Economic Impact Of Shopping Centers

2014ECONOMICIMPACT OFSHOPPING CENTERS1

CONTENTS3ICSC Values4Marketplace Fairness4Did You Know?4Annual Performance5A History of Shopping Centers6National Impact8Non-Anchor Tenant Sales8Shopping Center Definitions9Geographic Distribution of GLA10U.S. Country Fact Sheet2

ICSC VALUESEDUCATIONRESEARCHWhere we’ve beenWhere we’ve beenRecent special classes at the University of Shopping Centers, webbased programs and the John T. Riordan schools, have benefittedmembers by looking at redevelopment and retrofitting existingproperties and opportunities to maximize retail productivity.Conferences, books, sessions and ICSC events around the worldoffer potential to assimilate knowledge, and only ICSC offers globalprofessional certifications: CSM, CMD, CLS, CDP.Member research resources span an online library, a databaseof more than 14,000 industry statistics, a rich offering of learning,leadership and issues videos, 11 industry-leading publications,a global shopping center directory and a wide array of specialstudies.Where we’re goingStrategic alliances with complementary associations andindustry research providers will bring new range and depth toour information offerings, especially for new and timely industrybenchmarks.Where we’re goingConferences such as our NOI Conference will educate members onasset management priorities and maximizing net operating income attheir retail properties. We’re also working with like-minded shoppingcenter councils and associations around the globe to encourageinnovative thought leadership collaboration on best practices.ADVOCACYEARNWhere we’ve beenNETWORKINGWhere we’ve beenRECon Las Vegas draws over 30,000 attendees annually.An additional 300 global events provide local and regionalnetworking opportunities for 70,000 more industryprofessionals. Every year a significant share of all retail leasingactivity is shaped at ICSC events.Recent efforts to champion Marketplace Fairnesshave gained greater traction than ever before in theU.S. Congress. A robust public affairs campaign andaggressive advertising have garnered legislative supportand raised public awareness.Where we’re goingWhere we’re goingWe will strengthen our Global RECon and local events toprovide premier in-person networking opportunities formembers in Asia, Europe, Latin America and the Caribbean,and the Middle East and North Africa. We will also use newmedia and technology to create opportunities for online andmobile networking.ICSC is working diligently to thwart any attemptsto raise industry-focused taxes, such as on carried interest.In the regulatory arenas, we are playing a significant rolein ensuring that international, national and local rulesreflect the realities of operating in a multi-tenant retailenvironment.3

MARKETPLACEFAIRNESS ACTSince 2011, ICSC has made enormous stridesin advocating for sales tax fairness. Backedby the investment approved by the Board ofTrustees, ICSC put significant resources towardseducating Congressional offices and the publicabout sales tax fairness and the outstandingtax burden that consumers currently owe onmany online purchases. This campaign hastranslated into myriad media opportunities forICSC and has created significant momentum forlegislation at the federal level. ICSC leads theMarketplace Fairness Coalition; a unified voicefor the proponents of Marketplace Fairness.The members of the Coalition representnearly 3 million businesses, associations, andorganizations located in every state throughoutthe country.DID YOU KNOW? California has the mostshopping centers—15,160.Wyoming has the least with74. At year end 2013 there are1,511 enclosed malls in theU.S. The average enclosed mallcontains 875,187 sq. ft. oftotal floor space. The are 398 lifestylecenters operating in the U.S. In 2013, shopping centerinclined sales accounted for 2.5 trillion. Shopping centerinclined sales generated 137.2billion in state salestax revenue in 2012. Shopping center-relatedemployment totaled 12.5million jobs in 2013.Thus far, ICSC’s efforts have paid off in early 2013. Wehad several resounding bipartisan votes of approvalin the U.S. Senate, culminating May 6 with thepassage of S.743 by that chamber with a 69-27 vote.The push now continues to the U.S. House for actionand approval there.ANNUAL PERFORMANCE2013 RETAIL SALES Supermarkets are the mostcommon anchor in open-aircenters.Shoppers have found their way back to the malls; retail salesnumbers for 2013 regained their strength, registering nearly 2.5 trillion in sales, an increase from 2.4 trillion in 2012. Apparel and accessoriesstores account for 57.8% ofall non-anchor mall space.Shopping center–related employment accounted for almostthan 12.5 million jobs for 2013, an increase from 12.3 millionjobs in 2012. The last enclosed mall thatwas built was in 2011—CityCreek Center in Salt LakeCity, Utah. Wal-Mart was the highestgrossing retailer in 2012,earning 468 billion in sales.In 2013, there were 227 more shopping centers operatingin the U.S. than in 2012. The total number of U.S. shoppingcenters increased in 2013 to 114,485, up from 114,258 in2012.4

