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Reinventing Retail: Developers Adding 'Eccentric' Elements and Experiences to Help New Shopping Centers Stand Out and Stay Open

One New Center Makes Use of an Old Airline Hangar. Another will Feature a Car Originally Built for the Burning Man Festival
August 9, 2018

Area 15 has been described as "Blade Runner crossed with Burning Man and Mad Max."

When it opens as expected next year, the 126,000-square-foot retail development near the Las Vegas Strip plans to feature a 60,000-square-foot fantasyland anchored by Meow Wolf, a Santa Fe-based company that describes itself as an art collective. The space will include a 36-foot volcano, a 12-foot tall faceted skull and a car originally built for the Burning Man Festival, along with experiential retailers, virtual reality and escape rooms. Game of Thrones author George R.R. Martin is an investor.

The space will also feature up to 35,000 square feet of indoor and outdoor event space for conventions and live music.

James Cook, director of retail research in the Americas for Chicago real estate brokerage Jones Lang LaSalle Inc., called it "the most unusual shopping development I've ever encountered."

Developers across the country are incorporating eccentricities into their retail projects as they strive to reinvent the shopping experience. Area 15 and two other new retail developments reflect the new strategy as developers rethink their real estate footprints beyond bland, cookie-cutter shopping centers and apparel-focused big-box retailers.

The Airline Hangar

A new retail concept very different from Area 15 is in Aurora, Colorado, on the eastern fringe of Denver. Stanley Marketplace, which opened in late 2016, bills itself as a food mall, marketplace and community gathering spot.

The $30 million project, which was fully leased before ground was even broken, features more than 50 independently-owned Colorado businesses, including 20 drinking and eating establishments, 12 boutiques, exercise facilities, kids' activities and a co-working space.

Stanley Marketplace, located at 2501 Dallas St., totals 139,930 square feet and was originally built in 1954.

The site was once home to Stanley Aviation, a military aircraft seat manufacturer, until it closed in 2007. Its 18,500-square-foot event space is an old airport hangar.

Spencer Levy, Americas head of research for Los Angeles real estate brokerage CBRE Group Inc., called the project "one of the most creative" adaptive reuses he's seen because of its charming environment, variety of activities, smaller shops and locally sourced food and beverage offerings.

"The suburban mall is not dead," he said. “This proves they can still thrive.”

It is also in a growing population area in a strong commercial real estate market, which Levy said is "absolutely essential" for success.

CoStar research indicates that retail projects like Stanley Marketplace -- which is essentially a "lifestyle center," or an upscale specialty retail center without an anchor tenant -- are succeeding because they're located in commercially dense markets that provide additional sources of consumer spending

A Foundry Gets a New Life in St. Louis

An obsolete, 90-year-old foundry that sat vacant for 10 years will soon house St. Louis' first European-style food hall featuring local chefs and restaurants.

Design and development firm Lawrence Group's ambitious $187 million redevelopment, called City Foundry STL, will feature 338,000 square feet of retail, restaurant and creative office space. The largest chunk of that, 122,000 square feet, will be devoted to entertainment and restaurant space to reflect what Levy called "the new style" of mall development: Offering experiences and unique, enjoyable activities to lure shoppers.

Lawrence Group Chief Executive Steve Smith visited food halls around the world before launching the development, which was also motivated by Swedish retailer Ikea's decision to open across the street, said Todd Rogan, the project's development director.

"The population growth in the neighborhood has been 22 percent over the last six years, and they’re young, well-educated and well-paid," said Rogan. "And they don’t go to the traditional mall on the weekends. The days of Macy's, Dillards and other traditional anchors are gone."

The project is 60 percent leased and the initial phase is slated to open in late 2019.

In a recently released report, commercial real estate professional organization CCIM Institute Chief Economist K.C. Conway argues that creative adaptive reuse projects similar to Stanley Marketplace and City Foundry STL represent a new era in commercial development and will increasingly appeal to investors and developers.

Lawrence Group, based in St. Louis, is also the developer behind the experiential environment for eyewear company Warby Parker, the former online-only retailer that is rapidly expanding its brick-and-mortar footprint across the country.

Area 15

Demographics were a prime motivator in real estate developer Fisher Brothers’ decision to purchase land just outside the Las Vegas strip more than a decade ago. Fisher, based in New York, is Area 15's developer. More than 350,000 cars pass the development each day.

Fisher Brothers Partner Winston Fisher called Area 15 -- the name is the inverse of Area 51, the nearby highly classified U.S. Air Force Property -- "a radical re-imagining of retail."

"I’m not looking for a Foot Locker the way they’re selling their shoes," Fisher said. "But if Foot Locker decided to create an experience room, if you could see what it would be like to run a Boston or New York City marathon as you try on that shoe, I would love to have that store."

That’s the future of retail, JLL's Cook said.

"You have to offer something special to survive."

Rob Smith, National Retail Reporter  CoStar Group   

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