Conversion of malls to mixed-use centers gathers speed

Last year General Growth Properties announced that it will gradually redevelop many of its shopping malls into mixed-use centers. Now the Pennsylvania Real Estate Investment Trust (PREIT), which operates 38 malls in the eastern half of the US, is embarking on much the same strategy, starting with its floundering 1,127,000 sq. ft. Echelon Mall in Voorhees Township, New Jersey.

More than 40 percent of Echelon, which opened in 1970, has been demolished in recent months and is being replaced by housing, stores, offices, and amenities — a mix of uses called Voorhees Town Center. The new Town Center will stand alongside the remaining 657,000 sq. ft. portion of Echelon, which has been renovated and will continue to operate as a conventional enclosed mall.

The overhaul of Echelon, in a Philadelphia suburb of 28,000, is the first of several transformations that PREIT is considering carrying out at its malls, which are scattered across a dozen states. The Philadelphia-based 48-year-old REIT, which used to have properties mainly in the Mid-Atlantic region, has expanded greatly in the past five years, acquiring many malls that need a makeover.

PREIT hired Wallace Roberts & Todd (WRT) to determine how some of them could be redone to fit today’s market. WRT recommended the following techniques:

• Adding stores that open to the outdoors.

• Placing housing above some of the retail.

• Replacing open parking lots with structured parking.

• Creating street and pedestrian connections to nearby neighborhoods.

In a related initiative, WRT recommended using “sustainable” landscape techniques to make the properties more environmentally benign and make them feel more like “places.”

Fashion Square, an old mall in Orlando, Florida, that has been buffeted by newer competitors, offers especially good opportunities for those kinds of changes, says Richard Huffman, a principal in WRT’s Philadelphia office. WRT has suggested intensifying development of the mall’s property — adding apartments, office space, restaurants, and boutique retailers. Much of the parking now provided in surface lots would be shifted into parking decks.

“When malls started, the formula was that they had to have parking at grade” — enough spaces to accommodate all the customers arriving on “the second-busiest day of the year,” Huffman notes. That is becoming less and less practical; the land is too valuable.

“PREIT is trying to reposition Fashion Square Mall as a real town center,” says Huffman. The new direction reflects the rising appetite for urbanism in Orlando. Baldwin Park, an 1,100-acre new urban mixed-use development (see July 2004 New Urban News), is about a half-mile from the mall. “We’re basically tying this mall to Baldwin Park,” Huffman emphasizes. Once the mall has been furnished with livelier, better-defined outdoor spaces and improved pedestrian connections, it will be easy for Baldwin Park’s projected 8,000 residents to walk to it, according to Huffman.

PREIT will most likely execute the changes in stages. The work is unlikely to begin until there’s a revival in Florida’s residential real estate market, which Huffman says is “currently a basket case.”

Several other PREIT properties are undergoing design changes:

• Plymouth Meeting Mall, about 20 miles west of Philadelphia, is being shrunk as part of a renovation. An “outdoor lifestyle section” is being added, according to Wikipedia. Housing for families without children is being built close by.

• The Moorestown Mall in New Jersey is undergoing major renovation. Stores are being added to the side of the mall facing Rt. 38, to give that section a more village-like appearance.

• Cherry Hill Mall in New Jersey has been adding an outdoor retail street, or “bistro row,” containing an array of eating and drinking establishments that will put a more sociable face on Rt. 38.

• New Garden Town Center is being developed in New Garden Township, near Kennett Square, Pennsylvania. Town supervisors describe it as a “pedestrian-friendly, mixed-use village-style development.”

MIDSIZE MALLS CHANGING

Seth Shapiro, an associate at WRT, predicts that the next several years will bring many opportunities to alter the character of American malls, particularly those containing between 750,000 and 1.5 million gross leasable square feet. Some that 30 years ago were on the outskirts of their regions are now — thanks to suburban growth — regarded as relatively close-in. Denser development of their land has become economically viable. The emergence of affluent people with urban tastes, like those at Baldwin Park, is helping to alter shopping habits and cause malls to change.

In a few instances, whole malls have been razed to build walkable, mixed-use centers. Mizner Park — built in Boca Raton, Florida, in 1990 — is a celebrated early example. However, a larger number of malls, like Echelon, are becoming hybrids — part mall and part mixed-use town center, “lifestyle center,” or big-box collection. Where a town center is combined with a mall, the assumption is that the mall will help generate business for the town center, and vice versa.

“This is an opportunity to change the dialogue about retail,” Shapiro says. For PREIT, WRT worked on a “sustainability agenda,” which entails “using stormwater management as placemaking devices,” adding green roofs, installing angled roofs for solar energy, and applying other techniques. This approach would be implemented at some of the company’s malls, and may be done in “baby steps,” he says. Sustainability, Shapiro notes, is “incredibly tough” for a company like PREIT, whose “bread and butter is power centers and malls.” Public concern about the well-being of the environment is one factor pressing the company toward more resource-efficient development. “They see the ‘sticks’ [government regulation] coming,” he says.

“A lot of bad design practices are being resolved, knitting these malls back into the neighborhoods,” Huffman says. “This is an absolutely wonderful place for new urbanist efforts.”

This article is available in the March 2008 issue of New Urban News, along with images and many more articles not available online. Subscribe or order the individual issue.

An aerial view of proposed future development of Fashion Square in Orlando. Courtesy of Wallace Roberts & Todd