It’s not as though Sept. 11 never happened, but Chicago-area shopping malls seemed to have weathered the post-tragedy retail season rather well.
Managers at the area’s top malls, among them Water Tower Place, 900 North Michigan Shops and North Bridge in the city and Woodfield, Oakbrook and Old Orchard in the suburbs, report occupancy rates in the mid-to-high 90s and sales that have rebounded nicely post Sept. 11.
Indeed, management at Woodfield, the country’s fourth-largest mall with 2,270,000 square feet of gross leasable area (GLA), said sales the weekend of Sept. 15 reached holiday levels. “People just wanted to get away from the television,” said Marc Strich, Woodfield’s general manager. Business was so brisk that the mall had to institute holiday traffic control.
Since then, weekday business has leveled off but weekend business remains strong, Strich said. He estimated motorcoach traffic had increased by about 40 percent, most likely a result of people wanting to travel but not necessarily wanting to hop on an airplane.
At Water Tower Place on Michigan Avenue, a shopping mecca for both locals and tourists, holiday traffic was “pretty good, considering the state of the economy,” said Barbara Corrigan, senior marketing manager with Urban Retail Properties, the Chicago-based firm that manages the mall. For 2001, sales per square foot hit $560, a figure slightly up from the year prior, she said.
Not only was customer traffic stronger than expected, but retailers proceeded with late-fall and winter store openings as planned, Corrigan said. Eileen Fisher, J. Jill, Nine West Lifestyle and Chico’s have all opened stores at Water Tower in the past few months, as has the jewelry retailer Tourneau and Clark’s of England, the shoe store.
Paula Bennett, chief operating officer of Irvington, N.Y.-based Eileen Fisher, said the company thus far is “delighted” with its Water Tower store, which, at 2,700 square feet, is its Midwest flagship. The retailer chose Water Tower because it wanted to reach a combination of women who live and work in Chicago as well as tourists, Bennett said.
Compared with malls nationwide, the relative health of Chicago-area malls is atypical, said Neil Stern, partner at Chicago-based McMillan/Doolittle, the retail consulting firm.
“Malls have not been in a terribly good place, at least over the last six months,” Stern said. Home-furnishing stores have been thriving, but not enough to offset slack performances by department stores and specialty retail stores, Stern said.
Indeed, Chicago mall retailers have their concerns. Adelaide Herman, owner of Adelaide, an upscale women’s store at 900 North Michigan, said tourist traffic has dropped drastically, in part because the mall is housed in a tall building. Another retailer, who wished to remain anonymous, said that 900 North has never attracted much traffic. “It was designed as an atrium space to make people feel comfortable in a luxury setting, but even when the mall is busy, it looks empty. People want to feel [packed in] like cattle. That’s why Water Tower is so busy,” she said.
Because of its status as the Midwest’s number-one destination city for shopping, Chicago and its suburbs are packed with malls.
The area is home to two of the country’s ten largest malls: Woodfield, in Schaumberg, a northwest suburb, ranks fourth, and Oakbrook Mall, further west in Oakbrook, with 2,013,000 square feet of GLA, ranks 10th.
Urban Retail Properties has the lock on managing area malls. In the city it manages Water Tower Place, 900 North Michigan Shops and, further south and west, Ford City Mall. Its suburban malls include the upscale Oakbrook Mall, Old Orchard in Skokie, Hawthorn in Vernon Hills, Fox Valley in Aurora and Randhurst in Mt. Prospect.
Under an agreement reached in January, five of those malls will soon change ownership. Rodamco North America NV, a Dutch company that owns regional malls around the country, has agreed to sell its stake in Fox Valley, Hawthorn and Old Orchard to Westfield American Trust, an Australian company; and its stakes in Water Tower Place and Oakbrook to Columbia, Md.-based Rouse Co. Urban Retail Properties, which is partly owned by Rodamco, will continue to manage the malls.
The sales are part of an ongoing trend toward mall consolidation, said George Whalin, president of Retail Management Consultants in San Marco, Calif.
“Rodamco didn’t want to be in the mall business,” he said, not only because of the current economic climate but because malls are a cash-intensive business. “A mall is not an entity that you open and not worry about. You have to update it,” he said.
Regardless of the recent sell-offs, Urban’s Chicago properties are “doing excellent,”claimed Ross Glickman, president of leasing. “Our feeling is that the Midwest can sustain inflationary or recessionary times better than the West or East Coast,” he said. The Midwest, he explained, is less trendy and more fashion-consistent, which makes for a more stable retail environment.
It’s difficult to compare Urban’s Chicago properties with its 70-odd malls in other locations because malls are not cookie-cutter propositions, Glickman said.
“We lease centers to the demographic of the marketplace. Water Tower is tenanted a lot differently than Hawthorn, and 900 North is different from Water Tower. Each stands on its own merits.”
The biggest mall competition is on Michigan Avenue, where Water Tower Place, 900 North, North Bridge and Chicago Place compete not only with each other, but with high-profile retailers on the avenue such as Burberry and The Gap.
The malls share a mix of local and tourist traffic at Chicago Place, out-of-towners account for 45 percent of traffic but each has its own personality.
Water Tower features an extensive food court, and the bulk of its retailers are chain specialty stores. Its department-store anchors are Lord & Taylor and Marshall Field’s. 900 North Michigan is a little more upscale.
