Simon Property Group is embracing theformat as a way to rework existing retail properties and squeeze out more revenue. The nation's largest mall owner could spend as much as $1 billion on this new program.
Simon will partner with residential, hotel, office and other developers to create alternative uses for space at its malls, or sell the air rights foratop its properties.
“We call it asset intensification,” Chief Executive David Simon, told the Smith Barney REIT CEO Conference in March.
The program came to light just one week after the proposed Federated/May department store merger was announced and at a time when further shakeout is anticipated. For Simon, this will be a way to recycle abandoned department store space and use pads and outparcels. At some centers, Simon is considering vertical expansion by adding high-rise residential towers and. It's also considering putting self-storage facilities in the back of parking lots, said the the company's CEO.
“If we get back department stores, the highest and best use would be high-rise residential towers,” the audience was told.
Early examples include the addition of a hotel and residential units to the recently opened St. Johns Town Center in Jacksonville, Fla. Also, Simon plans to add a residential component to Domain shopping center in Austin, Texas, and 100,000 square feet of office space at Firewheel Town Center in, scheduled to open in October. Roosevelt Field Mall on Long Island, N.Y., and The Galleria in Houston represent opportunities for future expansion.