That environment is better known as the "lifestyle center" or "town center," and it could drive the traditional mall to extinction.
Before a crowd that has reaped billions from erecting the status quo, Mr. Thomas dropped a statistical bomb: After a peak a few decades ago of 60 to 70 mall openings a year, what may be the last new regional mall in America opened this year.
There are no others on the drawing board through 2008, according to ICSC. By then, more than 60 lifestyle centers will have opened, while dozens of traditional malls will have added lifestyle-center-like wings or have been demolished in favor of their conceptual successor.
What all of this means for developers, shoppers and the lifestyle brands that have replaced fading department stores as the mall's main draw depends on whom you ask.
having it both ways
Maverick developers such as Yaromir Steiner of Steiner & Associates (AA, Sept. 25) see themselves replacing sprawl with miniature cities. Executives at development-industry giants such as Simon Property Group and Taubman Centers, on the other hand, see lifestyle centers as a fad to be embraced and incorporated into their existing portfolios.
"It's a couple of things," said Michael Kercheval, CEO of the ICSC. "One is recognizing that the baby boomers will respond ideally to something that recalls their pasts. The second is that it's much easier these days to win approvals from cities, towns and their mayors to build a mixed-use development with trees and fountains than a mall, when the outside of most malls resembles a prison surrounded by a sea of asphalt."
Brand managers and real-estate chiefs of the retailers themselves will tell you that lifestyle centers and town centers-which frequently feature streets and curbside parking-actually liberate and empower their brands in a manner the typical enclosed mall never could.
The layout of lifestyle centers allow them to have it both ways: to draw consumers directly into their stores and to benefit from the ambient traffic malls generate. The sad paradox of malls in 2006 is that the feature that once made them so attractive to retailers-the all-encompassing environment-has become their biggest impediment.
"The lifestyle centers are representative of where shopping is headed-toward both greater convenience and entertainment," said John Scotti, VP-real estate at Ann Taylor. "Going to a mall today is a production. What we saw in the 1970s and '80s was nearly the extinction of downtowns. We've since realized that we like them and their cozy sense of community.
"In malls, you don't necessarily live off of traffic anymore; you tend to have more of a dedicated shopper who means business. All of the research shows the dollars spent per visitor tends to be high. Shoppers are going there with a mission."
An ICSC study of consumer behavior in lifestyle centers from 2002 backs up Mr. Scotti's contention: The average length of a customer's visit was significantly shorter (57 minutes vs. 78 minutes for regional malls) but more productive (an average spend of $84 per hour vs. $57.70).
Nearly three-quarters of those surveyed said they had come seeking a specific store or item. Lifestyle-center developers suggest that since the 2002 survey, anecdotal evidence points to increasingly lengthy visits, as shoppers are drawn to entertainment options such as restaurants, movie theaters and large bookstores.
The rise of the lifestyle center, then, represents a sort of breakdown of the traditional mall model, in which department-store anchors attracted shoppers with merchandise, sales and locally targeted advertising, while specialty brands basked in the traffic and subsidized the anchors by paying higher rents.
But the long-term decline of the department store shows no signs of slowing. Sales have fallen 14% since 2000 to $86.7 billion last year, according to U.S. Census Bureau estimates, while warehouse chains have grown 128% and clothing stores 31% during the same period.
Federated Department Stores' roll-up of fast-fading chains last year and their rebranding this month under the Macy's banner has only added insult to injury for the 85 or so malls that now have two of them. For example, a Macy's anchors either end of the Polaris Fashion Place mall in Columbus, Ohio. Across town, Easton Town Center-one of the first and most successful town centers-opened in 1999 without any department stores. Today, Easton's specialty retailers generate annual sales of $545 per square foot, compared with Polaris' $366.
"Economically speaking, it's a much better deal for a specialty retailer to assume the burden of drawing traffic in a lifestyle center," said Steve Morris, a former senior VP in charge of store planning for Limited Brands who is now a partner at retail consultancy Asset Strategy Group. "And the developer would probably prefer not have everything hinging on one store."
Complicating things further are major mall developers such as Simon Property Group that are trying to monetize traffic by transforming wall space into ad space. Their efforts have enraged some retailers who were already upset about paying fees earmarked for mall promotion.
"[Build-A-Bear founder] Maxine Clark believes she's drawing shoppers, not the mall," said the ICSC's Mr. Kercheval. "Why should she be paying advertising fees to the mall when, in her mind, [the mall] should be paying her? And one department-store CEO is livid about the fact that there are advertisements in his stores telling customers to watch the CW at 8 p.m. tonight. 'They shouldn't be doing that,' he told me. 'They should be here shopping in our store!' Over the next five to 10 years, this issue is going to come to a head."
This has been a nonissue so far for lifestyle centers, which have tended to skew in the opposite direction in terms of design, toward a nostalgic, small-town urbanism that hopes to resuscitate (or at least replace) the decayed downtowns that malls and big-box stores helped destroy.
To that end, they offer retailers a seat at the table to plan the next generation of American cities and sprawl, a conversation that's been dominated by the New Urbanists, an alliance of like-minded architects, urban planners, government officials and mall developers who hope to steer us away from cul-de-sacs and big-box stores and back toward self-contained neighborhoods in which we live, work and shop.
"There's been some assimilation and some conflict between the mall developers and the New Urbanists trying to create communities," said Steve Maun, president of Leyland- Alliance, an urban-planning firm that is building a campus-town for the University of Connecticut in Storrs, Conn. "Those architects think about residential first and commercial second, and it's fair to say that they've been pretty good at the first but not so successful at the second.
"On the other hand, the commercial developers, in the worst cases, are tacking on apartments to outdoor malls and declaring, 'Here it is: New Urbanism.' What makes it work is complexity. You need multiple types of retail, offices and especially housing, not just one type at one price point."
Developers' commitment will be put to the test in coming years, when supersize town centers such as Atlantic Station, north of Atlanta, and Glorypark, in Arlington, Texas, open with enough residences for 10,000 people or more.
Welcome home ... to the mall.
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