Villa Italia and Lakewood thrived together for 30 years. The mall lured an increasing number of shoppers while the town gained more and more residents--eventually becoming Colorado's fourth-largest municipality with a population of 150,000. To the extent that the sprawling town had a cultural center, it was Villa. The mall was where people shopped and dined, where they went for walks and where two generations of kids sat on Santa's lap. "It was a jumping place," says Lakewood Mayor Steve Burkholder.
But the same forces that gave birth to Villa and its hometown eventually did in the mall. Malls such as Villa Italia became a generic suburban fixture across the country. And in metro Denver, as elsewhere, the suburbs continued pushing outward, taking shoppers out with them. New malls were sparkling and huge, making Villa look worn and small. Villa also became harder to get to, especially for people driving from far away. It sat at the congested corner of Alameda Avenue and Wadsworth Boulevard, two busy arterial roads; the newer malls were located right off the interstate highway. One by one, Villa's anchor stores closed: Dillard's in 2000, then J.C. Penney and Montgomery Ward in 2001.
Lakewood officials could see Villa's demise approaching like the death of an ill grandfather, and they planned what to do after it was gone. Now that plan is taking shape. Bulldozers knocked down nearly the entire mall's superstructure this summer and ripped up the parking lot. Where Villa once stood, work crews are laying down something vastly different: a grid of streets. Over the next several years, a true downtown will rise up along those streets, one with offices, homes, sidewalk cafes, a cinema, a town green and, of course, shopping. It will be the downtown that Lakewood never had. And it will confirm something residents are only beginning to grasp: Their small bedroom community with its shopping mall--once an antidote to the city--has grown up into a full-fledged city of its own.
Dozens of communities across the country, especially inner suburbs, are coping with the death of their own shopping malls. Most aren't sure what to do with them. But a growing number of places are, like Lakewood, turning dead and dying malls inside out. Yearning for their own identity, they are converting the retail boxes and acres of asphalt that embodied suburban sameness into pedestrian-friendly Main Streets with unique character. "Many suburban communities are raising their civic ambitions," says Will Fleissig, a partner with Continuum Partners, the developer of Lakewood's downtown. "They're no longer content just to be bedroom communities. They no longer want to be part of the urban blob."
Every place with an aging shopping center, whether city or suburb, should take note of what Lakewood is doing. According to real estate experts, the nation has an overabundance of retail space. Shoppers' fickle tastes are bankrupting department stores such as Montgomery Ward that can't keep pace, while forcing other retailers to abandon older store formats. What this means is that hundreds of shopping centers will be shuttered in coming years. Currently, there are about 2,000 regional malls in the United States. Most of them are doing fine, but a study last year by PricewaterhouseCoopers found that 7 percent of them are dying and 12 percent are "vulnerable."
A lot of strip shopping centers and "big box" stores are at risk, too. The bankruptcy of Kmart alone will leave nearly 300 big-box vacancies in 40 states and likely drag down dozens of strip centers. Meanwhile, Wal-Mart regularly abandons its big box stores--some of them fairly new--for gigantic new "super centers" down the street. This phenomenon has become so common that developers have coined a term for it. They call the sites "greyfields."
Greyfields present a huge cognitive challenge, especially for suburbs that aren't used to re-inventing themselves. When most people look at a regional or strip mall, they can't imagine anything else there but a shopping center. As anchor tenants bail out and smaller stores struggle, the first instinct, almost always, is to recruit new anchors. That strategy doesn't always work. Many greyfields, especially regional malls built in the era of Villa Italia, are simply obsolete. In the current retail environment, they are too small, too dated and too far from the highways to be useful as big retail-only centers.
Declining malls will often hang on with low-end retailers and merchandise liquidators, or by staging flea markets in the parking lot on weekends. Sometimes malls go completely empty--boarded up and fenced off like the inner-city shopping districts so many malls replaced. This is unfamiliar ground for suburban officials. Most are too timid to propose large-scale redevelopment of greyfield sites and will wait for developers to present their own ideas. Some have recruited call centers to fill old department stores, or attracted light-manufacturing firms to occupy big-box stores. This puts the buildings to use. But it wastes huge swaths of land and adds little vitality to nearby neighborhoods.
