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Post-merger New England malls

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Time for a makeover

Malls could get new stores or even housing

By Thomas C. Palmer Jr., Globe Staff | March 1, 2005

The face of the mall is changing.

Federated Department Stores Inc.'s deal to buy May Department Stores Co. for $11 billion will almost certainly lead to department store closings in Greater Boston, and the holes could be filled in a lot of different ways. The changes could be conservative, such as expansion by discount stores like Target or Kohl's, or more radical ones in which malls become redeveloped into suburban minicities.

Regardless, retail industry analysts said yesterday the time-tested formula for malls -- with a couple of big anchor stores supporting strings of smaller specialty shops -- is wearing thin.

Federated owns Macy's and Bloomingdale's while May owns Filene's and Lord & Taylor. In Massachusetts, there are seven malls with overlap, not counting Downtown Crossing, where Filene's is located across the street from a Macy's. Those malls are in Brockton, Burlington, Hyannis, Natick, Newton, Peabody, and Braintree. Retail specialists said the weaker department stores in those malls will take a bullet in the consolidation.

One challenge for mall owners looking to fill a giant empty space will be that discount stores don't neatly fit into typical two- and three-story department store space. Adapting a vacant Filene's, for example, could be more difficult and expensive than just tearing it down and starting over.

That's where mall developer Stephen R. Karp, chairman of New England Development, said some bigger, more creative thinking might lead to more desirable and profitable uses.

''There could be a combination of mixed use, and the opportunity to change the zoning in some communities," said Karp, who developed malls in communities including Cambridge, Peabody, and Hyannis.

''A good housing complex as part of a regional mall" could transform the area by concentrating residents, Karp said. ''Those are the customers. It may be an asset from a mall owner's point of view."

It's a sort of if-you-lived-here-you'd-be-shopping-now concept. Imagine a version of the Prudential Center, say, in Brockton, Braintree, or Burlington.

Karp, who sold 14 of his regional malls to Simon Property Group Inc. in 1999, is now developing retail space, residences, and office space in Chevy Chase, Md., on the spot where a department store once stood.

Simon Property Group owns several of the local malls where Federated and May stores overlap. Indianapolis-based Simon declined to comment beyond a statement saying, in part, ''We feel that this merger is very good for the industry and especially for the consumer."

The 1.1-million-square-foot Natick Mall, where there is a Filene's, Lord & Taylor, and Macy's, is owned by General Growth Properties Inc. General Growth has an ambitious plan on the drawing board for additional uses in Natick. The company plans to build 335,000 square feet of new retail space on an adjacent plot of land, anchored by Neiman Marcus and Nordstrom. A later phase would include about 250 condos in a high-rise building.

One place some analysts said could withstand a Filene's and a Macy's is Downtown Crossing.

''It's entirely possible they'll leave them both open if they've been surviving this long with both there," said Ben Starr, a broker at Atlantic Retail Properties, which handles retail space in strip malls. ''It's not automatic that they're going to close all those duplicate stores across the area."

Boston Mayor Thomas M. Menino said he spoke with a Federated official yesterday. ''He said they're still trying to decide what will happen in downtown Boston and will be back in the next couple of weeks," Menino said. ''They do not have a definitive answer."

Department store owners typically sign covenants with mall developers that require them to operate -- sometimes under a specific name -- for a certain period. Each case is different, and it isn't clear whether Filene's, for example, is locked in to some of its locations for several more years.

If the merger of the two giants does mean stores close, ''You have a lot of other stores that want to come in, like Nordstrom or Bloomingdale's," said Annette Born, principal of Urban/Born Associates, a retail consulting firm. ''It's difficult for them to find a good footprint."

Although developer John E. Drew has been wooing Nordstrom for his planned Waterside Place project in South Boston, Born thought Nordstrom, an upscale alternative to Macy's, would fit well in Downtown Crossing if Filene's vacates.

''There's a huge amount of working people down there who have expendable income," Born said. ''The natural inclination for Boston would be to go upscale, not downscale."

James M. Koury, a senior vice president at Spaulding & Slye Colliers, said the merger has not caused great consternation among landlords that he deals with. ''It's difficult to build malls here, and if a vacancy opens on, say, the 128 corridor, retailers who are not here would love to jump in," he said. ''They're licking their chops."

From The Boston Globe

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One thing's for sure, the mall owners in this country better start thinking...and fast.

America's malls can't just solve their real estate problems with Target and Kohl's; there needs to be a concerted effort to create 'living communities' at malls: mixtures of retail, offices, and residential. Otherwise they're gonna go down the drain.

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^ Who would want to live at a mall? Definitely not me.

I really find it hard to grasp, turning a part of a mall into a mixed use facility. Might as well just tear down the whole mall and start over.

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The Prudential Center in Boston has residential towers, office buildings, and a shopping mall. (Also a hotel and a convention center.) Seems to work pretty well. In fact, they're about to add another residential tower.

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I could see this working at the Cape Cod Mall in Hyannis. Perhaps in Burlington. If you're going to live in the suburbs, you might as well live at the mall.

