Efforts to find creative solutions for dying malls have increased in these economic times as consultants, city officials, and new urbanists are called on to walk the lonely corridors of the dozens of half-vacant facilities in the United States.
This past summer and fall, Urban Land Institute Advisory Services panels got a firsthand look at a trio of troubled malls at the request of local economic development groups and stakeholders seeking innovative solutions. Findings from the panels suggested that one mall still had strong vital signs, a second would probably perish without prompt attention, and a third was likely to fare better in another format.
Eastland Mall. Although the 35-year-old Eastland Mall, located on 90 acres (36 ha) five miles (8 km) east of downtown Charlotte, North Carolina, is well past its prime, it can still serve as a vital retail cog on the city’s east side, concluded a ULI advisory panel composed of architects, developers, and industry veterans. However, the panel suggested that the mall change its name and branding and that it recruit community retailers, restaurants, and services with a keener focus on the growing Hispanic and Asian populations.
Though the 1 million-square-foot (93,000-sq-m) mall went through a comprehensive remodeling in 1990, it still struggles because of an oversupply of retail space, as well as deteriorating local roads and streetscapes that do not match the expectations of patrons. The panel suggested that mall owners aggressively lobby city government to improve area infrastructure and then redevelop the mall as an integrated, environmentally sustainable town center with public spaces and connections to surrounding neighborhoods.
Southwest Center. Just off the heavily traveled Interstate 20 corridor in far south Dallas, Southwest Center suffers from an obsolete configuration, 50 percent vacancy, and intensive competition from newer retail venues. The city has tried to recruit developers to recast the center, which opened in 1975 as Redbird Mall, but failed because of fragmented ownership and the lack of consistent vision. The ULI panel concluded that an opportunity still exists for the city to revitalize the 96-acre (39-ha) Southwest Center property, but as a higher-density, mixed-use development.
The city should waste no time exploring public/private partnership possibilities and other funding tools to lure private investors, the panel said, plus it should buy anchor sites owned by Dillard’s and JCPenney to consolidate ownership. Revitalization may require several developers with a variety of specialties, but the local trade area is waning and the window to act is closing, the panel said. Jamestown Mall. For the 37-year-old, 1 million-square-foot (93,000-sq-m)
Jamestown Mall in far northern St. Louis County, Missouri, the wrecking ball may be the surest way to bring about effective change, the ULI panel said. Like many other 1970s-era malls, the center’s configuration now hampers its livelihood, as do a significant surplus of retailers in the region and fragmented ownership of the 142-acre (57-ha) property.
Because renovation would just perpetuate the status quo and thus fall short of community needs, the panel suggested that the city start over, transforming the mall into a walkable town center with imaginative landscaping and buildings; a mix of uses, including residential; and overlapping activities that provide multiple reasons to visit. The panel also called for the site parcels to be assembled under a single ownership. “We recommended they tear down the mall and replace it with something more authentic,” said panel chair Ray Brown of Memphis-based Ray Brown Consulting. However, the property does not have the central location or surrounding residential density needed to turn it into a more desirable land use such as a transit-oriented village, he noted.
Nationwide, vacancies at regional malls (400,000 to 800,000 square feet [37,000- to 74,000-sq-m]) and super regional malls (over 800,000 square feet) rose to a record 8.8 percent at the end of 2009 from 7.1 percent a year earlier, reports New York– based Reis, a real estate research company. “Older malls, especially in secondary markets, are suffering far lower occupancy rates than those averages,” notes Bernard Haddigan, managing director of Marcus & Millichap’s retail real estate investment services. “If you’re not in a primary, affluent, high-spending area, you’re going to have some issues as a mall.”
Some aging malls in secondary markets have already made the transition to new uses. Once declared a lost cause on Deadmalls.com, Nashville’s 42-year-old One Hundred Oaks Mall, the city’s first large-scale enclosed shopping mall, was revived through medical intervention—the Vanderbilt University Medical Center. The medical center leased the mall’s second and third levels in 2008 plus an adjacent office building for offices and clinics. The mall’s lower floor continues to be used as retail space with anchors such as Burlington Coat Factory, PetSmart, and Ross Dress for Less. When clinic patients sign in, they receive pagers that buzz when the doctor is available, enabling them to visit mall stores and restaurants while they wait.
Another shopping center, 41-year-old Jackson Mall in Jackson, Mississippi, was also recast with a medical theme after falling on hard times in the 1980s. The University of Mississippi Medical Center teamed with local physicians and other community members in 1995 to develop an ambulatory health care center at the complex. Two other local colleges later joined the partners to create additional clinics and medical education facilities.
Not all aging malls are abandoning conventional formats. In Houston, Pacific Retail Capital Partners in December bought 26-year-old, 1.1 million-square-foot (102,000-sq-m) West Oaks Mall— except for the anchor spaces owned by Dillard’s and Macy’s—out of receivership in December for just $15 million. Pacific Retail, one of 18 bidders for the property, is investing another $15 million to renovate the property and lure new national and regional tenants, says Steve Plenge, the firm’s managing principal. In 2003, Pacific Retail had bought the property for $58 million before renovating it and selling it in 2005 to Edward Okun’s Investment Properties of America for $102 million. Okun let the property fall into bankruptcy just before he drew a 100-year prison sentence for defrauding clients of his 1031 Tax Group out of $126 million in a Ponzi scheme.
Even in relatively robust markets, a good location does not ensure the continued success of an older mall, even when multiple renovations are carried out. The oft-remodeled, 43-year-old Palm Beach Mall on busy Interstate 95 in upscale West Palm Beach, Florida, largely closed down in January, leaving only a few businesses with exterior entrances remaining.
“As a society, we’ve simply moved away from the mall experience,” notes Brown. “Young people in particular are looking for more authentic experiences. As that search goes on, there is a growing preference for what is real as opposed to manufactured sameness.”
