Nothing signals the death of a shopping mall or a downtown retail district quite like the loss of its main anchor store. So, when the Macy's in Ardmore's Suburban Square went dark two years ago, some wondered whether the art deco complex, one of America's oldest and most elegant open-air malls, would be the next to fall to the e-commerce juggernaut.
In a way, it already had. Macy's was doing so little business that Suburban Square's owner, Kimco Realty, decided to put the store out of its misery by buying back the company's lease, effectively kicking the store out of the mall. Given how many "ghost box" anchors already loom over the nation's highways, it was a risky move. What retailer would want a four-story, limestone-clad, former department store?
There's a happy ending to this story, and it tells you something important about where retail is headed in America. The former Macy's store — originally built in 1930 for Strawbridge & Clothier — has been reinhabited by Life Time, a company known for its high-end fitness centers. But its new Suburban Square location is much more than a place to work out: The 80,000-square-foot branch includes a full floor of coworking space, a child-care facility with studios for both kiddie yoga and Spanish classes, a full-service beauty salon, and a cafe whose menu runs from protein shakes to fresh-cooked harissa chicken platters. Instead of trying to sell you the latest clothing fashions, Suburban Square's new tenant offers you an entire lifestyle. After all, it expects you to buy your clothes online.
We've heard a lot about how the internet is killing the mall, but much less about how traditional downtowns are coping with the decline in brick-and-mortar shopping. Nearly 10 percent of our purchases were made online in the first quarter of 2018, double what it was a decade ago. While Suburban Square isn't exactly part of Ardmore's historic downtown, it's an interesting hybrid that offers useful lessons for urban shopping streets that are trying to adapt to the changing market.
To keep Suburban Square occupied, Kimco has reduced its emphasis on stores that sell the kind of commodities you take home in a shopping bag, in favor of ones that offer experiences — what economists call the "experience economy." The company is looking for more internet-proof tenants, including restaurants, walk-in health clinics, gyms, hair salons, music clubs, and unique specialty retailers. It's also planning to build apartments next to Suburban Square as a way of creating a built-in market for its commercial tenants. "We want people who will come here two to five times a week," Kimco's Tom Simmons, who heads the Mid-Atlantic division, told me.
Life Time opened its doors only a month ago, but plenty of eager customers already seem to be streaming through its doors. The coworking space, called Life Time Work, has sold out its 120 membership spots. On a weekday morning, I saw entire families descend on the building. After dropping toddlers at child care, one parent headed up Strawbridge's lacy metal staircase to the treadmills, while another took the elevator to the fourth-floor coworking office. Families later regrouped for lunch in the restaurant (called Life Cafe, of course). Some wandered outside to enjoy the new pocket park that Kimco just created by replacing a former delivery zone with turf and chairs.
According to the James O'Reilly, who helped start Life Time's coworking division, combining fitness and coworking in one place is a new approach. It seems like a perfect marriage, especially with up to three hours of child care a day bundled into the membership fees, which range from $179 to $750 a month. O'Reilly noted that more people are working remotely, up from 21 percent in 2012 to 34 percent today, and more are trying care for children during the workday.
One of the people I found hunkered down over a laptop in the sun-drenched coworking space was Bill Luff, a self-employed real estate consultant. Because the suburbs have so few coworking options, he used to commute to Pipeline in Center City. Now he walks over to Life Time from his Ardmore home. He spends 50 minutes working out and "taking a beautiful steam," before settling down at 7 a.m. at a long common table to prepare for client meetings. Free coffee and healthy snacks are in the kitchen.
If Luff needs to do business in Philadelphia, he can grab a SEPTA train at the station next to Suburban Square and be in Center City in under 20 minutes. Because Amtrak trains stop in Ardmore, the coworking space has been a popular option for people who work remotely for New York companies. "My global headquarters is very happy here," Luff joked, although he admits that he keeps a membership at Pipeline.
Suburban Square did have a traditional office building before Life Time opened. But Steven Gartner, a retail specialist at CBRE's Philadelphia office, believes the fitness-coworking combination will change the dynamic because it brings "people at odd hours." Adding to the new mix is a West Elm furniture store, which took a small corner in the Macy's building. The complex is now 88 percent leased, Simmons said.
This summer, the company plans to start construction on a two-story, mixed-use building next to the train station, with a restaurant on the ground floor. The project includes an outdoor dining space. Both Gartner and Simmons told me that statistics show American consumers now spend more money on prepared foods, from both restaurants and takeout, than they do on groceries.
Still, a shopping street dominated by restaurants doesn't sound very exciting. Manayunk's Main Street, which has lost many of its old retailers, is increasingly dominated by food purveyors. But the former Pottery Barn store is about to be converted into a coworking space called Kismet by Christopher Plant, a local Realtor. That building had been sitting empty for years.
Traditional retail certainly isn't dead, but the mix is often less satisfying. While Simmons believes Center City's high-end shopping streets are stronger than ever, landlords still tend to favor reliable, but boring, tenants, such as banks and phone stores. That is playing out at the intersection of 17th and Walnut, perhaps Philadelphia's most desirable corner, which will soon have three banks. Citizens Bank just leased the space that was previously occupied by Aerosoles, a shoe store, Gartner told me. It's also ironic that the new Alexander tower, at 16th and Vine, which was designed with a row of finely detailed shop windows, ended up leasing the entire ground floor to a day care.
Because "the Amazon effect on retail is unavoidable," O'Reilly said, the trick is to look for tenants that encourage interaction, such as an Apple store, coworking space, or music clubs. You can chalk those tenants up as experience.