Not Your
Father's Mall

By Joseph Dobrian

Shopping didn't become our national sport until the prosperous 1950s and '60s-and since that time the way we shop has gone through some astonishing changes. Our tastes and expectations seem to evolve at warp speed, and often it's more than developers can do to keep up with them. What are some of the most notable ways in which retail developments have changed in the past 60 years or so? We recently asked three second-generation mall developers, as well as several other retailing experts, to give us some perspective.

A Move To Open Air

"In the 1950s we had wide-open territory and great need for new retail," explains Robert S. Taubman, chairman, president and CEO of Taubman Centers (Bloomfield Hills, MI). "The business was all demand-driven. Now you have slow growth by a handful of well-managed companies.

"The consumer is much more educated today, with a much higher level of expectations. For example, 15 years ago there were no spacious and clean bathroom facilities in a shopping center. We put elegant restrooms into our Cherry Creek Shopping Center, in Denver, and soon other developers were doing the same. We put a ‘soft play' area in one of our centers to see if parents, grandparents and kids would find it another reason to visit. They did, and now  all shopping centers have one of those. When a developer goes beyond a shopper's expectations, those expectations are raised-and other developers have to move in that direction."

Taubman's latest development, The Mall at Partridge Creek (Clinton Township, MI), includes an open-air center that serves as a destination within a destination, making the development a sort of hybrid of an enclosed regional mall and a lifestyle center. That, Taubman says, creates a "sense of place," which modern retail developments must have in order to flourish.

The Mall at Partridge Creek

Another change is that malls and shopping centers have gotten much bigger over the years. Taubman's developments contain an average of 150 shops.

"The customer needs a reason to go to the mall," he elaborates, "and one reason is the opportunity to comparison-shop. You have to give the customer a lot of choice in a secure environment." Steven Lebovitz, president of CBL & Associates Properties (Chattanooga, TN), remarks that consolidation has changed the retail mix at many malls, since several traditional anchor tenants-mostly department stores-went out of business and/or were acquired by competitors. This, he suggests, is partly responsible for consumers' demand for a broader mix.

"We'll continue to see new anchors for malls, such as Costco, Target or Dick's Sporting Goods, replacing some of the department stores that were consolidated in the 1990s," he predicts.

Demand For More Variety

Food and beverage demands are also evolving, Lebovitz says. Malls that get a lot of lunchtime traffic might do better with a traditional food court, he suggests, while those that get more weekend and evening traffic will want to have a mixture of restaurants-including upscale sitdown operations-scattered throughout the facility.

John Bucksbaum, president and CEO of General Growth Properties (Chicago), says that the first sea-change in mall design was the addition of outward-facing retail: stores entered from the outside that may or may not go through to the mall. That, he says, led to the creation of outdoor villages as part of an enclosed mall.

"Today, close to half of our portfolio incorporates exterior retail-and we've started adding residential, hotels and, in some cases, offices. So you're getting a greater intensification of land that you used to think of only in terms of retail," he says.

"The type of tenant has changed too. In the 1950s and 1960s it was all about soft goods. Now a mall is an aggregation of various types of retail. The beauty of the mall concept is that it continually evolves. In large part, consumers tell you what they want. The days of ‘build it and they will come' ended in the 1990s. The consolidation that took place from 1994 to2004 was the result of a lack of willingness to reinvest-which created opportunities for owners and developers who did change, who did reinvest."

 Mitchell Friedel, executive vice president of Robert K. Futterman & Associates and head of RKF Retail Property Advisors, remarks that the traditional enclosed mall was already being supplanted somewhat in the 1990s by "urban entertainment developments"-which in turn lost out to lifestyle centers: mixed-use models that incorporate non-retail components.

"Urban entertainment developments were mostly about food and clubs," he explains. "Developers added more retail so that they wouldn't be just for kids-and thus lifestyle centers evolved.

"In a lifestyle center, the retail has to be successful and high-end, or it will negatively affect the residential component. But such projects also need service-type retailers, such as a dry cleaner and a supermarket, because you're building a mini-city that you hope will last a long time. You want powerful full-service restaurants-but you need sandwich shops and pizza places. In these outdoor environments you can be creative, scatter the restaurants around, and use the diversity to create opportunities for other retailers."

John O. Norquist, president and CEO of Congress for the New Urbanism (Chicago), remarks that larger retailers are now looking to have more of an outdoor presence-at least from a distance-and thus are more eager to be in a lifestyle center or mall environment.

"At first, the larger retailers migrated out of the mall, to the big boxes and parking lots," he says. "But now if they're in a suburban location, a retailer like Target or Home Depot might want to be in a lifestyle center-at a T intersection where their store terminates the vista."

Steve Sterrett, CFO of Indianapolis-based Simon Property Group, America's largest retail REIT, recently began developing in Italy, and he found that some American mall concepts work overseas, while others have to be modified. "Our Italian assets," he notes, "are all anchored by hypermarkets, and overall our tenants are moderately priced, because the high-fashion  retailers usually prefer the piazze of major cities. Also, modern American malls all have sit-down restaurants. That's less common in Italy, where the family meal at home is more valued."

Back home in the States, though, the objective seems to be to keep the whole family in the mall or shopping center for most of their meals, and indeed for most of their overall leisure time. With increased outdoor space, conveniences and diversity of shopping experiences, the mall of tomorrow might be regarded as the living room of an entire region.