Repurposing Our Nation's Malls

When the Highland Mall in Austin, Texas, opened 46 years ago with 1.2 million square feet of interior shopping space, people flocked to what was the city's first large-scale, enclosed shopping center. For decades, it did well.

But time, competition, neglect, changes in neighborhood demographics and buying habits took its toll. By 2009, U.S. News & World Report had dubbed it one of the country’s “most endangered malls.” A year later, all but a few of its stores were vacant.

The 81-acre Highland Mall didn’t die, however. Austin Community College (ACC), which had its administration offices on the edge of the mall, stepped in. Working with a developer who is building apartments and offices in former parking lots, it is turning the shopping center into a new ACC campus — its eighth in the rapidly growing Austin area.

As malls of all kinds around the country are shuttered, the Highland repurposing story is a bright spot on the national scene. But it’s not alone: In Nashville, Tenn., the Vanderbilt Medical Center has taken over much of the 100 Oaks Mall, while the Denver suburb of Englewood replaced the Cinderella City mall with a mixed-use, transit-oriented development called CityCenter Englewood that includes retail, residential, and office space and open-space elements with a light-rail focal point.

Not all malls are suffering, however, and some of the more upscale ones are doing quite well. But economists and other urban experts say the underlying problem is that developers overbuilt malls in the 20th century. There are now about 1,200 of them and roughly a third are closed or dying. According to Ellen Dunham-Jones, an architect and professor at Georgia Tech, the United States has twice the square footage in shopping centers per capita than the rest of the world, and six times as many as countries in Europe.

The demise of many malls may only pick up speed as department store anchors such as Macy’s, Sears and JC Penney continue to close and shoppers do more of their buying online. According to CMO.com, internet retail sales are predicted to grow steadily to $370 billion in 2017, up from $231 billion five years ago. CMO also reported that 72 percent of millennials research and shop their options online before going to a store or mall — if they go at all.

Leonard Schlesinger, a Harvard Business School professor, said that over the past decade, “many good malls have stayed really good and even gotten better, while everything else has deteriorated.

“There is still a portfolio of what I’d call class A malls that remain extraordinary shopping destinations, create excellent amounts of traffic and have incredibly high productivity per square foot. Those malls’ landlords have made huge investments in keeping their sites upto- date and managed the mix of retail concepts to make sure that there is actually a reason for the customer to go there. So it’s a ‘rich get richer’ scenario.

“For the remainder, the big question is ‘What do you do when your department stores go away?’ That’s because the fundamental notion was that these department stores were the source of the traffic generation and that is no longer the case.

“You now find everything from bowling alleys to community centers to kids’ gyms to churches and grocery stores in malls. A few years ago, that would have been unthinkable. So the jury is still out on what constitutes the best practice for repurposing a mall.”

Amanda Weinstein, an assistant economics professor at Akron University in Ohio, agreed with Schlesinger. She said that the future of the site of the Rolling Acres Mall in Akron — which opened in 1975 and was demolished this past fall after it failed — remains uncertain.

“It was once a big deal to go to ‘the mall’ to shop or even just hang out if you were a teenager,” she said. “People all over northeast Ohio flocked to it. Malls replaced the downtowns of inner cities, which many people felt were no longer convenient or safe.”

She said Rolling Acres had to compete with the nearby Summit Mall and the two chose different approaches, she said.

“It became a race to the bottom for Rolling Acres and a race to the top with Summit and now Summit is doing great because it has restaurants and entertainment and other things to attract the whole family. Rolling Acres chose the basement route and it died.”

But even the currently successful malls may have difficulties in the future because teens, who once thronged to these enclosed shopping districts, now do much of their “hanging out” and shopping online.

“That’s a harder one to figure out,” she said. “I don’t know if even the fancier malls will draw them in. Time will tell."

Neil Vickers, executive vice president of finance and administration at Austin Community College, said the school had a ringside seat for watching the demise of the Highland Mall.

“We’ve had our main administration building there since the early 1990s,” he said. “When department stories folded, we could see it right out the window.”

He said the school began planning for an expanded presence in central/southeast Austin about a decade ago. At the same time, the mall’s demise was picking up speed.

“We had something of an ‘aha’ moment when Dillard’s announced they were departing for the Domain, a highdensity, mixed-use project in the high-tech northwest corridor of Austin.

“We said, wait a minute, we are already right here, so why don’t we see about taking advantage of the new vacant Dillard’s building? We got a great deal, not knowing we’d have the opportunity to buy more of the mall. But it made sense.”

