury."
"There is no question that a vibrant main street has an appeal. I think this is more of a chamber of commerce or town supervisor issue however."

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38 Comments on "Will retail be woven into the fabric of the new, walkable suburb?"


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Dave Nixon
BrainTrust

Sort of like your hometown general store or hardware store of the past? FINALLY! Trends like this are all cyclical and YES retail should be embracing these more intimate and one-to-one retailing approaches as the buying preferences shift away from big box retailing. Those will become destination trips.

The opportunity is that retail will get back to a more personalized physical and approachable experience.

Bring it on!

Ian Percy
BrainTrust

Dave, I just noticed that we’ve both capitalized our “YESes!” Bring it on indeed! Sooner the better.

Dr. Stephen Needel
BrainTrust

We would need a major sociological shift before this makes sense on any scale. Here in Atlanta, the concept is beginning but the price tags for living are ridiculously high — much higher than the city.

Richard Layman
Guest
15 days 7 hours ago

Really the issue is new construction. By definition, new construction, based on current costs for land, labor, and materials is the highest price, regardless of where it is constructed. Maybe you don’t have a lot of this product in the city of Atlanta, but it’s present in cities like DC, Boston, West Los Angeles, Seattle, etc.

Charles Dimov
BrainTrust

Pop-up and smaller store formats are here to stay. It makes sense to have smaller-format walkable suburb centers. Naturally, these need testing to see if they will really drive enough foot traffic to make them viable, but it is great out-of-the-box thinking.

What these will definitely need is a focus on retailers’ omnichannel capabilities. OMS tech will be important to let customers see certain products in-store (within walking distance) and then place orders online or on in-store kiosks for items that they can pick up later in the day or week. I think there is some great potential here to leverage smarter technology and smaller-format locations, in more places, closer to where customers live, work and play.

Max Goldberg
BrainTrust

Retailers need to be where the consumers are, and that means rethinking locations, store sizes and formats. To stay with one format means loss of sales, profits and relevancy.

Phil Chang
BrainTrust

Re-thinking real estate is critical for brick-and-mortar to be able to iterate in the new age of retail. It’s a simple yet complicated process — re-imagining retail space requires more than retail; it requires urban planning, restaurants, gyms, yoga studios, etc.

Creating a community hub where the community wants to congregate is critical to success — for retailers that are used to being the “anchor” for malls this is going to be a change. They’ll need to fit in with all the other small businesses to make a walkable suburb a viable option.

Richard Layman
Guest
15 days 7 hours ago

Now it’s this product. 15 years ago it was the lifestyle center. Then when some lifestyle centers included a department store, that was a big thing too.

Art Suriano
BrainTrust

There was a phrase that once said, “It’s not times but people who change” and that is precisely what we see today. In the ’80s it was all about the enclosed mall which for many families was a day out with the kids for shopping, food court and entertainment. Then during the early 2000s, we saw the reinvention of the strip mall which was all about convenience and being able to get to the store you wanted quickly. What Matthew is talking about in the article is a natural next step for many retailers as we find many people today don’t want to give up city life even when moving to the suburbs. So yes, retailers should look for any opportunity for how they can fit into these new concepts because, within a few years, many of them will be the next new norm until we find our likes and dislikes changing again. Retailers would be smart now to look at how they can fit with unique store designs and an appealing category mix.

Peter Luff
BrainTrust

Yes, retailers should play with the new concepts and see if there are alternative models which are more productive and profitable. Adapting the product mix to be high-churn items providing a continuous, little and frequent return approach on lower rents, rather than the “big game hunting” required to service large mall or big box costs is certainly worth playing with. Also it’s healthy for people to walk more and better for the environment to drive less.

Cameron Conaway
BrainTrust

100 percent retailers should be considering these new concepts. Your mention of Target’s small-format stores was particularly spot on, Matthew.

I’m increasingly seeing massive apartment complexes being built with “walkable spaces” and “green courtyards,” but a few months later you’ll see what is perhaps the primary reason for these spaces: retail.

The spaces offer breathable perks for city dwellers and allow the apartment complex to pull in another revenue stream as they convert these spaces into mini retail outlets.

Mall-based retailers will, of course, be forced to downsize considerably, but moving into these smaller spaces with essentially guaranteed foot traffic could be one way for them to remain top-of-mind and maintain their physical footprint.

Naomi K. Shapiro
BrainTrust

It would be nice, but is it physically possible? Cities with which I’m familiar have shopping centers spread all over the suburbs, none of which seem to lend themselves to expansion to a walkable suburb. Stores alongside each other, e.g. next to an anchor like Target or Meijer, yes, but not in a walkable suburban setting. If people want to live in the suburbs, why should they build a walkable shopping community around themselves?

