Retail is a living organism, continuously evolving to reflect changing consumer tastes and lifestyles. One decade wide ties are in, the next they're out. The biggest catalyst in the evolution of shopping centers over the past half-century has been the Baby Boomers, the 77 million babies born in the U.S. between 1946 and 1964 in the post-World War II period.
Birthrates peaked in 1957 with 4.3 million births, and then declined from 4 million births in 1964 to 3.7 million in 1965. Population experts say the oldest boomers, who turn 65 in 2011, can expect to live to 83. They are likely to remain a retail force for decades.
“The Baby Boomers lived through incredible periods of prosperity and consumption became a way of life,” says John Bucksbaum, the 51-year-old CEO of Chicago-based General Growth Properties. The publicly traded real estate investment trust (REIT) is the nation's second largest owner of shopping malls with about 180 million sq. ft.
Boomers are finding that shopping centers have grown right along with them. “World-class shopping centers can be found on virtually every continent,” says Michael Kercheval, chairman of the International Council of Shopping Centers (ICSC). “Just 40 years ago, ICSC's first CEO, Al Sussman, predicted that in years ahead there could be as many as 10,000 shopping centers built. Today, some 50,000 traditional shopping centers exist in just the United States alone,” adds Kercheval. There are more than 100,000 shopping centers worldwide, says ICSC.
Bucksbaum's family is among the pioneers of modern-day shopping centers, and his life roughly parallels the history of this magazine. National Real Estate Investor is in its 50th year of publication. The May issue is Volume 50, No. 5.
General Growth started from humble beginnings, thanks to Bucksbaum's father Matthew, along with uncles Maurice and Martin. In Iowa in the mid-1950s, the brothers launched a supermarket business, later called General Management Co., with hopes of building the company into a national chain. Little did they realize a fateful turn was around the corner.
The Bucksbaums were enlisted to anchor a shopping center to be developed in Cedar Rapids, Iowa. “My uncle and his two brothers thought the idea of clustering retail with a grocery store anchoring the project was a good idea,” recalls Bucksbaum. “Those three [family members] would provide the grocery store anchor and this was going to be the beginning of their ambition to create the supermarket chain.”
But when financing for the center fell through, the site's owner offered the land to the Bucksbaums. Suddenly, they became developers. “They developed it, did everything wrong, and broke even or lost a little money, but they learned along the way,” says Bucksbaum. “Then they felt they should do another, taking the lessons they learned from the first one, to be profitable and successful.”
Through much of the 1950s, American shoppers found everything they needed downtown on Main Street. But as Baby Boomers began migrating out of the cities by the 1960s, Main Street retailing faced a slow and painful extinction.
“What happened to Main Street is the people left,” says Greg Maloney, president of Jones Lang LaSalle Retail, based in Atlanta. Americans fled to the wide-open spaces of the suburbs, thanks to new freeways and a boom in automobile production. For example, Detroit's population peaked with the 1950 census at 1.85 million. Today, the city's population is estimated at 919,000, a drop of 50%.
In the latter half of the 20th century, department stores realized that their customers were no longer living close to city centers, and they needed to go with them. As the suburban migration gathered steam, the Bucksbaum brothers' third shopping center, Duck Creek Plaza, opened in 1960 in Bettendorff, Iowa with a Yonkers department store, and GGP emerged as a regional retail force.
“You would have to say the biggest single event in terms of the evolution of General Growth was Yonkers' willingness to enter these additional markets throughout Iowa, and that moved us in that direction,” says Bucksbaum. Yonkers Chairman Joe Rosenfield told the brothers that wherever they built a shopping center in Iowa, Yonkers was interested in anchoring it, Bucksbaum recalls.
As suburbs grew, department stores like Yonkers forced strip centers to give way to shopping malls. Then came shopping center pioneer Victor Gruen.
