Unibail-Rodamco-Westfield Bets $100M 'City-Making' Is The Future For Aging Mall Properties
A $100M redevelopment project at a suburban Chicago mall will mark a "landmark vision" for the future of flagging shopping centers.
That’s the promise from Unibail-Rodamco-Westfield, which last week announced plans to reimagine the upscale but aging Westfield Old Orchard shopping center in Skokie, Illinois. The mall operator says the mixed-use miniature city marks the path forward for its mall assets everywhere.
“This is not the case of a dying mall, somewhere that’s a good piece of dirt but it shouldn’t be a mall anymore. Not the case with Old Orchard,” URW Senior Vice President of Development Stephen Fluhr told Bisnow.
“Old Orchard is a flagship of the North Shore. We continue to get great success in bringing the best retailers to the site, best entertainment, best food and dining, and now we’re going to have the opportunity to have people live there as well, which we’re really excited about.”
Old Orchard first opened in October 1956. While being an outdoor center led to stronger performance throughout the pandemic, Fluhr said, the mall — like others around the nation — has seen decreased traffic in recent years.
Visits to the mall fell 8% last month over November 2021 and nearly 16% over November 2019, per numbers Placer.ai gathered for Bisnow.
URW's $100M revamp calls for residences, new retail, gourmet markets, wellness amenities and entertainment offerings centered around a park and event space, with an open-air plaza that can host concerts, farmers markets and festivals.
The multiphase project started in fall 2022 with modernizing the shopping center and bringing in new shops like Bloomies, the downsized shopping concept by Bloomingdale's. In 2023, the Lord & Taylor space will be redeveloped, and work on the new residences, health facilities, stores and outdoor spaces will begin in 2024, with the goal of finishing by 2026.
The village of Skokie must still approve a zoning change for the project before construction can begin.
“I think this concept of city-making, village-making … we do believe that it is the right path forward for our assets,” Fluhr said. “If you take a step back and answer the question, who would want to live at the mall? Through our research, as it turns out, a lot of people do because the amenities that they have right outside their front door are unparalleled.”
In 2019, URW announced a similar redevelopment project at Garden State Plaza in Bergen County, New Jersey, bringing hotels, luxury apartments, offices, outdoor spaces and a dining district to the shopping destination.
“We’re really focused on making communities that are very foot traffic-friendly, which does not actually come as the first thing you think of when you think of a regional mall,” Fluhr said.
“But this is one of the many ways that we’re focused on making our properties more sustainable, bringing people to the site that can enjoy it 24/7/365. Once they get their car there and they park, that’s where they are, and everything that they need is going to be on-site.”
URW's concept of transforming old malls into cities and villages reflects the decadelong trend of diversifying mall offerings writ large. And according to Ethan Chernofsky, vice president of marketing at Placer.ai, such projects could also pave the way for a resurgence of lower-tier shopping centers.
Over the past five to 10 years, operators have reduced their focus on apparel and beauty, he said, expanding to include more offerings like housing, pop-up experiences, fitness centers, health clinics, increased food options and entertainment sites. Whereas malls used to be 70% to 80% beauty and apparel stores, now it is more like 50%.
“It gives more reasons to visit, so it’s not just, ‘I want to go buy clothes,’” Chernofsky said. “It’s ‘I need to go visit the dentist. I want to go to the spa. I have a health treatment. I want to go look at a car.’”
This shift stands to bring more people to the mall at different times throughout the week and provide more spaces where people want to hang out, especially as people increasingly live and work at these developments.
"That’s a really important shift for malls in general because it basically says, ‘I’m increasing the number of reasons you have to visit, I’m increasing the amount of time you’re going to spend there,’" he said. "Because apart from the trope of an ’80s mall where when you shop, you have 80 bags on your arms, it’s just not what people want to do anymore.”
Despite visits to indoor and open-air malls being down 6.4% and 5.4%, respectively, year-over-year in November 2022, Chernofsky said mixed-use investments at high-end malls might end up increasing traffic at other malls too.
For instance, retailers that no longer have a space at upscale malls will need new locations and might find themselves relocating to strip malls, main streets or Class-B malls, he said.
“Our theory is that you’re going to see a waterfall effect where you’re going to see retailers that were struggling to stand out amongst the noise of these major top-tier malls are now going to have the chance to be bigger fish in smaller ponds," Chernofsky said, adding that dynamic could "roll out to a wider resurgence of malls."