The rise in popularity of outdoor shopping malls has been a recurring trend over the past decade, a phenomenon that saw further validation during the Covid-19 pandemic.
As people began to venture outdoors again, the inclination towards open spaces was prevalent, making outdoor malls more appealing to cautious consumers seeking safety in open-air environments.
Outdoor shopping centers boast intrinsic advantages, especially given the favorable climate in Los Angeles, which enhances their chances of success but does not guarantee it.
Megan Martindale, a retail professional at Avison Young, emphasizes the importance of relevance in tenant selection and experiential offerings, stating that an outdated mix of shops can lead to a shopping center’s decline.
“It’s not just about driving foot traffic and visits. It’s also about building that loyalty and that frequency,” Martindale remarked.
To fully grasp the dynamics of outdoor retail, Martindale categorizes them into two distinct types: those developed under a unified vision by a single owner and those that embody an organic street environment.
The former type allows for a highly curated atmosphere, where every detail, from music to landscaping, is meticulously planned.
Caruso and Westfield are notable developers in this category, with Caruso being the force behind popular destinations such as The Grove LA, The Americana at Brand, and The Commons at Calabasas, while Westfield Group has a substantial presence with properties in Century City, Culver City, and Sherman Oaks.
Martindale argues that Rick Caruso, the founder of Caruso, possesses a unique advantage, being deeply familiar with the Los Angeles landscape.
“Caruso is L.A. He knows this landscape like the back of his hand… He really was able to see a void in the market on all of his projects and create that sense of community around it and then execute it in a hyper-detailed manner,” Martindale said.
This expertise is reflected in the fact that The Grove, The Americana, and The Commons all boast 100% occupancy rates.
In contrast, although Westfield tailors its offerings to specific markets, Martindale notes that its global corporate structure presents a different atmosphere.
Westfield Century City has been commendable in its efforts to remain contemporary and appealing to the local crowd through immersive experiences, like The Minecraft Movie Experience and the upcoming Pop Mart X TikTok Super Brand Day.
Overall, Martindale posits that while Westfield Century City might be the go-to choice for traditional shopping, The Grove stands out as the destination for unique experiences.
On the other hand, the street-oriented outdoor retail spaces, while potentially challenging to achieve cohesiveness, can provide a distinct ambiance that is hard to replicate when done well.
Take Abbot Kinney Boulevard in Venice, for instance.
Martindale highlights that the area has maintained its “cool factor” despite its multi-landlord structure.
The success of Abbot Kinney ultimately comes from its resistance to mainstream retailers, attracting niche companies and unique international brands instead.
With increasing rents and foot traffic, the area remains highly sought after, boasting low vacancy rates.
However, it wasn’t too long ago that Abbot Kinney was overshadowed by the once-dominant Third Street Promenade in Santa Monica, which now struggles with a vacancy rate of 21.4% as of May.
“The Promenade has really declined and seen a lot of store closures… It’s just lost its luster for a lot of the retailers,” Martindale noted.
Previously a high-rent area before the pandemic, the Promenade’s inability to recover has led her to suggest a reimagining of its retail strategies.
This might involve offering short-term discounted rents to attract businesses, even if it means lower margins initially.
“It’s hard to get people to swallow this sometimes, but I think you really have to price the real estate right to get retailers to come back in… You have to almost give away some deals to get the right tenants,” she explained.
Wick Zimmerman, CEO of Outside the Lines Inc., agrees, suggesting a shift in how the Promenade views monetary gains, emphasizing the potential of entertainment elements that could drive foot traffic, even without immediate revenue.
“Even if the experiential piece is not generating a lot of revenue… it gets people there and it keeps people there,” Zimmerman said, stressing that a shopper’s duration at a location correlates directly to their spending.
Indoor shopping malls, conversely, face greater challenges in today’s retail climate.
In Los Angeles, where the allure of year-round walkable weather favors outdoor spaces, traditional indoor malls are compelled to evolve.
Approximately 15 years ago, the typical indoor mall format—a department store as an anchor, quick service food options, and a movie theater—proved insufficient for attracting consumers.
According to Martindale, this resulted in a significant paradigm shift in consumer behavior, influenced by the rise of online shopping and a demand for new types of uses in shopping centers that were once unthinkable two decades ago.
These include gyms, upscale grocery stores, and entertainment options beyond movie theaters.
The shift towards smaller local boutiques over traditional department stores like Macy’s compounded the crisis for indoor malls, leading to significant vacancies.
Overall vacancy rates for indoor malls in Los Angeles have more than doubled since 2015, as per Avison Young’s findings.
As consumers pursued shopping as an activity rather than a chore, experiential tenants gained prominence.
Observing this trend since the 2008 recession, Zimmerman noted that post-recession consumer behavior shifted towards seeking reasons beyond conventional shopping to visit retail centers.
