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Breaking the rules at Bal Harbour

Upscale maverick

By Edmund Mander

Owner Stanley Whitman walks Bal Harbour Shops daily. “If there’s a leaf out of place, he’s on to it,” says his marketing director.

In the eyes of some, there never was a more perfect recipe for disaster than Stanley Whitman’s high-fashion Bal Harbour Shops.

Whitman, a real estate developer who had never built a shopping center in his life, broke just about every rule when he opened the Miami-area mall in 1965.

First of all, it had no anchors, because Saks Fifth Avenue and Neiman Marcus had convinced themselves this was neither the mall nor the market for them. How would Bal Harbour get in-line tenants without anchors, critics asked?

Then there was the matter of the rents: Whitman decided he was going to charge a minimum $5 a square foot in rent, at a time when the national average for total rent, including common area maintenance charges, was $1.53. And all the stores would be upscale — none of those mass-market or service tenants that everyone else believed were essential for a successful mall.

Bucking the trend in shopping center development further, he wanted the center to be open-air and filled with trees, not enclosed like those air-conditioned boxes springing up across the rest of the country. He fired his first architect, the renowned Victor Gruen, designer of the first fully enclosed shopping center, Southdale in Edina, Minn., in favor of a design for an open-air, vertically expandable mall by local architect Herbert H. Johnson Associates.

Bal Harbour tenants were concerned when Whitman put trees in front of their stores.

“If I had used his [Gruen’s] plan, I would have been broke,” Whitman said with characteristic directness, explaining that neither tenants nor customers would have tolerated an enclosed environment.

For air conditioning, tenants were — and still are — ordered to keep their doors open throughout the day to let in the prevailing ocean breeze. “We have 24-hour air-conditioning,” Whitman observed, referring to his center’s idyllic location north of Miami Beach. Bal Harbour is a jewel of the so-called Gold Coast, attracting well-heeled tourists from around the world. The residents of Bal Harbour Village, who number just 3,231, are pretty wealthy, too, with average annual household incomes exceeding $126,000.

To maintain standards and appearances, there were other strict rules. No lighted signs, for instance.

But the kicker involved parking: Customers would pay for it, Whitman declared, a decision that caused a near mutiny among shoppers and tenants alike. Store owners threatened to leave, and some shoppers did. “There were one or two instances where the customers tried to drive right over our cashiers’ feet with their automobiles.”

But Whitman refused to back down on this or any other standard that he set.

“What I planned to put in here is what’s in here today,” he said, and this year he celebrated an event that would have astonished his early detractors: the 35th anniversary of one of the most successful U.S. shopping centers.

“It is the most unique center of its kind in the United States,” opined Herbert Leeds, president of Leeds Business Counseling, a Miami-based consultant to developers and retailers. “He had the vision and the sheer guts, despite all the other things going on, to stick with it.”

It was hard work though. Whitman implored Stanley Marcus, founder of Neiman Marcus, to come anchor the mall, but initially without success. Whitman also walked Manhattan’s Fifth Avenue, trying to persuade some of the country’s most exclusive merchants to open branches in his center; more than a few threw him out, he said.

But a dozen or so followed his call, and Bal Harbour opened with a Martha Phillips boutique, Abercrombie & Fitch, Maus & Hoffman, Lily Dache, FAO Schwarz and Schrafft’s Restaurant — none of which had ever opened in a mall before — as well as a handful of leading local retailers.

Bal Harbour quickly confounded its critics. Sales amounted to $2 million in its first year of operation, and more retailers caught the scent of success. In 1971 Neiman Marcus opened the first ever store outside its native Texas, with two floors, and it added a third in 1973; Saks Fifth Avenue followed in 1976. These, in turn, attracted more in-line tenants.

Vindication also came to Whitman in other ways: The parking fees not only helped minimize unauthorized car parking, but also provided a lucrative revenue stream. Tenants made peace, too, with the foliage; originally some of them had threatened to cut down the trees, claiming they were obstructing their shopfronts.

And, of course, this year the industry has embraced the open-air “hybrid” mall, as pointed out in a Bal Harbour news release — “Topless Shopping for a Better Bottom Line” — written with a mischievous twinkle that often surfaces in Whitman. “Open-air malls may be the new hot trend in mall design, but Bal Harbour Shops Developer, Stanley Whitman, has known it for years,” the release begins.

But even Whitman has been surprised by some aspects of the center’s success, like the time Aldo Gucci insisted he could generate sales of $1,000 per square foot in Bal Harbour.

