Strained Relations: Local Areas More Reluctant to Open Arms for Malls

NEW YORK — Malls aren’t as welcome as they used to be.<br><br>Under pressure from Wall Street to expand and grow earnings, mall owners are desperately seeking land in areas with strong demographics. More often than not, they’re being...

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NEW YORK — Malls aren’t as welcome as they used to be.

This story first appeared in the January 23, 2003 issue of WWD.  Subscribe Today.

Under pressure from Wall Street to expand and grow earnings, mall owners are desperately seeking land in areas with strong demographics. More often than not, they’re being rebuffed by communities keenly aware that their lifestyle is being threatened by the encroaching development. The stakes now are higher than ever — there’s little open space left in the most desirable locations — so developers are hanging on by tooth and nail to any plot of land they set their sights on.

“There’s no question that it’s harder to build a mall now than it’s ever been,” said Chris Tennyson, a former executive of the Taubman Co., who represents and advises developers. “There’s a real tension now. It’s more competitive and contentious than ever before.”

The sometimes uneasy relationship between shopping centers and the local communities they hope to serve can be epitomized by the fight over a mall proposed in 1999 by Taubman for a 39-acre site in Syosset, N.Y.

When the developer’s initial application for a 1 million-square-foot center illicited objections in some corners of the community, Taubman revised its plans, first reducing the center’s size to 960,000 square feet, and then to 860,000 square feet. The township of Oyster Bay in June 2001 rejected Taubman’s final proposal of 750,000 square feet and there is pending legal action.

A group opposed to the mall mounted a vigorous campaign, saying its objections were based on traffic, environment, safety and quality of life issues.

“It can become a pitched political battle,” said Tennyson. “Malls have gotten more sophisticated.”

Indeed, some malls view the approvals process as a political campaign, contributing to the coffers of local politicians and hiring public relations firms to lobby in the community. Taubman, for example, reportedly hired Howard Rubenstein Associates, a public relations firm here that specializes in damage control, to convey its message to Oyster Bay residents.

Developers are also becoming more adept in using the media to cover their stories. A survey conducted by retail consultant David I. Silver for the International Council of Shopping Centers, and obtained by WWD, noted, “From a development point of view, the local news media is a major factor in shaping opinion for a project among municipal officials and the public at large. With positive media support, many projects gain entitlements more quickly and at less cost. Without it, retail real estate developments often find themselves bogged down in the approval process — or worse, rejected.

It’s not that easy to sway public opinion, however, especially since local politicians are growing sympathetic to citizens, whose rallying cry of “Not in my backyard” reverberates from the concrete jungles of Manhattan to the upscale suburbs of Dallas.

Some cities feel they’ve reached the saturation point when it comes to retail.

“Local citizens have become more active in the government process than they’ve ever been before,” said Cindy Stewart, who oversees an alliance program for mall developers and local governments run by the International Council of Shopping Centers. “In the past, there was more need for retail in general. There was a lot of desire for retail development around the country. A lot of communities have recently said, ‘We’ve had enough. We don’t need any more stores right now.’”

Several years ago, the lure of “ratables,” long a mantra of deficit-laden, tax-burdened towns, was strong. But recently, as the amount of open space has dwindled, the public and their elected officials have begun to take a dimmer view of development.

Communities are facing the difficult reality that ratables can come at a high price: overburdened police and fire departments, increased traffic and sometimes higher crime. Perhaps the end doesn’t justify the means anymore, they wonder. And maybe the cost of fixing the problems caused by shopping centers isn’t worth the tax revenue and jobs they generate.

Until recently, even the most ardent opposition efforts had little chance of stopping well-financed developers from malls. Lately, those efforts have been energized by politicians giving voice to residents’ concerns.

In New Jersey, for example, Governor James McGreevy has made fighting sprawl one of his administration’s main initiatives in 2003. He even promised that the state will help towns fight off the unwanted advances of aggressive, deep-pocketed developers who “effectively bully unwilling taxpayers into submission” by mounting expensive legal challenges to denials of applications or variances.

During the Nineties, Atlanta boomed, adding over a million people to create a current total metro population of over 4 million. Retail boomed also, with countless shopping centers springing up, mostly in ever-widening concentric circles on the far outskirts of town. Atlanta has over a dozen major malls, including the mega Mall of Georgia, opened in 1999.

Retail experts say the heyday of big suburban malls may be over, or at least slowing. With traffic, air quality and urban sprawl threatening quality of life, developers are turning their attention in town, to “mixed use” projects that combine residential, office and retail space. Developers and local government are often on the same page in attracting business downtown, but Atlanta neighborhoods, fearing the fallout from new projects, have often gone head-to-head with developers over big retail projects.

It took five years to resolve numerous neighborhood lawsuits over Lindbergh City Center, a mixed use complex that combines retail and office space near a rapid transit MARTA station and new BellSouth towers. The property remains partially leased. Neighborhood associations fought MARTA over the use of public money for private development and rezoning, stalling the project several times. Other proposed projects, in bohemian areas such as Little Five Points, have drawn negative reaction from residents.

But the biggest major in-town project in decades, Atlantic Station, is proceeding more smoothly. After drawing initial concern from neighborhood organizations, developers have held “hundreds of community meetings, with every planning board and association, with public forums to address neighborhood’s concerns,” according to a spokesman for Atlanta Station. Currently, their are no lawsuits.

