Owners putting up big money to save enclosed malls

Some analysts say the malls are relics of a bygone era, but the properties’ owners are invested in bringing them back

A woman looks at a store directory Sunday, Sept. 6, 2015, at the south end of Boulevard Mall. The space at the south end, formerly Dillards, is undergoing a renovation.

Neighborhood Shopping Malls

A view of the Boulevard Mall on Maryland Parkway Sunday, Sept. 6, 2015. The mall, which was sold to Sansone Companies in late 2013, has undergone extensive exterior renovations. Launch slideshow »

With blue-lit booths, nightclub-style music, a sleek bar and an hourlong wait for a table, the weeks-old Gen Korean BBQ House seems like it belongs in a flashy casino on the Strip. Music plays outside, and the restaurant is steps from a steakhouse with a $55, 16-ounce rib eye and a new Italian eatery.

The dining spots are nowhere near the resort corridor, though: They’re in suburban Henderson’s Galleria at Sunset mall, part of a big-money effort by shopping centers to boost business and, in many cases, stay alive.

“You can’t just have five department stores and 140 retail stores anymore and expect to dominate the market,” said Heather FitzGerald, marketing director for Galleria.

Long a staple of American suburbia, enclosed shopping malls have for years faced increased competition from online retailers and open-air, urban-style centers such as Town Square and Tivoli Village. Higher-end enclosed malls remain healthy and are growing stronger, analysts say, but older, lower-end ones are falling behind.

Las Vegas Valley malls haven’t been forced to lock up, but some are doing better than others. The Forum Shops at Caesars is an “A++” mall with $1,616 in sales per square foot, and “A++” Fashion Show books $1,185 in sales per square foot, according to research firm Green Street Advisors.

Meanwhile, Meadows Mall at U.S. 95 and Valley View Boulevard is a “B” mall with $390 in sales per square foot, and Boulevard Mall, a once-thriving retail hub a few miles east of the Strip, is a “C” property with just $270 in sales per square foot, according to Green Street.

Nationwide, when conditions at malls deteriorate markedly, properties can enter a “death spiral” in which sales slump, stores close and shoppers leave due to a thinning selection — all of which cause even more stores to close and more shoppers to go elsewhere.

There “undoubtedly” are too many malls in America, said Green Street analysts, who tallied about 1,000. That includes more than 200 lower-quality properties, which are “the most at risk to close over the next several years,” Green Street says.

Many media reports this year have focused on the death of American malls, and the website deadmalls.com chronicles their demise. But in general, the gloomy outlook is “completely exaggerated,” said industry analyst Rich Moore, of RBC Capital Markets.

More than other types of real estate, healthy malls get “significantly better” with higher rents and more stores and shoppers, while “bad retail goes away,” Moore said.

Las Vegas, with its abundance of strip malls and shopping hubs, is the most saturated retail market in the country, according to a report by mail-services and software company Pitney Bowes and publisher Directory of Major Malls.

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Built in the 1960s, Boulevard Mall was hugely popular through the ’70s but eventually lost its standing with shoppers, who fled for the suburbs and Fashion Show, which opened in 1981.

Southern Nevada developer Roland Sansone bought Boulevard in 2013 for $54.5 million from lenders who listed it at a price of “best offer.”

“It was a bargain,” he said.

Fashion Show and other malls on the Strip are almost fully occupied, but Boulevard was just 75 percent leased when Sansone bought it. The most notable vacancy was a two-level, roughly 200,000-square-foot department store that had been empty since Dillard’s moved out several years earlier.

Last year, Sansone launched what he said would be a $25 million overhaul to upgrade the mall and make Boulevard more of an entertainment destination with restaurants, a bowling alley and a farmers market with a playground. He said he wanted to restore Boulevard to its former glory.

Sansone, head of Henderson-based Sansone Cos., said Boulevard looked “like a prison” when he bought it, with subpar landscaping, lighting and paint, and a backlog of repairs.

The previous owners were underwater, and they spent practically no money or effort trying to sign more tenants, general manager Timo Kuusela said.

The former Dillard’s store — which now is being renovated for John’s Incredible Pizza, thrift store Goodwill of Southern Nevada and call-center operator Sutherland Global Services — “looked like a bomb had gone off and people had disappeared,” Sansone said. “It felt eerie to walk into a store (that) had been abandoned.”

Sansone said he still is working to bring more entertainment options to Boulevard — he’s in talks with a movie-theater group — and that he might “make a run” at Meadows, adding, “I like fixing things.”

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On a recent Thursday night, Galleria felt busier than it was. The mall, which opened in 1996, is well-lit and has an open feel. Music plays, department stores and shops look new and inviting, and the food court has a stylish design.

The 1 million-square-foot mall, owned by Cleveland-based Forest City Enterprises, pulls in more business than Boulevard and Meadows. It’s an “A-“ property with 94 percent occupancy and $475 in sales per square foot, according to Green Street.

The owners have spent millions over the past few years to lure more tenants and customers, with a heavy focus on dining and on sprucing up Galleria’s appearance. In 2013, the mall launched a $7 million renovation, the first since it opened. Last year, it broke ground on a $24 million, 30,000-square-foot expansion that included new restaurant space, an outdoor plaza and a valet area.

Galleria management removed water features and palm trees from inside the mall, creating more space for shoppers and events. And they renovated the food court, where sales increased by double digits after the overhaul, FitzGerald said.

Store sales also are up this year, helped in large part by the improved housing market and economy, FitzGerald said.

• • •

At Meadows, Maude Curry sifts through clothes on the second floor of Dillard’s. The department store has been converted into a clearance center, with the first floor closed to shoppers.

Curry is there because clothing is discounted up to 65 percent, but it’s the first time she has been to Meadows in about a year.

“I don’t like this mall at all,” says the retiree who has lived in Las Vegas since 1988.

Meadows, which opened in 1978, is 97 percent occupied, according to Green Street — and appears in good shape. It was renovated in 2003, according to its owner, Chicago-based General Growth Properties. But walking around, it looks like a typical mall from the ’90s.

It’s also short on shoppers. Meadows, at 945,000 square feet, gets busier on weekends, but even then, it’s not packed, clothing-store worker Esteban Hernandez said.

“It’s pretty slow,” he said.

Galleria and Boulevard have put a big focus on luring sit-down restaurants, but Meadows has only a food court.

“I know I would go get a drink after work if there was something here, definitely,” Hernandez said.

Janet LaFevre, senior marketing manager for General Growth’s Las Vegas malls, said at least six retailers have renovated, expanded or relocated inside Meadows this year; three others opened in the past year; a 10,000-square-foot shoe store is being built; and management is close to making an announcement about the Dillard’s building.

She also said Meadows has a new general manager, Chris White, who brings a “breath of fresh air” to the mall, and that Meadows hosts community events with charities and other groups.

Luring sit-down restaurants, LaFevre said, is “absolutely one of our wish-list priorities.”

General Growth also owns Fashion Show, which is getting 22,000 square feet of new restaurant and retail space. LaFevre said the 1.8 million-square-foot mall is “never stagnant” and “never dull” and is one of the company’s “most dynamic properties.”

“You have to be when you’re on the Strip,” she said.