Lifestyle centers are growing in popularity, but some say malls will win out

Reston Town Center, a neighborhood with shops and restaurants, is considered a "pioneer" of the trend.
Reston Town Center, a neighborhood with shops and restaurants, is considered a "pioneer" of the trend. (Jeffrey Macmillan For The Washington Post)
By Jonathan O'Connell
Washington Post Staff Writer
Monday, May 31, 2010

LAS VEGAS -- Lifestyle centers have been hailed as a replacement for struggling shopping malls, but despite their popularity, retail developers aren't sure the trend is likely to last.

Sometimes referred to as town centers, lifestyle centers have emerged in recent years and have been billed as a more authentic-feeling shopping experience than malls. Often arranged in walkable, outdoor settings with grids akin to city streets, projects such as Reston Town Center have succeeded by offering shoppers the chance to stroll between stores rather than drive into and out of the parking lot of a national chain. BusinessWeek magazine has referred to them as the "shopping center of the 21st century."

"It's a significant, relatively new genre," said Bill Miller, director of leasing for D.C.-based Transwestern. He called Reston Town Center, a mixed-use neighborhood with more than 50 shops and 30 restaurants, a "pioneering example" of the trend.

Lifestyle centers were among the few retail property types to experience an increase in leasing activity in the first quarter, according to data compiled by CoStar Group, a real estate research firm. But despite the success in Reston, and the legions of copycats that have sprouted across the country, a number of developers and brokers said they weren't convinced that the developments constituted a safe bet as the retail sector begins emerging from the recession.

Gary D. Rappaport, president and chief executive of McLean-based Rappaport Cos., a developer and manger of retail centers from Fredericksburg to Baltimore, said his concern about the concept involves centers that are too small to be a destination.

"These lifestyle centers, if they're not large enough, are very hard over time to be successful," Rappaport said.

That hasn't stopped people from continuing to build them, though. "Many communities in this country were requiring new centers to look like town centers and forced such upon builders," Rappaport said. "And many of them were mistakes."

Not everyone agrees on what developments deserve the "lifestyle center" tag. Federal Realty Investment Trust, based in Rockville, has a retail portfolio of 18 million square feet nationally, about 30 percent of which is in the Washington area. Its properties include Bethesda Row and Rockville Town Square -- the type of open-air, mixed-use properties that many see as part of the trend.

But Stuart I. Biel, a Federal Realty Investment Trust leasing agent, said lifestyle centers are largely defined by a reliance on national chains. "It's kind of funny to me that people would say lifestyle centers are safe [business bets], because I would actually say the very opposite."

Transwestern's Miller said one sign that developers aren't confident in the model is that more are trying to leave room for big box stores.

"There's a conundrum in taking a bigger box, like a Target, and trying to integrate into the city streets," he said. "Sometimes you go, 'Hey, these guys draw a lot of traffic.' So you want foot traffic and you want this synergy, but if the front door of the Target isn't on the main street and people don't have to get, let's say, out of their car and walk across the street to get to Target, they may park almost in Target, go shop at Target and get back in their car and leave."

© 2010 The Washington Post Company