Reviving the dead shopping mall with residences, hotels

Efforts to resuscitate dead shopping malls include adding living space:

Four years later, after failing to make that work, owner The Krausz Companies is pitching a new plan that would keep existing anchor stores but demolish vacant Kohl’s and Sears stores and significantly shrink the size of the mall. The concept plan, proposed in April, also calls for building 155 town homes and 256 apartments north and east of the existing mall…

Melaniphy said he thinks there also will be more redevelopments that shrink the amount of space devoted to retail and mix it with residential or hotel development.

That’s already happened at the former Randhurst Shopping Center in Mount Prospect. It billed itself as the largest mall in the world when built in 1962 but struggled to keep up as more upscale shopping centers opened nearby. It relaunched as Randhurst Village in 2011, an open-air shopping center with shops, restaurants, a movie theater and hotel.

This sounds a lot like the retrofitting of suburbia suggested by Ellen Dunham-Jones. The key is to have a steady flow of people on the site – people who live there or who are staying at a hotel – rather than relying on people driving to the mall. If all goes well, it might be hard to tell decades from now that these sites were once large shopping malls. (At the same time: (1) these mixed-use developments might stick out in the suburban landscape and (2) the trickiest part of improving these malls might be linking the edges to the surrounding areas. Suburban developments often have fairly impermeable edges.)

A reminder: this does not mean that the traditional shopping mall is dead. There may just be a lot fewer and they will be concentrated in wealthier areas:

“The fancier malls are going to be healthy because there are always folks that want that aspirational lifestyle, but there’s still a lot of money to be made with people who might have more value-oriented customers as their focus,” Trombley said.

While food deserts were all the rage several years ago, we might talk of retail deserts in the future.

 

Mixing shopping malls and transit centers in Hong Kong

Hong Kong demonstrates a very different model of shopping malls compared to the American suburban mall:

Hong Kong has more than 300 shopping centers, but most of the city’s malls don’t sit on asphalt parking lots; rather, they’re above subway stations or underneath skyscrapers. In my book “Mall City: Hong Kong’s Dreamworlds of Consumption,” I describe how some are connected to so many towers that they form megastructures—cities in and of themselves that can accommodate tens of thousands of people who live, work and play without ever going outside. Hong Kong also has the world’s tallest vertical malls—“mall skyscrapers” that rise up to 26 levels, with crisscrossing “expresators” that shoot shoppers high up into soaring atriums…

As convenient this urban form may be, it does come with strings attached. In the case of Union Square—as in many other podium-tower developments—the mall is deliberately placed at the intersection of all pedestrian flows, between all entry points into the structure and the residential, office and transit areas…

For millions of residents and pedestrians, then, entering commercialized areas becomes an inevitability, not a choice. It normalizes a culture of consumerism: Everyday life is played out on the terrain of the mall, and the private shopping atrium takes on the role of the public square. Because Hong Kong’s apartments are small—its summer climate hot and humid—the mall becomes a default gathering place. And why not? There’s plenty of space and the air-conditioning is free. And while you’re there, you might as well browse around the shops and spend some cash…

The Asian hyper-dense urban mall is also making an appearance in American cities. Miami has Brickell City Centre, a five-story mall in the heart of the city. Covering three city blocks, it’s topped by three high-rises (and was built by a Hong Kong developer). New York City is building a seven-story mall attached to two skyscrapers in Hudson Yards, America’s largest private development. The Santiago Calatrava-designed Oculus—the centerpiece of the World Trade Center—has a mall with over 100 stores, with its white-ribbed atrium attracting an army of tourists taking pictures with selfie-sticks. Since the hub connects office buildings with train and subway stations, the stores are also “irrigated” by the 50,000 commuters who pass by each weekday.

