"Built in 1962, Seminary South was the first mall in Fort Worth, Texas and, by all accounts, the archetypal American shopping center. At its peak, it was home to a Sears, a JCPenney and a Dillard's. There was a bowling alley, a movie theater and a space for the Fort Worth Opera to practice. Families took their children on weekends, and neighbors mingled."
We're all familiar with this model of shopping center. THE model for success for decades, I will add a few more types of businesses. Before I became licensed investment agent, I was a working journalist covering business news. In talks with developer after developer back in the 1970s and 1980s, the "list" I heard was nearly the same. You need:
- An anchor store or two
- A barbershop
- A bowling alley
- And you MUST have a liquor store
The perfect mix, one long-time developer told me repeatedly.
But U.S. consumer preferences are changing, as our demographics are changing. One of the trends across many American markets is a retail rebirth of older -- and even newer centers -- whose owners are tapping into the most powerful new demographic in the U.S. economy: Hispanic consumers.
Just how important is this market segment? One in six Americans is Hispanic, up from one in 16 in 1980, according to recent Census data. The group is projected to have an annual buying power of $1.6 trillion by 2018 -- more than any other minority group -- according to the University of Georgia. Companies from fast food chains to cell phone carriers are pouring billions of dollars into marketing to this demographic, primarily by airing Spanish-language commercials.
A fantastic story in the April 28 edition of Time magazine, headlined Mercado Of America, takes a look at how traditional malls in the United States are struggling, and how one developer is remaking them to meet the tastes of the new American consumer.
For seasoned investors, or new owners, knowing what your marketplace desires is key. Not necessarily what it demands, but what it desires. There is a difference. There is no one cookie cutter approach to the "American Experience" anymore, particularly when it comes to retail. Malls are making them entertaining. They are becoming destinations, rather than the place you "need" to stop by after work. No longer relegated to a category of place to merely explore, consumers in some of these "repurposed" shopping centers come to be entertained, once again mingle with family and neighbors, and to shop.
Says Jose de Jeusus Legaspi, a developer who is remaking shopping centers across the southern U.S., you have go "all in" and not just adopt a latin accent. He started in 2004 looking at dilapidated malls as possible investments. Today he owns nine shopping centers. Using government revitalization grants and his own investment, his refurbished malls attract consumers with considerable buying power. And his mix of tenants includes retailers that cater heavily to a targeted market.
To be succinct, shopping malls that include something for the fast growing economically powerful Hispanic marketplace -- even working to attract family members who aren't there to shop, are thriving and growing in number.
Interested in owning a retail center, or growing your retail portfolio? Successful retail recipes increasingly include a south of the border flavor. Take note.