Some cities, however, are using retail abandonment as an opportunity to re-imagine themselves. The Congress for the New Urbanism highlighted a dozen examples in "Greyfields into Goldfields," a book published this July. Some malls, such as Villa Italia, are located in traditional suburban settings while others are in urban areas near downtowns. What all the localities are doing is converting land designed for just two purposes--parking a car and shopping--into walkable, mixed-use neighborhoods with buildings oriented toward the street. They hope this more traditional form of development, with a mix of building uses and types, will prove less vulnerable to retailing's fickle winds and produce store spaces that are less disposable and more re-usable. "It's easier to retrofit one building than it is to redo an entire mall," says Lakewood city manager Mike Rock.
For example, Park Forest, a suburb south of Chicago, purchased a dying open-air mall within its borders in 1995. It stripped away half the retail space, punched a street grid through the site and is now developing the land with offices, residential buildings, a city hall, cultural center and village green. "We've shed our tears for the regional mall and kissed it good-bye," says village manager Janet Muchnik. "Now, we're deconstructing it as a mall. We're taking down those retail spaces which are no longer useful and figuring out if it's no longer a regional mall, it's just for our town, how much retail the site can support."
St. Paul, Minnesota, bought and demolished most of a dead strip center in a low-income area called Phalen Village. Most of the parking lot was turned into a lake, an amenity that is now attracting new residential development, retailers and a state office building. Chuck Repke, head of the local planning council, says the project reminds him of a Joni Mitchell song. "She sang, 'They paved paradise and put up a parking lot,'" Repke says. "We did the reverse."
Redeveloping a dead mall is one of the most difficult planning projects for a city to pull off. But one thing is clear: In order for it to happen, local government must be heavily involved. "Once the mall is on its knees, that's the time for the community and the city to step up and take control," Repke says. "The city has to be an active player, as opposed to believing nothing much positive can happen there and settling for anything a developer comes along with."
In terms of sales, Villa Italia reached its peak in 1994. When sales began to wane, Lakewood's initial reaction, naturally, was to try to save the mall. Mayor Burkholder convened a citizens advisory committee to ponder its fate. For months, discussion fixed on slapping a fresh coat of paint on the mall and recruiting some new tenants. People were reluctant to admit that the anchor of their suburban lives for 30 years had become obsolete. "A lot of people said, 'I went to my prom there. That's where I first saw the Easter Bunny and sat in Santa Claus' lap,'" Burkholder says. "There was a lot of nostalgia attached to that place."
Lakewood measured Villa's worth in more than memories, however. At its peak, sales taxes from the mall padded city coffers to the tune of $3.2 million. As tenants pulled out, that figure steadily declined toward zero. The revenue, though, was a secondary worry. "We were more concerned with quality-of-life issues," Burkholder says. "I could see a boarded up mall with a chain-link fence around it bringing down property values in the surrounding neighborhoods."
Lakewood officials decided not to let Villa die a slow agonizing death and to intervene before the remaining tenants failed. Gradually, they came around to the idea of completely re-imagining what the Villa site could be. The citizens advisory committee sent members out with cameras to snap pictures of places where they liked to shop. They came back with photos of places such as downtown Boulder and Denver's lower downtown or "LoDo." Both are compact, walkable, mixed-use neighborhoods. The message was clear: Lakewood wanted its own downtown--an identifiable heart. Or as Burkholder described it, Lakewood wanted not just a shopping spot but also a place to hold a parade when the high school basketball team wins the state championship.
Coming up with the vision was the easy part. But how do you turn a hulking mall into a downtown? The first problem was finding a developer willing to try a mixed-use concept. Most suburban builders are hooked on quick-buck projects that rely on cheap land--the cookie- cutter housing developments and shopping centers that define so much of suburban America. Lakewood chose Denver-based Continuum Partners, New Urbanist developers who believe traditional downtown-style development will prove more profitable in the long run than strip and tract development.
