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Inside/Out

New hybrid malls offer best of both worlds

By Debra Hazel

Taubman Centers’ hybrid center, Tampa International, will open in the fall. “Bringing the outlots in makes them more convenient,” says Taubman VP Bruce Heckman.

Is it a mall? Is it an open-air entertainment center? For a growing number of new regional shopping center developments, the answer to both questions is yes.

As developers look to be all things to all people, they are turning increasingly to what some are terming "hybrid" centers, which combine a large, traditional enclosed mall with an urban streetscape retail/entertainment component. Simon Property Group's Mall of Georgia, Buford, Ga., is the first of a series of such projects to be built across the United States by companies including Westcor Partners, Urban Shopping Centers, General Growth Properties and Taubman Centers.

It is the first major shift in regional mall configuration since 1956, when Southdale Center in Edina, Minn., opened as the first fully enclosed, climate-controlled center with competing anchor stores. Indeed, the hybrid may be the prototype for the mall of the early 21st century, both in North America and abroad.

The new design accomplishes two important missions: It accommodates the time-pressed and sensation-hungry consumer, and it opens the center to tenants that may not want or need the indoor mall experience.

"It became obvious to us, as we looked at the evolution of retailing, what is appealing to the customer," said Wally Chester, executive vice president of Phoenix-based Westcor Partners. "We have to compete with e-commerce, catalogs, etc., or else we're a dinosaur."

Westcor is building two projects in the hybrid format: FlatIron Crossing, opening in Denver in August, and Chandler Fashion Center, which will open in Phoenix in 2001.

The hybrid also is designed to attract shoppers who may be a bit bored with a format that has served them so well since the 1960s. During brainstorming sessions at Westcor, executives decided to bring big boxes into the mall complex, with a lifestyle-center twist. Multiple uses, including those not previously associated with retail development, were added to the mix.

"We hear constantly from our customer, 'Don't make it just another mall,'" Chester said. "It's more exciting to be in an experience. We're trying to make people feel like they're on vacation."

The center most often cited by architects and developers as the prototypical hybrid is Mall of Georgia.

"In retail development, we try to be as many things to as many people as we can," said Tom Schneider, senior vice president of development at Simon Property Group, Indianapolis. "At Mall of Georgia, we have a mall and a village, with a nature center under development. We also have a community center, peripheral development, an amphitheater."

The challenge, developers say, is to give shoppers all of that, while at the same time providing them the convenience of parking in one place.

In a way, the hybrid isn't all that different from the retail format of the past: an enclosed mall with restaurant outparcels and, usually, a neighboring power center with big-box retail. The hybrid combines all of those elements in one plot of land, and unifies them architecturally.

"Basically, 20 years ago, when we were developing malls, we would do the mall, then develop the periphery with the outparcel mentality," said James Czech, president of Urban Shopping Centers, whose hybrid Galleria at Roseville (Calif.) opens in August. But with the hybrid concept, "We said, 'Let's make it more homogenous. Let's add some retail continuity and make it one experience.'"

That meant drawing all of the pads, which had traditionally come to surround centers over the years, closer to the mall and to each other.

"The feedback from our customers was that having a mall with outparcels around it may be nice, but is not terribly convenient," said Bruce Heckman, vice president of development at Bloomfield Hills, Mich.-based Taubman, which is building the upcoming Tampa International hybrid center. "Bringing the outlots in makes them more convenient."

The village portions bring in tenants that normally would not be typical regional mall candidates: Large restaurants, major bookstores, home furnishings stores and services (often owned by mom-and-pops) all are part of the hybrid mix. Many of those retailers previously could not have afforded the rents and CAM charges associated with mall tenancy.

"We have to recognize the margin challenge of the retailer; certain categories were excluded from the center because of margins. This allows us to bring in the home category and restaurants," said Stanley Eichelbaum, SCMD, president of Marketing Developments, Cincinnati, which is consulting on several hybrid centers in Latin America and the Middle East.

While hybrid malls seem to be taking the shopping center industry by storm, developers should take care: Projects incorporating both an enclosed regional mall and an open-air retail/entertainment component generally can cost 15% to 25% more to build than a traditional center. The saving grace is that they can cost less to operate.

Designs vary

The designs of the hybrid centers are not uniform. While Mall of Georgia combines a two-level mall with a village leading into the first floor, Tampa International's 112,000-square-foot Bay Street village will feed into the 1.2 million-square-foot mall's second level. In FlatIron's case, the mall itself is both indoor and outdoor — the enclosed portion uses roll-up doors that will merge it with an outdoor promenade heavily weighted with entertainment and services. That creates an ideal one-stop shopping and entertainment experience.

"We wanted to combine the regional shopping center experience, apparel shopping, with the lifestyle 'see and be seen' experience," Chester said. "We want someone to drop off their dry cleaning, have lunch and buy a sweater. We're back to cross-shopping."

As a result, while some might believe entertainment uses compete with more traditional retailers in terms of customers' time, even mall anchors favor the new format.

"We're trying to create a format where a customer can park the car one time and experience the retail environment," said David L. Mackie, vice president of real estate at Nordstrom. The Seattle-based upscale fashion anchor is entering several hybrid malls over the next two years, including FlatIron, Roseville, Tampa International and Mall of Georgia.

