- Power centers were a hot real estate proposition in the mid-1990s, but no more. Although power centers have remained popular with customers because of category killers such as Target, Barnes & Noble, PetsMart and Wal-Mart, their pace of growth has slowed dramatically, according to a retail survey compiled by Chicago-based National Research Bureau (NRB).
Between 1994 and 1995, the industry experienced a 61% increase in the number of centers reporting to be positioned as a power center, according to the NRB report. However, since that time the annual rate of growth has substantially dropped to a 31% increase in 1996, 18% in 1997, 13% in 1998 and only 2% growth in 1999.
Nancy D. Veatch, author of Power Centers: The Decline Continues published in the fall of 1999, says power centers have decreased in popularity for various reasons. One explanation stems from concern about what will happen if a big-box retailer vacates the center and 70% to 80% of the space goes dark, Veatch says. Also, shopping center development reflects industry trends. The hottest new trend, according to Veatch, is entertainment, lifestyle or Main Street centers, not power centers.
Also, the report indicates that newdollars are being redirected to re-energize older regional malls either through renovation, expansion or total reconstruction from the ground up. More than 33% of all regional and super-regional centers have been renovated and or expanded in the past five to 10 years.
The bottom line is that the peak has been reached for the power center concept, Veatch concludes, and developers and management companies are changing with the times.