A native Austrian who emigrated to the U.S. in 1938 after the German occupation of his homeland, Gruen used hisdegree and convinced the Dayton family — of Dayton Hudson department store fame — to build what would become the first mall in America to cluster retailers around a central department store, the 1.2 million sq. ft. Northland Center in Southfield Mich., a Detroit suburb. The center, anchored by a Hudson's, opened in 1954.
Only two years later, Gruen also designed the first enclosed mall in America, Southdale Center Mall in Edina, Minn., outside Minneapolis. The 800,000 sq. ft. mall included anchors Dayton's, Donaldson's department store, Woolworth and Walgreen's Pharmacy.
“After the Baby Boomers, the enclosed shopping center was probably the most influential thing in retail in the last 50 years,” says Maloney. “We've managed both Northland and Southdale, and if you look at Detroit and Minneapolis, they have very cold climates, and these malls gave people the opportunity to shop during varying times of the year. Before, they would wait until it warmed up to go shopping because it was all street shopping.”
In 1959, Gruen posited a new strategic plan for the growth of downtown Kalamazoo, called “Kalamazoo 1980.” The key element of the plan for this southwest Michigan city was to close part of the main thoroughfare, Burdick Street, to traffic and create a landscaped outdoor oasis that was pedestrian friendly. In effect, Gruen was trying to bring the shopping center back downtown.
As with Northland and the Southdale mall in metro Detroit and Minneapolis, only the retail portion of Gruen's vision was realized for the new Burdick Street Mall. It was renamed Kalamazoo Mall and city planners reopened two blocks of Burdick Street to limited car traffic in 1999.
Back in Iowa, the Bucksbaum brothers joined the newly formed ICSC, which gave them a national view of development trends. “They were now part of an industry and they could observe what was happening in other areas of the country,” says Bucksbaum. “It was the natural thing to do if you were going to stay in the large retail shopping center business, and with department stores in particular, because now the national department stores wanted to be part of suburbia as well.” ICSC membership grew with the industry, now numbering more than 65,000 members.
Soon, the Bucksbaums were building shopping centers in secondary markets in surrounding states like Minnesota, Nebraska and Missouri.
Suburban retail growth explodes
The 1970s saw an explosion in the growth of suburban shopping centers, and malls in particular. But in the late 1960s and early 1970s, the concept of the suburban mall was still as foreign to many veteran retailers as shopping in China.
“My dad ran the Sears store in downtown Chicago,” says Maloney of Jones Lang LaSalle. “That was ‘the’ Sears store, the first one that Richard Sears opened and expanded. Then all of a sudden Woodfield Mall opened up [in 1971 in suburban Schaumburg] and my dad moved out there to run it.
“That was the No. 1 Sears store in terms of sales at the time. I remember my dad saying, ‘Why in the heck are we taking our Sears stores out to the suburbs when we can dominate the cities by keeping them downtown?’ He was thinking Sears was so big and strong why go out there.”
Maloney says his dad's opinion quickly changed. “It was revolutionary in his mind because Sears was very cocky at that time. But then they realized if they didn't make the move somebody else would take their spot. That was a big move for Sears back then,” says Maloney.
Bucksbaum started in the family business in 1978, when the company was developing malls all over the country. “It was the halcyon days of development and that was the glamorous side of the business, the go-go side, and it was very exciting to be a part of it,” he says.
By the time of his death in 1980, mall pioneer Gruen had long since disavowed malls, feeling developers had misinterpreted his notion of building communities. He had envisioned a mini-city with a mall at its center, surrounded by interlocking social functions, including apartments, schools, parks and lakes.
In the early 1990s, a recession took its toll, and the excesses of overdevelopment caught up to the industry. Many companies, including Taubman Centers Inc., Simon Property Group and General Growth Properties, went public as REITs.
A new urban resurgence
By 2000, many Americans had tired of long commutes to work, averaging more than 30 minutes in major metros. As suburban land prices rose, developers sought land closer to city centers.