Continuum drew up plans for 19 city blocks whose buildings will face the street and help create round-the-clock life on the sidewalks. There will be 1 million square feet of retail space--one-third less than what Villa Italia had--and while much of it will be small street- level shops, there will be big-box room in the street grid for retailers who require that format. Another 1 million square feet is slated for office space, and many of the 1,400 new residences will go above the shops, just as in traditional downtowns. A 250-room hotel is planned, along with a 16-screen movie theater and four acres of parks and public plazas. The project goes by the name "Belmar," after the estate that Villa Italia replaced. "The building part isn't tough," Will Fleissig says. "The hard part is creating a civic realm. The streets, the streetscape and a pedestrian quality all must be incorporated to make us feel like this is a real place."
Even with a willing developer such as Continuum, redeveloping a shopping mall is no easy task. The biggest problem is the mall ownership and leasing structure. Shopping mall developers have traditionally offered department stores and other anchor tenants sweetheart deals. That's because anchors are essential for the mall concept to work: Their name recognition and advertising budgets draw shoppers in the door, providing foot traffic for the smaller stores that pay most of the rent. In their leases, anchors usually win the right to veto any structural changes to the mall. Amazingly, this right often continues even after the anchor has closed its doors.
When Continuum Partners bought Villa Italia from its previous owners, the developer inherited these restrictive leases. Some on-site tenants resisted the redevelopment plan, threatening to hold the whole project up. Lakewood had to use its powers of eminent domain to evict them and clear the way for demolition. A court upheld the action, although it required Continuum to pay some compensation. "If the city hadn't been willing to use eminent domain, the mall would never be redeveloped in a timely way," Mike Rock says. "Even one tenant can stand in the way."
The city also helped finance the deal. A mixed-use project such as this requires up-front investments in streets, sidewalks, sewers and parking garages. None of these things create an immediate payoff, which is part of the reason why developers shy away from these types of projects. "You have to think of this in a different manner than building a sea of parking and walking away," Fleissig says. Lakewood agreed to raise $120 million to help pay for infrastructure. The bonds will be paid off over two decades using a "public improvement fee" on retail sales at Belmar.
Given Belmar's immense size--103 acres, or about one-third the size of downtown Denver--the development will be built out in a series of phases. It's currently slated for completion by 2007, some 13 years after Villa Italia began its slide. The long timeline is a challenge in itself. "The pressure on elected officials is to get something done during their individual terms of office," Rock says. "The council has shown the courage to say this is an important project and will take a long time."
Muchnik, Park Forest's manager, agrees that redevelopment of a mall on such a large scale is not for the faint-hearted. In Park Forest's case, the town itself is playing the role of developer. In 1995, it purchased the dying mall located in the village center, making it one of the few municipalities in the country to be in the shopping center business. "I remember it well," Muchnik says. "We negotiated on Monday, Tuesday, Wednesday and Thursday. On Friday, instead of a village manager, I was a mall manager. It was the scariest day of my life."
The village left some buildings from the mall standing and demolished others. Parts of the surface parking area have been sold to developers who are building dense single-family and senior housing. Village hall moved downtown into a former department store building close to a newly planted village green. To date, Park Forest has spent $14 million on the improvements, although $9 million came from outside sources.
According to Muchnik, the hardest part of creating DownTown Park Forest is leasing out the retail spaces. Road construction took several years, and in that time, a florist and a couple of gift shops have come and gone. Ground-floor space is only about 50 percent leased. The village has had to give some retailers free rent for a few years to help them get their legs and pump some vitality onto the streets. "If I'm a developer, all I can think about is return on investment," Muchnik says. "But this is a municipal government. I have a cancer in the middle of my village that is sending a signal that the village is dying. I can't measure success the same way a developer would."
