Will car dealerships fill vacant positions in shopping malls?
Now that more of the vehicle sales process is online, dealers can consider different approaches to in-person buying and can find exciting opportunities in malls. Challenges can include architectural limitations or after-sales service needs.
Triple Five Group entered into a 2020 lease with Prestige Auto Group of Edmonton for a 118,000 square foot Toyota dealership currently under construction. Mayfield Toyota is slated to open in September and will occupy two floors in a location previously occupied, in part, by a Sears department store. The site will include a showroom and after-sales service with 72 bays.
One person said replicating a similar design at their U.S. malls would be problematic, but changes are possible.
“The challenge with Mall of America is the space we have on the third floor of the building. It’s not that accessible to get in and out, and American Dream is similar,” he said. “Making a facility as we built it in Edmonton would be a challenge for us in the other two locations, but that doesn’t mean we wouldn’t consider a variable of sorts.
No one said that Triple Five was in talks with “a number of luxury brands” for the New Jersey mall and also with a large US dealer group for central Minnesota. He declined to give more details.
Dealer associations surveyed by Automotive news saw both the benefits and the challenges for retailers who envision a mall as their new home.
“I’m not sure exactly how that would work to maintain and sell vehicles, but as long as malls need a few more tenants, it’s not a bad delivery model,” said Scott Lambert, president of the Minnesota Auto Dealers Association.
“There will always be questions about parking, but it seems like a pretty natural solution. I think it’s a definite possibility. It makes a lot of sense.” He added that two- and three-story dealerships are nothing new to the state.
“It’s not that unique a floor plan for dealerships, but to fit into a main store or once a main store in a mall is a good use of space,” a- he declared. “It’s probably a little cheaper for a dealership to renovate than it is to build a new facility.”
While underutilized commercial space might be a good choice for automotive retailing in theory, it won’t necessarily work in practice, said James Appleton, president of the New Jersey Coalition of Automotive Retailers.
Displaying large numbers of gasoline vehicles in a shopping mall could create a fire hazard, requiring a major safety upgrade, Appleton said in an email, although this is not a problem for electric vehicles. .
Depending on how it’s done, he warned, moving to shopping malls could go against the franchisor’s demands.
“Automakers, for the most part, will not allow spaces reserved for sales,” he said. “While mall locations may be suitable for sale, they would not be suitable for service.”
But if the architectural questions can be resolved, partnerships between malls and dealerships could become a trend, said Michael Kehoe, broker / owner of Fairfield Commercial Real Estate Inc. in Calgary, Alta.
“The synergistic benefits of traffic between a car dealership and a shopping center are perfectly aligned,” he said.
“The service visit lasts at least three hours, which provides a great shopping opportunity for the mall. There is great potential for cross-shopping there.”