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Catch and Hold - March 2017

Attractions are proving vital to new mixed-use real-estate developments by drawing a wide range of visitors and increasing length of stay

by Keith Miller

For more than 25 years, the amusement parks and other attractions within the massive West Edmonton Mall in Alberta, Canada, and Mall of America in Bloomington, Minnesota, have proven how attractions can draw hundreds of thousands of people each year to retail locations and shopping centers. Today, this strategy is being used to lure crowds not only to retail locations, but mixed-use developments of all types around the globe.

Leisure Development Partners (LDP) in London, England, specializes in the economics of visitor and leisure attractions in real-estate projects worldwide. Michael Collins, senior partner at the firm, explains why attractions are becoming a major part of retail complexes: “Increasingly, developers have to look at attractions to enhance their real-estate schemes—it’s becoming the norm now and is changing shape of retail. In the past, retail had been the anchor, but there are quite a number of factors now making that more difficult. Many of the traditional retail anchors have suffered and struggled to survive. So there’s pressure on developers and malls to do something special. Also, online shopping has caused retail to take a look at itself, and that is also forcing this change.”

Steve Shah, senior director of retail and mixed use with Forrec Ltd. of Toronto, Ontario, Canada, agrees: “Developers are looking to infuse that added ‘extra.’ [This] generally translates into more footfall, increased length of stay, higher spending, etc. The design should make people want to go to a place, stay longer, enjoy the experience, and connect—not simply pass through. On many levels, it’s about creating an emotional connection.”

The new AltaPlaza Mall in Panama City, Panama, which features Crazy Park, an indoor family entertainment center (FEC), is a good example; the facility offers a trampoline zone, 16 climbing walls, laser tag, and a challenge course among its attractions. Albert Montaner, Crazy Park’s creator and the mall’s general manger, says this trend is also being driven by changing consumer desires: “Customers continue buying, but consumption behavior has changed. We see it emphasized more in the generation of millennials, who every day look for more places to satisfy all their [purchasing] needs, and, at the same time, socialize and eat.”

Unlimited Snow in Haarlem, Netherlands, is partnering with the Al Jarwani Group on Snow Park Palm Mall, an 85,000-square-foot alpine-themed arena with about 20 attractions that will open in late 2017 at the $300 million Palm Mall in Muscat, Oman. The retail mall will also feature an aquarium and an FEC, and Unlimited Snow’s CEO Kees Albers says these attractions will drive hundreds of thousands of people to the mall annually. “This is important for getting potential retailers interested to rent space, which has been proven by the fact that the mall already had to increase the retail space early in the building process. Vice versa, the leisure components will also benefit from the exceptional mall and repeat visitors. Adding leisure is a way to stand out,” he says.

In Funworld’s first “Money Issue,” here we examine what’s behind this trend of mixed-use developments, and what role experts believe attractions will play in the future of this space.

What Types of Attractions Are Best?

The term “attractions” covers an enormous range of venues, from amusement, water, and snow parks; to aquariums and museums; to FECs, trampoline centers, and challenge parks. So which ones are best for retail and mixed-use developments?

“A lot depends on the location, region, country, culture, and sophistication of the development,” says Shah. “Indoor theme parks can generate a lot of footfall for retail developments; indoor water parks have a tremendous appeal when combined with hotels; branded attractions can carry weight in more sophisticated tourist markets; and cultural-based attractions are becoming very popular, as they have appeal to adults and children alike.” He adds it’s generally not about one major attraction, but rather the right mix of smaller pieces that work best together when combined with retail, food, and other interests.

LDP’s Collins mentions Kidzania’s 20-plus global locations have become go-to anchors at retail and mixed-use developments, as have Merlin Entertainments’ Sea Life aquariums. He says the chosen attractions should be able to draw from great distances: “For a soft-play center, people will drive maybe 15 minutes—it’s not a driver of visitation. Attractions that do it are those of scale and/or have strong branding.”

