News: Mall Wars

Does the public benefit from mall developers trying to out-flank each other?

Jul 20, 2000 at 2:06 pm

For years, people have been moving farther away from Cincinnati into swanky subdivisions and other new housing in Butler and Warren counties. Now the stores are following them.

Although the proposed Monroe mall between Cincinnati and Dayton now seems like a long shot, it's only one of six malls either on the drawing board or under construction in the Tristate.

But what about the area's existing malls, not to mention the strip malls and other collections of stores? How many stores do local residents need? And if there's too many, how can overbuilding be prevented?

"We have plenty of malls," said Glen Brand, director of the Sierra Club's Cincinnati office. "That's the fact."

"No matter what, we are definitely overbuilt (in retail space)," said Stan Eichelbaum, president of Marketing Development Inc., a local consulting company specializing in retail, planning and development issues.

There's enough retail in the United States to serve 500 million people, according to Eichelbaum, but there are less than 300 million people living here.

Europe averages two to seven square feet of retail space per resident. The U.S., where retail construction is driven much more by speculation, averages 19 to 22 per resident, Eichelbaum said.

At the same time, many parts of Europe protect their inner cities, while we essentially abandon many of our old neighborhoods in favor of using undeveloped land for new construction. It happened and still is happening for a variety of reasons, including race, Eichelbaum said.

"America is a role model for obsolescence," he said.

The retail business is very speculative in the U.S., with increasingly intense competition. Under this competition, retail has changed from a business with strong earnings to one with slim profit margins. In some places, the pressure to compete has driven developers to build malls across the street from each other, such in Broward County, Fla. (which contains Fort Lauderdale).

Forest Fair Mall is a pretty good example of that kind of speculation, according to Eichelbaum, who believes that better market research would have convinced banks not to finance the once-upscale mall. But despite the overall retail saturation and Cincinnati's sprawling development patterns, the region hasn't attracted a lot of the newer and hipper chain stores.

A Mega Stumble
For months, Ohio Department of Transportation (ODOT) officials were under the impression that Michigan-based mall builder Taubman and Co. and Monroe developer Leonard Robinson were working on an interchange justification study. The work was required as part of a request to fund half of a $22 million highway interchange needed to access Taubman's proposed regional "value center" just off I-75 in Monroe, designed to draw shoppers from both Cincinnati and Dayton. Critics such as Brand called it the "mega-sprawl mall."

But the ODOT's spring application deadline passed without Taubman turning in the study, according to a letter from ODOT Director Gordon Proctor to the Ohio-Kentucky-Indiana Regional Council of Governments.

Robinson, however, hasn't conceded defeat. He said there just wasn't enough time to do a thorough study before ODOT's deadline and that Taubman still has a "long-term" option on the property.

Still, the project will have to wait at least one year to get another shot at state funding. Plus there's the issue of the more than 1,400 letters and emails ODOT received against the mall — the largest opposition to a state transportation project in the last few years.

John Hurley, vice president of real estate for Federated Department Stores, doesn't see a bright future for the Taubman project.

"The Monroe site really only ever had potential as an off-price project," Hurley said, such as an outlet mall. But with Bass Pro Shops moving into the redeveloped Forest Fair Mall, Taubman's list of potential tenants was shortened, he said.

Sprawl opponents, such as Brand, are claiming a "historic" victory, saying this is the first sprawling project in Southwest Ohio reversed by a massive public outcry.

But what about the other malls on Tristate drawing boards? None are attracting the fire the Taubman project has, probably because none need a $22 million, state-backed interchange to open. But four of the other five proposed malls are located in prime sprawl territory north of I-275 between I-71 and I-75.

At the same time, older malls are struggling to attract new shoppers, who are being lured to bigger specialty stores with flashier environments. At least two existing malls — Beechmont and Forest Fair — are being redeveloped to meet these new demands.

The Next Wave
The first of the new malls — the 350,000-square-foot, open-air Rookwood Commons — is opening Aug. 1 next to the existing Rookwood Pavilion in Norwood, the only new project inside the I-275 belt. It includes 45 stores, half of which are new to Cincinnati, such as the organic grocer Wild Oats, according to Mark Fallon, director of real estate for project developer Jeffrey Anderson Real Estate.

Of the new malls, Brand likes this one the best because it's located in an older neighborhood on a previously occupied site. We should be filling in our cities with these type of projects before we spread beyond the suburbs, he said.

