Thursday, August 30, 2007

Requiem for a mall

About 15 years ago, when I was living in Des Moines the first time around, I had a girlfriend who was assistant manager of "Everything .99" at Southridge Mall -- one of those stores where everything costs a dollar. The store had originally been "Everything 1.29," but it knocked 30 cents off to keep the traffic coming in. This week, I returned to Southridge for the first time in probably a dozen years. "Everything .99" was gone; in its place was "Filipino Store," a merchant that, obviously, caters to Des Moines' burgeoning(?) Filipino population.

The evolution of that one storefront sums up perfectly the continued deterioration of Southridge: from downscale retail, to cut-rate downscale retail, to micro-niche retail.

But at least Filipino Store had customers. I counted three people in there (Filipinos, of course), buying groceries and other specialty items not available at Aldi or Fareway. That was three more people than were shopping at "Natural Therapeutics," a jacuzzi dealer whose lone visible employee was keeping shoppers away with some kind of political-rant radio show turned up to full blast, and two more than were browsing the secondhand material at Book Trader, whose lone visible employee was unshaven and disconcertingly bleary-eyed.

Those three storefronts were occupied, though, and at Southridge that's saying something. A visit to the Soutridge Mall website reveals that of 91 specialty retail locations within the mall, 38 are listed as "leasing opportunities," meaning they're vacant. (This count does not include kiosks. When a kiosk is vacant, the mall management just takes it down. So whenever you see a hastily arranged "sitting area" in the center of a mall concourse, it's a good bet there was once a Piercing Pagoda or Sun Tropik on that spot.) Several empty Southridge storefronts are being consolidated into a single large location for discount clothier Steve & Barry's, but even when that project is completed, one-third of the specialty stores will still be vacant.

On the north side of town, at Merle Hay Mall, things are better, but just a bit. On a recent walkthrough, one could see 21 vacant specialty store locations out of a total of about 85, a vacancy rate closer to 20%-25%, compared with 40% at Southridge. While Southridge's vacancies are spread pretty evenly throughout the mall, certain areas of Merle Hay have been hit especially hard. The north end, near Sears, is a particularly stark dead zone. If you ever wondered what a paradigm shift looks like, you can see it here: Empty storefronts still bearing Sam Goody and Suncoast Motion Picture Company signage face each other across a deserted corridor. (In the Internet age, stores like these that sell commodity products are doomed. At a bookstore, at least you can pick up the volumes and page through them. Music and movie stores offer you nothing you can't get online, and in fact much less.)

Southridge is deep into the shopping mall death spiral, while Merle Hay is just starting to slip into the funnel. They show the classic symptoms:

  • Bejeweled islands. In just about any mall, thriving or dying, you'll find jewelry stores wherever corridors intersect. One major reason is that jewelry is the ultimate impulse buy: People want it, but no one needs it, so the stores are positioned to poach people coming to the mall for other purposes. Also, of the people who do go to the mall intending to buy jewelry, few have a particular store in mind. The stores are pretty much interchangeable. To all but the most discriminating buyers, one 50-point diamond or lump of white gold is as good as the next. Thus, location becomes critical, and stores "on the corner" are best poised to grab those customers prepared to stop at the first place they see. When malls are going through their death throes, jewelry stores hold out longer than most. Perhaps their margins are higher -- one really good sale can carry the entire store for a day. Or perhaps years of exposure to all those corner jewelry stores have fixed in people's minds the idea that malls are full of indistinguishable jewelry stores, so that when people are in a mind to buy, they'll go to a mall they might not otherwise frequent. Whatever the reason, when you walk through a dying mall, it will seem like every other store is selling jewelry. That's because during your walk you see one empty storefront after another (and another and another), then you get to an intersection, and there's a jewelry store on every corner. You can see this in action in a stretch of stores in the northwest corner of Southridge. At one corner, there's a Helzberg Diamonds with three vacant stores on one side and two on the other. Directly across the corridor is a Zales with two empty stores on one side, and two out of three stores empty on the other.

  • Cellphone clutter. I don't know why this happens, but it does. Dying malls fill up with stores trying to sell you cellphone service. My only guess is that leasing agents are desperate to get some tenant, any tenant, to fill empty storefronts, and that cellphone sellers have very little overhead. Southridge has separate stores for Nextel, T-Mobile and U.S. Cellular; a Shock City Cellular location that offers Verizon, Sprint and T-Mobile; a Radio Shack that handles AT&T; plus a kiosk that sells phone holsters and other cell-crap. Merle Hay has Verizon, U.S. Cellular, Sprint, Qwest, Shock City, Radio Shack, Cingular/AT&T and an accessories kiosk. Within five years, both of these malls will have microeconomies based exclusively on people selling each other tennis bracelets and two-year unlimited text-messaging contracts.

  • No goods, just services. The business model for American malls in the late 20th century was to offer people a wide range of shopping to get them in the door, and then provide services to keep them there. If a person could get their hair cut at the mall, or get something to eat, they'd be more likely to stay longer and arrange to do all their shopping there. A dying mall sees this dynamic reversed. Stores close, and all that's left is the services. People now come to the mall specifically to get their hair cut. That's fine for the salon, but it does nothing for the mall, it creates no "through" traffic. Each of the two malls has at least three hair or nail salons, for example.

