Book stores may be back in vogue, and if you’re William S. Taubman, chief operating officer of Taubman Cos., you gotta believe it.
“I laugh when people say book stores are dead and nobody shops in stores anymore. We brought Indigo into Short Hills last year and it does incredibly well.”
Taubman is discussing Canada’s Indigo book store chain, which opened its first location in the U.S. last October in the Mall at Short Hills in New Jersey. Short Hills is among Taubman’s most productive centers within the real estate investment trust’s portfolio of 27 centers. Taubman Cos. remains the most productive shopping center owner and operator in North America, with 12-month trailing U.S. sales per square foot at $919, an increase of 10.9 percent over the 12 months ended March 31, 2018.
Indigo reflects Taubman’s intent to upgrade and update shopping centers with concepts that differentiate from the pack and keep up with the rapidly evolving and increasingly competitive retail industry, and changing consumer shopping patterns. Beyond book stores, Taubman is partial to RH, formerly called Restoration Hardware. Taubman has the only three RH gallery formats situated inside malls, in Tampa, Denver and Nashville. Other RH gallery formats are freestanding.
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Across the Taubman portfolio, “The merchandise mix has always evolved, but it’s happening more so today than ever,” Taubman told WWD in an interview. “There are just so many different ways centers are evolving today. The amount and pace of change is greater than it was historically.”
Central to Taubman’s mall transformations — among the most dramatic are at Beverly Center in Los Angeles, The Mall at Green Hills in Nashville and The Mall Short Hills — is fortifying the luxury component, attracting digitally native brands, repurposing or putting new retail in space vacated by anchors, and adding food and beverage options.
“We have substantially a greater amount of luxury than we did historically,” Taubman said. “Brands want to control their own brand image and are more willing to open stores and pull out of department stores. I was with a brand yesterday who said they have gone from being in 160 department stores down to 50, in a year.”
At the 1.4 million-square-foot Short Hills mall, $125 million was spent on making changes. Luxury increased by 17,372 square feet since 2018, bringing the total to over 80,000 square feet there. Dior doubled in size; Chanel tripled. Other luxury tenants present are Brunello Cucinelli, Cartier, Celine, Dolce & Gabbana, Ermenegildo Zegna, Fendi, Gucci, Hermès, Loro Piana, Louis Vuitton, Prada, Saint Laurent, Salvatore Ferragamo and Van Cleef & Arpels.
After Saks Fifth Avenue closed in 2016 at the Short Hills mall, Taubman eventually filled the space with Indigo, the Industrious co-working space slated to open later this year, and the existing Crate & Barrel store expanded.
Short Hills was also among the first malls in the country to welcome digitally native brands including Boll & Branch, Untuckit, Casper, Indochino and Monica + Andy, and a wider “global” approach to leasing is apparent, with such additions as the Primo Mercato food hall from Florence; The White Company from London, and the Canada-based Canada Goose, Mackage and Indigo brands.
The 30,000-square-foot, one-level Indigo, considered a “cultural department store,” sells books and other categories like toys, fashion, home decor, stationery, electronics and wellness, and surrounds such merchandise with related books. Indigo has a café, plenty of seating, and areas for book signings and lectures, creating what Taubman considers “an experiential” setting to draw people to the mall and off their cell phones. The experiential idea extends to The Cold Room in the Canada Goose store where customers can test parkas in temperatures as low as minus 13 degrees Fahrenheit, in case you are planning an Arctic adventure.
“Traffic has been very strong at Short Hills. We always had a very strong market,” Taubman said. “The bedrock of our customer base has been Wall Street, but we have seen a growing movement of higher-end Asian customers from Fort Lee and Elizabeth, N.J., coming into the market. That has driven our luxury volume, which is now commensurate with [volumes generated] at flagship street locations.” According to Taubman, the median household income for Short Hills shoppers is $250,000.
