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IN A GIANT’S SHADOW

Forty years on, the ‘dales’ still thrive, despite Mall of America

By Jim McCartney

Southdale Shopping Center is luring teens with hip tenants and bringing in adults with some of the area’s busiest restaurants.

As the first enclosed, climate-controlled mall in the United States when it was built in 1956, Southdale Shopping Center, Edina, Minn., has a special standing among regional malls, enhanced by decades of success.

Yet not even this elder statesman is immune from changes in shopping patterns and increasing competition, especially given that just six miles to the east, on Interstate 494, sits Mall of America. Southdale is one of several established regional malls in the area that have had to scramble to keep up in this increasingly competitive market.

That’s why several years ago, Southdale, now owned by New York City-based Concordia Properties and managed by Jones Lang Lasalle at press time, began making plans for its biggest expansion and renovation project since the building of a Dayton’s store more than a decade ago; it is adding a 16-screen movie theater, a handful of hot restaurants and a retail wing devoted to luring back teen-agers and young adults.

Southdale isn’t the only Twin Cities “dale” — one of four built by what would later become Dayton Hudson Corp. (today Target Corp.) and sold off in 1978 — to make changes of late. Brookdale Center in Brooklyn Center has just completed a $60 million renovation of its own. The other two are Rosedale in Roseville, which added a food court early this year, and Ridgedale in Minnetonka, which remodeled its center court about a year ago.

Meanwhile, Eden Prairie (Minn.) Center, another regional mall about eight miles to the west, spent about $90 million two years ago to add an 18-screen AMC theater, a new Von Maur department store, such restaurants as Wildfire and Biaggi’s Ristorante Italiano, and Barnes & Noble, Kohl’s and Talbots. The General Growth Properties mall now stands at about 1.2 million square feet.

Another mall in this busy market is the sprawling Arbor Lakes Retail Center, 18 miles northwest of Southdale in Maple Grove, developed in 2000 by Minnetonka, Minn.-based Opus Corp. Then there is Burnsville (Minn.) Center, about 11 miles southeast of Southdale, which has added new tenants, including an Old Navy store. And some observers expect Indianapolis-based Simon Property Group, which recently bought Maplewood (Minn.) Mall, to make some renovations (not much has been done to it since Dayton’s built a new store there five years ago). Maplewood Mall lies about 30 miles to Southdale’s northeast.

But the regional shopping centers in the Twin Cities got a bit of good news earlier this year when the Columbia, Md.-based Rouse Co. (which owns Ridgedale) scrapped plans for a new regional mall in Maple Grove, which would have been the area’s first since Ridgedale opened in 1975.

“It was a relief,” said James A. Schlesinger, CEO of the Coral Gables, Fla.-based Talisman Cos., which owns 40-year-old Brookdale. The mall would have sat about 14 miles away from his mall and was slated to include a Dayton’s (now Marshall Field’s) and a Nordstrom.

The last big dale renovations came in anticipation of Mall of America, which opened in 1992. Dayton’s built larger stores at Rosedale and Southdale, largely paid for by the two malls’ owner at the time, The Equitable Life Assurance Society of the United States. The deal was part of an agreement under which Dayton’s, the Twin Cities’ leading department store retailer, would not build a store in Mall of America.

Still, Southdale’s sales were hurt, falling in the first two years after Mall of America’s opening. Noticeably absent at the center were teen-agers, who were flocking to Mall of America.

“They needed to develop a strategy that could attract back that younger market,” said Jim McComb, a Minneapolis-based retail consultant.

Accordingly, the new Southdale devotes about 60,000 square feet to a new “Trendz on Top” wing on its third floor replete with retro neon signs, trendy music on a new sound system and moving store graphics. New tenants are geared to Generation Y shoppers (those born between 1979 and 1994) and include Gadzooks, Front Row Sports, Rave and Zumiez.

Other improvements are aimed not just at teens, but shoppers of all stripes looking for food and entertainment. A new food court helped Southdale land a MegaStar movie theater, which in turn helped attract an impressive array of restaurants, said Mike Scott, a retail broker at Bloomington, Minn.-based United Properties.

About 84,000 square feet of the 150,000-square-foot addition is devoted to the movie complex. Also housed in the expansion is Motorwerks Mini, a dealership for BMW’s new Mini. In all, Southdale is adding 61 new stores (41 last year, 20 this year), including many that competing malls don’t have, such as Crate & Barrel, Guess and Orvis.

Recently, the mall has also opened such restaurants as California Pizza Kitchen, Cheesecake Factory and P.F. Chang’s China Bistro. Cheesecake Factory will be the highest-grossing restaurant in the Twin Cities, beating the downtown Minneapolis Manny’s Steakhouse, which did about $8 million in volume last year, and P.F. Chang’s won’t be far behind, said Christopher Cummins, vice president and general manager of Southdale. Opening soon, he said, will be his mall’s largest restaurant yet: Maggiano’s Little Italy, with about 558 seats in 15,000 square feet.

“These restaurants are all destination restaurants — people are coming to them from all over the Twin Cities area,” Cummins said.

“The restaurants feed off each other and off the theater,” Scott said. (Attracting the restaurants would have been tougher had not Edina voted several years ago to end the city’s ban on alcohol sales and start granting liquor licenses.)

The results of Southdale’s renovation are impressive. Shopper traffic has been steadily increasing — it’s up 22 percent so far this year. Last year the mall drew some 14 million shoppers, said Cummins.

“They’ve made some drastic improvements, but they accomplished their mission,” said Mike Sims, a retail broker at United Properties.

Including the addition, Southdale now has about 1.4 million square feet of leasable space and is about 92 percent occupied, Cummins said. Though he declined to say how much was spent on the renovations, industry experts peg it at more than $20 million.

There is still work to be done. Scott said he thinks Southdale’s J.C. Penney wing could use some help. But the mall has been repositioned enough that Concordia Properties recently put it up for sale.

Meanwhile, Brookdale’s owners have fixed up its interior, resurfaced the walls and floors, and added new signage and skylights, not to mention a 150,000-square-foot addition and a new food court. Like Southdale, Brookdale, which was constructed in 1962, was designed by the acclaimed Austrian-born architect Victor Gruen. Brookdale had suffered from a dated, shabby appearance and rising vacancies. Then in 1997 Talisman, which specializes in turning around problem malls, bought the 925,000-square-footer for $25 million. Among the new retailers are American Eagle, Barnes & Noble, Gap, Hot Topic and Old Navy, and the mall added a variety of restaurants. In addition, Marshall Field’s expects to complete a $10 million renovation of its store at the mall this fall, while Sears and J.C. Penney have already completed fix-ups.

The addition of the stores will bring Brookdale’s occupancy to 85 percent, Schlesinger said, and with the addition of several more tenants over the fall and winter, occupancy should hit 95 percent by spring.

Rosedale, which opened in 1969, and Ridgedale haven’t needed to make major improvements, United Properties’ Scott said. Both are in strong trade areas a good distance from Mall of America and have fared well over the past decade.

That said, no malls are entirely immune to the effects of change and competition, United Properties’ Sims observed. “These malls will have to continue to re-evaluate themselves as to what consumers are looking for.”

Jim McCartney is a business reporter for the St. Paul Pioneer Press.

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