The massive 140-acre mixed used project, is the first in an area called “Midtown,” just north of downtown Atlanta. Built on the former industrial site of Atlantic Steel, the new project will include 12 million total square feet of office and residential space, 11 acres of public parks and over 1 million square feet of open-air retail.

Jim Jacoby, chief executive, Atlantic Station LLC, purchased the property in 1997, with a vision to develop the the first major midtown development.

“Midtown Atlanta is one of the most under-retailed urban areas in the U.S.,” he said.

Wal-Mart didn’t receive such an enthusiastic reception when it decided to open a SuperCenter in Dallas. The company suffered a high profile blow in June when the Dallas Plan Commission unanimously rejected its bid to build a 220,000-square-foot two-story concept store, labeling it an “oversized gorilla.”

“Wal-Mart made donations to church organizations located near the proposed site in a bid to sway their support for the SuperCenter,” Michael Singer, a member of a grassroots neighborhood coalition that was in large part responsible for defeating Wal-Mart’s proposed SuperCenter near the wealthy Greenway Parks neighborhood where he lives, claimed Thursday. “It was all legal and I would guess tax deductible. Wal-Mart spent a lot of money on yard signs, Web sites, mailers and other collateral.”

Wal-Mart continues to press ahead on other Dallas fronts, including McKinney, Tex., north of Dallas, where the City Council voted 7-0 on Tuesday to approve a new Wal-Mart SuperCenter. But it was not without controversy. On Dec. 10, the McKinney Planning and Zoning Commission voted 4-3 to deny a request to rezone the property, with opposition coming from several contingencies that didn’t want the 118-acre site commercialized. The council’s 7-0 decision, called a super majority, was required to supercede the Planning and Zoning Commission’s decision.

Tennyson believes that most new shopping centers are driven by a region’s need, not greed on the part of developers. “The Taubman Co. likes to look at a market with at least 300,000 people in the trading area. Are there really places where 300,000 people aren’t served by retail within a 20 minute drive? There are some, and those are the battlegrounds where things will happen.”

It’s easy to understand why Taubman would want to build a shopping center in Syosset. The trading area includes wealthy towns such as Oyster Bay and Huntington, and Taubman received early commitments from Neiman Marcus and Lord & Taylor.

John Simon, Taubman’s senior vice president of development, said the company was required to prove that it could remediate any impact to the area caused by the center. He said the company provided the necessary information to the township. A judge agreed. The town has appealed that interim decision.

“We have a very strong legal position, and the city has no position,” Simon said, noting that the appeal will be heard by a four-judge panel on Feb. 7.

Allegiances are not always what they seem. Simon contends that the Simon Property Group, which is involved in a hostile takeover attempt of the Taubman Co., boasted about funding the mall’s opponents in Oyster Bay. He said the Simon organization has an ulterior motive: It owns two centers in the area, including the Roosevelt Field Mall.

“Simon coalesced a group to lobby very heavily against our center,” he added.

A Simon Property spokesperson could not be reached for comment.

John Simon said that the Taubman Co. hires lobbyists in certain areas on occasion “because that is sort of how you do business in a particular town.” But he said he isn’t close enough to the Syosset project to know whether a public relations firm has been engaged.

Meanwhile, the hulking Roosevelt Field Mall, asked the Town of Hempstead Zoning Board for a special permit to expand the shopping center. The application was denied. One reason cited by the board was the inability of over-saturated roads surrounding Roosevelt Field to absorb the increased traffic. The case has reportedly entered the appeals stage.

Before the Palisades Center, a disjointed 1.8 million-square-foot hybrid mall sprouted just off I287, the biggest problem for the township of Clarkstown was the growing and seemingly unstoppable population of Canadian geese, which the city decided to grind into burgers for the homeless.

But the mall, which has been plagued with physical problems since opening, has been a cause of concern. Local fire and ambulance personnel have complained about safety concerns, gridlocked parking lots and problems with crowd control. There have even been reports in the press that the Palisades Center, which was built on a swamp, is sinking.

When the mall recently wanted to expand into 250,000 square feet of unused space, Clarkstown residents rejected the referendum by nearly two to one.

“We had the opportunity to host a brand new concept called Kid’s City,” said the Palisades’ manager John Mott. “There was not a lot known about this concept and not a lot of time to educate people. We got a clear message from the electorate in the town of Clarkstown: make some improvements and smooth out some of the growing pains.”

Mott complained that the verbiage of the referendum may have misled voters. “We only wanted to use existing unused space,” he said. “The town chose to phrase it as the full release of our covenant, which theoretically would have allowed us to build another wing or add 800,000 square feet. That isn’t going to happen any time soon in this economy. Maybe as people get tired of budget deficits and tax increases, the town will come back. People have been asking me, ‘When are you going to try again? I see my property taxes going up.’”

Tice’s Corner in Woodcliff Lake, N.J. is an example of a developer and township coming together. The lifestyle mall, which was built on the site of a farm, was opposed by neighborhood groups, which ultimately contributed ideas for its design. While the project was not without litigation, most of the issues were ultimately resolved. One unusual aspect of the mall is an old stone house, which belonged to the matriarch of the family that owned the farm. She gave the house to the town, which expanded the structure to create a senior center. The mall’s owner allowed the house to stand and dedicated part of the parking lot to the senior center.

In the spirit of community involvement, Tice’s Corner hosted a Halloween party for local children, a nod to the Halloween festivities that used to take place at the farm.

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