Chain retailers have their eyes on a new type of mall — your university. While higher education may once have been associated with the ivory tower — a secluded place of rigorous study — now companies like Target, Trader Joe’s, Urban Outfitters, and Publix are opening stores on or near college campuses, chasing students who are setting up shopping habits that could last a lifetime.
“It gives the colleges a competitive edge when they have a vibrant retail strip or area around their campus,” Kathy Sawin, executive vice president of brokerage services at retail brokerage firm Metro Commercial, told BuzzFeed News.
The University of Pennsylvania was one of the first institutions of higher education to bring retailers onto its campus at what is now known as Sansom Place, said Swain, who worked on the project in the early 2000s. The university livened up what had been an unused parking lot with retail storefronts and restaurants, the University of Pennsylvania’s executive director of real estate, Ed Datz, told BuzzFeed News. Today, retailers on the campus include Urban Outfitters and Lululemon, which both pay rent to the university, with profits going back into the university’s real estate portfolio.
Before Sansom Place was built, chain retailers were reluctant to locate stores around universities because they determined potential sales by the average household income in the area, said Datz. To lure retailers, the university offered favorable leasing terms for new tenants. Business quickly took off. Now the university owns 350,000 square feet of retail space and manages 125,000 more. Its occupancy rate is somewhere between 90% and 100%.
“We’re the size of a small mall,” he said. “We were able to demonstrate there was a market for retail.”
But not all college towns are embracing the mall trend. Starbucks closed a store on Telegraph Avenue near the University of California, Berkeley, in January after local opposition. In June, a community board that oversees the East Village area in Manhattan, which is home to New York University, passed a resolution limiting the size of retail stores in the area and restricting new chain stores to East 14th Street and East Houston Street.
Nevertheless, the trend is growing. Target has doubled down on developing on and around campuses since it opened its first small-format store near the University of Minnesota in 2014. It has opened 98 small-format stores so far, with 26 of them located near college or university campuses, a company spokesperson told BuzzFeed News. In the last two weeks, it opened three small-format stores in East Lansing, Michigan, near the University of Michigan; in Lexington, Kentucky, near the University of Kentucky; and in Seattle near the University of Washington.
The stores are stocked with dorm essentials, school supplies, quick meals, and game day snacks, Tim Eklund, vice president of Target’s small-format stores, told BuzzFeed News. “We’re offering an experience tailored to the neighborhood, while also building connections with guests who may be shopping Target on their own for the first time,” he added.
At around 12,000 to 13,000 square feet, the stores are smaller than the company’s usual ones, but their sales productivity is higher — customers are shopping more frequently with smaller basket sizes than at Target’s regular stores. In part because of that metric, the company told BuzzFeed News it plans to open about 30 small-format stores each year over the next few years.
“We want (students’) campus life experiences to be convenient and enjoyable,” the University of Minnesota’s vice president of university services, Mike Berthelsen, told BuzzFeed News.
Devan Blanchard, who graduated with a master’s degree in social work in 2018 from the University of Minnesota, told BuzzFeed News that she went to the Target in Dinkytown, a commercial district adjacent to the campus, every other week because of the convenient location. She’d usually buy small grocery items like bananas, coffee, chicken, rice, and sandwich ingredients for days when she didn’t feel like cooking.
“It was nice to have in the area,” she said. “There weren’t many produce options, but overall it has good options for what you need.”
It’s not just the retailers that benefit from these deals. As cities have moved toward multiuse zoning, some institutions of higher education have also embraced the model in their own real estate development. In Los Angeles, the University of Southern California renovated an area previously called the Village into a mixed-used development, with retail space at the bottom of student housing. The USC Village opened in 2017 after three years of construction at a cost of $700 million.
“You’ve got tremendous market power,” Laurie Stone, USC’s associate senior vice president of real estate and asset management, told BuzzFeed News. “We’re in Los Angeles, in an urban setting. You’ve got a campus population of 45,000, plus faculty staff, and a neighboring community. You have a built-in consumer market here.”
The first tenants in the 15-acre retail site were Trader Joe’s and Target. Soon, the storefronts were filled with nail salons, taco shops, and burger spots, above which 2,500 students live in campus housing. Nearly all of its retail tenants pay market rate for rent, and the profits go back into the Village project, said Stone.
The project drew opposition from community advocates who feared it would lead to gentrification. In response, USC agreed to pay $20 million for affordable housing and promised to hire about 30% of the USC Village workforce from low-income areas, with special attention to employing people within a 5-mile radius of the university.
Cristian Moreno, who was born and raised in South Central Los Angeles and is not a USC student, told BuzzFeed News that the Village was more of a family destination before it was remodeled. “It was a great way to spend a Sunday afternoon with your friends or family,” he said in an email. “Now all these big corporate stores took over it (which I don’t mind) & it’s just more of a place to shop for your needs instead of a place to hang out & enjoy some ice cream or watch a $5 movie.”
Hafsa Fathima, a former graduate student in journalism at USC, told BuzzFeed News that while the USC Village was convenient, the selection of food was out of her budget. “Sometimes I would study there at a coffee shop or get lunch, but that was more of a treat since the restaurants were pretty pricey,” she said.
Many university representatives who spoke to BuzzFeed News anticipate that retail will become a more central part of campus life. Berthelsen, at the University of Minnesota, said the school is in discussion with the city of Minneapolis and local community to envision the future of its college areas, including its retail centers.
“We’re not a developer, but we are working and encouraging those things to happen nearby and to help make sure the neighborhood that surrounds us is positive, vibrant, interesting, attractive, and a safe place,” he said. “With the growth and future of more diverse residential options beyond undergraduate housing will come an increase and variety of retail, service, and anchor spaces — things that make it an interesting place to be.”