Just turning a vacant Filene's into apartments won't work of course. But if you work to turn the mall away from being just a box floating in a sea of parking, it can become an attractive area. Mashpee Commons on the Cape was a mall that is in the process of being transformed into an new urbanist village centre. With streets and streetside storefronts, on-street parking, and above store housing.

The Cape Cod Mall when it was first designed was to include some early ideas of new urbanism. Seperate buildings that customers go outside to walk to, parks... But it ended up going the regular route and being set in a sea of parking, but the plans still exist to transform it into that original vision.

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Just turning a vacant Filene's into apartments won't work of course.

<{POST_SNAPBACK}>

I agree. But the land that Filene's sits on has a lot of potential as residential property.

Tearing down the existing store and building apartments or condos with proper landscaping will make living at the mall a little more comfortable and attractive.

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The Prudential Center in Boston has residential towers, office buildings, and a shopping mall.  (Also a hotel and a convention center.)  Seems to work pretty well.  In fact, they're about to add another residential tower.

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Yeah, but I never think of the Pru as primarily a mall with housing tacked on. I think of it as office/residential space that happens to have a shopping concourse. I think existing malls would need major facelift to revamp their images in the same way.

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Yeah, but I never think of the Pru as primarily a mall with housing tacked on.  I think of it as office/residential space that happens to have a shopping concourse.  I think existing malls would need major facelift to revamp their images in the same way.

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I agree that the Pru works well because it is a mix of residential, retail, and commercial and because it does not cut itself off from the surrounding Back Bay/Copley Square area (though it is not perfect in this respect). As such, I think these big department store changes will affect the Pru less than most malls because retail is only part of the mix, with less pressure on big-box draw than other malls.

Having worked for several years a block from the Pru complex, I still am impressed with how it continues to thrive. It really is a dynamic urban entity with recent commercial (111 Huntington), residential (The Belvedere) and retail (Shaw's supermarket) additions.

Probably the best example of an urban mall I can think of, if you have to have such things.

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I agree that the Pru works well because it is a mix of residential, retail, and commercial and because it does not cut itself off from the surrounding Back Bay/Copley Square area (though it is not perfect in this respect). As such, I think these big department store changes will affect the Pru less than most malls because retail is only part of the mix, with less pressure on big-box draw than other malls.

Having worked for several years a block from the Pru complex, I still am impressed with how it continues to thrive. It really is a dynamic urban entity with recent commercial (111 Huntington), residential (The Belvedere) and retail (Shaw's supermarket) additions.

Probably the best example of an urban mall I can think of, if you have to have such things.

<{POST_SNAPBACK}>

Agreed. I can't think of a better urban mall than that whole Pru/Copley Sq complex. It's well done and both it and the surrounding neighborhood appear to be thriving.

It's also true that malls are facing some tough times. There just isn't a big enough market out there to support 3 to 4 anchors per mall. I think of the Danbury, CT mall which, last I remember, had FIVE anchors, including a L&T, Macy's, AND Filenes (!!!) plus a Sears and JC Penny's as anchors. Those first three could be consolidated to just one and both Sears and JC Penny's are not in great shape looking long-term. Wow...

Wouldn't it be hugely ironic if the future of malls was as new urbanism developments? Mini-cities or mini-towns unto themselves?

Oh, as to the economic viability of living at the mall? I know many people who would LOVE to live at the mall. As a physician, I also think it would make a perfect living environment for senior citizens (lots of walking, little senior driving, easy access to services, family would be more likely to visit elderly relatives if they lived at the mall). Frankly, if I were forced to live in a suburb, I'd probably pick a new urbanism mall as my preferred environment!

- Garris

Providence, RI

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As a physician, I also think it would make a perfect living environment for senior citizens (lots of walking, little senior driving, easy access to services, family would be more likely to visit elderly relatives if they lived at the mall).

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I hadn't thought of that before, but you are right. Especially here in the Northeast where winters force our seniors to Florida. If someone can't afford, or doesn't want to go to Florida, the indoor environment provided by a mall is a great alternative. Seniors would also have easy access to part time jobs in the mall. Many seniors use malls already for early moring walking groups. And if our malls had better outdoor space, it would give the seniors a place for recreation outdoors during the warm weather months. It allows our seniors to be part of society, instead of being trapped in retirement homes on the edges of towns. The captive market would also attract services that cater to them, doctors, dentists, hair salons, grocery stores...

Here in Rhode Island the Warwick Mall already has residential units next to it. The Rhode Island Mall could be helped by adding residential units, creating a market for itself, that is obviously lacking now.

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Many seniors use malls already for early moring walking groups.

<{POST_SNAPBACK}>

Boy, no kidding. In some (most?) malls, before opening, you can get mowed down by power-walking seniors if you are not careful.

I know the Simon malls encourage this by organizing senior "mallwalking" programs. Probably others as well.

Senior access to malls through co-locating retirement communities and independent assisted living complexes nearby strikes me as a good idea on a number of levels, particularly for urban malls.

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