Shopping center developments have an enormous impact on the U.S. economy. According to the International Council of Shopping Centers, the industry’s umbrella trade group, shopping centers generate annual sales exceeding two million dollars, and employ almost 10% of the total non-agricultural workers in the U.S.
So what trends are shaping the industry today? Shopping centers range from the so-called “strip center” (e.g., an open-air linear strip row of stores) to the super regional malls which are typically anchored by large department stores. However, the growth of “lifestyle centers” is an emerging trend, particularly when coupled with adjacent non-retail developments as part of a larger mixed-use project. Mixed-use developments create the “live-work-play” environment by combining retail shopping with other kinds of developments like hotels, offices, cultural venues and/or apartments and residential condominiums. The retail component typically includes a so-called “lifestyle center” which caters to the “lifestyle” of its patrons. These centers are typically built in an open-air, pedestrian-friendly configuration, populated with upscale national chain specialty stores, restaurants, movie theaters and health clubs. The centers are leisure time destinations built with streets and sidewalks, and often include multi-story apartments or condominiums above the ground floor retail space.
All of this new development has also spawned new configurations for the real estate ownership. The mixed use projects often include multiple developers, one owning the retail and the others owning the office, residential or hotel components. Another emerging ownership trend is to build the developments on separate parcels and sell those parcels to individual investors needing a place to roll over a capital gain from the sale of other real estate. Other developers are selling fractional interests in their developments to a group of investors each owning a small percentage of the project creating a “tenant-in-common” or “TIC” form of ownership.
These general trends are bringing new shapes to both the physical and legal structures of shopping center developments, as this industry continues to serve as a major economic engine for our economy.