Across the country, America’s malls are facing an identity crisis.
These huge retail centers, which have been around since the late 1950s and saw constructional boom periods in the 1980s and 1990s, now have high vacancy rates and aging properties. In fact, commercial real estate company CoStar Group, based in Washington, D.C., reported that more than 200 malls with at least 250,000 of rentable square feet have vacancy rates of 35 percent or higher.
Data from the New York-based International Council of Shopping Centers shows that between 2008 and 2012, 74 mall department stores closed. These anchor tenants are especially important because they help draw in shoppers.
Meanwhile, online sales are soaring, hitting $231 billion in 2012 and projected to reach $370 billion by 2017, according to Massachusetts-based Forrester Research.
This is forcing some malls to close and others to reinvent themselves, which is particularly apparent in the Corridor. In 2013, a string of developers and mall owners announced plans to redevelop and expand their properties.
Lindale Mall is undergoing a 14,600-square-foot expansion, adding shops and restaurants.
Portions of Westdale Mall will be demolished this spring, making way for a $90 million update that will turn the enclosed mall into an open-air, mixed-use development.
After losing Von Maur to Iowa River Landing, Sycamore Mall is re-branding itself as Iowa City Marketplace. Architectural concepts reveal parts of the building will be torn down and an exterior plaza space and interior courtyard will be added.
Redevelopment, not new development
Across the country, and in the Corridor, companies are investing considerable amounts of money into redeveloping and expanding older shopping centers rather than building new ones.
“Owners and developers want to reinvest in their current assets,” said Jesse Tron, spokesman for the International Council of Shopping Centers.
Money dried up during the recession, he said, and new construction was put on hold. The last enclosed shopping mall to be built before 2012 was in 2006.
“What property types that might be built remains to be seen,” he said, adding that fewer developers are planning to build enclosed shopping centers. “Hybrids have certainly popped up, with mixed-use developments and incorporation of non-traditional tenants during the recession — it was done to combat vacancies.”
Les Morris, a spokesman for Indianapolis-based Simon Property Group, the owner of Lindale Mall, said the company is investing $1.1 billion into redeveloping or expanding 35 of its properties.
“Lindale is not without precedent,” he said. “We’re adding a variety of new tenants and fresh vitality” to other centers, he said.
The only area in the company that’s seeing any new development is in its Premium Outlet shopping centers.
“There are very few new shopping centers going up, but there is a ton of remodeling going on,” said Mark Seabold, an architect with Shive-Hattery, which is working on the Sycamore Mall and Westdale Mall redevelopments. “Transformation is going on here – at Sycamore Mall, Westdale Mall – we’re turning them into a social hub.”
Seabold said similar types of reuses are occurring nationwide, turning existing structure into social space by bringing together dining, entertainment and mixed-use areas.
Ramping up entertainment
Adding more entertainment options is an important part of redevelopment, experts said, because malls need to give families a reason to come in and shop rather than just purchase items online from the comfort of their homes.
“A key thing they’re doing is ramping up dining and entertainment options,” Tron said. “This was something that was always looked at, but it is even more now. You see lots of large shopping centers adding a sitdown-style dining option to draw people to the mall.”
Tron said family activities, such as lazer tag and miniature golf, are becoming popular in addition to more traditional entertainment options such as movie theaters.
Monica Nadeau, general manager at Coral Ridge Mall, said she has seen the benefits of offering families several choices.
“The entertainment piece is very valuable,” she said, noting that the mall’s carousel, ice skating rink and the Iowa Children’s Museum all help extend shoppers stay. “They can also pick up their groceries at Target or see a movie,” she said.
Morris said Simon Property Group is revisiting the food options and food courts in many of its properties. And as with Lindale, which is getting a Chipotle and Cheddar’s Casual Café, it’s trying to add restaurant chains that don’t have other locations in the area.
“We’re trying to give customers healthier options when possible, or ethnic options as well,” he said.
Shive-Hattery’s Seabold believes that now is the time to incorporate national trends into the aging malls in the Corridor.
“Sycamore Mall is proving to be a great place to start,” he said. “The mall has seen its share of vacancies in recent months, but this rebranding will open the area up to greater possibilities.”
“Each (mall) is getting their identity re-established,” he said.