Anne Howe
BrainTrust

Retailers woven into walkable communities will thrive because they have the opportunity to fully cater to the locals. This is the bedrock principle on which retail was founded. It can still work today if retailers are astute enough to understand human desire for a true community experience.

Ben Ball
BrainTrust

Walkable developments are trendy and popular and practical — but the ones I am familiar with are not cheap except in comparison to downtown Manhattan or Chicago. These developments effectively create a manageable miniature urban “neighborhood” without all the downsides of traffic, noise and crime. Culturally, it is akin to European-style village living. Retailers who want to be embraced by such a culture must embody the personalized characteristics of “the butcher, baker and candle stick maker” as well.

Ian Percy
BrainTrust

YES! Please YES!

We’re seeing an escalating longing for true community. The other day, writing about a piece about Ace Hardware, fellow panelist Tony Orlando waxed nostalgic for the days when you got to know the butcher (who knew your dog’s name), the deli owner, the family who owns the hardware store, etc. We want to belong and we want to relate … it’s as basic as breathing. Gratefully this movement is being driven by the architectural community as well.

But here’s my warning. Just making something smaller doesn’t cut it. That’s the mechanical side which is fine but not where the longing is. A small Target store can be just as cold, impersonal and anonymously corporate as a Supercenter. That is UNLESS whoever is managing it is a true part of the community and is empowered to do what is right for that community rather than the distant whims of headquarters.

There are HUGE possibilities here; it is rewarding on the financial and spiritual levels.

Ron Margulis
BrainTrust

Quick answer is yes, most retail channels need to look at formats suited to walkable suburbs. Even car dealerships and other channels that previously required acres of space may find benefit from having at least a showroom in these kinds of communities. For traditional mall-based retailers, you don’t have to look further than the success of towns like Westfield, NJ, which has attracted several of these kinds of companies plus many that are usually found in bigger cities to create a thriving downtown.

Lee Peterson
BrainTrust

I think we’re talking about Easton Town Center just outside of Columbus, Ohio, right? Hats off to Yaromir Steiner & Associates for creating exactly this idea almost 20 years ago now. Where there was once seven shopping centers in Columbus, there are now only two, and Easton is the clear leader with local and global merchants and restaurants of all stripes. Auto dealers too (Tesla)! It’s a place you want to go to, and we all know that you don’t have to go to stores anymore, you have to want to go.

Every time I step foot into Easton I think of how advanced the idea is and how overlooked it has been. The fact that the Wall Street Journal didn’t even mention Easton is further proof. You’re not going to believe this, but sometimes, great ideas come from the middle of the U.S.!

Brandon Rael
BrainTrust

I couldn’t agree more, Lee! I worked and lived in the Easton area for a year. The Easton Town Center was and continues to be the innovation leader of combining lifestyle, shopping and accommodations in one place. I enjoyed not having to drive anywhere as everything was literally right near the hotel I stayed at.

This is coming from someone who lived in NYC for 10 years.

Brandon Rael
BrainTrust

Yes absolutely 100 percent! The move to mixed-use real estate investments is a welcome development, as the suburbs get a taste of the cosmopolitan city life! In addition, the ease and convenience of shopping relatively near where you live mitigates much of the stress and bad experiences of driving to an overcrowded mall.

The migration to a more personalized, localized and curated shopping experience can and will drive increased traffic, provide a sustainable and engaging brick-and-mortar retail model and will enhance the local city and town economies.

This strategy is here to stay, and it has come at such the right time!

Zel Bianco
BrainTrust

Yes, they should be. My son and daughter-in-law just bought into an area like this in the Washington D.C. suburbs to get have more space. It is a planned area and right next to a smart city that Microsoft is building. There are theaters, restaurants, great grocery stores like Harris Teeter and plenty of parks and open spaces for concerts, etc. Do they miss the neighborhood that they were living in closer to D.C. and chock full of fun things to do? Yes, but eventually the area that they moved to will get better and better and will fill in appropriately. The amount of retail in areas like this does not leave you feeling left out at all. And yes the areas are, for the most part, walkable. For Millennials who want to have more space to start a family, these types of areas are almost ideal and retailers would be smart to follow them there.

Lee Kent
BrainTrust

It’s all about convenience these days! We buy what we can online and for those other things, we want convenient easy shopping. Yes, this is a great concept and it speaks directly to what today’s consumers want. For my 2 cents.