Speaking of strong branding, there are few global brands more renowned than National Geographic, and now it is becoming available to retail developments around the globe in the form of interactive indoor exploration centers. Resulting from a partnership between National Geographic and iP2 Entertainment, the first center will open in Changzhou, Jiangsu, China, in June 2017, followed shortly thereafter by another in the K11 Art Mall in Shengyang, Laioning, China. They’ll offer around 20 different experiences per location, where children travel through rainforest canopies, arid deserts, polar regions, deep oceans, and outer space.

“Retailers want this because online shopping cannot offer it,” says Rosa Zeegers, executive vice president of consumer products and experiences with National Geographic Partners. “What you see more and more is that shopping turns into retail-tainment and is seen as a family outing. It can turn the shopping mall into a destination. We attract traffic to the mall and extend their stay, which is beneficial to the retailers.”

Collins notes attractions can work well with resorts and vacation housing, but aren’t nearly as successful, traditionally, with residential housing; unlike a mega-mall, casino, or vacation resort, there is no tourist draw or even local or regional lure to a residential area. The only exception is when it’s part of a large mixed-use development, he says.

KOP Winterland Pte Ltd. in Singapore is developing just such a large mixed-use project in Shanghai called Northern Lights that will include an 800,000-square-foot snow-and-ice Winterland, a water park, hotels, retail, and apartments. Totaling 2.5 million square feet, the project is scheduled to open by the end of 2020. Project Director Dmitriy Shport believes the type of attractions chosen influence the visitors they attract: “There are two types of customer appeal in relation to attractions—adrenaline-driven and imagination-driven. It’s not exactly a question of the type of attraction, but the quality and unique ideas.”

But Montaner at AltaPlaza Mall believes the best attractions entice all demographics: “Crazy Park is a mall anchor and is the differentiator because it’s entertaining for all the family, with attractions enjoyed by kids, adolescents, and adults.”

Challenges and Cautions

A concern that mixed-use developers and especially retail developers have about including attractions in their projects is whether the venues will monopolize so much of visitors’ time and money that merchandisers, restaurants, and other businesses will suffer.

“If you’re a shopping mall developer, you don’t want your visitors spending too much time at the attractions,” says Collins. “They’ll spend eight hours in a theme park and they’re not going to then visit your mall. So it’s attraction types like water parks and adventure sports that deliver the right length of stay. Plus, there’s the associated retail with the activity, like snowboard shops and clothing.”

He notes the dynamic changes when there are overnight accommodations involved, which completely alters the visitation timetable. Also, he stresses developers must be realistic about judging attractions by the same earnings returns as retail, commercial offices, etc. “Attractions can give great returns,” he says, “but you can’t look at them as rent-per-square-meter and revenue-per-square-meter. Attractions often won’t deliver that like retail, and some developers can’t see the value of the attraction beyond that. They don’t see the attraction delivers additional people to their retail. You can’t look at attractions in isolation.”

Some developers and retailers may have concerns about visitors spending too much time and money at the attractions, but the reverse could also be true. Snow Unlimited is addressing both concerns by implementing a sophisticated reservations system so guests won’t waste time standing in queues.

“While we expect most people will make advance reservations, we’ll keep a percentage of capacity available for mall visitors,” Collins says, “so they can look inside the snow park and trigger a spontaneous decision to enter. As long as there is a real synergy, both will benefit from each other’s visitors.”

As global real estate developers increase their pursuit of attractions to entice and retain visitors, amusements are transforming into more than just entertaining diversions; they are becoming indispensable experiences in the lives of individuals around the world. Whether people are going shopping, stepping out for dinner, residing at a hotel, or just searching for a little exercise, visiting an attraction is fast becoming an integral part of daily life 

A Few Benefits Attractions Bring to Real Estate Ventures

Michael Collins, senior partner with Leisure Developments Partners, outlines some of the advantages attractions bring to real-estate developments:

  • Increased catchment time — “These are the people who can reach you in a certain amount of time. When you use attractions, you push the catchment time out from 15 minutes to an hour. For retail schemes, that’s the number-one consideration.”
  • Image enhancement — “Look at Ski Dubai—the retail mall there is actually known for it. Only a fraction of the shoppers do Ski Dubai, but everyone knows about it and it truly enhances the image.”
  • The “planning game” — “In a developed market, you say to authorities, ‘We want 100,000 square meters of retail space,’ and they resist. Then you say, ‘By the way, we’re also going to deliver a water park.’ You make a very compelling case to government authorities that the project should get approval. Developers can sell their projects so much more easily when they have this attraction hook.”

