The torrid pace of shopping center development in Chicago and elsewhere has cooled and isn`t likely to heat up again to its past level.
”We`re looking at much slower new development in the future, not like when the Baby Boom was the driving force behind all the shopping center construction of the `50s and `60s,” said John Melaniphy, president of Melaniphy & Associates, a Chicago retail consulting firm.
But that doesn`t mean that creativity in shopping center design is withering along with development.
”The shopping center industry is that part of real estate that is the most dynamic and the most rapidly changing,” said Alexander Bul, vice chairman of Henry S. Miller Corp., a Dallas-based shopping center development and management firm.
”The jury is still out on things like hypermarkets. The point is that there are a lot of changes and innovations and it is hard to tell which will work and which won`t,” Bul told members of the American Society of Real Estate Counselors at a recent seminar in Chicago.
Shopping center developers must have a strong feel for the pulse of the buying public to create successful centers. And the buying public is often difficult to read.
”The retailing industry and the developers it works with are undergoing a profound and fundamental change,” said Walter Levy, chairman of New York City-based Walter K. Levy & Robert E. Kerson Associates, a retail consulting firm.
”Consumer values are changing. Baby Boomers are still shaping what happens in retail, but they have different values and different lifestyles. Saving is a greater priority, investment in the home as a sanctuary from society is much more important and there is a move toward simplification,”
Levy said.
Those trends will have an effect on the type and design of the shopping centers that are built in the coming decade.
”New concepts in retail architecture usually come from trends in retailing and merchandising, such as the addition of food courts to malls,”
said Stephen Karp, chairman of New England Development, a shopping center builder on the East Coast.
”But great retail architecture is really a backdrop, like scenery, for retail stores because the architecture cannot stand on its own,” he told a panel at the recent International Council of Shopping Centers` annual convention in Las Vegas.
Retail architecture, however, is often limited by the requirements of the stores that will occupy a center.
”To the dismay of the architect, exterior design comes in low on the priority list,” said Mark Hopkins, president of Otis Associates Inc., a Schaumburg-based firm that has designed numerous Chicago-area shopping centers, including River Tree Court and Town Line Commons in Vernon Hills.
”On the flip side, a great design doesn`t necessarily make for great retailing,” said Jon Talty, who worked for developer Bradford Companies before joining Otis. ”The design could be too expensive or you might not be able to lease parts of the space.”
Finding tenants for retail space is a major concern these days, with retail vacancy rates on the rise in many parts of the country. CB Commercial Real Estate Group estimates that more than 10 percent of the retail space outside of regional malls is vacant in the Chicago area.
”Trends come and go in this area of design as much as in any kind of building,” said Joseph Scalabrin, vice chairman of RTKL Associates Inc., a Dallas architecture and engineering firm. ”It`s difficult separating what is serious, a social trend, from what is trendiness, which in retail is common.” One trend that everyone agrees is for real is the desire to bring more life and entertainment into retail development.
”There is a worldwide desire for shopping and leisure to work together and no one has done it yet,” said Roy Higgs, who heads the Baltimore office of Design International, a design and development consulting firm that has been involved in projects from Miami to Indonesia.
But Higgs thinks his firm may have the answer: Fantasy Dome.
”This concept appeals to all five senses. It`s a retail-driven project with leisure and entertainment all around,” Higgs said.
The dome is one of six projects in competition to be built outside of Tokyo. It would be an enclosed space of 2.35 million square feet on eight levels, including 750,000 square feet of shops plus theaters and nightclubs.
Activities and shops would be arranged in five areas: Visurama for most retail, Audiorama for electronics, Playarama for games, Tastearama for food and a water-themed Envirorama for nightclubs and other entertainment.
”It`s kind of a combination Las Vegas and Disneyland,” said New England Development`s Karp. ”It sounds pretty ambitious and innovative.”
”A Fundome? It`s a nice concept and maybe it will get one shot in Tokyo,” Talty said. ”But it`s not real. We have to concern ourselves with Vernon Hills or Munster, and there the parameters a typical retail developer confronts are totally different.”
Despite the technological advances that pervade retailing, such as point of sale computerized inventories, shopping centers of tomorrow still need to cater to people, analysts warn.
”We`re working in our shopping centers to make them more warm, more customer friendly than computer friendly,” said Harold Carlson, president of Harold J. Carlson Associates Inc., a Rosemont-based retail management and leasing firm.