American shopping malls tend to get a bad rap: they take up a lot of space with their endless parking lots, they often require a car in order to get to one, and are centers of consumerism. The Hong Kong malls eliminate two of these major issues: they are a more compact use of space and don’t require cars. Indeed, it is clever to combine mass transit space with a mall. However, these integrated malls may present even larger consumption issues since travelers have to go through these spaces rather than choose to go there. Isn’t this the complaint about gift stores in museums, zoos, or amusement parks where you finish an exhibit or ride and then have to go through the items for sale? And mass transit is supposed to be a public good so it may be a bit strange to mix it so closely with private profit-making. (I wonder if the transit facilities/authorities could take a cut of the sales in these transit malls and funnel more money into transit systems. Is this a way to fund necessary infrastructure maintenance and improvement in the United States?)

I’d love to see an analysis of how sales change when people are intentionally funneled through consumption spaces like this.

Making money by betting on dying malls

Some are hoping to make a lot of money with the decline of shopping malls:

It’s no secret many mall complexes have been struggling for years as Americans do more of their shopping online. But now, they’re catching the eye of hedge-fund types who think some may soon buckle under their debts, much the way many homeowners did nearly a decade ago.

Like the run-up to the housing debacle, a small but growing group of firms are positioning to profit from a collapse that could spur a wave of defaults. Their target: securities backed not by subprime mortgages, but by loans taken out by beleaguered mall and shopping center operators. With bad news piling up for anchor chains like Macy’s and J.C. Penney, bearish bets against commercial mortgage-backed securities are growing…

Many of the malls are anchored by the same struggling tenants, like Sears, J.C. Penney and Macy’s, and large-scale closures could be “disastrous” for the mortgage-backed securities. In the worst-case scenario, the BBB- tranche could incur losses of as much as 50 percent, while the BB portion might lose 70 percent.

I’d love to see some analysis of whether this is a good development: it doesn’t sound like this will break the mortgage industry in the same way as the subprime mortgage crisis, clearly some investors have learned something from the past, yet the default of shopping malls can have a big effect on the local economy and community.

There is an interesting summary of the fate of the American shopping mall in the final paragraph of the article:

“When a mall starts to falter, the end result is typically binary in nature,” said Matt Tortorello, a senior analyst at Kroll Bond Rating Agency. “It’s either the mall is going to survive or it’s going take a substantial loss.”

This can’t be good in the short term, particularly if the retail money vanishes into the Internet ether. In the long run, it does hint at a very bifurcated retail experience in coming decades: wealthier places where shopping malls still thrive and are popular and other places where there is nothing but big box stores, the occasional strip mall, and online shopping.

Creative writing at the suburban shopping mall

The Mall of America is offering a unique opportunity:

The Mall of America is taking applications for a summer writing residency, which makes now a good time to question whether our collective taste for absurd mash-ups has gone too far. Is this an attempt to out-quirk the Amtrak residency, where writers typed on trains? What’s next — a sculptors’ retreat in a Chevron station? A poetry workshop at Ikea?

Maybe, but think about it: The people-watching alone would make easy fodder. Look — there goes a man in a plaid shirt, walking past Foot Locker into Sephora. He emerges with a small bag. The story practically writes itself.

Submit your residency application by Friday, and you could be selected to commemorate the shopping destination’s 25th birthday by spending five days writing while “deeply immersed in the Mall atmosphere.” (Nights are spent in a hotel, not sleeping on a department store mattress as I’d hoped.)

I agree: the shopping mall could be part of all sorts of interesting stories. But, I do wonder how many of them would be positive in the hands of today’s writers. Too often, stories of suburban life follow a similar script: happy looking family or couple ends up spiraling downward as the facade falls away from their American Dream. Such scripts could involve the postwar suburban tract home, current McMansions, or the shopping mall, perhaps the symbol of suburban affluence, consumerism, and emptiness. What is the shopping mall but the poor facsimile of authentic Main Streets?

Maybe this would be an even more challenging task: do such a residency and craft a range of stories representing the experiecnes of all those mall visitors and employees.

Avoid public wi-fi

Here is a helpful reminder:

And finally, don’t forget for one minute that public Wi-Fi is dangerous.

This one illustration is humorous:

Evan, now 11, programmed fake Wi-Fi portals and took them to food courts shopping centers across the Austin, Texas, area and waited to see how many agreed to some pretty outrageous conditions. For the love of free internet access, they’d have to give their OK for the Wi-Fi owner to do things like “reading and responding to your emails, monitoring of input and/or output, and ‘bricking’ of your device.”