Fallon also is redeveloping Beechmont Mall into an open-air center anchored by existing tenants Lazarus, Kmart, Thriftway and others. Basically, the mall would lose its roof and be reopened with a new mix of stores, possibly in November 2001. Other proposed or in-progress malls include:

· Union Town Centre, located just off I-75, which will be a high-end, mixed-use project with 400,000 square feet of retail space, according to David Kass, vice president of retail development for Columbus, Ohio-based Continental Real Estate, the project's developer.

The project, which hasn't announced retail anchors yet, also will include two or three hotels; 200,000 square feet of office space; and about 400 upscale, multi-family apartments and townhouses with brick sidewalks and other enhancements, Kass said.

· In November, a redeveloped 1.5 million-square-foot Forest Fair Mall will unveil a 144,000-square-foot Bass Pro Shops plus Burlington Coat Factory, Media Play and another anchor tenant to be announced soon, according to James Goldsmith, president of Gator Investments of Miami, Fla., the mall's owner.

A 10-screen Showcase Cinemas is expected to open in August or September 2001, about the same time as the mall's grand reopening, complete with a refreshed stock of 120 specialty stores.

· The open-air Deerfield Town Centre is expected to have 360,000 square feet of retail on a 10-acre site, but plans are very preliminary and no anchors are signed yet, said Ernie Reno, spokesperson for Duke Weeks Realty.

"And I don't anticipate that will happen at least for a couple of months," Reno said. "The only thing I know for sure is that the land is in the process of being assembled."

The best-case scenario is opening the mall in spring 2001 at the intersection of Mason-Montgomery and Irwin Simpson roads. "That's a fairly aggressive timetable," he said.

· The Rouse Company of Maryland is working on a Nordstrom-anchored mall across the street from the Deerfield Town Centre. Plans are preliminary, but Rouse hopes to open it in 2003 with a 144,000-square-foot, two-level Nordstrom store and two other undetermined anchors, according to Rouse spokesperson Nancy Taylor.

· And local firm Madison Marquette is working on an open-air mall near the Union Town Centre project.

Leveling the Playing Field
There are no mall wars in Minneapolis and St. Paul.

That's largely because the state of Minnesota adopted a tax-sharing program for the region, according to Myron Orfield, president of Metropolitan Area Research Corporation, a consultant firm specializing in regional and urban issues. As a result, the seven-county, 187-municipality region surrounding Minneapolis and St. Paul shares 40 percent of its commercial and industrial taxes.

When the law was passed in 1971, the region's richest cities had 12 times as much revenue as the poorest cities. Today that ratio is 4-1, which has led to more balanced funding in the area's 71 school districts and more stable communities in general.

Liz Blume, head of Cincinnati's planning department, called it "a model tax-sharing program."

The program has prevented mall wars in the district, because cities in the region are less likely to approve or use tax dollars on projects that might compete with each other. Using taxes to spur unnecessary retail competition is "a big waste of money," Orfield said.

Although the twin cities' system hasn't been widely used elsewhere, other states and cities across the nation either have passed or are considering their own versions of tax- and revenue-sharing programs, from Cook County, Ill. to Allegheny County, Pa., Wisconsin and Michigan.

"The more regional we can get in terms of planning, the better it would be," Blume said, adding that affordable housing and schools, to start, need to be examined regionally.

Blume agreed there is already a lot of regional thinking going on through projects such as the proposed light rail system, the Cincinnati 2012 Olympic bid, studies of the I-75 and I-71 corridors and even the Big Pig Gig. But without some sort of state involvement, she said, local government has a hard time doing regional planning.

Although nothing like the Minnesota tax plan on the local drawing board, the seeds of regional cooperation are being sown by Ron Miller, executive director of the Hamilton County Regional Planning Commission. Months ago he began visiting the county's 49 political subdivisions to pitch the Regional Planning Partnership, a new effort to get all of the county's political leaders and planners to the same table.

The partnership will act as an advisory group to the county's seven-member Regional Planning Commission, which spends most of its time dealing with day-to-day zoning in the unincorporated county. It doesn't have the time to do long-term planning, and that's where the partnership comes in.

The planning partnership came from a strategic planning session held two years ago, which was largely initiated by County Commissioner John Dowlin, Miller said. After a lot of opinion gathering, the conclusion was that the county municipalities needed to work with each other more often. For example, state funding requests would get more attention with a unified Hamilton County backing them.

So far, six townships have joined — Green, Springfield, Anderson, Harrison, Columbia and Miami — plus the Village of Fairfax, the city of Cincinnati and, of course, Hamilton County. That's nine municipalities down and 40 more to go.

But the partnership became an entity after two governments signed on, and its meetings will begin in about two months, Miller said.

"As an alliance, we can probably do something very effective," he said. ©