PREIT CEO says new Virginia development is prime for experiential retailers

If there ever was a time to open a storefront, it’s now. Three years after the pandemic shuttered many stores, commercial real estate is now a hot commodity.

Retail vacancies in the United States dropped to 6.1% in Q2 of last year, a 15-year low. But asking rents for shopping center spaces during that same time were 16% higher than five years ago, per Cushman & Wakefield. Pennsylvania Real Estate Investment Trust (PREIT) is one landlord that’s signing tenants for one of its newest developments in a major market.

• PREIT is filling out Springfield Town Center, a new development in Fairfax County, Virginia that is already ~95% occupied with tenants.
• Burlington is the latest tenant, and it will join the likes of the Lego Discovery Center, Lovisa, BoxLunch, Carters, Macy’s, Dick’s Sporting Goods, Target, H&M, Sephora, Abercrombie Kids, and American Eagle.

“Mixed-use assets increase consumer dwell time, encourage return visits, and provide customers with an experience beyond shopping,” PREIT CEO Joseph Coradino told Retail Brew. “Serving as community hubs, they offer consumers a one-stop shop and offer tenants a built-in audience. By creating high-quality spaces that offer multiple services from different tenants, we are able to attract more customers and encourage longer stays.”

Springfield Town Center is exemplary of the kind of spaces retailers and their tenants want to occupy, Coradino said. The key to a successful mixed-use project is diversity—a blend of retailers, restaurants, activations, and office or residential space that keeps a continuous flow of people in and around the development. On top of other tenants such as Nordstrom Rack, Five Below, and Target, Springfield Town Center includes 460 apartments and a 165-room hotel.

• In 2022, more than 20,000 square feet of stores opened their doors for operation, with Burlington bringing an additional 30,000 square feet.
• Despite inflation and the demand for low-priced apparel, Burlington has struggled as of late. Last fiscal year, sales fell 7% to $8.6 million. Erin Schmidt, senior analyst at Coresight Research, previously told Retail Brew that much of that decline for off-price retailers can be attributed to the performances of Burlington and Ross, specifically.
• But Coradino isn’t worried. Mixed-use developments like Springfield Town Center can help struggling retailers like Burlington thrive, especially in this environment where inflation is high.

“There is absolutely space for brick-and-mortar to thrive in the current retail environment, Coradino said. “Record new leasing activity across mall REIT portfolios evidences the resurgent popularity of the tactile shopping experience, likely a function of multi-year transformations of mall assets.”

Let’s go: The upcoming Lego Discovery Center is a staple for PREIT’s vision at Springfield Town Center. The store, according to Coradino, mirrors Lego’s NYC flagship, which opened in 2021, given its experiential nature. Experiential concepts are the exact types of tenants that Coradino is looking to bring into the fold at its other properties. Tenants that offer experiential components are able to bring more customers.

• Willow Grove Park is a three-story mall PREIT is currently constructing in the  Philadelphia suburbs that exemplifies the drive for experiential concepts. The mall will include “laser tech, bowling, mini golf, virtual reality, pinball, and over 200 games and attractions” to the property, Coradino said on PREIT’s Q3 2022 earnings call, on top of tenants that are yet to be announced.
• Moorestown Mall in Moorestown, New Jersey, is also an example of PREIT reshaping its traditional mall assets that are in competitive retail environments. The mall offers dining, entertainment, fitness offerings, including Planet Fitness and Orangetheory Fitness, as well as a value retail collection, including HomeSense, Sierra, Five Below, and Michaels.
• Cooper University Health Care and a 375-unit apartment complex are also currently under construction at Moorestown. These two specifically are replacing a vacant Sears.

“We believe this is a result of our proactive repositioning and anchor replacement strategy, having replaced 19 department stores with over three dozen tenants in their place,” Coradino said. “Our properties are true community hubs providing shoppers with everything they need while staying on site.”