Led by urban development pioneers like Baltimore's James Rouse, downtowns began to stage a comeback as early as 1976. Rouse's development of the Faneuil Hall Marketplace in Boston heralded the first of the “festival marketplace” concepts, which became popular destinations.
Car-centric cities like Dallas and Houston are redeveloping their downtowns to lure new residents. “People are starting to migrate back to the cities,” says Maloney. “The reason is lifestyle, from traffic to gas prices.”
Will malls evolve or die?
Many sociologists argue that the modern shopping mall mirrors rights and wrongs of society — urban sprawl, sterile and disconnected communities, and dependence on the automobile. But children born of the Baby Boom generation, the so-called “Echo Boomers,” have grown up with the mall as their favorite social spot.
New generations of Gen Xs and Ys are leaving their mark on shopping centers. And malls will have to adapt and change to meet the needs of these younger shoppers to remain relevant.
“They don't want what their moms and dads had, they want their own mall,” says Maloney. “They want their own excitement. They aren't interested in just shopping, they want to be entertained,” he says. “They look at what the previous generations did as boring and slow. They want fast and cool.”
So-called “lifestyle centers” like the Grove in Los Angeles have become popular, while many malls like GGP's Cumberland Mall in Northwest Atlanta have been redeveloped with lifestyle components. Maloney admits retail real estate owners have a long way to go. “Have we figured it all out? Absolutely not.”
Over the past 50 years, America's retail environment has gotten a lot more complicated, with formats including suburban malls, urban malls, power centers, lifestyle centers and neighborhood shopping centers. The question is, will malls be around 50 years from now?
Bucksbaum argues that malls can forever evolve. “Everybody is always talking about the death of the mall, almost since its inception, and it will have to be a completely different place than it is today, just as what it is today is quite different than in the '60s, '70s and '80s.
While developers have been caught up in the youth movement, the impact of the Boomer population can't be ignored.
“We were so focused on that youth market and how they were going to change our malls that we forgot that the largest demographic that was still buying in our malls and have even more buying power in the future was that Baby Boomer,” says Maloney. “We are taking the time now to look at our offerings and figure out what it is they want.”
Ben Johnson is a Dallas-based writer.
1950s - 1960s
1950 — Northgate Mall in Seattle, Wash., becomes the first shopping center to open with a department store anchor
1954 — Northland Center outside Detroit, Mich., opens as the first center to have central air conditioning and heating
1957 — The International Council of Shopping Centers is incorporated in Illinois
1962 — New retailers appear, with S.S. Kresge Co. opening Kmart, Dayton Co. launching Target and Sam Walton forming Wal-Mart
1964 — There are now 7,600 shopping centers in the United States
1964 — Melvin Simon & Associates (precursor to Simon Property Group) opens its first enclosed mall in Fort Collins, Colo.
1970s - 1980s
1974 - First multi-outlet mall, Vanity Fair, opens in Reading, Penn.
1979 - Belz Enterprises opens the first enclosed factory outlet mall in Lakeland, Tenn., near Memphis.
1976 - Faneuil Hall Marketplace opens in Boston
1980-1988 — U.S. retail purchases increase from $7.3 billion to $18 billion
1980-1990 - 16,000 shopping centers are built
1987 - The lifestyle concept first emerges, starting with the Shops of Saddle Creek in Germantown, Tenn., developed by Poag & McEwen.
1990s - 2000s
1992 — The world's largest mall, Mall of America, opens in suburban Minneapolis
1996 - Simon Property Group and DeBartolo Realty Group merge in a $1.5 billion, creating the largest owner/operator of shopping centers in the U.S.
1999 — General Growth Properties pays a record $810 million for Ala Moana Center in Honolulu
2002 — Westfield America, Simon Property Group and The Rouse Co. divvy up their purchase of Rodamco North America's mall assets for $5.3 billion
2003 — General Growth Properties acquires The Rouse Co.
2004 — Sears and Kmart forge an $11 billion merger