A primer on retail types and urban centers

Developing and managing retail centers remains one of the most risky of all real estate categories. Retailers must respond to ever-changing consumer trends and demands, while constantly fending off new competition. As a result, the retail industry relies upon proven methods and techniques to minimize the risk and to earn a market rate of return on investment. This risk is more acute in mixed-use urban developments, where vacant store fronts or undesirable retailers can significantly disrupt the surrounding residential and office quality of life.

Most shopping centers fall into one of six primary proven types. Each type of center appeals to distinct market segments and has specific sizes, tenants, location criteria and site plan standards. Although there are always exceptions to these commercial center types, centers that deviate from these industry standards and sizes are often considered risky and difficult to finance or lease.

These primary shopping center types are: The corner store, convenience center, neighborhood center, community center, regional center, and the lifestyle (town) center. In addition, each of these center types can be “supersized” or increased by 30 to 50 percent.

Corner stores
The smallest and most useful retail type, the corner store, ranges from 1,500 to 3,000 square feet. These small stores offer beverages, food and sundries that are needed on a regular basis by most households, workers, and travelers. Beer, bread, cigarettes, prepared sandwiches, sundries, and snacks represent the bulk of their sales. These stores primarily offer convenience over selection and value.

Corner stores ideally are located along major local roads at the busiest entry to the neighborhood. However, in densely populated TND’s, the corner store can be sustainable within the neighborhood when located along its primary street. The store also benefits if located adjacent to community buildings, parks and schools.

Approximately 1,000 households are necessary to support the average corner store. This number can be reduced significantly if the store is located along a major road with 15,000 or more cars per day. Corner stores that also sell gasoline are supportable with virtually no adjacent homes.

Convenience centers
Typically between 10,000 to 30,000 square feet, these centers offer an array of goods and services geared towards the daily needs of the surrounding neighborhoods. These centers are often anchored with a small specialty food market or pharmacy. Convenience centers tenants offer a limited balance of food, personal services, and local offices.

Typical tenants include a bagel store, bakery, bank, coffee shop, dry cleaner, financial services, florist, food market, ice cream shop, laundry center, mail center, package liquor store, personal services, pharmacy, real estate office, or tailor.

Convenience centers need about 2,000 households — the equivalent of about two TND neighborhoods — to be supportable. These centers must be located along a major road, ideally at the primary entry to both neighborhoods. Their average trade area typically extends up to a 1.5-mile radius.

Neighborhood centers
Anchored with a supermarket, pharmacy, or video store, neighborhood centers offer a full depth of goods and services not available at smaller centers. The primary anchor is a full-sized supermarket typically ranging from 45,000 to 60,000 square feet. This major anchor is the engine that supports most of the other smaller businesses to the extent that if a supermarket closes, many of the other tenants will immediately leave the center.

Neighborhood centers generally range from 70,000 to 90,000 square feet in total size (including the supermarket) and require the support of 6,000 to 8,000 households in a 1- to 2-mile radius. Most households in the primary trade area will visit the center once or twice a week. However, in very rural areas it’s not unusual for residents to drive more than 50 miles weekly to visit a neighborhood center.

These centers typically have 10 to 15 smaller retailers such as a bakery, bank, cafe, dollar store, dry cleaner, florist, food market, mail center, pharmacy, tanning salon, family restaurant, laundry center, or stores that sell hardware, electronics, bagels, bicycles, cards, eyewear, shoes, financial services, picture frames, home furnishings, ice cream, jewelry, liquor, telephones, personal services, or rent DVDs.

Community centers
The backbone of the shopping industry, community centers are larger than neighborhood centers but often include the same tenants. Typically 250,000-350,000 square feet in size, community centers pull from a 4 to 6 mile trade area with a 50,000 or greater population. Many community centers exceed 500,000 square feet when multiple anchors are included.

The centers often include discount department stores, home improvement stores, sporting goods, apparel, booksellers, restaurants, and supermarkets. These centers are a challenge to plan in a pure new urban model, although plans using A-B quality formats — a high-quality main street (A) combined with a suburban planned area (B) — have proven acceptable by leading retailers, when demographics are favorable.

Regional centers
The largest shopping center type, regional centers focus on apparel and goods typically sold in department stores. The centers are always anchored with multiple full-sized fashion department stores and often include 200,000 to 300,000 square feet of inline shops and restaurants. The regional center generally exceeds 900,000 square feet, but can go up to 2 million square feet. The centers have an average trade area of 10 to 12 miles in suburban densities.

The lead department stores determine when and where the regional centers open and often seek at least 150,000 persons living within the primary trade area. Recently, discount department stores have been welcomed to regional centers in response to consumer preferences and the consolidation of traditional department stores.

First opened in the mid-1950s, regional mall growth has slowed due to increased competition from community and lifestyle centers. Most regional centers are enclosed and self-contained; however, new open air formats are being tested. Recently numerous regional centers have been converted into mixed-use open air centers.

Lifestyle centers
The newest retail type, the lifestyle center was created in an effort to offer upscale fashion and home furnishing centers without department stores. These open-air centers have become very successful with busy shoppers who seek specific favorite shops. The centers are built with and without streets; however those with streets tend to be more successful.

With a 4- to 6-mile trade area, lifestyle centers can squeeze between regional centers or into tight niche markets that are underserved by retail. Most retailers seek access to at least 75,000 households earning a minimum of $75,000 per year. However, the lifestyle center format has been proven to work for moderately priced retailers that have a broader consumer base. Developers have recently found that the lifestyle format when combined with residential, office, and community uses can increase traffic and improve overall performance. These new mixed-use centers are often referred to as “town centers.”

Although town centers often closely parallel many new urban principles, they pose a potential threat to historic downtowns. This “main street” collection of popular retailers and restaurants combined with conventional parking and modern retail management techniques offers shoppers an experience that is perceived as “urban enough.” Ideally the popular shopping center formats could be weaved into existing downtowns so they don’t compete with retailers on historic main streets.

Robert J. Gibbs, ASLA, is principal of Gibbs Planning Group in Birmingham, Michigan.