  • Non-retail "store"-fronts. Faced with 40% vacancy rates, a mall will do just about anything for rental revenue. Southridge is now home to two churches, the Iowa Mortgage Association, a temp agency and the Des Moines Jaycees' annual haunted house, a large space that is unused for 11 months of the year.

What's killing the Des Moines malls? The West Des Moines malls, of course. More specifically, Jordan Creek Town Center.

When I first lived here, there were three malls, each with a distinct identity. For lack of better terms, let's just say that Valley West Mall, on what used to be called 35th Street, was the highbrow mall, Merle Hay was the middlebrow mall, and Southridge was the lowbrow mall. The malls' identity reflected their surroundings. Valley West was in the monied western suburbs, Southridge was on the working-class south side, and Merle Hay was on the border of Des Moines and Urbandale. (Snubbed as usual, east-siders have a mall called "Ankeny.") Then, while I was out, Jordan Creek came along to meet a need no one knew existed. Built in the Dallas County portion of West Des Moines (guess which county gets the sales tax revenue), it was to feature high-end retail and restaurants, assuming you consider Dillard's and P.F. Chang's "high end."

With Jordan Creek going up in the western suburbs, which mall stood to lose the most? Here's a map of the Des Moines area, with the pre-existing malls spotted in red and Jordan Creek in blue:

The average person would probably say Valley West. It's the closest of the three, and it targets the same upscale clientele as Jordan Creek. The correct answer, however, is Southridge.

Southridge is what's known in the industry as a "super-regional" mall -- or, it was, before its customer base collapsed. It was designed to be the primary shopping venue for a large area, starting with the south side of Des Moines and extending to Norwalk, Carlisle and Indianola. Indeed, a stroll through Southridge in the early 1990s found it teeming with letter jackets from the high schools in those southern-tier communities. Warren County license plates filled the parking lots. As the southern suburbs became more affluent, the mall underwent a dramatic expansion and renovation, the centerpiece of which was a delightful indoor carousel. Southridge, which had been sliding, was poised for a comeback.

Around this time, Des Moines business leaders, airport boosters and others were again pressing for construction of a southern freeway that would connect Interstate 35 on the west with U.S. 69 on the east, giving Des Moines a true beltway. They would eventually get their wish with the relocated and expanded Iowa Highway 5, a truly beautiful stretch of highway that leads ... pretty much straight to Jordan Creek Town Center. Families that used to come up from the south to shop at Southridge Mall could now hop on this brand-new freeway and in just a few extra minutes be stuffing their faces at the Cheesecake Factory at Jordan Creek. The death of Southridge Mall had begun.

When I was there this week, there was only one child on the carousel.

Merle Hay also took a beating, though not quite as severe. It still has an Old Navy store, a Limited, an Aeropostale, an American Eagle, and an updated Victoria's Secret. (The old Victoria's Secret stores were designed to look like Parisian salons; the updated ones are designed to look like Amsterdam whorehouses.) But there are far fewer people moving through. Merle Hay's proximity to Interstate 35-80 had long brought in shoppers from the north and northwest. Now that same freeway sweeps many of those same shoppers down to Jordan Creek.

What of Valley West? Its website shows just three vacancies out of more than 100 specialty locations, plus two storefronts that are being filled temporarily while Victoria's Secret and The Limited renovate their stores. Closer to Jordan Creek than either of the two other malls, and yet its vacancy rate is under 5%. How can that be? Some theories:

  • The "my mall" effect. For tens of thousands of people in West Des Moines, Valley West is simply "my mall." It's close by and has all the stores they need. If they really have to, they'll go to Jordan Creek -- say, to get an iPod at the Apple store -- but for day-to-day shopping, there's no need to go any further. Merle Hay may benefit from a similar effect, though its immediate and satellite neighborhoods are neither as affluent nor as populous. Southridge, meanwhile, is surrounded almost entirely by commercial property.
  • The I-235 advantage. The city of Des Moines is still the population center of the metro area. And for most people in the city, you would get to Jordan Creek by taking Interstate 235, which goes ... right past Valley West Mall. It's a significantly shorter trip to Valley West, and the payoff for going all the way to Jordan Creek is not much greater.
  • The Southdale strategy. Southdale, in Edina, Minnesota, was "my mall" when I was growing up in Minneapolis. The first fully enclosed shopping center, it was a roaring success from the 1950s until the '90s, when the gigantic Mall of America opened a relatively short drive away down Interstate 494. Despite suffering a sharp initial drop in traffic, Southdale embarked on an extensive renovation plan and an aggressive advertising campaign. The strategy was this: "We can't keep shoppers from going and checking out the megamall. So let them go. When they get fed up with the traffic, the parking hassles, the tourists and the sheer damn size of the place, they'll come back to Southdale." And they did. Twin Cities residents will go to the Mall of America, if they have to, but they don't shop there. Who has the time? Valley West can make this same appeal: Why go all the way out to Jordan Creek, and deal with all the out-of-towners with their Mahaska County license plates and creative turn-signal usage, and park a mile away, and wait at one stoplight after another, when all you need is right here? Valley West has undergone a renovation aimed at looking even more upscale than Jordan Creek. I suspect it will work.

The Des Moines area didn't need another mall, but it got one anyway. Southridge is dying, and Merle Hay isn't looking so hot, either. Who knows? In a few years, maybe we'll need Jordan Creek after all.

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