How Hudson Yards is Trying to Create the Mall of the Future with a $2Bln Investment
The Shops and Restaurants at Hudson Yards, part of the $25 billion Hudson Yards development in Manhattan New York debuted on March 15, 2019. It is the developers’ Related Companies and Oxford Properties Group’s take on what the mall of the future should look like. With residential space (estimated at over 4,000 units), office space, a hotel run by Equinox and Shed a cultural and art centre it is more like a mini city than your typical mixed-use shopping centre. The retail space alone cost $2 billion to develop. In a retail climate that has been fraught with store closures, with the number of store closings in the United States coming in at 7,888 year to date according to Coresight research and the number of store openings trailing at 3,239, the developers went all in when trying to construct a shopping experience that would resonate with shoppers.
The mall has one million square feet of retail space and it capitalizes on many of the current retail trends from: direct to consumer brands moving into bricks and mortar space to a focus on experiences. The developers left nothing to chance. Take a look at what the mall has to offer and see if it sounds like the kind of shopping experience that you hope pops up somewhere near you.
1. With all of the store closures over the last few years mall operators have been scrambling to fill empty space. This has led to a trend in more flexible lease terms. Mall leases to retailers can be as long as 10 years but within the new Shops and Restaurants at Hudson Yards there are leases that are as short as one year and as long as seven years. Speaking about this Webber Hudson, Executive Vice President for Related said: “with emerging brands, we lean into them and try to limit the terms to shorter terms because they don’t have the track record.”“We need to hedge our exposure so that if it doesn’t work out, we’re not sitting there with something we didn’t bargain for.”
2. Some of the brands that are taking advantage of short lease terms are digital native brands that move offline not only to gain more exposure but to reduce the high customer acquisition costs that go along with a direct to consumer business. This is a win-win situation for digital native brands and Shops at Hudson Yards that has resulted in a number of digital natives with stores at the mall including: Rhone, M.Gemi, b8ta and Mack Weldon on what is called the: “Floor of Discovery.” Not only is it beneficial to the brands looking to gain more exposure but it can be a boon for traffic as customers try to see the in real life version of their favourite online only stores. Glossier and Warby Parker are two of many digitally native brands that have opened bricks and mortar stores to great success.
3. The movement towards offering more experiences is another trend that the developers have bet on. From restaurants, to a gym, to a hotel, to co-working spaces there isn’t much that you can’t do during a visit to this property. For example, Equinox opened its first hotel at Hudson Yards and it contains its largest gym in the world. For the foodie in you there are places to eat run by popular chefs including Thomas Keller and David Chang. The mall also has cocktail bars for all the of office works looking to grab a quick drink after work.
There is even a business in the mall called 3DEN. 3DEN is: “your space to make the most of your time between places. Space for productivity, peace, or a little of both.” Customers can take a nap or grab a shower if they want. The many amenities included in 3DEN’s space include: Casper nap pods, a meditation room, a yoga room, private showers and sound proof photo booths. To use 3DEN it costs customers $6 for 30 minutes. 3DEN hopes that corporations sign up to use the space to provide their employees with a way to get a breather from open office layouts which are used by many companies but are often not the best for productivity. The Hudson Yards complex also contains an arts and cultural centre called Shed that hosts live concerts. For example, to celebrate the opening of Shed there was a five night concert series featuring African American music. There is also an exhibition space in the Shops at Hudson Park called Snark Park that features immersive and interactive art installations that change three times per year.
It seems as if the Shops at Hudson Yards is trying to implement many of the prevailing retail trends at the same time. But will it work? Certainly having a community of people from residences and offices will naturally drive traffic into the mall. Some of the experiences sound a little gimmicky like the ability to grab a shower at 3DEN but at least the developers are making an effort to move away from the mall of the past where the biggest attraction outside of shopping was the food court. Instead of saying if we build it they will come the developers have literally built it and the traffic via the offices and residential space should give the development a natural uplift.
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