Center Court: Demographics as a Differentiator
Implementing a portfolio management strategy for a multi-million square foot retail portfolio requires a very thoughtful and well-planned approach. While there are multiple considerations, improving the quality of our portfolio has been a goal since we outlined our transformation plan in 2012. The quality of property is somewhat subjective and requires insight into the opportunity, but local market conditions, including demographics and psychographics, help inform our portfolio management strategy. Understanding who surrounds our properties and what drives them can position us to capture market share as well as maximize the value of our assets through thoughtful tenant mixes.
Demographic composition is an important consideration in our decision to sell or invest in an asset, notably the 17 underperforming properties that we’ve sold since 2012. In addition, the data provides critical insights into curating well-balanced tenant mixes at properties – enabling us to fully understand local consumer behavior and identify the right tenants that meet shopper needs at each individual mall. For example, PREIT’s Woodland Mall is located in close proximity to the high socio-economic communities of Ada, Cascade and East Grand Rapids in Michigan. To appeal to this audience and fuel shopper demand, PREIT is investing in a multimillion dollar redevelopment and remerchandising program inclusive of a new high-end department store, Von Maur; an array of high-quality retail; and 30,000 square feet of quality polished casual restaurants. These new concepts will attract the strong demographics of the area and solidify Woodland Mall’s position as the premier retail and entertainment destination in the region. A firm understanding of the conditions surrounding the well-located Plymouth Meeting Mall also helped us secure one of only 9 LEGOLAND Discovery Center’s in the country!
Demographics and psychographics help inform our strategy, but they also serve as clear evidence of our strong and differentiated portfolio. In fact, Evercore ISI’s annual demographic report for retail REITs demonstrated the strength of our refined portfolio, placing us ahead of many of our larger peers. Within a 15-mile radius of our properties, average household income tops $93,000, with 32 percent of households earning more than $100,000. In addition, the total population is more than 1.4 million people – a robust audience that underscores the long-term value creation opportunities of our underlying real estate.