'Lifestyle centers' are remaking American malls

LOS ANGELES — Here in the land of malls, one of Southern California's oldest indoor retail centers is no more.

Many of the boxy buildings at the Huntington Beach Shopping Center sat boarded up despite sitting astride one of Orange County's busiest freeways. Now, the site hosts one of the most extreme examples of a growing movement in mall design.

Noting the success of upscale, open-air shopping areas — "lifestyle centers" in mall jargon — the owners tore down the 1960s-vintage shell, and up sprang an airy shopping plaza with water fountains and a grassy amphitheater. The $170 million Bella Terra was born.

Lifestyle centers first arrived nearly two decades ago. But their success, even in cold climates, is now prompting traditional mall owners to invest millions of dollars in redesigns rather than new development. A shrinking number of major department stores also is spurring a change that is remaking the American mall.

In past years, a remodel may have included a paint job, new furniture, maybe marble accents. Not anymore.

"There's always been a need to update," said Anita Kramer, director of retail development for the Urban Land Institute, a Washington, D.C., think tank dedicated to land use and development. "Just now the update is a whole new configuration."

The "de-malling" of the Huntington Beach mall isn't the norm. Most developers looking at projects from Seattle to Iowa aren't starting over but instead adding "lifestyle" elements — outdoor streetscapes leading to existing entrances, destination restaurants and cinemas.

The redesigns are not cheap, and there's always a risk of misreading the market. Still, lifestyle centers are showing they can compete: They averaged $325 worth of sales per square foot of retail space in 2004, according to the most recent figures from the International Council of Shopping Centers. That's compared to $392 for enclosed malls in 2005.

And lifestyle centers have been proliferating nationwide.

Nationally, they will number over 100 by year's end, according to CoStar Group Inc., which tracks data for commercial real estate professionals. That's nowhere near the 1,077 enclosed malls CoStar recorded. But the number of new enclosed malls is shrinking — from a height of 387 built in the 1970s to just 47 so far this decade.

Some lifestyle centers have become bona fide destinations.

The Grove in Los Angeles often is credited with helping establish the viability of the lifestyle center.