”Malls have an image problem. It`s one of the reasons their traffic is falling,” Carlson said. ”It`s the sameness and sterility of too many stores with too same merchandise chasing too few customers. We`ve got to find a way to energize those centers.”
A good sprucing up is one way that owners can generate interest in a center, and many have undertaken or are considering such action.
”Rehab and renovation, that`s the future for retail development,”
Hopkins said. ”There are a lot of tired old centers out there.”
Simple cosmetic renovations may be enough to make older centers as attractive as their newer counterparts. But more extensive rehabilitation projects are increasing around the country as well, Scalabrin said, with centers adding levels above or below existing space.
”Few new centers are going to be built in most parts of the country. The action will be in refurbishment and retrofit,” said Irwin Barkan, president of I.J. Barkan Inc., a Boston-based retail real estate firm.
”There are a lot of empty office buildings in great shopping center locations, but the economics doesn`t work in reverse. It costs too much to tear them down and start over,” Barkan said.
Scalabrin said that traffic flow and parking areas will be two areas that all centers will be looking to upgrade in the coming years, part of shopping center owners` desire to make life more convenient.
”We`re going back to a communal type environment that we got away from in the suburbs. And shopping centers are going to become areas for these communal events to occur,” said Jon Jerde, president of the Jerde Partnership of Venice, Calif.
”It`s time to deliver on the promise of the town center,” Jerde said.
Cities and villages from Brandywine, Pa., to Buffalo Grove have attempted to do just that.
”Shopping centers are at the forefront of a community`s image,”
Scalabrin said. ”You can take a conventional center plan, or conventional mall, and without changing the general characteristics by stretching it out you can allow it to open up to the community.”
Although the intersection of Milwaukee Avenue and Town Line Road in Vernon Hills looks little like a traditional downtown, it has become the retailing center of the village with the Hawthorn Center mall, River Tree, Town Line Commons and the Hawthorn Hills Fashion Center all occupying space there.
”You want retail that is pedestrian-oriented, one that injects life into the area and keeps people there,” Hopkins said. ”But a lot of projects happening now with the nomenclature of Town Center or Village Center are really just strip centers getting some sort of tax financing.”
But town center-type projects are leading developers to explore other innovative ways of configuring shopping space.
”For the first time, we are departing from shopping centers with traditional anchor stores. We`re finding that you can create an anchor with an office building, with transit stations, with residential or with food courts and cluster specialty stores around them,” Scalabrin said.
There are risks involved in such projects, however.
”Department stores have historically been tremendous advertisers and you need to have ad dollars to attract consumers. So you have to have another hook for an anchorless mall,” said Melvin Simon, chairman of Indianapolis-based Melvin Simons & Associates Inc., which has built more than 150 shopping centers in the U.S.
Simon`s project in Scottsdale, Ariz., a 400,000-square-foot center now under construction in the suburb northeast of Phoenix, is an anchorless center. It will be filled with specialty shops, art galleries, museums, restaurants and an IMAX theater. So far the center is 65 percent leased.
”It is on the cutting edge of what could happen with shopping centers,” Simon admitted. ”And there have been a lot of failures with unanchored centers. It will be an interesting experiment and it may take a couple of years to get the right mix.
”But 7 million tourists a year go through Scottsdale, so we think we have that different kind of hook for them,” he said.
Simon is also building an unanchored center in Las Vegas, a 240,000-square-foot project between Caesars Palace and the Mirage Hotel. That center, scheduled to open in October, is 75 percent leased.
”There, we`re relying on traffic and not advertising. More than 20 million people walk on the street running between those hotels each year,”
Simon said.
”The Mall of America will be different. We feel it will draw from 200, 300, 400 miles, not 5 or 10 miles like a regional shopping mall. It goes far beyond retailing. It`s amusement, like at the Edmonton Mall, but on a much more advanced basis,” Simon said.
The 4.2 million-square-foot mall in Bloomington, Minn., has a Knott`s Berry Farm Camp Snoopy theme park as its amusement anchor.
The center also will have a 1.2 million-gallon walk-through aquarium, a two-level miniature golf course and a Legoland, where the toy blocks will be manufactured and sold.
Simon said he is negotiating for an additional entertainment facility to take up a major space in the mall.
”I`m all for entertainment and excitement in malls,” said Gerald Blum, president of Gottschalk`s Inc., a medium-sized California department store chain, ”but to me, the most innovative idea out of 1990 was the adults-only car wash, with the topless attendants. There is a lawsuit over the concept, but it certainly was innovative.”
