Retailers Drive Boom in Open-Air Shopping Centers

By Dave Cranshaw, Staff Writer

The first indoor shopping mall in the nation, The Arcade, was opened in Providence in 1828. Since then, shopping centers have sprouted around the state to the tune of 234 such establishments, according to the 2004 National Research Bureau Shopping Center Census.

The new trend, however, is shying away from the enclosed mall and moving more toward open-air shopping centers or strip malls.

According to the national bureau, a Connecticut-based provider of retail real estate information, the proportion of open-air shopping centers (greater than 400,000 square feet) being built is growing. In the 1970s, only 36 of 441 malls constructed were open malls. From 2000 to 2003, 207 of the 257 shopping centers built were classified as open malls.

Kelly Coates, senior vice president at Carpionato Properties in Johnston, predicted that only regional malls, like Emerald Square Mall in North Attleboro and Providence Place mall, will remain as enclosed malls, while smaller shopping centers will look to redevelop.

In fact, Lincoln Mall is “de-malling” and plans to eliminate its enclosed areas, said Coates. “Shoppers like the open-air environment,” said Coates. People can go directly into a store, park nearby and get out quickly. “The convenience factor is the key,” he said.

In a strip mall, the tenants can have an independent identity, which better allows the stores to step up their merchandising, marketing and product offerings to cater to their target audience, said Coates.

“Among the most sophisticated retailers are those that go primarily in open-air shopping centers,” he said.

In Rhode Island, the four-year-old, open-air Crossings at Smithfield on Route 44 is the third-largest shopping center in the state, trailing only the Providence Place and Warwick malls. The anchor tenants, occupying more than half of the center’s 630,000 square feet of space are big-box giants Home Depot, Target and Kohl’s. Other stores in the mix occupy between 1,600 and 46,000 square feet apiece.

In addition to the merchandising and marketing advantages, it can be more cost-effective for a retailer to abandon the closed-in mall for the freedom of the open air. Enclosed areas in a mall can cost a retailer between $13 and $20 a square foot in addition to $20 to $60 a square foot of rent, said Coates. Rent in a strip mall can cost from $10 to $35 a square foot.

Carpionato currently manages 10 strip malls in Rhode Island and southeastern Massachusetts that total 1.3 million square feet of retail space.

Ultimately, the region is getting close to a saturation point, said Coates. But judging by the company’s upcoming work, Rhode Island is not there yet.

There are plans for seven additional open-air centers that range from 30,000 square feet in Westerly to 850,000 square feet in North Attleboro. In addition to construction, the market for shopping centers as real estate investments remains active.

The Smithfield Commons, a 35,130-square-foot open-air shopping center at the intersection of routes 44 and 5, was bought last month by Linear Retail in Burlington, Mass., for $8 million.

Linear focuses on the acquisition and management of “convenience-oriented” retail properties in eastern Massachusetts, southern New Hampshire and Rhode Island, according to the company’s mission. Since forming in 2003, Linear has purchased 12 shopping centers in separate transactions totaling about $80 million.

Aubrey Cannuscio, senior vice president of acquisition and partner, said the company specifically looks for smaller and moderately sized shopping centers that range in size from 10,000 to 125,000 square feet and are priced from $1 million to $15 million.

Linear also bought the 73,000-square-foot shopping center at 1000 Bald Hill Road in April for $6.8 million.

The effect these shopping centers have on the economy cannot be ignored. The 2004 National Research Bureau census reported that the 234 shopping centers in Rhode Island generated sales revenue that totaled $5.2 billion in 2004, up from $4.9 billion in 2003 at 218 shopping centers.

Scott Wolf, executive director of Grow Smart Rhode Island, maintained that the proliferation of strip malls is due to the state’s heavy reliance on property taxes – the fifth-highest per capita in the nation, Wolf said – to fund education. Building shopping centers is a way for a community to increase its tax base but not add schoolchildren, he said.

Grow Smart would rather see revitalization and redevelopment of existing urban and town centers that are within walking distances of the surrounding residential areas, said Wolf.

Areas like Darlington in Pawtucket and Main Street in Bristol and East Greenwich are examples of development that can help maintain the character and charm of the area, he said.

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