Bloomingdale’s and Max Mara have street-level entrances and display windows, and the six levels include the upscale cashmere store Ballantyne, as well as Mark Shale and Jessica McClintock. Banana Republic Woman, the mall’s newest women’s wear retailer, opened last June.
Sales per square foot average $650 at 900 North Michigan, slightly more than Water Tower because of the higher caliber of retailers housed there, Corrigan said.
Two blocks south, Chicago Place, which has 310,000 square feet on eight levels, is home to Saks Fifth Avenue as well as Talbots, The Body Shop, a three-level Ann Taylor, Tall Girl and Petite Sophisticate. The 11-year-old mall is 98 percent leased, said Sara Baker, assistant director of marketing. Baker would not release sales per square foot, but said the holiday season was strong and January and February have been brisk as well.
“[Sales] haven’t been where they were last year, but they’re definitely on the increase,” Baker said. North Bridge, which opened in October 2000 with Nordstrom as its banner tenant, is the newest mall on the avenue. Reports of its success are mixed.
Greg Merdinger, principal with The John Buck Co., developer of North Bridge, says that all 37 retail spaces are occupied, and sales per square foot average just over $500. The company expected that figure to range from $500 to $600, in keeping with the rest of the retailers on Michigan Avenue; nonetheless, Merdinger says he’s happy. “It’s not up to plan, but given the [retail] environment, we’re quite pleased.”
Nordstrom, which anchors North Bridge, was the highest-grossing retailer on Michigan Avenue last year, with sales of just more than $105 million, Merdinger added.
That’s to be expected, considering the store’s high-profile Michigan Avenue presence, said Stern of McMillan/Doolittle. Stern’s take, however, is that the department store and indeed the mall could be performing better.
“I think it’s struggling,” he said. “There are plenty of stores that have either complained or closed.”
To date, only one retailer, the children’s store Madison & Friends, has closed. Merdinger said he is disappointed in the performance of women’s wear retailers in the mall, but wouldn’t name names. “Three-quarters of the stores are doing well, and five percent I’m disappointed in,” he said. North Bridge’s tenants include A|X Armani Exchange, Oilily, Lucky Brand Dungarees, Benetton and Ann Taylor Loft.
According to Stern, the young mall is working through an identity crisis.
“The mall suffers from [a lack of] identity, outside of Nordstrom. It’s going to take people some time to understand what it is,” he said.
In doing so, North Bridge is following a pattern all Chicago malls have seen: slow initial acceptance by consumers, then growth over time, Stern added.
“900 North started slow, Chicago Place started slow, and North Bridge is starting off slow,” he said. To keep their identities and appearances fresh, the four malls have embarked on spruce-up projects. Water Tower’s $15 million renovation, begun last year, is the most ambitious, encompassing new outside signage, a new lobby and renovations on each floor.
The building, a gray-and-white marble affair, has been extended 12 feet out onto Michigan Avenue. Mock bay windows on each corner sport the Water Tower Place logo.
Inside, a new dancing water fountain extends to the second level. Still to come are the floor renovations, which will feature new, softer lighting, chandeliers and more and softer seating.
Chicago Place, for its part, has added merchandise display cases and cubes in its lobbies, and last year redid the landscaping, Baker said. And even though it’s only 18 months old, North Bridge redid all its signs, banners, plantings, furnishings and display cases last year. Work will soon begin on expanding seating in the food court, adding hand-painted murals to the walls, and revamping the outdoor landscaping.
Competition isn’t quite as fierce out in the suburbs, where Woodfield, Oakbrook and Old Orchard hold court. Woodfield, opened in 1971, serves as a tourist attraction and shopping destination for residents of the northwest suburbs. Oakbrook handles the western suburbs, and Old Orchard, which opened in 1956, handles traffic from the North Shore and the city. Schaumburg-based Woodfield, in addition to the hefty increase in motorcoach traffic, saw an upswing in 2001 holiday parties, reported manager Marc Strich. Instead of hosting a party at a restaurant or hotel, corporations threw shopping sprees for employees, giving them Woodfield gift certificates to spend.
As far as cosmetic updates are concerned, Woodfield is “constantly reevaluating” the property, Strich said. Recent improvements include the addition of family restrooms that Strich termed “upscale compared to most malls.” Old Orchard, located in suburban Skokie, enjoys a mix of traffic from the city, the suburbs and even Milwaukee, said Maria Berg-Stark, senior marketing manager. “Milwaukee doesn’t have great shopping,” Berg-Stark said, noting that Old Orchard advertises in Milwaukee, which is a 1 1/2 hours’ drive from Chicago.
The occupancy rate at Old Orchard stands at about 98 percent. Coldwater Creek and J. Jill, the mall’s newest women’s wear retailers, have opened in the past months. Coldwater Creek, known as a catalog retailer, sparked high interest among customers. Berg-Stark said the mall received more than 200 e-mail and phone inquiries from customers curious about the store.
Like Old Orchard, Oakbrook does not release sales per square foot. Nonetheless, the mall, located in the western suburb of the same name, saw holiday sales that were 3 percent to 4 percent higher than the year prior, said Suzanne Beres, marketing manager. No new women’s stores have opened recently; J. Jill and Eileen Fisher have spring openings planned, Beres noted. As for changes or upgrades to the mall, “there really haven’t been that many,” she said.
March 5, however, the mall celebrated its 40th anniversary, an occasion that might give rise to a facelift. “Though the mall doesn’t need a cosmetic makeover, we are looking for possible enhancements,” Beres said.