Evolution of area malls began before COVID.
The traditional American mall has long been evolving, and regional centers have been catching on. Some shopping centers have already adapted by including necessary elements — open-air sections, economy-flexible anchor tenants, and mixed-use designs — while others have plans on the drawing table.
Redevelopments of shopping centers in and around Boulder have reimagined the mall that became a familiar part of Americana: an enclosed structure with hundreds of merchants and big chain department stores. A center that’s almost entirely retail with maybe a food court and a movie theater, is changing fast in the region.
The now 4-year-old redevelopment of Longmont’s Twin Peaks Mall into The Village at the Peaks’ open-air and mixed-use layout has helped protect it from financial hardship during the COVID-19 pandemic. Proposed developments for parts of FlatIron Crossing are on the table, and Boulder’s Twenty Ninth Street reuse of Macy’s is gaining momentum.
Though a mall can be a one-stop destination to knock out a holiday shopping list, diversifying its business model is a way to compete with online vendors.
Consumer trends of online shopping have been exacerbated by the coronavirus pandemic, according to Stephanie Cegielski, vice president of public relations for the International Council of Shopping Centers.
“Prior to the pandemic, about 10% of all retail sales occurred online. That number increased significantly during the pandemic since it was one of the only ways people could shop or felt comfortable shopping during the shutdown,” she said in a prepared statement.
The trade association represents a network of 70,000 shopping centers around the world. It was established in 1957, one year after the first American mall, Southdale Center in Minnesota, opened.
In a June letter to all members of the U.S. Senate urging more government support for American malls, ISCS President Tom McGee wrote that “the shopping center industry is one of the most distressed industry sectors impacted by COVID-19.”
He added that some tenants stopped paying contractually obligated rent, resulting in an estimated $35 billion unpaid in April and May. McGee wrote that 12 million shopping center-related jobs have been lost.
Some U.S. properties that have seen success during the pandemic are anchored by grocery stores or other essential businesses, Cegielski said.
Anchor tenants
For shopping centers in NewMark Merrill Mountain States LLC’s portfolio, grocery stores and restaurants offering fast-casual service have performed well during the pandemic, said Danaria McCoy, vice president of operations for The Village at the Peaks. NewMark Merrill is the developer and landlord of the Longmont shopping district.
One of the first anchor tenants to sign on to the project — a redevelopment of Twin Peaks Mall — in 2016 was Whole Foods Market Inc. The natural-food chain declined to disclose revenues at the shopping center or for the company. Its parent organization Amazon.com Inc. net sales increased by 40% in its second quarter compared to the $63.4 billion made in 2019, according to a financial report in July. Amazon reported that its online grocery sales tripled in its second quarter. Along with Whole Foods, it owns Amazon Fresh, a grocery delivery service.
Other Village at the Peaks tenants that continued operations include Sam’s Club, Wyatt’s Wines and Spirits, Bellco Credit Union and 10 restaurants. Village at the Peaks recently added a Bank of America branch. It also broke ground on a Raising Cane’s Chicken Fingers restaurant last month.
“We are happy to have Whole Foods. We’re happy to have Sam’s Club, Wyatt’s, these are businesses that have been serving the community throughout COVID,” McCoy said. “But then we also have all sorts of wonderful restaurants who have developed curbside programs and outdoor dining programs that can operate currently at a reduced occupancy.”
She added that she considers Village at the Peaks to be a community center where locals can find their daily needs.
Thanks to its essential business merchants, sales-tax revenue generated by the property has increased during the economic downturn. Jim Golden, chief financial officer for the city of Longmont, said sales-tax collections are up 17.1% as of August over the same eight-month period in 2019.
“VATP (Village at the Peaks) is faring very well as big box stores, groceries and liquor stores have all performed strongly during COVID. Those are also obviously the three largest tax generators at the VATP,” Golden said in a written statement.
McCoy said that Newmark Merrill worked with tenants on accessing government assistance, and where to source masks and sanitizer. It also helped with marketing and updating the public on store reopenings and safety precautions implemented by merchants.
Currently, Village at the Peaks has eight vacancies, according to its website. McCoy said that the property has retained its estimated 98% occupancy.
Key tenants for Twenty Ninth Street Mall in Boulder are Century Theatres, Colorado Athletic
Club, The Home Depot, Nordstrom Rack and Zayo Group Holdings Inc, according to its 2020 property listing brochure. A Macy’s store is also listed though Macy’s Inc. owns the building at 1900 28th St. In addition it houses a Trader Joe’s which often has a long line of customers waiting to enter, as the grocery chain has associates monitoring capacity at all locations.
Twenty Ninth Street is owned by Santa Monica-based Macerich Co.(NYSE: MAC). The investment firm did not respond to interview requests for its Colorado properties Twenty Ninth Street and FlatIron Crossing in Broomfield.
Twenty Ninth Street lost its California Pizza Kitchen after the pizza chain filed for Chapter 11 bankruptcy protection in July, as previously reported by BizWest. The Loft women’s clothing store, a subsidiary of Ascena Retail Group Inc., also shuttered doors at the mall in April.