“I thought, ‘He’s been out in the sun too long,’” Whitman said. But Gucci did exactly that when in November 1976, he opened his first-ever mall store in Bal Harbour. “He’s a genius.”

Gucci was the first overseas designer to prove a success in the United States, Whitman observed. “Before Gucci came in, all the international retailers were disasters.”

Bal Harbour also was the first mall location for Cartier and Bulgari, and the first venture outside New York City for Louis Vuitton, Prada, Sergio Rossi, and Dolce & Gabbana.

Today the 500,000-square-foot center is a hall of fame of the greatest names in fashion around the world; its roster of nearly 100 tenants includes Georg Jensen, Chanel Joaillerie, Hermès and Fendi. And while Bal Harbour might be physically small, its impact has been anything but. By 1997 its sales had reached $300 million, with stores achieving sales of $1,000 per square foot, against a national average of $200; the center contributed $20 million a year in state sales taxes, $2 million in county taxes and about $200,000 to Bal Harbour Village that year. In 1999 the mall’s average sales per square foot had reached $1,200, and this year that had grown by 12.5% at press time. At that rate, Whitman said he was expecting mall-wide sales of $330 million for this year.

While many other malls this old now are showing their age, if they are around at all, Bal Harbour is hitting its prime. Its basic design has been unaltered since opening. Whitman added a second level of in-line retailers in 1982, and Saks has expanded; at 130,000 square feet, it’s the largest Saks Fifth Avenue in Florida.

“It still holds up under the hot Florida sun,” said Robert Cohen, senior managing director at Robert K. Futterman & Associates, New York City, a real estate leasing and consulting firm to retailers and developers. A lot of Bal Harbour’s youthfulness and stamina can be attributed to its being family-owned, Cohen said.

“There’s a lot of pride in the ownership,” he said, adding that multicenter corporate operators often sacrifice aesthetics on the altar of the bottom line, straining to gain the biggest return for the smallest investment.

Bal Harbour’s bottom line has benefited from Whitman’s attention to detail, though. For one thing, it has discouraged tenants from defecting to the 2 million-square-foot upscale Aventura Mall, which opened in 1983 just a few miles to the north in Dade County, Cohen said.

“He walks the mall every day with his son, and if there’s a scratch or if there’s a leaf out of place, he’s on to it,” said Enid Rosenthal, marketing director, who has worked at Bal Harbour in various capacities for the past 30 years.

And Whitman is totally unsentimental when it comes to underperforming tenants. If sales per square foot drop below $500, the tenant is in danger of expulsion.

“We either do that or we perish; that’s painful sometimes; you develop a very friendly relationship with some of your merchants.”

When a space does open up, though, there is no shortage of candidates eager to replace an outgoing tenant, unlike the early days when Whitman pounded the pavement of Fifth Avenue. “We’ve got a list of merchants two miles long who we would love to have in here.”

There is little scope for further retail expansion, however. For a start, European retailers all insist on ground floor locations, even though shoppers can drive right up to the second level, Whitman said. And, prepared as he is to break rules, even he isn’t going to dabble with a third level of retail.

“I’m not going to lower the bar and have junk on the third level.”

But he has played with the idea of putting an upscale movie theater up there. Like everything else at Bal Harbour, it would be exclusive, offering patrons cocktails rather than popcorn. However, with the current turmoil in the movie theater industry, he has that plan on ice for the time being.

In the meantime, Bal Harbour is just fine the way it is, looking as fresh today as ever, observers say. “It’s 35 young,” is the way Leeds puts it.

“If I could be a mall, I’d be Bal Harbour,” Jerry Powers, publisher of Ocean Drive Magazine, a local fashion and celebrity gossip publication, once said.

But while the accolades are still pouring in, the offers to buy Bal Harbour from large mall operators have tapered off, Whitman said. “Over the years it’s finally dawned on them that this is a family center, and I don’t have any interest in selling.”

Neither is Whitman interested in replicating his success by building upscale centers in other markets.

“I’m not that hungry,” he said. “And I don’t enjoy riding around the country in an aeroplane.”

Because of his passion for Bal Harbour, Whitman, who is 82, isn’t talking about retirement. Even though his son, Randy, has joined the business as the property’s leasing agent — Whitman also has a daughter, Gwen — and despite his enthusiasm for playing tennis, he still comes into the office nearly every day. “I wouldn’t do it if I didn’t love it.”