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Rise in online shopping has forced retail areas to evolve

Construction at Mill Station on the site of the old Owings Mills Mall continues. Costco is slated to open in August and several other retailers are expected to open in 2019.

Construction at Mill Station on the site of the old Owings Mills Mall continues. Costco is slated to open in August and several other retailers are expected to open in 2019.

The demolished Owings Mills Mall, now a massive construction site, is a reminder that with the rise of internet shopping, an old model of retail is dead.

But Maryland’s commercial real estate developers are planning for a new future with an omni-channel approach across multiple platforms, where shoppers will be drawn into community spaces with more experiential shopping and more food.

In Owings Mills, a 148,000-square foot Costco is expected to open in late August followed by Lowe’s Home Improvement in early 2019. The two will serve as anchors to the new Mill Station, which will incorporate the renovated AMC movie theater and a mix of dining and retail brought together by an outdoor gathering space.

Wilbur “Tom” Simmons, president of Kimco’s Mid-Atlantic Shopping Center Region, said they planned for retailers who have found a way to work with, or around, the internet.

Sales from e-commerce for U.S. retailers were $389.1 billion in 2016, up 14.4 percent from about $340.2 billion in 2015, according to Census Bureau figures released in May.

Total sales increased by about 2.8 percent, and e-commerce made up about 8 percent of total sales, up from 7.2 percent the previous year.

“Bricks and mortar isn’t dead; there’s not been a retail apocalypse, there’s been a retail renaissance,” Simmons said. “And the retailers who we’re bringing to the site are prime examples of retailers who are thriving in today’s day and age and have really went through a renaissance themselves.”

Experiential model

For example, Costco has a different business model in that it makes most of its revenue through membership sales and is able to offer customers lower prices as a result. The Mill Station location will also include gasoline sales, which can’t be poached by the internet.

Lowe’s can offer products like a 2-by-4 in a more efficient way than delivering them to a house from the internet but still embraces the model of ordering online then picking up in store, Simmons said.

In June, Kimco announced its next set of retailers – Homesense, Marshalls, Burlington and Five Below – all slated to open in spring 2019. Simmons said the next round of store announcements will be coming in the next 60-to-90 days.

The entire 620,000-square-foot development should be completed by next summer, he said.

The group of stores announced in June all share a common thread of creating a more experiential-based model.

“Part of that is an every-day low-pricing model, but it’s also the concept of ‘I need to buy this now or it’s not going to be here tomorrow.’ So retail becomes an experience that people are looking for that candidly you just can’t get on the internet,” Simmons said of the retailers.

An artists’ rendering of Mill Station once it is completed.

An artists’ rendering of Mill Station once it is completed.

At Mill Station, the developers wanted to capture the market of not only residents living in and around Owings Mills, but also daytime traffic generated by employers on adjacent properties and the T. Rowe Price campus.

A mix of fast-service dining options and small retail will draw in those visitors during the day and transition for movie theater patrons in the evening, he said.

Many people think of Toys R Us as an example of retail going under, but Simmons thinks of it as a missed opportunity for change.

He envisions a smaller store where parents and children would come interact with toys as opposed to just having them stacked to the ceiling.

“But unfortunately Toys R Us like many other retailers get so saddled with debt that they can’t change. So it becomes a self-fulfilling prophecy of doom, which is ultimately what happened to Toys R Us,” Simmons said.

‘The next wave’

One traditional mall in Maryland that has been evolving rapidly is the Mall in Columbia, where anchor-store Sears recently downsized to the first level only.

In its place, Main Event Entertainment brought family-focused entertainment with bowling, full-service dining and games. On a recent weekend, the venue hosted 22 birthday parties and the mall’s Senior General Manager Barbara Nicklas said that it fits in and Sears also seems to be happy with the move.

“Our leasing strategy, we’re focused on the next wave of retail with new and innovative concepts,” Nicklas said.

The mall, which is owned and operated by General Growth Properties, is about 1.4 million square feet and had five tenants renovate and expand last year, with Bath and Body Works and J. Jill renovating this year.

The mall is especially emphasizing being a dining destination, announcing four new restaurants. Shake Shack opened in December, Walrus Oyster and Alehouse opened in April, Uncle Julio’s in May and Urban Place is planned to open in August.

Barnes and Nobles will be opening in September, near Uncle Julio’s and Main Event where Sears was formerly located.

At the same time, the mall is renovating its restrooms, adding a new elevator between Sears and Main Event, and creating a games lounge in the center court with shuffleboard, connect four and a giant Jenga game.

“It’s all about the experience and it’s all about when people come here giving them different things to do, different places to sit, different things to interact with, reasons to stay longer,” Nicklas said.

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