In general, new mall owner is aggressive

FORT COLLINS — At a time when many regional shopping malls are battling for survival in the retail arena — under siege from lifestyle centers, the Internet and big-box stores — the new owner of Foothills Mall in Fort Collins seems content to stand and fight.

Chicago-based General Growth Properties Inc. (NYSE: GGP), a real estate investment trust, buys malls in bundles. After buying Foothills Mall Dec. 11, along with centers in Chico, Calif., and Medford, Ore., General Growth has expanded its holdings to 170 around the country.

Its earnings make General Growth a Wall Street darling, outperforming the Standard & Poors 500 index by 25 percent over the past 12 months.

The company’s secret: It’s all in the name.

In general it puts money into its properties to keep sales growing.

A company official said General Growth invests “hundreds of millions of dollars a year” in redeveloping its mall properties to maintain their allure for shoppers.

“As a public company, they have a consistent desire to improve their assets and portfolio,´ said Malachy Kavanagh, a spokesman for the International Council of Shopping Centers, an industry trade group.

General Growth happily seeks underperforming or even distressed properties, Kavanagh said.

“That allows them to bring it (a mall) up to market rents, which allows them to increase the value of the property,” he said.

While the 600,000-square-foot Foothills Mall can’t be called a struggling mall, with $325 of sales per square foot and 95 percent occupancy, it’s a candidate for the General Growth formula.

Bob Everitt, the man who developed the mall in 1973 and was half owner before selling the center, was contemplating changes himself before the sale.

“We think the property deserves a lot of tender loving care,” Everitt said. “It will need substantial redevelopment at some time in the future.”

The mall, the long-time linchpin of Fort Collins retail, faces competition from two new lifestyle centers scheduled to open by 2005 in Fort Collins and Loveland, various big-box or “power-center” projects around the region, and changes in shopping habits.

So, what to expect?

General Growth contends that it will gauge shoppers’ interests before stepping forward with any changes, a process that could take up to three months.

However, a sampling of General Growth’s other mall redevelopment projects hints at some likely moves in Fort Collins.

At Chapel Hills Mall in Colorado Springs, for instance, General Growth expanded the food court and brought entertainment-oriented features into the center, such as a multiplex theater and an ice arena.

Southwest Plaza in Littleton, another General Growth holding, was touched up in 2001 with new carpeting, signage and entrance canopies. The owners also added large restrooms with private changing rooms for parents and children.

In Tucson, Ariz., General Growth is spending $15 million to upgrade the Tucson Mall and recently finished a $50 million makeover for the Park Place center.

Common to many of the mall projects around the country is expansion of entertainment venues, including restaurants, theaters, arcades and play areas.

In fact, some malls have taken to calling themselves “entertainment centers” to emphasize those features.

The entertainment move is an answer to some of the nonretail competition for time and dollars, such as cable television and the Internet, said the ICSC’s Kavanagh.

Another trend is the creation of retail clusters in malls.

Statistics show that shoppers are spending less time per mall visit, and are more interested in shopping at one category of store when they go to a mall.

“One of the trends you’ll see is to put teen retail or children’s retail or home-improvement retail together,´ said Beth Coronelli, head of investor relations for General Growth. “It’s convenient for the shopper so they can come in and go out.”

We’re seeing that people have more and more demands in their lives. From our standpoint ? we want to make it as conducive an environment as possible for consumers to get all their shopping done as quickly and conveniently and as stress-free as possible.”

For that reason, more mall stores are creating outside access points, allowing the possibility of parking in front of the desired store and avoiding the walk through the common areas.

Valet parking is also gaining popularity, Coronelli said.

General Growth’s size — the company works with about 16,000 tenants in its 170 malls — can also be beneficial, Kavanagh said. Vacancies don’t stay open for long.

“When you have that amount of centers, it helps as far as negotiating,” he said. “Based on reputation and experience, a retailer knows that if they rent in their (General Growth’s) property, they’re going to have good management and in all likelihood will be successful.”

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