Taubman spent $500 million to entirely “reimagine” the 828,000-square-foot Beverly Center, with the help of design architect Massimiliano Fuksas. Completed last year, the reimagining involves additional luxury and contemporary retail, including Balenciaga, If & Co. and MCM, creating a 25,000-square-foot skylight ribbon running the length of the center, and a new “grand court” gathering space to recharge devices, hang out and hold special events. In addition, nine restaurants opened on the street level, and two more are coming soon. The Webster is opening an 11,000-square-foot store in 2020.
Overall, Beverly Center has been transformed into a brighter, friendlier center with a closer connection to the neighborhood and a more democratic appeal. “Half of the stores are new or relocated,” Taubman said. “Beverly Center was old and tired. But we reimagined the entire project and are still remerchandising it. We’ve picked up substantial market share. It’s the only location in Los Angeles where you can shop high, low and medium [prices]. There’s luxury down to Zara and H&M.”
At the Mall at Green Hills, more than 130,000 square feet of additional retail space will open next month. A new Dillard’s flagship concept, the first RH gallery in Tennessee both recently opened, and Apple renovated, doubling its footprint.
“Here again we are evolving the assets, adding new luxury, a bunch of new food destinations — really redoing and remaking the entire shopping center while keeping it open,” Taubman said. “Green Hills has always been the dominant center in the market, but now its expansion really gives it the full breadth of stores, with all these luxury names, including Louis Vuitton which is expanding and adding men’s. And we never had an athletic footwear brand there but we added Footlocker. We have added lots of brands at different price points.”
At the Miami World Center, Taubman and The Forbes Co. are handling the retail leasing. “The original plan was to build a big, conventional enclosed regional mall. As costs went up, we pulled back. The owners retooled so it’s more of an urban community,” with residences, offices, a hotel and retail. “It’s not retail-driven and will have less retail than Hudson Yards. We don’t have a department store. The center is a street scape with retail at the base of the buildings. Retail is more of an amenity, with a lot of food and beverage, right in the heart of downtown Miami.”
Through the Taubman portfolio, “We can add more food, but we’ve added a lot already. We’ve got to add more.
“We also need to evolve some of the anchors,” he observed. “There are redundant mid-priced anchors that won’t survive. We will evolve with [new] anchor ideas.…More luxury will come in and we are at the tip of the iceberg of Internet brands coming to the mall. They are all dipping their toes in. A lot are setting up pop-ups, which is one way to begin. Warby Parker, Bonobos, Untuckit have substantial presences. They don’t call it brick-and-mortar. They call it off-line. They all believe in the omnichannel ideal and are trying to figure it out. Some are scared of lease obligations and trying to understand cost structure, but it’s going to happen. There are so many of these companies. Brands know to be competitive they need to have a brick and mortar presence. They’re just not going to want to open 1,000 stores.”
Taubman’s Musings
• On some of the hottest tenants: “It’s Lululemon, Apple, Untuckit, Peloton, Warby Parker. Zara does well but is not expanding and I like H&M’s new store design. On the luxury side, there’s Gucci, Balenciaga, Louis Vuitton and Christian Dior.”
• On defining entertainment in the mall: “It’s difficult. You’ve got all these bowling concepts, aquariums, new virtual and augmented reality ideas, Dave & Buster’s formats, Legolands. Peppa Pig is like the hottest thing around. There’s a lot to pick from, but it’s not clear who is going to survive and win.”
• On malls still getting a bad rap: “There is this persistent narrative because there is so much money behind technology companies where it’s in their self-interest to perpetuate this and suggest brick-and-mortar has no future. The problem is, it’s a broad brush they paint. There is not sufficient recognition of the diversity of retail projects that exist.”
• On improving the retail experience: “The holy grail will be the connections between payment, logistics and brick-and-mortar, and the technology [that] allows for efficiencies and the development of information that is actionable. We are in the second inning of this.”
• On book stores: “There is a certain stable reading population. There is a customer for it. There is more opportunity for book stores. There has been big growth in independent book stores. People like the authenticity and individuality versus bland corporate chains.”
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The Mall at Short Hills