A HISTORY OFSHOPPING CENTERSShopping centers have existed in some form for more than 1,000 years as ancient market squares,bazaars and seaport commercial districts. The modern shopping center, which includes everythingfrom small suburban strip centers to the million-square-foot super regional mall had its genesis in the1920s.1920sThe concept of developing a shoppingdistrict away from a downtown isgenerally attributed to J. C. Nichols ofKansas City, Mo. His Country Club Plaza,which opened in 1922, was constructedas the business district for a large-scaleresidential development. It featuredunified architecture, paved and lightedparking lots, and was managed andoperated as a single unit.In the latter half of the 1920s, small stripcenters were built on the outskirts oflarge cities. The centers were usuallyanchored by a supermarket and adrugstore, supplemented by otherconvenience-type shops. The typicaldesign was a straight line of stores withspace for parking in front, such as theGrandview Avenue Shopping Center inColumbus, Ohio, which opened in 1928and included 30 shops and parking for400 cars.Many consider Highland Park ShoppingVillage in Dallas, Texas, developed byHugh Prather in 1931, to be the firstplanned shopping center. Its stores werebuilt with a unified image and managedunder the control of a single owner.Highland Park occupied a single site andwas not bisected by public streets. And,its storefronts faced inward, away fromthe streets—a revolutionary design.1930s-1940sIn the 1930s and 1940s, Sears Roebuck& Co. and Montgomery Ward set uplarge freestanding stores, with on-siteparking, away from the centers of bigcities.1950sThe early 1950s marked the opening ofthe first two shopping centers anchoredby full-line branches of downtowndepartment stores. Northgate in Seattle,Wash., (two strip centers face-to-facewith a pedestrian walkway in between)opened in 1950, and Shoppers Worldin Framingham, Mass. (the first twolevel center), debuted the followingyear. The concept was improved uponin 1954 when Northland Center inDetroit, Mich., used a “cluster layout”with a single department store at thecenter and a ring of stores around it. In1956, Southdale Center in Edina, Minn.,outside of Minneapolis, opened as thefirst fully enclosed mall with a two-leveldesign. It had central air-conditioningand heating, a comfortable commonarea and, more importantly, it hadtwo competing department stores asanchors. Southdale is considered bymost industry professionals to be the firstmodern regional mall.1960sBy 1964 there were 7,600 shoppingcenters in the United States. Most ofthe centers built in the 1950s and 1960swere strip centers serving new housingdevelopments.1970sBy 1972 the number of shopping centershad doubled to 13,174. During the1970s, a number of new formats andshopping center types evolved.In 1976 The Rouse Co. developedFaneuil Hall Marketplace in Boston,Mass., which was the first of the “festivalmarketplaces” built in the United States.The project, which revived a troubleddowntown market, was centered on foodand retail specialty items. Similar projectswere built in Baltimore, New York City,and Miami, and have been emulated in anumber of urban areas.The bicentennial year also marked thedebut of the country’s first urban verticalmall, Water Tower Place, which opened5on Michigan Avenue in Chicago. Tomany experts, Water Tower Place with itsstores, hotel, offices, condominiums andparking garage, remains the preeminentmixed-use project in the United States.1980sThe 1980s saw an unparalleled periodof growth in the shopping centerindustry, with more than 16,000 centersbuilt between 1980 and 1990. This wasalso the period when super-regionalcenters became increasingly popularwith shoppers.Between 1989 and 1993, new shoppingcenter development dropped nearly70 percent, from 1,510 constructionstarts in 1989 to 451 starts in 1993. Thesharp decline in new center starts wasattributed to the savings and loan crisis,which helped precipitate a severe creditcrunch.1990sFactory outlet centers were one ofthe fastest-growing segments of theshopping center industry in the 1990s.In 1990, there were 183 outlet centers.Today, there are more than 225 outletcenters in the United States.By 1992, the prevailing trend in theshopping center industry had becomethe remodeling and expansion ofexisting projects. In 1992, theserenovations outstripped newconstruction, with 571 additions andalterations reported.One of the retail formats that becameincreasingly popular in the 1990s was thepower center. Power centers are oftenlocated near regional and superregionalmalls. San Francisco–based Terranomicsis credited with pioneering the conceptat 280 Metro Center in Colma, Calif.

In 1995, with the construction of the Mall of America inBloomington, Minn., entertainment quickly became an industrybuzzword as technological advances allowed shoppingcenter developments to foster the same magical experiencesthat were once only seen in national amusement parks suchas Disney World. The Mall of America, currently one of thelargest malls in the U.S., includes a seven-acre amusementpark, nightclubs, and restaurants, and covers 4.2 millionsquare feet (with about half that total devoted to retailing).Since the start of the entertainment wave, retailers have focusedon keeping their presentations exciting, and shopping centerowners have striven to obtain tenant mixes that draw traffic fromthe widest audience possible. Under one roof or in an outdoorretail format, consumers enjoy children’s playscapes, virtualreality games, live shows, movies in multiplex cinemas, a varietyof food in either the food court or theme restaurants, carouselrides, visually stunning merchandising techniques, roboticanimal displays, and interactive demonstrations.Many shopping centers are also focused on added serviceoriented tenants, which offer today’s busy consumer anopportunity to complete weekly errands or to engage in avariety of other activities. Among the many services found intoday’s malls are churches, schools, postal branches, municipaloffices, libraries, and museums.THE SHOPPING CENTERINDUSTRY NATIONALIMPACTEconomic ImpactShopping centers have become an integralpart of the economic and social fabricof their communities. In 2013, shoppingcenter-inclined sales were estimated at 2.5 trillion, an increase of 2.6% fromthe previous year. In 2012, state sales taxrevenue from shopping center-inclined salestotaled 137.6 billion, up from the 131.6billion collected in 2011.Shopping Center-Inclined 0022001 1.06 1.25 1.5 1.75Trillions 2.0 2.25 2.5