Malls viable, but growth slows

Lack of land and a different approach to attracting shoppers are curtailing the growth of a mainstay in American merchandising — the mall.

"I've got 20 years worth of experience in both the retail and mall business, and currently the buzz in the industry is lifestyle centers," said Joel Hill, manager of Northpark Mall in Ridgeland, Miss. "I still think there's strong support for regional malls. However, I do see lifestyle centers as continuing to put pressure on malls."

Lifestyle centers feature an "open air" design, with shops and restaurants opening to the outdoors, whereas malls traditionally enclose shops, restaurants and entertainment under one roof.

More than 100 lifestyle centers operate nationwide — and that's expected to double in the next few years — compared with 1,130 super regional malls, according to the International Council of Shopping Centers.

Nine malls are expected to open in 2005, down from an all-time high of 19 openings in 1990, according to the council.

"It's getting very difficult to find a suitable location for a million square feet for a super regional mall — and a market not already filled," Hill said. "Most major cities already have several regional malls."

Also contributing to fewer malls being built are real estate investment trusts that own almost 48 percent of malls — and their discovery of lifestyle centers as a different and profitable way to package retailing. "The (trusts) have to deliver a return for their investors," Hill said.

Real estate investment trusts own or have an interest in 538 of the 1,130 regional and super regional malls in the country, according to the council.

But the concept of enclosed malls shouldn't be written off, said Patrice Duker, spokeswoman for the council. "We feel it's very viable," she said.

Southdale Center in Edina, Minn., was built in 1956 and is the oldest mall in the nation and competes with the Mall of America, the world's biggest mall, she said. "They've renovated, made sure the tenant mix is right and people still want to go there," she said of Southdale Center.

Malls remain viable because they're located in high-traffic suburban areas and offer year-round shopping regardless of weather, she said. Malls are able to adapt to consumer trends, and kiosks and carts at malls have proved successful as incubators for small retail ventures, she said.