PRINT THIS STORY:

CHANGE TEXT SIZE:

Is high-tech next for Mall of America?

By Jim McCartney

Jim McCartney covers retail for the St. Paul Pioneer Press, St. Paul, Minn.

The Hyperport, Mall of America's potential next phase is envisioned as a high-tech showplace for companies such as Microsoft, Sony and Oracle.

Already a 4.2 million-square-foot landmark, Mall of America is looking at expansion. The Bloomington, Minn., megamall's second phase is shaping up to be an even more ambitious, complex, futuristic and expensive project than the first. And the path to its development may be as fraught with difficulty as the original mall's construction.

Called the Hyperport, Phase 2 is planned to be a high technology business showplace and communications center that defies easy definition. The Hyperport would be the lead component of a $1 billion Information Age business park that would also include hotels and office buildings, and would be linked by covered bridge to the Mall of America.

At the project's heart would be a satellite-computer network that would essentially serve as an "information power plant," according to Curtis Nelson, who last fall left his job at Ceridean Corp., a Bloomington, Minn.-based data processing and information services firm, to devote himself full-time to the Hyperport. Bob Nelson and Minneapolis architect John Ruggieri are Mr. Nelson's partners in Hyperport.

The network, known as the HyperCore Power Plant, would be an information and communications center that would provide a faster, higher quality and more efficient alternative to browsing the Internet from a personal computer. In addition, high-tech companies would provide a variety of products and services proprietary to the Hyperport.

Its developers ultimately see the Hyperport as a high technology business, which would be expanded throughout the world. At its heart, the Hyperport would be an international showplace to display new technology and train people in its use.

Visitors would be issued an electronic smart card, to be used each time they log on to the Hypercore or to various exhibits. The smart card would also serve as a charge card (some exhibits or services will cost money) as well as provide access at the Hyperport, providing both security and a high-tech way to monitor traffic.

Connected to the "power plant" would be the Hyperport's main attractions:

* Discovery fairs appealing to consumers in nine areas, including health, travel, schools, careers and culture. Consumers would be able to explore the latest products and information in each category. In many cases, they could have an interactive, virtual reality experience through 3-D computer-animation.

* Tech Pointe, a business-to-business interchange in which companies could explore a variety of technology-based business solutions such as information technology products and solutions, identify new markets and form strategic alliances.

* Space and Discovery Park would promote and demonstrate the everyday benefits of space exploration, and boast a life-size model of the International Space Station. Visitors would be allowed real-time access (via satellite hookup) to the actual space station, which is to be built over the next five years at an estimated cost of $60 billion. The space station's lead contractor, Boeing Commercial Space Co. has agreed to furnish exclusive engineering services to provide this link for the Hyperport.

"So much is still in the concept stage," said Rick Krueger, president of the Minnesota High Technology Council, which plans a major presence at the Hyperport through an expanded version of Wonders of Technology, a popular exhibit it has run at the Minnesota State Fair.

"Some of it falls into the category of wishing or hoping. But the significance of the Hyperport is that it puts Minnesota square on one of the main sites of electronic commerce," he said.

The project is really the master plan for what would be a series of 35 separate but interconnected developments. Each pad would be sold to a developer, most likely the business or institution that would occupy the space, who would then be responsible for financing and building out that section of the Hyperport.

But the Hyperport's primary commercial appeal is as a marketing tool to both consumers and other businesses.

Sony is a prospect for a 100,000-square-foot pad in which it would show off its latest products, Mr. Hoffman said. While the electronics company would not directly sell its products, it would have a targeted method to market its latest products to businesses and consumers. That may be a more cost-effective and efficient way to market its products than relying on expensive media advertising or sales clerks in electronics stores.

Meanwhile, The Hyperport and its participants will be able to track the interests and activities of its visitors, and eventually build a detailed and massive database.

"As our society becomes more fractionalized and diverse, companies wonder how they can reach their customers," Mr. Hoffman said. "Instead of four channels it's 38 and soon it will be 500."

The Hyperport would also develop specialized services, such as its conference information center, which would offer the latest equipment and technology for conventions or trade shows. In fact, Mr. Nelson said, he sees an opportunity in hosting tightly focused alternatives to the huge Comdex technology show in Las Vegas, which IBM, Armonk, N.Y., recently said it will boycott, claiming it has become too large and unfocused.

