How America's Building the 21st-Century Mall

By John Hendel

Here's a conundrum for the American capitalist: How can malls, those decades-old bastions of shoppers everywhere, compete with the shopping technology and up-to-the-minute gratification of the Internet?

The simple answer is that they can't—yet. But our nation's malls are undergoing a revolution, with new investment, energy, and innovation. Retailers such as Disney have begun adding interactive elements, Reuters reports, so that the stores resemble entertainment centers. Wave a wand in the store, for instance, and Cinderella appears. More than a billion dollars in investment have already emerged to support a planned New Jersey mall called The Point, 620,000 square feet in size, equipped with countless LED lights, and "10 times that of Times Square in terms of signage," which may be one of the first malls to integrate these new retail-development concepts.   

"It's a transformation of the industry," said Grant Herlitz, president of the Howard Hughes Corp, a developer and diversified real estate company spun off from mall owner General Growth Properties Inc.

"Developers have to meld themselves with those retailers to figure out the mall of the 21st Century," Herlitz said.

Malls are great big organic beings, with the fate of the specialty retailers, department stores and mall owners intertwined. Legal agreements govern what department stores and landlords can do with the buildings they either own or lease and often require all parties approve major physical changes. Other agreements, such as operating covenants, dictate the hours and years a department store must remain open for business and what it can sell.

"It's not that simple," William Taubman, chief operating officer of luxury mall owner Taubman Centers Inc, said while attending the International Council of Shopping Centers annual convention in Las Vegas.

"They take enormous approval from the department stores as well as the communities," he said. "Where we've had department stores that in our view were underperforming and in our view were willing to downsize, by the time you get done figuring all the cost involved, it almost never works."

Retailers will shape new mall development, said Howard Hughes Chief Executive Officer David Wienreb.

The company has more than a dozen development sites or redevelopment projects, such as Manhattan's South Street Seaport, Hawaii's Ward Centers and Cottonwood in Salt Lake City.

"We create a user friendly experience that's an enhancement to the community and that speaks to what the retailer is looking to deliver to their customers," Weinreb said.

Read the full story at Reuters.

This article available online at:

http://www.theatlantic.com/national/archive/2011/05/how-americas-building-the-21st-century-mall/239471/