When I read the title, “The Economics (and Nostalgia) of Dead Malls,” in the New York Times (January 3, 2015), my hackles were raised. Having spent a significant amount of my career reinvigorating existing shopping centers, I realized that The Gray Lady missed the mark.
Almost halfway through this decade, I have seen a trend emerge that debunks the sensational story of dead malls: redevelopment.
The most successful mall owners, no matter their size, have been the ones who have not rested on their laurels and who have embraced innovation.
In the case of General Growth Properties, the company, which had just emerged from bankruptcy, spent $270 million in 2012 to acquire 11 Sears pads, proactively leasing the spaces with restaurants, cinemas, and new anchors like Nordstrom and Pirch.
Sometimes action takes longer. In 1998, Palisades Center, owned by The Pyramid Companies, opened in Rockland County. Created in a warehouse-like environment, the center was groundbreaking at the time: BJ’s Whole Sale Club and Lord & Taylor in the same mall; an entire level devoted to ten sit-down restaurants; concrete flooring, an ice skating rink, and a Ferris Wheel. People flocked to the new. A few miles away, Nanuet Mall was impacted by its success and became an endangered species as tenants and shoppers alike jumped ship. In 2012, Simon Property Group shut down the mall and rebuilt a beautiful, pedestrian-friendly, open-air center that debuted in 2014. Today, it is difficult to get a table at PF Chang’s on a Saturday night, the movies consistently sell out, and the aisles are crowded at Fairway. This new “old mall,” renamed Shops at Nanuet and rumored to have cost $150 million, successfully coexists near Palisades Center, each finding its own cadence.
The Shops at Nanuet is not an anomaly. Fayetteville Mall in Upstate New York was plagued with vacancies until COR Companies re-tenanted the mall with the area’s first Target, restaurants like Bonefish Grill and Pizzeria Uno, and fast favorites like Panera Bread and Great Northern Pizza Kitchen in the early 2000s; now it is 100 percent leased and the go-to destination for the community.
The New York Times piece misses the mark when it states that thriving malls have focused on the high-end, luxury. What successful owners have realized is that most shopping venues cannot be all things to all people, so it is better to focus on a customer and cater to her needs.
The Legaspi Company’s directive is to serve the Hispanic market. The company has redeveloped projects in Southern California and in Texas, catering to the Mexican-nationals with its food offerings, events, music, signage, and of course, tenants who have a strong Hispanic customer. The results of this focused initiative are found in the strong repeat foot-traffic, extended length of stay, and most importantly, in sales.
A lot of great transformations have concentrated around the booming outlet business. Vornado Realty Trust created a powerhouse with The Outlets at Bergen Town Center, succeeding in the face of stiff competition in Northern New Jersey with a line up including Nordstrom Rack, Whole Foods, Nike, and Bloomingdales Outlet. Great Lakes Crossing Outlets in Michigan transformed into the state’s largest outlet mall, also adding strong restaurants to its mix. And Orlando Premium Outlets International Drive was re-energized by previous owner Prime Retail, taking a tired and lackluster Belz Factory Outlet and transforming it into a world-class outlet destination.
Keeping a property top-of-game is not easy nor without costs. But that expense is tenfold when a Landlord operates without awareness —be it with competition, technology trends, or shopping habits—and doesn’t realize that a property is on a doomed path before it is too late.
And yes, while the New York Times reports that 3 percent of all malls have vacancies of 40 percent or higher, a trend that does not make. Like all industries, there will be some less-than-favorable projects. But before sweeping statements are made, let’s probe deeper: how big are those projects (strip centers or behemoths), where are they located, and who owns them?
Despite the talk surrounding the death of malls, I am encouraged by Landlords’ innovation and willingness to embrace new ideas. Westfield was a pioneer when it put Target and Neiman Marcus in Topanga, California in the 2000s. Brookfield Place New York opened its Hudson Eats food hall in 2014 with best-in-class local eateries, offering marble tables and water vistas for its customers. And Simon Property Group is bringing e-commerce to its malls through partnership events with Refinery29 and eBay.
While some experiments may fail, many become the new standard of excellence. Let’s rally behind creativity on all scales before we eulogize the death of the mall.