The pandemic further reinforced this transformation, creating a demand for experiential elements in retail spaces.
“It seemed like retail was going to go down the tube because everybody was sitting at home and ordering everything online,” Zimmerman reflected, “What that did was create this incredible pent-up demand where all of us wanted to go out and do something.”
For indoor malls, the expectation of experiential elements is now a prevailing norm rather than a luxury.
Beverly Center is a notable example of a successful indoor mall that has reinvented itself, having undergone a $500 million renovation in 2018 that integrated aesthetic and entertainment upgrades.
This included the addition of skylights, floor-to-ceiling windows, and redesigned walkways, creating a lighter, more inviting space akin to outdoor shopping centers.
Furthermore, the Beverly Center enhanced its dining options, incorporated art installations, and introduced virtual reality experiences, as well as a fitness center and seasonal fashion shows, clearly aligning its offerings with contemporary consumer experiences.
Martindale lauds Beverly Center as a case study in relevance and adaptability, underscoring the necessity of sufficient funding to maintain such transformations.
Los Cerritos Center is another example of revitalization, effectively applying similar strategies to remain competitive.
As the retail competition between indoor and outdoor malls intensifies, the proximity of Glendale Galleria to The Americana at Brand serves as a vivid case study.
While Glendale Galleria continues to be a reliable mall operator, Martindale believes it lacks the excitement factor that The Americana offers, which has influenced its appeal to shoppers.
In a similar vein, the Del Amo Fashion Center revitalized itself through a renovation in 2015, significantly overshadowing the South Bay Galleria, which is still struggling with delays in redevelopment plans.
Martindale recalls visiting the Puente Hills Mall and describing it as a “sad, sad day” to witness its decline despite the area’s strong retail potential.
Recent strategies suggest that indoor malls facing occupancy struggles should explore partnerships with schools or local organizations for events and activities.
Hammond suggests such partnerships could offer safe, alternative uses for mall spaces that diverge from traditional retail setups.
On another note, grocery-anchored retail centers have emerged as stronghold anchors in the retail landscape.
Jim Dillavou, a principal and co-founder of Paragon Commercial Group, identifies grocery-anchored centers as resilient players, particularly after Covid-19 highlighted the divide between necessity and non-necessity retail.
These centers have maintained a remarkable 95-97% occupancy rate from 2020 to 2025, highlighting their continued relevance in community landscapes.
Dillavou attributes their consistent success to strategic positioning and tenant selection, emphasizing the necessity of integrating essential retailers within grocery-anchored centers.
The pandemic surged online grocery shopping but also reignited interest in hands-on grocery experiences, leading to trends like “click and collect” options at grocery-anchored centers.
Adaptations in grocery store sizes have developed alongside these consumer preferences, transitioning from larger formats to more compact, specialized models.
Lea Clay Park of Axiom Retail Advisors affirms specialty grocers have significantly influenced the market dynamics, prompting traditional grocery chains to reevaluate their offerings.
This seeks to align with changing consumer demands for quality over quantity, resulting in smaller store sizes, as a Trader Joe’s, for example, can generate sales that rival larger supermarkets.
Successful grocery-anchored centers have become adept at creating a unique community identity through tailored store selections that reflect local demographic needs.
Dillavou asserts that understanding community demographics plays a critical role in tenant mix strategies.
“It’s demographics first by far, and then it’s looking at the competition to understand what sort of voids you’re filling,” Martindale echoed.
The rise of co-grocery anchors has garnered attention as well, showcasing advantages in consumer choice and traffic.
Examples include centers in Encinitas featuring both Ralphs and Trader Joe’s, serving the diverse grocery needs of the community.
Effective collaboration among grocery anchors and supporting tenants remains paramount for centers aiming to enhance their appeal.
Grocery-heavy spaces might allow owners to charge higher rents while contributing to a broader customer base that extends beyond grocery shopping.
The legacies of established grocery stores like Erewhon Market demonstrate the evolving landscape—harnessing both grocery and entertainment to attract a modern consumer base.
Erewhon’s unique positioning has fostered a devoted following, offering experiences that offer more than mere shopping.
“Erewhon is the most interesting tenant in the business right now,” Dillavou remarked, noting how it has created a grocery shopping experience akin to entertainment.
Martindale highlights Erewhon’s potential to attract specific demographics, aligning effectively with surrounding retail offerings.
The Summit at Calabasas serves as another case in point, successfully addressing the needs and preferences of its upscale clientele.
As the retail landscape continues to evolve, grocery-anchored centers stand poised for opportunities ahead, especially amidst shifting consumer demand and increasing construction challenges.
With unique spatial configurations, customer preferences, and demographic insights shaping the future of retail, grocery-anchored centers have taken center stage as key players in the industry.
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