11/02/2006

Buildings of the Decades: The Shopping Center’s Future

Modern shopping-center history includes both successful open-air and enclosed facilities, but today’s developers favor one over the other

By Karen Penafiel

 

With 170 current tenants, the Fashion Centre at Pentagon City in Arlington, VA, is an enclosed mall that continues to flourish. The mall is now wireless enabled (Wi-Fi) for the convenience of shoppers.

 Key Concepts

  • Modern shopping-center history includes both successful open-air and enclosed facilities.

  • Building owners are using new practices, such as “de-malling” and “re-tenanting,” to put life back into struggling, enclosed malls.

  • Today’s developers are building a new fleet of open-air lifestyle facilities in place of the enclosed mall

Defining Trends in Shopping-Center History (Over the Last 50 Years)
As ranked by ICSC members

1. Rise of real estate investment trusts (REITs).
2. The enclosed mall comes into its own.
3. Greater access to consumer credit.
4. Online retail.
5. Lifestyle centers.
6. Institutional investors enter the shopping industry.
7. Suburban highway intersections as preferred locations.
8. Discount department stores.
9. Power centers (a type of open-air center).
10. Convenience as a driver of consumer traffic.

SOURCE: Intl. Council of Shopping Centers (www.icsc.org)

Retail Facility Facts

  • There are 48,695 shopping centers in the United States as of May 2006. The vast majority of shopping centers (95 percent) are open-air centers.
  •  California has the most shopping centers: 6,379.
  • Wyoming has the least shopping centers: 55.
  • In 2005, there were 861 more shopping centers operating in the United States than in 2004.
  • There are approximately 1,104 enclosed malls operating in the United States.
  • Currently, the average enclosed mall contains 863,870 square feet of non-anchor space and 516,798 square feet of anchor space.
  • There are about 140 lifestyle centers currently operating in the United States as of May 2006.
  • Each month in 2005, 190.8 million adults visited various shopping centers in the United States.

SOURCE: Intl. Council of Shopping Centers (www.icsc.org

 

Will the shopping mall - an icon of Americana culture of the ‘60s and ‘70s - soon become extinct? Believe it or not, an entire Internet culture has formed to examine this topic. Enthusiasts can browse “dead malls” by state to find out what went wrong, follow blogs on newly discovered dead malls, and even purchase dead-mall apparel. Although it’s true that the landscape of retail facilities has changed over the years, some of these traditional facilities remain profitable and heavily trafficked. The ones that aren’t are being rebuilt from the inside out to draw crowds back. And, in some cases, owners/developers are building new types of facilities to make shopping an accessible and attractive activity for everyone.

The New York City-based Intl. Council of Shopping Centers (ICSC) defines shopping centers in two different configurations: 1) a shopping mall, a facility that is “typically enclosed, climate-controlled, and lighted, flanked on one or both sides by storefronts and entrances,” and 2) an open-air center, “an attached row of stores or service outlets managed as a unit.” Both types of shopping-center facilities have offered consumers convenient options.

Built in 1924, Country Club Plaza in Kansas City, MO, is considered one of the first American open-air shopping centers that was designed for the automobile, with trend-setting shops, a theater, entertainment venues, and plenty of parking lots and garages. Real estate developer Jesse Clyde (JC) Nichols spent 17 years acquiring 55 acres of land, studying shopping areas around the world, drawing up plans, and building the center across from a residential neighborhood he also developed. Nichols envisioned a place where residents of his neighborhood could work or shop; today, Country Club Plaza is even more than he imagined. Touted as Kansas City’s premier entertainment district, the shopping center has continued to flourish through more than 75 years of changes in retail facilities and has shaped the open-air centers of today.

The birth of the enclosed mall in the 1950s was ranked as the second most-influential trend in the last 50 years of shopping-center history by ICSC members. Southdale Shopping Center, the United States’ first fully enclosed mall, opened in the Twin Cities suburb of Edina, MN, in 1956. Offering customers the convenience of multiple stores under one climate-controlled roof with free parking, the enclosed suburban mall became the standard for the next 40 years. Even up until the mid-‘90s, building owners conformed to the trend by putting roofs over open-air centers.

