To get a glimpse at what Simon Property Group envisions for the future of indoor shopping hubs battered during the pandemic, just take a look at what the biggest U.S. mall landlord is doing at a retail center in Seattle.
Simon, based in Indianapolis, said ground has been broken and work started on a 167-room Residence Inn by Marriott at Northgate Station. Simon, which touted Northgate as the country's first regional shopping center, is in the process of transforming the property into a mixed-use hub that not only includes retail but hospitality buildings and apartments as well as office space.
The Residence Inn is the first of two hotels planned at the Seattle mall, with the second one being an AC Hotel by Marriott, which will have about 170 rooms. But it isn't the first hospitality property that Simon has brought in to help transform one of its regional retail centers.
In Atlanta, Simon has already added a Nobu hotel and restaurant — a well as office space and a Life Time fitness center — to Phipps Plaza as part of the redevelopment of that downtown mall.
Retail real estate investment trusts as Simon and Pennsylvania Real Estate Investment Trust, or PREIT, and other retail landlords are diversifying their tenant mix to add restaurants, entertainment, hotels, fitness, healthcare, personal services and housing.
The goal is to bring consumers to their malls on a repeat basis, to create constant foot traffic and generate business for tenants.
Changing the Mix
David Simon, CEO of Simon Property, on a first-quarter earnings call in May said the REIT planned to add 2,000 hotel rooms and apartment units to its malls in the next five years, looking to make a $1.5 billion investment to accomplish that target.
In 2018 Simon announced it was going to redevelop the 55-acre Northgate mall into a mixed-use center that would also include a headquarters and practice facility for the Seattle Kraken National Hockey League team. That facility, the Kraken Community Iceplex, has been completed and is now a "regional hub for ice sports in the Pacific Northwest," according to Simon.
The Northgate area is also benefiting from a new upgrade of the Northgate Sound Transit light rail bus station, Simon said. The multi-stage mall redevelopment will continue this year, with a new recreational area scheduled to open this summer, according to the landlord. Visitors will be able to come to Northgate Station's shops, restaurants, and communal gathering areas throughout the construction process, Simon said.
"As the first hotel in the Northgate Station complex, this Residence Inn will provide our guests with walking-distance access to the newly opened Northgate Sound Transit station, the recently opened Kraken Community Iceplex and the Northgate Station shopping center," Robert Sanger, area vice president of lodging development at Marriott International said in a statement.
"Simon's investment has been instrumental to our expansion in commercial developments," Sanger said.
Simon and Marriott International didn't immediately respond to emails seeking comment on Thursday.
The Residence Inn will be completed in 2025 and will be an amenity to the community, Patrick Peterman, senior vice president of development and mixed use at Simon, said in a statement.
"This mixed-use, transit-oriented development will create a sustainable and vibrant live, work, play, stay, and shop experience for the Northgate Station and the surrounding community," he said.