The indoor mall isn't dead, not yet

The Washington Post has a wonkblog entry, "Why no one likes indoor malls any more," about the death of the indoor mall.

For what it's worth, the decline of the shopping mall isn't anything new, and changes within the industry have been occurring for decades.

The author acknowledges this, and really the headline is misleading, because what the piece is about is the failure of single use, inwardly focused shopping malls, which is a mouthful in trying to encapsulate for a headline.

1.  But a couple months ago, I needed to go to the (Westfield) Wheaton Mall in Montgomery County, Maryland and I was surprised at how busy it was, calling into question the thesis that all inwardly focused shopping malls are on death's door.

There are many other successful inwardly focused malls in this region and others.  And so far, they aren't all that mixed use, even if they are being more inventive in adding "new" types of anchor stores like Target or Costco.

2.  The lifestyle center, focused on delivering an outdoor focused shopping experience, more modeled after traditional commercial districts, has been around for 15 years or more (see this 2006 piece, "Lifestyle Centers vs. Traditional Commercial Districts").

A few lifestyle centers even have department stores and/or massive anchors like the big sporting goods stores (Bass Pro Shops, Outdoor World, etc.).  Or a casino, like in Anne Arundel County, Maryland.

And some shopping centers have grafted the open air restaurant elements onto their properties.

Rick Caruso in Greater Los Angeles (The Grove, etc.) is one of the innovators in this project type ("Malls will be 'historical anachronism,' says Grove mogul," Los Angeles Times; "Developer Rick Caruso on the Grove in L.A.: It's “a Main Street of Dreams," Vanity Fair).

3.  But yes, more shopping malls, especially in weaker markets, are dying.  And mostly the mall as a development type has been built out.

4.  Especially as the retail industry consolidates, in part because the US has more retail space per capita than any other nation in the world.

5.  But consolidation of the department store format especially has hurt the shopping mall.  Most major markets  have had one or more department store chains consolidated into Macy's, even as these firms survived the decline of the format in the 1970s and 1980s.  Nordstroms is the only other department store company that aims to have a national footprint, along with the other upscale chains Saks, Neiman Marcus, and Lord & Taylor.  But these companies are small compared to Macy's and their 800+ stores.

The national chains, Sears and JCPenney, have big problems.  Sears has been in a long, slow decline for decades.  It's not likely to survive because it is owned by a hedge fund whose leader has not shown any real skill in retail merchandising and verve.

6.  And there aren't that many regional department store chains independent of the big companies, and able to fill out a multi-story 100,000+ square foot floorplate at a shopping mall, but there are some.  Bon-Ton in the Midwest has a bunch of the chains that Macy's never got.  Boscovs is active in the Northeast.  Von Maurs in the Midwest.  Dillards in the Central US.  Belk in the Southwest.  Bealls, very successful, in Florida, etc.

So as a result there just aren't that many department store companies around to fill out the spaces necessary to "anchor" a successful shopping mall.

For example, in Greater NYC you had Macy's, Abraham & Strauss, Sterns, and Bambergers which are all now amalgamated into Macy's.  That means one store for a shopping center, not three or four.

7.  That being said, there are plenty of shopping malls that are successful and they will remain successful provided the firms stay on top of their game.

My biggest lesson about how 21st century focused real estate firms are capable of change is the firm Edens, a shopping mall developer active in the Mid-Atlantic and South.

They had no substantive experience in center cities and then they took a big position in DC's Union Market.  And they have done amazing things, proving to me that I need to acknowledge that some companies are well capable of "change, innovation, and transformation."

8.  Like Edens, many shopping mall developers are making their once exclusively retail centers mixed use places, with a variety of building types and a spatial form stressing the outdoor experience, and adding residential, office, and hotel.

Actually, that's not a new trend necessarily, either.  Hines Interests did this first (office and hotel and skating rink) with the Houston Galleria back in the late 1970s.  But it's only been in the last five years or so that more shopping store companies recognize that to stay relevant, they need to move in this direction.

9.  Plus the other way the best firms are differentiating their projects is with a heavy dose of special events and programming to bring people back week after week in search of new experiences.  (The problem is that retailers are expected to pay for the privilege of providing activation to real estate developers who reap most of the rewards.)

10.  Finally, along the lines of this blog's continued focus on differentiation, I do think that in center cities, the department store can still be relevant, like Macys in DC, or NYC or SF.

Macy's store in Midtown Manhattan is one of the busiest in the world, and a major tourist draw.  The single store is run as a "district," whereas normally a district might have a dozen stores, and it's undergoing a $400 million renovation ("For Macy's, a Makeover on 34th Street," New York Times).

In 2013, the city's convention and visitors bureau even opened a visitor center there ("Macy's and NYC & Company Enhance the Tourist Experience").

But it is important for local jurisdictions to take a more active role in discussions with the companies to make this a reality in more places.

11.  Shopping centers in cities.  The inwardly focused "mall" hasn't been that successful in US cities, although many cities (Providence, Sacramento, etc.) went this route in the 1980s but even Manhattan has some, like Time Warner Center at Columbus Circle, and Embarcadero Center in San Francisco, that do quite well.  (Georgetown Park Mall in DC is an example of this type of local failure.  However, if it had a superstrong anchor, maybe it could have survived.  OTOH, it had the same problem of wanting to sweep visitors off the streets of Georgetown, when people go to Georgetown to walk around and be outside.)

I noticed a bunch of these in Essen.  In terms of whether or not these formats support urbanism is a matter of placement, connection to transit, etc.  The shopping centers I saw were mostly part of or immediately proximate to the pedestrianized city center.  They complemented the outdoor experience rather than attempting to draw customers away from it.