Swedish company Hennes & Mauritz AB or H&M (OTCMKTS: HMRZF), the popular clothing retailer, announced that it will close 250 locations next year due to the COVID-19 pandemic in its monthly report on Oct. 1. Locations were not revealed, so it is unclear whether the Twenty Ninth Street and FlatIron Crossing stores will be considered in the mass closure.
The July 2020 revenue report for Boulder recorded that Twenty Ninth Street year-to-date sales tax is 37.3%, or $1.7 million, lower than 2019.
Joel Wagner, tax and special projects manager for Boulder, said that Twenty Ninth Street accounted for 4.1% of the city’s total sales and use tax revenue through July.
But Twenty Ninth Street has added new names to its portfolio. Cava Grill opened in the former Zoe’s Kitchen. Warby Parker relocated to the shopping center after three years on Pearl Street east of the outdoor mall.
According to Twenty Ninth Street’s website, it’s expecting Madison Reed, a brand of hair-care and hair-color products. Also coming soon is an Amazon 4-star store, an Amazon.com Inc. (NASDAQ: AMZN) retail store that sells products that are rated at least four stars, are top sellers or are new on its website.
FlatIron Crossing and its surrounding business is an important factor in Broomfield’s retail profile, said Jeff Romine, economic vitality director and economist at the city and county of Broomfield. He added that Broomfield doesn’t look at the property alone and includes its surrounding businesses.
He estimated that normally 20% to 25% of sales-tax revenues for Broomfield are collected from that area. Romine added that FlatIron Crossing and surrounding businesses employ around 1,500 to 2,000 people.
FlatIron Crossing is anchored by AMC Theatres, The Container Store, Dick’s Sporting Goods, Dillard’s, Forever 21 and Macy’s according to the Macerich 2020 property listing brochure.
Nordstrom, Inc.(NYSE: JWN) in May announced plans to permanently close 16 store locations including its 84,000-square-foot location at FlatIron Crossing. It resulted in 167 retail jobs cut. According to a WARN notice letter filed with the Colorado Department of Labor and Employment on May 11, 70% of sales come from in-person shopping and the impacts of COVID-19 forced Nordstrom to “take a critical look at the physical footprint,” of its stores.
FlatIron Crossing resembles a traditional mall and is mostly enclosed. The mall reopened in June, but only after a variance request Broomfield submitted to the Colorado Department of Public Health and Environment. Under the Safer-At-Home mandate at the time, only stores with external entrances could operate at 50% capacity, making many tenants ineligible to reopen.
“We worked hard to get a variance approved by the state of Colorado, so that that facility can open more completely and those businesses can begin to recover from the effects of the public health measures as well as the economic recession that we’re in,” Romine said.
Property design
Broomfield City Council reviewed preliminary drawings last year for a mixed-use development at FlatIron Crossing just south of the shuttered Nordstrom, as reported by BizWest.
“We’ve been working with (FlatIron Crossing landlord Macerich Co.) in more detail over the past year and a half about the redevelopment of a portion of FlatIron Crossing — the addition of some residential uses, some hotel uses, some offices and some green open areas,” Broomfield deputy city manager Kevin Standbridge told BizWest in May.
Construction would call for a 100- to 200-room hotel, 650 to 850 residential units, 415,000 square feet of office space, a five-story parking garage with 850 spaces and a 3,000-square-foot pavilion. It’s not yet clear how the Nordstrom vacancy may play into those plans.
Macy’s Inc. has been eyeing its Twenty Ninth Street location for a mixed-use redevelopment since 2017. Working with Corum Real Estate Group Inc., Macy’s wants to reuse its real estate for a three-story office space, with 7,700 square feet reserved for retail.
“While we’ve been proud to anchor the Twenty Ninth Street mall for decades, the time has come for us to think about the future,” Macy’s director of development Jessica Fraser said at a Boulder Planning Board meeting in September, as reported by BizWest. “… The retail market is changing, and COVID has only accelerated what’s already occurring.”
The board recommended approval of the plan on a 4-3 vote at the Sept. 24 meeting, but will need City Council approval.
Village at the Peak’s outdoor layout has been an asset during the pandemic, McCoy said. The center has added more outdoor seating. It’s also resumed some events including “Village Vibes,” outdoor concerts that can be observed from restaurant patios. It also has regular drive-in bingo nights.
“We have noticed that the community is not only looking for goods and services, but they’re also looking for these meaningful ways to come together in a socially distance safe environment,” McCoy said.
Jessica Erickson, president and CEO of the Longmont Economic Development Partnership, said that referring to Village at the Peaks, a redevelopment of Twin Peaks Mall, as a “mall” is a misnomer. She calls it a lifestyle amenity, as it has grocers, entertainment, retail and dining. It supports a workforce that then puts dollars back into Village at the Peaks, she added.
She added that the developer’s foresight into the dying mall model kept the shopping center afloat during the economic downturn.
“I think it’s a credit to the mix of merchants in that center,” Erickson said. “That traditional mall model was on its way out prior to COVID and just like with a lot of things, COVID has accelerated that but I don’t think it caused that.”