Today, the consumer demand for enclosed malls appears to be waning. Indianapolis-based Simon Property Group Inc., the largest retail real estate company in North America, affirms the change. “We’re not building new regional enclosed malls from the ground up now. Nobody is,” says Les Morris, corporate public relations manager at Simon. Enclosed facilities that haven’t fared well are suffering for a variety of reasons: declining traffic, loss of tenants, and increased competition. Some sit abandoned along highways, and others remain open despite empty wings or floors. “Malls don’t stay the same. They either get better or worse. There’s not much stagnation. Your property’s either improving or it’s not improving,” Morris explains.

In certain cases, mall-facility ownership is taking drastic measures to resurrect struggling malls. “De-malling” has varying definitions; most often, it is the practice of turning an enclosed mall inside out. The mall is reconfigured so that the majority of individual store entrances are on the exterior rather than the interior of the facility. Talisman Cos. LLC, a Coral Gables, FL, firm that redevelops and remarkets shopping centers, purchased Roswell Town Center in Roswell, GA, in 1994. Originally built in 1974 as Roswell Mall, the 400,000-square-foot, 2-level mall was reformed into a successful open-air center with a mix of indoor and outdoor entertainment venues. A variation of de-malling, “re-tenanting” a retail facility occurs when mall management fills vacancies with non-traditional sources of tenant income, such as universities, churches, museums, office space, and medical or dental clinics.

In addition to de-malling projects, there are other ways to make improvements to existing malls. “There [are a] number of properties where we have renovations [under way] - improving the lighting, improving the entranceways, making the flooring more attractive, improving the handrails, making sure the bathrooms are as good as they can be. All those things are big. It’s a major endeavor, but you need to do it,” Morris says.

Simon’s current development focus (as well as that of most retail developers) is on open-air lifestyle centers that combine a mix of shops and restaurants along with business offices, family-entertainment options, and residential components. “We project that, in the next 4 years, from 2007 to 2010, both domestically and internationally, we will spend $4.7 billion on development. It’s quite an aggressive pipeline,” says Morris. This amount is heavily budgeted toward these lifestyle centers, on which $700 million will be spent (compared to the $350 million allocated for regional malls).

The focus on lifestyle centers offers attractions not possible in enclosed malls. Morris describes a 500,000-square-foot facility in Carmel, IN, where temperatures dip well below freezing in the winter months. “There’s an outdoor fire pit right by a Starbucks, so you can have a cup of coffee and sit by the fire pit. People warm themselves up and it’s great; they just sit around [the fire] and talk.” Not unlike the Country Club Plaza, which used Spanish influences in its buildings and courtyards, today’s lifestyle centers are able to create a themed experience. “The amenities package in outdoor shopping centers is, I think, much more important, and there’s a premium on design and architecture,” Morris comments. Developers and owners of retail facilities are seeing an opportunity to enhance the shopping-mall experience by introducing elements of the lifestyle center. Simon, like many developers and owners, is examining its options. “We’re looking at ‘asset intensification.’ How can we make these properties even more productive for our customers and shareholders? It may be adding uses, it may be expanding a regional mall and adding a lifestyle outdoor component.”

Despite the increasing number of dead malls across the United States, some malls built during the boom of the late 20th century are still thriving. Historic Southdale Shopping Center, the first fully enclosed U.S. mall, has flourished since its landmark opening; it now offers 130 retail and dining options in 1.3 million square feet of space. The 170 tenants at the Fashion Centre at Pentagon City in Arlington, VA, owned and managed by Simon, still draw crowds from the Washington, D.C., metro area. The fact that over 1,000 malls like these have survived while others perished suggests that the facility itself is not necessarily the problem, but rather a combination of factors that include location and tenant mix.

Is the enclosed mall dead? Probably not. Morris says that even though malls are not being built right now, “[it] doesn’t mean that the enclosed regional mall is not still the best delivery system ever invented for goods and services.”

Anne K. Goedken (anne.goedken@buildings.com) is new products editor at Buildings magazine.

 


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Visit our website today to learn about the design flexibility of a Morton building and the endless possibilities of partnering with our designBUILD team.


Wood construction is both cost and energy efficient. Check out Morton Buildings and our designBUILD team online today to discover all the benefits of post-frame construction.


When choosing a metal-clad building for your next construction project, consider Morton Buildings, Inc., and their designBUILD team, we’ll make your dream a reality.

Bluebeam® Revu® simplifies digital facilities document management from design review to leveraging as-builts, maintenance manuals and O&Ms submittals.

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Our mission is to help our customers manage their buildings' energy costs, improve reliability, and enhance performance while having a positive impact on the environment.
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