Commercial Real Estate
Deep in the Malls of Texas, a Vision of Shopping’s Future
DALLAS
— Scott Beck, the chief executive of a local real estate company,
remembers riding his bike as a child to Valley View Center, a shopping
mall in North Dallas. Cars filled the vast parking lot and anchor stores
like Bloomingdale’s, J. C. Penney and Sears teemed with customers.
Now,
the bustle of shoppers has been replaced by the din of construction —
led by Mr. Beck, whose company is clearing the way for a new $3.5
billion development of restaurants, offices and housing.
“We’re not trying to repurpose the mall,” Mr. Beck, 43, said. “We’re simply repurposing the land.”
Many
malls across America have hit tough times, squeezed by changing
demographics and competition from e-commerce, discount stores and newer
malls with more diverse offerings. Morningstar Credit Ratings recently
called the changes in the industry a “seismic shift” and warned of more
financial pain ahead. Hundreds of department stores, mall anchors for
decades, are expected to shut their doors this year.
Several
shopping centers in Texas give a peek into how mall owners and
developers are responding. In spots where the shopping activity has
slowed, the response is clear: Move away from strictly shopping, and
expand the mix to include more restaurants and entertainment, or health
care and education. Or, in the case of Valley View Center, start over
from scratch.
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“Dining
and entertainment is the new anchor — not Sears, not Macy’s,” said
Allan Davidov of Misuma Holdings, based in Beverly Hills, Calif., which
is transforming two shopping centers in Austin, Tex.
At
Grapevine Mills, a popular shopping destinations in North Texas, the
“experiential” formula is a major part of the marketing strategy.
Owned
by Simon Property Group, one of the country’s biggest retail real
estate owners, Grapevine Mills feels almost like an amusement park. In
addition to more than 200 retail outlets and restaurants, it has a Sea
Life aquarium, a Legoland and a Round One Bowling and Amusement, which
includes 24 lanes of bowling, billiards, video games and a karaoke
studio.
What
was once a J.C. Penney Store is now Fieldhouse USA, a
106,000-square-foot indoor sports complex with nine volleyball and nine
basketball courts.
The
mall, about two miles from Dallas/Fort Worth International Airport, is
one of 16 Mills-branded shopping centers nationwide. Gregg Goodman,
president of the Mills division of Simon Property, said Grapevine Mills
drew from a “very wide distance,” including surrounding states, with a
strategy focusing heavily on families and intended to encourage repeat
visits and longer stays in the mall.
On
a recent Friday morning, dozens of schoolchildren escorted by teachers
and parents trooped through Entrance Five to visit the aquarium and
Legoland.
“You
get the kids here, the parents here, everybody’s happy,” said Stephanie
Zafiridis, a preschool teacher from nearby Flower Mound.
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About
200 miles to the south in Austin, Highland Mall is getting a different
kind of makeover. It is being reincarnated as the 11th campus of Austin
Community College, under a nearly $900 million public-private initiative
that has stirred new life into the surrounding North Austin
neighborhoods.
Highland
Mall opened in 1971 as Austin’s first enclosed suburban mall, but, like
Valley View Center in Dallas, it was ultimately outflanked by
competition from newer malls. It closed in 2015.
In
2009, RedLeaf Properties paired up with Austin Community College to
convert the mall buildings into a campus to ultimately serve up to
20,000 students. The first phase opened in 2014 in a former J. C. Penney
anchor store and serves about 6,000 students per semester.
The
campus, four miles from downtown Austin and the Texas Capitol, will
serve as the center of an 81-acre development that will include retail
stores, offices, about 1,200 residential units and three new parks
connected by jogging trails. The overall vision, said Matt Whelan, the
founder of RedLeaf, was to transform a dying mall “into an
academic-anchored mix-use area where people could learn, people could
work, could live, and play and recreate.”
The vision Mr. Beck had for Valley View Center in Dallas is even more ambitious.
The
project is called Dallas Midtown and is often described as a city
within a city. Renderings show clusters of office and residential towers
overlooking parks and other green space. It is expected eventually to
include boutique shopping, high-end restaurants, two luxury hotels, a
branded surgical center, a 10-screen movie theater, an athletic club and
a 20-acre park that Mr. Beck described as “our version of Manhattan’s Central Park.”
That
is a far cry from the Valley View that opened in 1973, riding a wave of
retail expansion and grabbing national attention when a shoe store at
the mall offered a free eight-ounce steak with any purchase of $5 or
more.
About
a decade later, Galleria Dallas popped up as a competitor. And while
the two coexisted for many years, the Galleria eventually won out.
“What
effectively happened over the subsequent 15 to 20 years thereafter is
that you had two malls,” Mr. Beck said. “The new shiny object, which was
the Galleria, sucked the best tenants out of the Valley View Mall.”
Today,
Sears is the only remaining store, though not for long. It is scheduled
to close in two weeks, and a black-and-yellow “Store Closing” banner
hangs just under the roof near the entrance.
The
rest of the mall, much of which has been closed off for demolition, was
virtually devoid of foot traffic, except for a pair of security guards
and a few other pedestrians. Colter’s Barbecue, which has operated at
the mall for more than two decades, had served only four or five
customers by the middle of the afternoon. “When we opened in 1995,”
recalled the manager, Santos Castro, “we had four registers open all
day.”
Louis Schultz, 71, a retired Navy officer, walked down a near-deserted corridor after seeing a movie at the AMC theater.
“You can walk around and it’s like a ghost town,” Mr. Schultz said. “It’s an area that just sort of got neglected.”
Mr.
Beck said he had mixed emotions about all the changes, as he remembered
Valley View in its glory days and looked ahead to the vast new
development about to replace it.
“What
I’m excited about,” Mr. Beck said this week, “is being able to restore
this portion of Dallas to the stature that it really had when I was a
kid, and the opportunities it brings to the surrounding neighborhoods.”
