Open-air Retail Markets Outstrip Mall Mentality

By Bridget Botelho, Staff Writer

Strips of shopping centers and open-air marketplaces, like the newly developed Oak Harbour Village in Exeter, appear to be the retail experience of choice for developers.

“Each decade has its own development trend. In the ’70s and ’80s it was enclosed malls. In the 1990s it was power centers – strips of big box stores like Wal-Mart, Staples and Petco all in a row – were being built. Now we are seeing open-air shopping centers,” said Patrice Duker, media relations manager for the International Council of Shopping Centers.

In 2003 and 2004, only three new malls were constructed in the United States, and between six and eight are planned for 2005, ICSC reports.

“The trend is toward open-air centers. People want the convenience of parking relatively close to those stores,” said Kelly Coates, senior vice president of Carpionato Properties, a Johnston-based development company that owns and manages 1.3 million square feet of open-market style retail space. “Also, people seem to hearken back to old village types of shopping arrangements where you can stroll down the street.”

New malls aren’t being developed as quickly as super centers or open-air markets because enclosed malls typically require more than 1 million square feet of land for development, which is less available than it was three decades ago, Duker said.

The economy also plays a strong role.

When a new mall is conceived, the project normally takes about two years from start to finish. The economy in recent years has been conservative, so there has been less investment into mall projects. As the economy picks up again, so will mall construction, she said.

“Two or three years ago, the economy was slower and people were being more conservative shoppers,” Duker said. “Open-air centers require less land because they can be small, and construction is faster.”

Shopping trends have also changed. Thirty-three percent of mall shoppers are there to browse, where 45 percent of people go the mall to shop at a specific store. In 2003, shoppers visited malls less frequently but stayed about seven minutes longer (82.2 minutes), an ICSC study of 2003 mall shopping patterns shows.

Consumers are looking for the quickest way to get what they need and get to their next destination, which makes open-air centers ideal in today’s society, said Carpionato Properties Director of Leasing Mark Briggs.

Malls also charge higher rents and some require retailers to pay for heat and electricity in the common areas of a mall, which can strain stores and restaurants.

“The disadvantages of a mall are the common area costs are high. Small retailers have to pay to heat, light and air-condition that common area, the central corridor. Including the real estate tax, that adds up to $12 to $20 per square foot. Retailers in open-air centers pay between $4 and $8 in common area costs,” Coates said. “There’s also the identity issue. Unless people come into the mall, they don’t see the stores.”

Carpionato Properties retail centers include University Marketplace in Providence, North Attleboro Marketplace, South Attleboro Square in Attleboro, Johnston Plaza, Douglas Crossing in North Providence and Narragansett Park Plaza.

The company is also developing three more marketplace-style shopping centers: Chapel View near Garden City in Cranston; Westerly Crossings at the intersection of U.S. Route 1 and R.I. Route 78; and Stonehill Marketplace at the intersection of Interstate 295, U.S. Route 6 and R.I. Route 5.

But even with all the open-air style shopping centers, on a national scale, malls aren’t dying out.

“All the malls in Rhode Island, with the exception of Rhode Island Mall, have been very successful,” Coates said.

Enclosed malls have some advantages over open-air shopping plazas.

“For people who want to browse, malls are climate-controlled – in places like New England, that can be important,” Duker said. “There is also the advantage of having all of those retailers side by side for people who want to browse.”

While few new malls are being built, developers and mall owners appear to be investing in established malls by adding on, renovating or re-evaluating tenants to upgrade their property portfolios, Duker said.

The largest enclosed mall in Rhode Island is Providence Place, with 1.36 million square feet, opened in 1999. Warwick Mall is second-largest with 815,000 square feet, opened in 1970, followed by the Lincoln Mall with 500,000 square feet, which opened in 1975. The Rhode Island Mall, which was sold recently for $36.6 million, opened in 1967 and is the state’s smallest mall with 454,015 square feet, ICSC reports.

The Crossing at Smithfield (2002) is the third-largest shopping center (in a list including malls) in Rhode Island, with 642,015 square feet. Garden City Center in Cranston first opened in 1949 and is the state’s fifth-largest shopping center with 473,000 square feet of space.

As of 2003, there were 217 shopping centers, including malls and open-air marketplaces, in Rhode Island, which contributed $362 million in state sales tax revenue in 2003 – up $29 million from 2002, ICSC reports.

There are 46,990 shopping centers in the country, which contributed $84.3 billion in 2003, ICSC reports.

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