Nine million Camp Snoopy rides later, the Mall of America turned 1 year old this month, with much of its early promise fulfilled and with tenants giddy over a summer shopping frenzy deserving of a cameo appearance by Santa Claus.
“It’s unpredictable, but terrific,” said Eric Nordstrom, manager of Nordstrom department store.
Who would have predicted, for instance, that Nordstrom’s 17-day sale in July would be busier than the 17 days before Christmas? Or that a hallway cart peddling refrigerator magnets would blossom into a full-fledged store?
Or that mall managers would come close to delivering on a seemingly absurd projection of 40 million visitors in the first year? (The mall’s latest first-year attendance is conservatively estimated to be 35 million, while the city of Bloomington estimates it to be 30 million to 32 million.)
“It’s fair to say it has been considerably more successful than most of the local real estate community thought it might be,” said Louis Frillman, president of the Consulting Service Division of Minneapolis-based Marquette Partners, a commercial real estate firm with no ties to the megamall. “But one year at a mall like that doesn’t tell the story.”
Still to unfold are two crucial subplots. For the nation’s largest shopping mall to succeed, it must earn more business from the consumers in its own backyard and avoid getting old in the eyes of tourists, say mall retailers and industry experts.
The Bloomington mall opened to a whirlwind of local, national and international publicity, combining four nationally known anchor tenants-Macy’s, Nordstrom, Bloomingdale’s and Sears-with 400 retailers, an indoor amusement park, nightclubs, restaurants and movie theaters. Its sheer size virtually guaranteed attention for what many observers predicted would be a honeymoon year.
“I don’t think the issue is one year later; I think the issue is five years from now, 10 years from now,” said Judith Martin, director of urban studies at the University of Minnesota. “I think the long-term prospects for something of that scale are something to worry about.”
Worrisome, even in the first year, was the initial reluctance of area residents to shop at the mall. Mall of America General Manager John Wheeler admits “there still is a significant opportunity” in gaining local market share.
“There are some local shoppers who have not yet learned how easy Mall of America is to shop,” Wheeler said.
For instance, the summerlong rush that has anchor tenants gushing about unexpected sales is believed to be fueled largely by tourists. The seven-acre Knott’s Camp Snoopy conducted an informal weekend survey in late July and found that 60 percent of its customers on those days were from out of state, not just from out of town, said mall spokeswoman Michelle Biesiada.
Furthermore, the mall has been more dependent on weekend traffic throughout its first year than most suburban malls, said Linda Jensvold Bauer, operating vice president and general manager of the Bloomingdale’s store. It’s another sign that residents haven’t embraced the 4.2-million-square-foot center as a place to run shopping errands.
But Bauer and others from the anchor retailers say local consumers are becoming more familiar with the mall’s layout. Frillman said the design by developer Melvin Simon & Associates Inc. combines excellent access and a strong mix of retail and entertainment.
“I think the locals stayed away from us for a while,” said Macy’s manager Jeff Gennette. “They really found us on their own time and in their own way.”
The mall is owned primarily by Teachers Insurance and Annuity Association, a New York-based pension fund. Reggie Long, a senior investment analyst at Teachers, said the association is “exceptionally pleased” with the mall’s maiden year.
Teachers paid cash for the mall and the property is already generating a return, although it is not performing better than its more established malls, Long said.
Wheeler said Indianapolis-based Simon & Associates designed the megamall to have long-term appeal, and that its face will change continuously with the addition of new tenants and attractions.
Rumors have been circulating, for instance, that the mall is close to adding a giant aquarium that had been deleted from the original plans because of the cost. Also in the offing are two high-profile nightclubs: Planet Hollywood and Bourbon Street Live.
According to Wheeler, retail sales in the first year are likely to be around $650 million, the amount the mall had projected. With an estimated half of those dollars coming from tourists, Wheeler figures that they spent an additional $450 million to $500 million elsewhere in the Twin Cities.
His estimate is based on a study of visitors to the world’s largest shopping mall in Edmonton, Alberta. Tourists there spent $1.50 in the surrounding area for every $1 they spent at the mall.
Sixty-one new tenants opened after the mall opened last Aug. 1, bringing occupancy to 83 percent, surprisingly high for such a large mall. Only nine permanent tenants have closed.
The typical failure rate is 10 percent in the first year at a new mall, compared with 2.5 percent at the Mall of America, Wheeler said.
“My assessment has to remain positive,” said Isaac Lagnado of Tactical Retail Solutions Inc. of New York, a retail consulting firm.
Nordstrom, Macy’s and Sears said first-year results surpassed expectations. Bloomingdale’s, which appeals to a smaller upper-moderate market, is performing according to plan, Bauer said. Still, she said, “We are very, very happy with business” and the store has set a record for opening new charge accounts.
Lagnado estimates the total sales of the four anchor tenants at $175 million: roughly $70 million by Nordstrom, $55 million by Macy’s, $30 million to $35 million by Bloomingdale’s and $25 million by Sears, which is the smallest of the four stores.
In St. Paul, Mayor Jim Scheibel said the Mall of America hasn’t had a measurable financial impact on downtown trade. In Minneapolis, Downtown Council President John Labosky said the effect has been “neutral, if not better.”
While the Mall of America clearly has softened the 3-million-square-foot retail community in downtown Minneapolis, Labosky said, it has boosted restaurant and hotel business by attracting tourists and has given urgency to downtown renewal efforts.
“I think people are realizing it’s not an evil monster; it’s actually some benefit to the area,” Nordstrom said.