Stuart Jackson
BrainTrust

The whole ethos of High Street shopping and big suburban malls is changing because stores are being squeezed by online sales, but more importantly by customers’ desire for convenience in terms of location. If the store isn’t close to them — really close, preferably within short walking distance — they’ll just order the item online. People are time poor and they’re not going to waste that valuable time getting in the car and driving to the mall. Why would they?

Improvements in supply chain processing also mean that it’s much easier for a big chain group to justify the idea of ditching the warehouse-size store — which costs so much in rent, staff costs and utilities — and opt for much smaller premises closer to the customer. Huge malls are useful when you’re shopping because you get enormous choice but they’re not always very appealing places. Customers want intimacy, a feeling of discovery and personal service, and smaller stores provide this. I think downsizing is going to become the new normal.

Cate Trotter
BrainTrust

As with all major developments and shifts, retailers should absolutely be aware of the walkable suburb and what it offers in order to decide whether it makes sense for their individual business. Certainly as more and more people strive to have both the benefits of city life and the cheaper, greener suburban living, retail estate is going to change and physical retail stores will be part of that. Pop-ups and small format stores are great examples of this. I think though there will always be a place for different retail formats, so it’s about each retailer working out which work best for them and the way their customers shop.

Gene Detroyer
BrainTrust
This brings to mind something I posted a few years ago. I have a friend who is a developer. He has focused on development for Millennials needs. He builds apartment buildings in the suburbs located within walking distance to commuter rail. His buildings and ancillary development include everything a lodger would need, from Starbucks to a gym to various restaurants. One thing they are not geared to is garages, because most of his targets don’t own or want to own cars. They just rent them when they need them. I should add, his developments have been quite successful. I also will add a comment made by former GM chairman, Bob Lutz, who said in 20 years no one will own cars. They will call Uber, Lyft or another, which will pick them up in autonomous cars and take them where they want to go. I don’t know if that will happen within 20 years, but I have been astounded by the speed of progress in the last decade or two. As we look at this… Read more »
Joel Rubinson
BrainTrust

There is no question that a vibrant main street has an appeal. I think this is more of a chamber of commerce or town supervisor issue however. I, for one, could not live in a town that has a dead or non-existent main street.

Neil Saunders
BrainTrust

As the article notes, there are quite a few of these developments springing up in Arizona.

There’s a proposal for North Scottsdale which features a European-style plaza design with small shops. There’s also a more dense development underway at Tempe near ASU which integrates retail into a new residential community.

Personally, I think such schemes will be a success. They deliver on the need for convenience and connection that so many consumers now crave.

The downside is that unless the developments create completely new demand, they will have an impact on existing retail space. The greater Phoenix area and Scottsdale, in particular, are already over-spaced when it comes to retail. That means the gains these schemes make is likely to come at the expense of other retail centers.

Liz Crawford
BrainTrust

Sure — retailers will join in this form of urban plan. Shops help to create public spaces, which is why people like to live in these kinds of walkable environments.
However, because of the insularity of these new developments, the experience itself will be a far cry from a “real” urban setting. These will be clinical “Disneyland” places. Missing will be the elements that bring a city alive: cultural and economic diversity, legacy establishments and faddish joints, as well as street life itself, which includes the daily tide of people rushing in and out. It’s a sad, sanitized world.

Joanna Rutter
BrainTrust
15 days 8 hours ago

Echoing others here by agreeing — we’re seeing that more square footage doesn’t translate to more sales when it comes to retail real estate. Small footprints mean a more curated product selection and lower operational costs. Like Art said, destination malls and then strip malls have become relics of the way people used to shop, and mixed-use development is one of the most notable new trends. The urban planning nerd in me cautions that these developments and the retail tenants in them only succeed when the housing in these communities is a healthy mix of affordable and luxury. The cruel irony of making retail associates rent apartments an hour’s bus ride away from the store their customers live above should not be lost on the folks with the blueprints — or the retailers who want reliable, happy employees and low turnover.

Kenneth Leung
BrainTrust

Convenience does not mean in-home delivery, it also means walking down the street if you are in a walkable neighborhood. I live in a high rise in downtown and I see a lot of deliveries, but I also see people walking down the street to Walgreens and coffee shops if only to get their step counts up on their health monitors (it is either that or go to gym). I think the digital health lifestyle actually drives more walking to brick-and-mortar shopping when it is available.

Dave Bruno
BrainTrust

One hundred percent yes, this is a good idea! The more we merge retail into daily life, the more retail becomes part of our daily life — whether it be digital or physical. I LOVE this vision, and experience some of it already in my suburban hometown, as documented here in a recent blog post.