One reason for Nordstrom's enthusiasm is that the villages often are tenanted with the lifestyle tenants — such as the book and home stores — that the higher-end Nordstrom prefers for co-tenants; the format keeps shoppers who are searching for those retailers in Nordstrom's vicinity, rather than at another project a mile away.

"It's more synergistic in the manner presented at a FlatIron than with outparcels all over the place," Mackie said.

Location, location, location

But where to put these projects could be developers' greatest challenge, both in terms of size and geography. To accommodate so many uses, hybrid centers generally exceed 1 million square feet, requiring a fair amount of property in a market with substantial population density.

"People want to know there are some choices, and if the [village] is under 120,000 square feet, you might have only a half-dozen tenants, and that's not enough," said Robert Tindall, president of Seattle-based Callison Architecture, FlatIron's designer. "Restaurants are huge now. We're not just operating with fast-food vendors and delis; we're dealing with sit-down restaurants. And FlatIron has six of them."

That does not necessarily mean a much larger plot of land, however. Parking can be stacked to maximize the use of property, allowing room for the village.

"The previous outparcels are being reorganized and planned to take advantage of restaurants and bookstores. This is bringing a lot of uses together to make a project stronger," said Thomas Porter, senior principal of Thompson, Ventulett, Stainback & Associates, Atlanta, which designed Mall of Georgia.

And while most of the projects now under way are located in more temperate climates such as California or the Southeast, the hybrid is not necessarily limited to those regions. Summertime Phoenix temperatures often exceed 100 F, Denver has its share of snow and, as Czech and several others observed, Urban's completely open-air Old Orchard and Oak Brook malls in suburban Chicago are extremely successful. TVSA's Porter said that if Mall of Georgia were being built today, it might be totally open-air (see story, page 5). To protect customers from extreme weather, all an outdoor mall needs are some areas of shade and shelter.

"It's very hot in Georgia in the summer, yet Mall of Georgia is successful. We still exist in outdoor climates; we still walk to our cars," said David Doll, vice president of development for Westfield America, Los Angeles. The firm is expanding its Santa Anita Fashion Park in Southern California to include an open-air village, opening in early 2001.

Concept goes global

Just as the design of Southdale was eventually exported to Europe, the hybrid format is not limited to the United States.

"America has done this to be novel. Overseas, they are much more pragmatic regarding retailer operating costs and issues of creating an ambience," said Eichelbaum, the international marketing consultant. His firm is a consultant for three such projects — Pacific Mall in Panama (see story, page 200), which also features an open area with a 60,000-square-foot home store and restaurants leading into an enclosed mall; Al Ghurair in Dubai, which is being expanded to include an outdoor component; and Metro Centro in El Salvador.

The hybrid format is not limited to new projects, either. Developers are using the new configuration during renovations. Urban has added an entertainment village to its Valencia (Calif.) Town Center; General Growth Properties is renovating its Park Place Mall in Tucson to incorporate a retail village; and Westfield is expanding several enclosed malls to include open-air villages.

But accommodating an existing layout and land configuration can require some creative carving.

"We're taking a different approach, where the outdoor village is more a part of the existing building. We're taking a standard project and bumping it out, creating an area for street merchants that won't have mall access," said John Bergstrom, CSM, senior vice president of development for General Growth Properties, Chicago.

The biggest challenge may be getting control of the land, Urban's Czech points out. "It depends on who has ownership of the outparcels," he noted.

Despite the rush to build in the new format, success is not guaranteed every time, all note. Nor will every new regional mall or renovation accommodate a hybrid.

"Retail that will have the greatest lasting impact is the streetscape," Eichelbaum said. "We experimented for 30 years with the malls. But the streetscape provides the best convenience for the consumer and the best expression for the retailer."

"As with any new concept, there will be a shakeout. What we're trying to do is walk the line between being a natural extension of the mall and a separate destination," Heckman of Taubman said.

But the hybrid may give shoppers the best of both worlds: the convenience of an enclosed mall, with an almost nostalgic urban shopping experience that may, at the same time, be new to today's shoppers raised in the suburbs.

Back to the past

The hybrid mall might just be the next stage in returning to the open-air centers of yesterday. In fact, says the architect of the pioneering Mall of Georgia, that project could have been totally open.

The center was developed by Atlanta-based developers Ben Carter Properties and Scott Hudgens Corp., and Indianapolis-based Simon Property Group, which came on board through its acquisition of Corporate Property Investors, also a partner in the center. The 1.4 million-square-foot regional mall, which opened in August 1999, is adjoined by a village accommodating big-box retailers, restaurants and entertainment. Some retailers open into the mall common area and also onto the village plaza.

“Ben Carter had a vision from day one of what he wanted to build. If he came to us today, we probably would have built an open-air center,” said Thomas Porter, senior principal of Thompson, Ventulett, Stainback & Associates, Atlanta. “This was a real combination of things, including Ben’s desire to build an open center.”

Leasing led the design. TVSA did three renderings, with the village originally consisting of about 35,000 square feet of restaurants.

“But as the project evolved, more and more larger tenants wanted to go [into the village]. So we did a second rendering. Then, some wanted to have both indoor and outdoor access, so the village grew to [140,000 square feet,]” he said