As part of that acquisition, ACC partnered with Red Leaf Properties, which is building apartments, offices and retail on 1 million square feet of parking lots as part of a mixed-use development.

Because the surrounding neighborhood was hurting, he said the city welcomed the renovation of the former mall. That has meant moving through the required upgrading of water, sewer and other utilities has been a breeze. No zoning changes were required to turn the actual mall property into classrooms, he noted.

Vickers said ACC has so far completed the renovation of 200,000 square feet of the mall into a traditional college campus, including a huge computer lab with 600 stations. The school is now at work on a 600,000-square-foot effort and will eventually repurpose all 1.2 million square feet and may even put up some additional buildings.

“We’ve been very happy with all that’s happened so far,” he said. “A lot remains to be done and things are happening a lot faster than anyone imagined. In fact, our 20-year-plan is now a five-year plan. But the Austin economy is strong and that has helped accelerate a lot of development plans for this site.”

In Colorado, Englewood Community Development Manager Harold Stitt said when Cinderella City opened in 1968, it was one of the largest enclosed malls west of the Mississippi. It was the city’s sales tax “cash cow” for two decades until more modern malls in other Denver suburbs began to draw business away and the decline began.

He said the mall’s 1.3-million-square-feet of space was not maintained well after things began to go south. The demise picked up speed and by the mid-1990s, the drop turned into what he described as a steep “double black diamond ski slope.” In 1999, it closed, in part because the owners did little to “freshen it up. In fact, it only had one facelift over its 30-year-life.”

Worse, he said, the owners threatened to put a fence up around the mall and auction it as distressed real estate.

“Of course the city did not want that to happen to a 55-acre chunk of land that was only a short distance from our old downtown, which was doing OK,” he said, noting that Englewood owned about 40 percent of the ground on which the mall parking lots were built.

When city leaders found out that the regional transit district was planning to expand light rail into the southwest corridor of Denver’s suburbs and build a station next to the failed Cinderella City, they saw that as an opportunity to build a transit-oriented development (TOD) with a mix of residential, commercial, retail and civic tenants. It did just that by forming its own Englewood Environmental Foundation, a development group.

The former Foley’s Department Store was repurposed into the Englewood Civic Center, which is now home to city offices, the library, municipal court and the Museum of Outdoor Arts. The Civic Center was the first part of City- Center Englewood to debut when it opened in 2000. Englewood became one of the first suburbs to replace a mall with a mixed-use downtown.

“It’s worked out well,” he said of the CityCenter Development. “I’d describe it as a ‘hybrid TOD’ because we also have a 147,000-square-foot Walmart on one side that is not transit development. But the closer you get to the light-rail line, the uses are more accommodating of mass transit, with residential and civic functions, including open space that includes a piazza with a performance space for concerts in the summer.”

In Nashville, the grand opening of the 100 Oaks Mall back in 1967 was a big deal. It, too, did well for several decades, before it fell on hard times. But in 2007, the Vanderbilt University Medical Center (VUMC) leased more than half of the mall’s 800,000 square feet and converted the second floor into 20-plus clinics, replacing shuttered department stores and shops. In addition, the mall’s former main entrance has been converted into the medical center’s lobby.

Janice Smith, the VUMC chief administrative officer, said the move to 100 Oaks gave a boost to the remaining retail stores in the mall and has given a lift to the district bordering 100 Oaks.

“It’s been nice to watch the metamorphosis since we moved in and pumped new blood into the neighborhood,” she said. “We took our police force with us out there too, and that added level of security has been a catalyst for the surrounding area."

Smith said the medical center kept the interior of the mall model, with waiting areas throughout the concourse and 20 different specialty clinics on either side.

“It was a bit of a leap for us to do this, but we engaged several focus groups to try to understand what people wanted. But we also knew we needed to expand off our main campus where we are relatively landlocked.”

She said 100 Oaks was the first mall in Nashville. And even though it had fallen on hard times, Smith said many Nashville residents “had sentimental reasons” for wanting to see it refurbished.

She said workers gutted the entire facility and “took everything back to the concrete walls and floors” so the building could be converted into a medical center.

“We looked at all we needed from an air handling perspective, to beefed-up plumbing and having back-up, emergency power — which is not something most retail needs,” she said.

Smith said the medical center has proven to be popular with patients.

“It’s been a big success and folks appreciate the easy parking and access,” she noted. “We worked to make it accommodating, so it’s easy to find where you’re going. Frankly, I was a little worried about how the ambiance would turn out, but it is very calming and welcoming, not sterile at all.

“People have responded positively and told us they’d love to see us do something like this again and add more clinics in the community,” she said.