It should come as no surprise that America's malls, the wonderlands of the 80s, are in big trouble. After slowly losing market share to online competition for years, brick-and-mortar retailers have finally succumb to changing consumer habits which has resulted in a massive surge in bankruptcies and store closings.
Of course, as we've pointed out before, mall owners have tried just about everything to fill their empty spaces including the addition of grocery stores, doctors' offices and even high schools.
But while most mall owners have been trying to figure out how to fill up the inside of their stores, they apparently overlooked another very 'valuable' asset: their empty parking lots.
With customer traffic sagging, U.S. retail landlords are using their sprawling concrete lots to host events such as carnivals, concerts and food-truck festivals. They’re aiming to lure visitors with experiences that can’t be replicated online -- and then get them inside the properties to spend some money.
“Events draw people to come to the shopping center,” said Keith Herkimer, whose company, KevaWorks Inc., is working with big landlords including GGP Inc. and Simon Property Group Inc. to produce outdoor events. “They generate revenue for the owner and offer a chance for cross-promotion, so they can try and drive more customers into the stores.”
The idea, obviously, is to attract customers for experiences that can't be replicated online with a focus on everything from movies nights to carnivals.
Retail landlords have already made a push toward experience-driven offerings by adding restaurants, movie theaters and activity centers for children. Many malls are also adding rotating stores around for only a short time -- known as pop-up shops -- that are meant to attract young customers who see shopping as an event.
Now, events are reaching beyond the malls themselves. Herkimer’s task is to bring crowds to parking lots with events that generate as much as $60,000 a week for mall owners from the largest outdoor events.
The idea is gaining traction. Next month, Simon Property is having the first carnival in its Round Rock Premium Outlets parking lot, about 20 miles (32 kilometers) north of Austin, Texas. Similar events are being held for the first time at locations such as Central Mall in Port Arthur, Texas, managed by Jones Lang LaSalle Inc., and a Cheyenne, Wyoming, mall owned by CBL & Associates Properties Inc. In July, Simon Property’s Orland Square Mall, southwest of Chicago, will be holding its first parking-lot food-truck festival, with plans for live music performances, Herkimer said.
Meanwhile, REIT investors are finally starting to understand that while carnivals may help to pay the electricity bills of America's malls they do little to help generate a return on the hundreds of millions of dollars worth of retail square footage that lies empty inside the stores.