More than half of the shoppers shown these terms accepted them.

I like that this the article ties this issue to shopping malls. This might primarily be due to this time of year when plenty of people are out purchasing gifts. However, it also works because shopping malls are about as close as we get as Americans to public spaces. Where else can you regularly go for a safe environment to be around other people to do one of the ultimate American activities (consume)? While this article reminds us that the mall may not be so safe, is it odd that Americans tend to think of it as a safe place? And if malls want to keep attracting people (who then spend money), shouldn’t they do something about protecting their wi-fi?

I see an opportunity for either malls or security firms: ensuring that your public wi-fi experience is a good one.

The suburban mall of today is an entertainment center

Stores alone are not enough to attract people to malls; they are now full of additional entertainment options including restaurants and movie theaters.

“The traditional mall with four department stores as their primary traffic driver is no longer the best model,” said Joe Parrott, a senior vice president with the Chicago offices of CBRE, a commercial real estate company…

“A lot of these big entertainment players are coming,” Parrott said. “And the malls are interested in bringing tenants that are more experiential and broaden the appeal of the mall beyond just department stores.”…

Stratford Square Mall in Bloomingdale is a perfect example of the changing dynamic. The mall is launching a multimillion-dollar renovation and tenant improvement project that features both interior and exterior improvements at the 1.3 million-square-foot center. It’s a continuation of an earlier renovation that included the 2014 opening of Round One, a 40,000-square-foot entertainment center that features bowling, billiards, numerous video games and karaoke…

Experts with California-based Green Street Advisors have predicted that 15 percent of malls nationwide will close or be repurposed over the next decade. But that doesn’t apply to successful malls listed in the “A” and “B” category.

On one hand, the major changes in retail – big box stores, online shopping – mean malls have to adjust as do a lack of public spaces in many suburbs – which can be approximated by private entertainment spaces at the mall.

One expert cited in this article says, “Bad malls disappear.” Within the next decade or two, we might expect to see fewer shopping areas in the suburbs overall but the ones that do survive becoming behemoths. This could have some interesting consequences for communities that are home to these entertainment complexes as well as for those who lost out on the chance to have a mall decades ago.

How many suburban entertainment centers can one region have?

Schaumburg is looking into creating a new entertainment district out of underused properties:

Schaumburg trustees Tuesday approved a $6.58 million offer to buy the two single-story office buildings just north of the village’s convention center and Renaissance Hotel to help develop a new entertainment district and reconfigure Thoreau Drive.

The 110,000-square-foot Woodfield Green Executive Centre lies on the north side of Thoreau Drive and just across Meacham Road from Zurich North America’s new headquarters…

The long-term plan is to hold the property to sell to one or more developers interested in building more restaurant and other entertainment venues near the southeast corner of Meacham and Algonquin roads.

This sounds like a typical suburban strategy today: take properties that are not doing well or even abandoned (see efforts to utilize closed grocery stores) and start generating revenues through new entertainment use. Stores come and go but theaters and restaurants can come together to create a vibrant distract that will generate property and sales tax revenues for years to come.

This did lead me to a question: within the Chicago metropolitan region, how many entertainment districts can the region support? If many suburbs are trying to pursue these goals, can most of them sustain successful districts? There are already a number of successful or established districts: Evanston, Arlington Heights, Schaumburg and Woodfield, Rosemont, Gurnee Mills, the Oak Brook-Yorktown corridor, Naperville, plenty of other downtowns with lively scenes and regular festivals and events (Geneva, Aurora, Elmhurst, etc.) and countless shopping centers that are transitioning to lifestyle centers. I assume there is a saturation point where these districts start losing people to each other. Of course, this might be mitigated by two factors: (1) continued population growth so that everyone can share from a growing spending pie and (2) specialization among entertainment districts that could help each remain competitive.

Another thought: how often do entertainment districts simply reproduce existing patterns of wealth and the distribution of higher-end commercial properties?