"The regional mall is dead," says David W. Marks, president, Marketplace Advisors Inc., Orlando and a former Trammell Crow Co. senior vice president/retail. "The regional mall replaced the old town center and now the town center is making a comeback." Marks is working with developers/owners on at least two major town center projects in the Southeast.
"The sterility of the regional mall as a one-dimensional fashion center is being replaced by the concept of a town center that is more inclusive with other activities, such as entertainment, office, residential and civic functions," the consultant tells GlobeSt.com. "It is a place where the community comes together."
Marks says that, "For the regional mall to regain its position of dominance in our urban landscape, it needs to reinvent itself as the town center for communal activity of its region, supporting such diverse activities as civic events, people watching, meeting friends, working and being entertained."
On the revenue side, Marks finds that "while discount department store sales have been skyrocketing over the last 15 years, in their self-service setting, mall-based department stores sales have been flat at best."
A similar scenario is surfacing in the Midwest where the one-year-old, 506,000-sf Deer Park Town Center in the affluent Chicago suburb of Deer Park, IL already is generating $400 per-sf sales.
The success of town centers and lifestyle centers may have larger retailers reconsidering their preference for regional shopping centers, Scott Wolstein, CEO and chairman, Developers Diversified Realty Corp., Chicago, notes in a recent conference call.
"Because there are no new super-regional malls being built in the country today, tenants are looking wherever they can in order to do business," Wolstein says. "What I would have considered the historical snobbery of saying, 'I want to be in a mall of one million sf that does sales of X' has gone by the wayside."
The developer says "tenants are a lot less interested in their neighboring tenants than they are in doing volume."
In Texas, town centers and regional malls appear to be competing peacefully, so far. Sales at several town centers are reaching $300 per sf-plus. Texas malls are averaging $330 per sf.
"I don't think it's a question in terms of replacement," Brian Stebbins, CEO, Cooper & Stebbins, Dallas, tells GlobeSt.com Southwest Bureau Chief Connie Gore. "It's a question of can they do as well, or better."
Cooper & Stebbins is developing the 500,000-sf, 125-acre, 100% pre-leased Southlake Town Center in Dallas.
In Houston, Chicago-based General Growth Properties' 1.2 million-sf regional mall anchors the shopping district of Woodlands, a new town with a population of 750,000. Fort Worth, TX-based Crescent Real Estate Equities Co. and Morgan Stanley of New York are the developers.
In suburban Portland, OR, Holt & Haugh is developing Fairview Village, a 95-acre new town within the city of Fairview, 15 miles east of Downtown Portland. When complete, the project will comprise 130,000 sf of office, 10 acres of retail and 600 residential units, West Coast Bureau Chief Brian Miller reports.
The success or failure of town centers today hinges on demand, as it does for any new or revived real estate product, developers and brokers tell GlobeSt.com. And right now, the demand for town centers is coming almost exclusively from the affluent neighborhoods, not from the consumer mass accustomed to shopping at big-box retailers.
"Town centers are limited to the highest-income areas," John M. Crossman, senior vice president/retail, Trammell Crow Co., Orlando, tells GlobeSt.com. "Town centers do not appeal to the masses. Wal-Mart is the real town center of America."
Town centers won't replace regional malls, Crossman says, "but they can hurt them." He says, "Keep in mind that the mall and town centers are a different experience." For example, "the mall is still the best place for Christmas shopping, but not for dinner."
The broker says "today's consumer is extremely busy" at the same time he or she is "looking for socialization and an experience. The town center concept provides an outlet for that."
David Marks of Orlando-based Marketplace Advisors Inc. agrees. "We are just starting to scratch the surface of new town center concepts and development opportunities."
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