Reports of the death of the suburban shopping center have been greatly exaggerated.
For 15 years, the West Ridge Mall in Topeka, Kan., was very good to Briman’s Leading Jewelers. But in the past decade, co-owner Rob Briman could sense a change.
“As the 2000s began, business started declining,” he says. “2007 and 2008 were awful years for us in the mall.”
Eventually, Briman shut that store and focused on his main location downtown. Looking back, he blames the shopping center’s attempts to lure a younger demographic.
“It is mostly targeted toward the 15- to 20-year-old customer,” he says. “There really isn’t much there anymore for people of my generation.”
Briman isn’t the only person shunning the neighborhood mall. Long pilloried as soulless shrines to consumerism, malls hit tough times in the 2000s—there is even a website (DeadMalls.com) devoted to their demise. By 2005, journalists began declaring the “end of the mall”; those stories continue to this day. “The enclosed mall…is as dead as your average big-city newspaper,” wrote Reason last March.
Courtesy of King of Prussia Mall
Just a sampling of the jewelers at Pennsylvania’s King of Prussia Mall: Cartier, Tiffany & Co., Pandora, Tourneau, Tous, Bailey Banks & Biddle, Zales, and Kay Jewelers (in the Court and in the Plaza)
But people in the retail real estate business will tell you that many malls are alive and well; there has simply been an often brutal—and ongoing—winnowing-out process. “Malls are doing much better than is being reported,” maintains Chris Macke, senior real estate strategist with the Washington, D.C.–based CoStar Group. “For all the negatives, you still have an inherently desirable concept.”
According to ShopperTrak, a Chicago company that measures retail commerce, after a dramatic decline during the recession, mall traffic made a resurgence in 2010 and has remained flat in 2011. “The highs we saw in 2006 and 2007 have not come back,” says founder Bill Martin. “But malls are doing pretty well given the economic times.”
Retail analyst Howard Davidowitz, chairman of Davidowitz & Associates, a New York City retail consulting firm, says it depends on the center: “There are maybe 400 malls that will be good forever. They are in the right areas; they have the best tenants. But you have many more that are goners. There is no reason for them to exist.”
Indeed, the real estate industry has seen a real demarcation between “good” and “bad” sites, says Ivan Friedman, president and CEO of RCS Real Estate Advisors. “Retailers are becoming far more selective,” Friedman says. “Everyone wants to get into the [A] malls; no one wants to go into the B and C malls.”
Malls are graded based on sales per foot. “A” malls, such as Briarwood Mall in Ann Arbor, Mich., and The Falls in Miami, are ranked among the dominant properties in their markets, with top anchors and at least $400 per square foot in sales, according to Retail Traffic magazine. They are also generally well-kept aesthetically. “It is easy to tell which malls are going to be the winners,” says Macke.
The ups and downs of malls notwithstanding, they remain a prime place to buy jewelry, providing homes for the majority of Sterling and Zale Corp. stores (save Jared, Sterling’s “big box” jeweler, and Zales Outlet). Likewise, nearly all of Ben Bridge Jeweler’s 73 stores are stationed in shopping centers, and the company has no plans to change that. “From where we are, in the Western part of the United States, malls are still by far the most logical place for shopping to occur,” says Steve Davolt, Ben Bridge’s vice president of marketing.
Independents are finding success in the mall as well. In May, for example, Robert Irwin Jewelers moved one of its four stores into the Wolfchase Galleria Mall in Memphis, Tenn. Owner Howard Knopf says that, so far, the gamble is paying off. “Sales are up significantly,” he says. “Our store was literally right across the street from the mall and just getting in the mall has made a huge difference.”
Knopf likes the Galleria because of its traffic, which gets a boost from events like Ladies’ Night Out and auditions for The X Factor. He admits staying open late (a mall requirement) can be tough; location, however, is what’s important: “It’s in the middle of a highly populated area of Memphis. It is the only major regional mall around here.”
The mall houses several other jewelers, but Knopf sees that as a plus. “There is also a Zales and a Kay here, but you want as many of those around you as possible,” he says. “They do the advertising, they bring the people in, then you try and sell them.”
One thing working in malls’ favor: New construction has all but halted. In their heyday, so many were built that they often cannibalized each other. But the last major enclosed regional mall in America was built in 2006, five long years ago. “The retailers are going to existing space, which helps with vacancies,” says Jesse Tron, spokesman for the International Council of Shopping Centers (ICSC).
Other pluses for malls: They specialize in fashion, which Macke feels has made them less vulnerable to online competition. “A lot of the goods on the mall you want to feel and touch,” he says.
Meanwhile, faced with empty space, some locales have welcomed nontraditional tenants such as doctors’ offices, government offices, grocers, even schools. “Those also provide some spillover effect,” says Tron. “A kids’ gym is a prime example. A parent can drop off their child and then go shop for an hour.”
And because malls are typically places to not only buy things, but also hang out, a large number have added attractions that boast entertainment value. The Regency Mall in Racine, Wis., for example, just opened a glow-in-the-dark miniature golf course.
“Malls are trying to reinvent themselves once again,” says Martin. “They want people to come for something other than shopping.”
Davolt agrees that developers have become “more creative” at luring people, noting that many have also beefed up their dining options; the King of Prussia Mall, for instance, in King of Prussia, Pa., features the grill and wine bar Seasons 52, along with Sullivan’s and Morton’s steakhouses. “It’s no longer just the old food court,” he says.
As the recession lifts, the ICSC sees a trend in redevelopment. “Mall owners…are reinvesting in current properties to bring their rents up to market value and attract more people,” Tron says.
All of which means the best sites will continue to lure consumers, not to mention tenants. Take Scott Murray, owner of Murray’s Jewelry in Jasper, Ala. He had two stores along a local highway. But in May he closed both to open at the Jasper Mall—right across from a Zales.
“It’s the best move I ever made,” he says. “In my old location, I’d get a $1,500 sale once every six months. Now I’m seeing them once a day.”
He praises the center for staying spruced up. “It’s a real pretty mall,” he says. “And traffic is great. It’s busy from the time it opens until the time it closes. I’m always surprised when I come in in the morning how many cars there are in the parking lot.”