Richard Layman
Guest
15 days 7 hours ago
The problem with this discussion is it’s merely a reformulation of the once dominant mall as a retail real estate product. The average resident supports 7.5 s.f. of retail space. The building featured in the WSJ article has 250,000 s.f. of retail and the complex will have 700 households. At a minimum more than 30,000 residents are required to support it. (Note that the figures I use need to be revised downward to account for the impact of e-commerce, so now maybe the average household supports 5 s.f. of retail brick and mortar space.) Obviously, to support that amount of retail space, the site has to draw on the surrounding retail trade area. What makes the new building product any different from all the other retail developments — malls, strip shopping centers, neighborhood centers, town centers — likely already present in the RTA? What’s more “interesting” is that it says that the mall as a standalone real estate product is past its prime and that new, or more accurately different, retail real estate products are… Read more »
Richard Layman
Guest
15 days 7 hours ago

The other problem is that regional and national real estate developers generally aren’t very good at dealing with independent retailers. Some are developing the skill set (e.g., how Edens has done developments in DC, Northern Virginia, and elsewhere). But most aren’t. Neither are traditional real estate development financing systems, which are focused on “credit tenants,” that is “chains,” although franchises (e.g., Ace Hardware, Dunkin Donuts, etc.) work within that kind of regime.

James Tenser
BrainTrust
Mr. Layman, thank you for chiming in on this discussion with an informed perspective. As you imply, chain retail organizations were not designed to thrive in these new mixed-use developments. They will need to adapt to succeed in smaller footprints that draw from a more localized customer base. I haven’t studied the economic model yet, but your words of caution have a ring of truth. In travels overseas — particularly in Japan and Germany — I have observed how walkable retail spaces revolve around suburban rail stations. Some have big chain stores as well as local shops and restaurants. All benefit from the commuter foot traffic that passes through daily. There are good examples here in the U.S. as well — I think of Rockville Center on Long Island and Lafayette, CA (east of San Francisco). Notably, the last two are not products of a master planning process as far as I know, but the presence of a major rail line (LIRR or BART) seems to provide the natural organizing principle. So I’d offer a… Read more »
Craig Sundstrom
Guest

I think the potential depends heavily on the type of retailer. Small “neighborhood”-type shops — café, bakery, cleaners — in short, the kinds of businesses one still finds in shopping strips in older cities, certainly, but what about a Walmart, or Home Depot, or even a large supermarket whose model is dependent on the volume that can only come from a large and drivable trading area? I just don’t see it … once people are confronted with the reality behind their nostalgic vision of returning to 1900.

Rich Kizer
Guest
All this conversation immediately brings to mind two locations: Cherry Creek North in Denver, and Naperville, IL., a suburb of Chicago. Both of these renewing downtown areas have loaded up with great small retailers as well as featuring larger marque retailers’ presence. These renewed and renewing areas both feature a great mix of retail, dining and night life. That is critical. Both of these areas are well established and today very current for their their demographics which consist of the very young to the old. Both areas are strong enough to attract customers to come and park (which sometimes is an availability issue) and walk and enjoy the environment. Many will drive in because the expense of real estate in those areas is a major issue. So these areas have to make sure they are competitive and aggressive in drawing customers. In these two cases both are very good. But retailers have to be their best, because in the minds of customers, the presentations and depth of product will always be compared with the opportunities… Read more »
Ralph Jacobson
BrainTrust

The overall U.S. and global trend of people moving INTO cities continues to drive urban retail development. However, this article touches upon a concurrent event, and that is the need to build walkable shopping environments for those suburban shoppers who may not only miss the urban convenience, but even for those suburbanites who have never lived in the city, but desire that style of shopping center.

I think this will be an ongoing opportunity for small brick-and-mortar retailers for the foreseeable future. There is plenty of dead space commercial real estate that is just begging for this suburban renewal investment.

Ricardo Belmar
BrainTrust

Ultimately, this is about convenience for the consumer. Consumers want to shop when they want, where ever they are. As a result, absolutely YES, retailers should rethink real estate. Walk-able suburbs may or not become significant in the near future, but as long as they are being created, smart retailers need to decide how to best serve those customers. It makes complete sense to look at these new locations as new formats for their stores. We see clear trends that mall-based shopping is changing, and this may be one of the outcomes for the future.

Patricia Vekich Waldron
BrainTrust

Downtowns are new again! That’s why people of all ages are moving to center cities … and retailers would smart to follow!

wpDiscuz
Braintrust
"Sort of like your hometown general store or hardware store of the past? FINALLY! "
"The urban planning nerd in me cautions that these ... only succeed when the housing in these communities is a healthy mix of affordable and luxury."
"There is no question that a vibrant main street has an appeal. I think this is more of a chamber of commerce or town supervisor issue however."

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