The Hyperport has received "indications of interest" from 450 major companies and institutions that wish to participate either as tenants or co-developers, Mr. Hoffman said.

"The idea has been presented to a variety of private and public bodies, and many of them, such as Harvard University, Sony and Imation, have said 'Wow! it's the best idea we've seen,' " Mr. Hoffman said. "We've gotten verification of the idea."

He acknowledged that an expression of interest is a long way from a signed agreement. He added, however, that his project needs to nail down a site before it can win firm business commitments.

"We've had so much interest in this, one of our main goals now is to come up with a selection criteria for who we choose as participants," said Rick Marklund, Hyperport's president.

For now, Bloomington, Minn.-based Hyperport Development Partners has an informal agreement with Mall of America to work out a master plan and shepherd the project through the government approvals process. It is expected to take about five years to go through design, approval, engineering and construction, said Bob Hoffman, a Bloomington real estate attorney who is a partner in the Hyperport project. He cautions that his project is by no means a "done deal." However, the Hyperport is so complex that some uncertainty early on is almost to be expected.

In fact, the project's path could echo Mall of America's own tumultuous development past. Originally conceived by Edmonton, Alberta-based Triple Five Corp., the builders of West Edmonton Mall, Mall of America's construction was delayed several times. Triple Five eventually brought in Indianapolis-based Melvin Simon & Associates as a co-developer, and the mall debuted in August 1992.

Before Mall of America's owners can choose a project for its second phase, they must secure development rights to the 53-acre site just north of the megamall where the Met Center arena once stood. The original Phase 2 site, just east of the megamall, is in the path of a new runway planned at the nearby Minneapolis-St. Paul International Airport.

The Metropolitan Airport Commission, which runs the airport, owns the Met Center site, and is hoping to use it as trade bait to compensate Mall of America's owners for losing the rights to develop the original Phase 2 site.

Mr. Hoffman, as it happens, represents Mall of America's owners in the land deal, just as he negotiated the development agreement for the original megamall in a completely separate transaction.

The Hyperport partners must show the megamall's owners that their project is financially viable as well as the right complement to their shopping complex. The Hyperport business park would be an estimated 2 million square feet, while additional related development -- which will include office towers and hotels -- tied into Hyperport could account for yet another 2 million square feet.

Mr. Hoffman argues that his project will draw a whole new class of visitor to the megamall complex -- business executives, scientists, students and government officials who would probably stay longer than other visitors typically do. Some would bring their families, who would likely spend time at the shopping center and Camp Snoopy in its entertainment area.

Mall of America's owners are impressed with the array of major corporations and institutions that are interested in participating in this project, according to Art Spellmeyer, vice president of development for Indianapolis-based Simon DeBartolo Group, the successor company to Melvin Simon & Associates, and the mall's manager.

Should the megamall's owners get the rights to the Met Center property, a transaction now being negotiated, they and the Hyperport developers must agree on a master development plan, win a daunting array of predevelopment approvals, sign co-developers and tenants, obtain financing and, finally, build what would be a challenging high-tech commercial real estate project. What's more, the Hyperport hinges on the creation of new businesses, and even new technological applications, which include obtaining medical information via satellite transmission.

In addition, the Hyperport's backers must convince the Mall of America's owners that it is a financially sound project.

"If we don't show them how we're going to make money, we're dead," Mr. Hoffman said.

The concept will not be exclusive to the Mall of America. The Hyperport Development Partners plan to create a network of Hyperports, including a smaller version called Hyperportal and Microports in such locations as regional malls and urban centers throughout the United States and internationally.

The Hyperport plans to sign a lease for its first Hyperportal at the megamall late this summer, and open in the spring, Mr. Marklund said. The 34,000-square-foot facility would introduce, demonstrate and field test the Hyperport concept -- as well as generate revenue for the company.

Because of the high-tech Hypercore, the Hyperport is a much more complex, leading-edge business enterprise than even Mall of America. And while the megamall was built essentially as one big project with one main lender and two developers, the Hyperport will be a mosaic of about 35 distinct projects, each likely having its own developer and lender.

The ultimate success of the Hyperport is enhanced by the advantage of being next to Mall of America.

"In reality, if you do something next to the Mall of America, you will double your activity," Mr. Krueger says. "Still, this is going to be a significantly different and new development done in a big way."