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ENCLOSED MALL? YOU BET, IT’S 120° OUT

BY SUSAN WARNER

Think no one is building enclosed malls anymore? Think again.

Lifestyle centers may be today’s development juggernaut, but a visit to El Centro, Calif., in July, when temperatures can soar to 120 degrees, would convince anyone that an air-conditioned mall is the way to go, says Michael I. Lebovitz, senior vice president of mall projects at CBL & Associates Properties. And that’s exactly what he’s building in that Mexican border town 120 miles southeast of San Diego.

“It’s hot,” he said. “No mist is going to cool you down in the 120-degree heat there.”

Chattanooga, Tenn.-based CBL is co-developing Imperial Valley Mall, one of only two U.S. enclosed malls scheduled to open this year. The other is Taubman Centers’ Northlake Mall, set to open in the fall, in Charlotte, N.C. An enclosed, air-conditioned mall appeals to cross-border shoppers looking for a full shopping and entertainment experience when they come to the United States, Lebovitz says.

The 725,000-square-foot mall, which at press time was set to open March 9, is a joint venture with the Dallas-based MGHerring Group. With Dillard’s, JCPenney, Robinsons-May and Sears as anchors, Imperial Valley will also contain 100 specialty retailers, including American Eagle Outfitters, Charlotte Russe and Hollister, as well as a 10-vendor food court and a 14-screen UlstraStar cinema.

“We are very excited about this location,” said Julie Bull, Dillard’s director of investor relations. “We do well in the border towns, and we do well in California. So this appears to be a very attractive venue for us.”

In addition to the mall tenants, the first stage of peripheral development will include Chili’s, Chuck E. Cheese’s, Fairfield Inn and Starbucks.

Lebovitz says 80 percent of the tenants are entering the market for the first time. “It’s not a situation where a store is moving from the old mall to the new one,” he said. “That’s pretty exciting in today’s day and age.”

Border boom
The trade area population is 1.25 million, according to the developers. An overwhelming majority of those people — 1.1 million — reside in Mexicali, Mexico, 10 miles south of the border. Mexicali, the capital of the state of Baja, is one of the most affluent border towns, says Heather Herring, Imperial Valley Mall’s director of leasing. Herring says 45 percent of Mexicali’s population are in the A-to-C-plus tier of mall shoppers, versus 25 percent in most Mexican border towns.

There are 28 million border crossings a year between Mexico and California at El Centro, Herring says. San Diego, by contrast, with eight times the population, reports only double the number of crossings.

Mexican shoppers typically enter the United States using a B1/B2 or so-called laser visa, granted to Mexicans who can prove they have ties to Mexico that compel them to return home after a visit. The visas allow them to travel into a zone 25 miles beyond the border into California, Texas or New Mexico, or 75 miles into Arizona. Last year the U.S. Department of Homeland Security extended the length of time per visit from 72 hours to 30 days.

During these visits, Mexican shoppers are seeking trendy food, entertainment and fashion venues, Herring says. “The Hispanic and Mexican markets want a true shopping experience,” she said. “They want name brands and the status and prestige of coming across to the United States and shopping on the U.S. side.”

To attract the family-oriented Mexican shopper, the mall features a two-story-high carousel from Venice, Italy, as a centerpiece. The carousel has floors of Brazilian oak, about 1,800 lights and some hand-painted murals.

Lebovitz says the mall design scheme uses earth tones and turquoise to evoke the Southwest. Its logo features the Ocotillo, a slender, spiky desert plant with tubular red flowers. “We designed it to identify with the community,” he said. “We want the Imperial Valley Mall to feel as if it is owned by the residents of the market.”

CBL has three other border malls, in Texas — in Brownsville, Del Rio and Laredo — all of which cater to residents of both sides of the line. “The Mexican consumer is very interested in American fashion, and the fashion components of all of these malls do very well,” said Lebovitz.

Ready, set, grow
CBL considered coming to Imperial County, which includes El Centro, 15 years ago, but the time was not right until MGHerring approached with a proposal. “Imperial County is a bit like a sleeping giant that’s woken up,” said Anthony Gild, a shopping center specialist in the San Diego office of Sperry Van Ness, a commercial real estate advisory firm.

The eight agricultural towns on the California side of the border have a combined population of only 150,000, but the region is growing. Herring says 6,000 new homes got built this year, up from 5,000 the year before.

Moreover, Imperial County has a good supply of water compared to other areas of California and will be able to sustain the growth, Gild says. The area already has a concentration of government workers employed at the federal court facilities and the border agencies. In fact, state and local government makes up the largest employment category, 30 percent, followed by agriculture at 23.5 percent, according to Herring. The region is also becoming a bedroom community for San Diego commuters driven farther from the coast by housing prices.

Gild cautions, however, that Imperial Valley Mall may overlap with a mall in Yuma, Ariz., about 60 miles away. And he points out that Target and Wal-Mart have stores on the northern end of El Centro, which may tend to splinter the retail market.

“When you take a town like that, with a mall on the one hand and some big boxes on the other end, you are not consolidating all your retail in one area, so there’s a slight division of the trade area,” Gild said.

But the mall at least has the southern end of El Centro, he adds, which should be an advantage.

“The Mexican customer will hit the mall first,” Gild said. “Eventually, the developers will build around the mall and get first crack at that dollar before they move across town.”