A Look at Attractions in Mixed-Use Developments

Mission Hills Shenzhen and Mission Hills Haikou, China

“We understand that when the entire family takes a holiday together, one major challenge is to cater to everyone’s preferences, needs, and expectations. That’s why we established Mission Hills Centreville Shenzhen and Mission Hills Centreville Haikou in 2015, to address the needs of every member in the family and provide a wide range of leisure offerings to introduce a new ‘retail-tainment’ and ‘edu-tainment’ experience to our customers. These two HOPSCA (Hotels, Offices, Parks, Shopping, Culture, and Arts) mixed-use developments aim to provide one-stop recreational, business, education, entertainment, shopping, leisure, and cultural experiences so that everyone can find something here to enjoy.”

These are the words of Ken Chu, chairman and CEO of the Mission Hills Group, as he explains the strategy behind these two large mixed-use developments. The centerpiece championship golf courses are augmented by 1,000-plus retail brands, trendy restaurants, and a host of attractions, including ice-skating rinks, bowling alleys, aquariums, and museums. The $300 million Movie Town theme park at Mission Hills Haikou combines shopping and dining options with vintage street settings from famous movies, a film studio, and numerous entertainment and leisure features. Resort hotels include a Ritz-Carlton and a Hard Rock Hotel.

In partnership with Australia-based Village Roadshow Ltd., the $1.6 billion Mission Hills Haikou will open Wet ‘n’ Wild Haikou water park in July 2017.

Paradise City, Inspire, and Caesars Korea Integrated Resorts, Incheon, South Korea

These three large, multi-use resorts on Yeong-Jong Island are being developed as one clustered project. The first to open will be Paradise City in April 2017. The $1.6 billion development, set on 82 acres, features a variety of attractions among a shopping mall, hotel, convention center, and casino.

Inspire Integrated Resort will include retail, dining, and a performance arena. Indoor Entertainment Village will feature more than 30 rides and experiences such as roller coasters, drop rides, and virtual-reality motion simulators. The Life Science Center will explore area wildlife through high-tech digital attractions. An indoor/outdoor adventure park will have land- and water-based adventures with ziplines, rope bridges, and climbing walls.

Among Caesars Korea’s retail offerings, gaming facilities, and luxury hotels will be a family zone focused on immersive experiences with unique content and interactive entertainment. Though these multi-use resorts feature casinos, Nick Kim of the Tourism and Leisure Team at the Incheon Free Economic Zone Authority says, “Different from previous casino-only facilities that have been operated focused on VIPs, [we] aim to expand the target to the mass public. This is why we are placing equal emphasis on the successful development of both gaming and non-gaming amenities.”

National Harbor, Washington, D.C.

On the banks of the Potomac River just a short distance from downtown Washington, D.C., is National Harbor, a 350-acre mixed-use development offering several attractions spread among more than 160 shops, 40 restaurants, offices, residences, and seven hotels, including the latest addition—the MGM National Harbor Resort and Casino.

Receiving more than 12 million visitors annually, the destination’s attractions include the 180-foot-tall “Capital Wheel,” which affords passengers views of the Washington Monument, National Cathedral, and the Potomac River waterfront. The waterfront’s marina offers paddleboards, kayaks, pedal-boat rentals, and sightseeing cruises. 

Adventurous guests can climb aboard a pirate ship and learn to dress, talk, and play games as seafaring pirates. Exploits include searching for hidden treasures while battling enemies with water cannons. Those searching for a more laid-back experience can enjoy the Carousel at National Harbor, or summertime outdoor movies on a Jumbotron.

National Harbor is currently about 50 percent complete and will eventually comprise more than 7.3 million square feet of mixed-use development.