It’s a sultry Saturday in midsummer and shopping is sizzling at Christiana Mall.
Shoppers stand shoulder-to-shoulder at the Apple store, where the buzz is so loud you can barely hear an iPhone ring. Diners wait in line for tables at Cheesecake Factory. And customers are queued more than 10 deep at Target’s self checkout kiosks.
This picture of bustling commerce suggests an economic boom. But, in reality, consumers are still challenged by high unemployment, foreclosures and tight credit. And just outside the air-conditioned retail cocoon, traffic is snarled as roadwork drags on at the interchange of Route 1 and Interstate-95.
So why are so many people at the mall?
Economy and roadwork no detour to Christiana Mall revitalization.
Christiana Mall GM Steve Chambliss discusses Christiana Mall’s revitalization.
“We have great stores, great restaurants, lots to do,” said Steve Chambliss, the mall’s general manager. “It’s a nice place to be, a good place to bring your family.”
More than 50 percent of Christiana’s customers are out-of-state shoppers, most from neighboring Maryland, Pennsylvania and New Jersey, he says. Some drive up to an hour to take advantage of Delaware’s tax-free shopping.
Others come because Christiana offers a diverse shopping experience, bringing together popular merchants including Nordstrom, Williams-Sonoma, Lucky Brand Jeans and Anthropologie, retailers that typically choose only one location in each market. The Apple store already has expanded to a larger location in the Nordstrom wing of the mall.
“We are the only Apple store within an hour’s drive (of the mall),” Chambliss noted. “If you don’t come to Christiana, you have to go to Cherry Hill, King of Prussia or Towson, Maryland—and none of those places offer tax-free shopping.”
In the language of retail, the customer is traditionally referred to as “she,” said Nathan Isbee, vice president at Stifel Nicolaus in Baltimore and a research analyst covering the retail sector.
The mall patron is intent on the personal touch, experiences she can’t obtain shopping online. She likes to smell the perfume at the department store counter. She wants to know if the green sweater suits her complexion or the pleated skirt makes her look fat.
Most of mall traffic is driven by apparel sales, Isbee notes.
“People still want to try on those shoes, the new pants, the new dress,” he said.
That emphasis on the human experience makes restaurants an important addition to the modern mall’s menu of offerings.
“You can’t eat on the Internet,” Isbee said.
An avenue of restaurants at Christiana includes Brio Tuscan Grill, California Pizza Kitchen, Panera Bread and JB Dawson’s, a locally-owned restaurant and bar.
“Restaurants are a key component in the revitalization of the mall,” Chambliss said. “If you want to get into Cheesecake Factory, you should get there right when they open because the restaurant fills up fast.”
But in a climate of lackluster consumer spending, are there too many stores? It depends on where you look.
“Is the U.S. over-retailed? Absolutely,” Isbee said. “But most of the over supply is in shopping centers, not malls.”
Still, more than 400 malls closed between 2007-2009 in the United States, a period when consumer spending swooned 9.8 percent. Green Street Advisors, which tracks real-estate investment trusts, predicts that ten percent of the surviving 1,000-plus malls in the United States will be repurposed or razed by 2022.
Of the surviving centers, Green Street says only 142 have strong sales, defined as exceeding $450 per square foot.
General Growth Properties, the Chicago-based REIT that owns Christiana, does not release those statistics. However, GGP’s website describes Christiana as “among the most productive super-regional malls in the country.” Food court sales are $1,380 per square foot. In 2003, when the Rouse Co. acquired a stake in the mall, sales were listed at $606 per square foot. (GGP acquired Rouse in 2004.)
Isbee said Christiana’s success is the result of evolution, in which one mall dominates each market. In the Philly ‘burbs,’ that’s King of Prussia. In South Jersey, Cherry Hill is on top. And in Delaware, Christiana Mall is the powerhouse.
Five years ago, Christiana was in dire need of getting its house in order. The mall, built in 1978, had not been updated since an interior renovation in 1991. Finishes were faded.
In 2006, the Strawbridge & Clothier anchor went dark after the May Co., Strawbridge’s parent was acquired by Macy’s. That same year, Lord & Taylor closed its underperforming anchor.
Meanwhile, groups of rowdy teens who congregated at the mall in the evenings were a turnoff to serious shoppers. In response, Christiana rolled out a policy in 2008 in which shoppers under age 18 must be accompanied by a supervisory adult after 5 p.m. on Fridays and Saturdays.
With the ranks of department stores shrinking, mall management considered alternative tenants to replace vacant anchors. A concept called The Epicenter Collection was slated for the Lord & Taylor site. The model would assemble various catalogue and online retailers, providing them with a bricks-and-mortar venue to showcase their wares.
The Epicenter crumbled before it ever got off the ground. The plan was scrapped in 2008; the anchor was razed in 2010 and GGP struck a deal with Target to build a new, one-level store on the site.
GGP filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in 2009, the largest such filing ever for a mall operator. As part of its reorganization plan, the company was able to obtain a carveout to continue the redevelopment of the mall, then in progress.
The company emerged from bankruptcy in November 2010. GGP stock is now trading at $18 a share, near its 52-week high.
Despite Christiana’s popularity as a destination, getting there is often a hassle due to ongoing road construction.
On July 16, the Delaware Department of Transportation closed Exit 4B on northbound I-95, leading to Route 7. The ramp will remain closed until early 2013.
The next day, DelDOT closed the exit ramp south of the mall onto Route 1. Signs will direct motorists around the mall ring road to entrances to I-95. Completion of that project is expected this fall.
Mary McNear of Smyrna spent 45 minutes sitting in the backup traveling from her home to an appointment at Christiana Hospital. She is steering clear of the mall until roadwork is completed.
“I have become stuck in the traffic from construction far too many times,” she says. “I now do my shopping in other parts of Delaware because I do not have the time to sit in the car for such lengthy periods of time. I avoid that area at all costs, unless absolutely necessary.”
Chambliss acknowledges roadwork is a deterrent for some would-be shoppers. But he says access to the mall will be improved over the long haul.
“I don’t know anybody who won’t be happy when it’s done,” he says.
In making over Christiana, GGP might have taken a page from the playbook of Pennsylvania Real Estate Investment Trust, which spearheaded a successful transformation at Cherry Hill two years earlier.
Both malls were rundown and had lost anchors. Both generated consumer excitement by signing Nordstrom, the popular luxury specialty anchor, as well as expanded XXI Forever (larger versions of Forever 21) and Urban Outfitter locations.
“There are a lot of similarities between what we have done here and the redevelopment of Cherry Hill,” Chambliss said.
This year, Christiana has brought on board such A-listers as A/X Armani, True Religion, Everything But Water and Michael Kors. The mall also bagged Vera Bradley, the posh purveyor of colorful purses, accessories and luggage.
Melissa Schenkel, Vera Bradley spokeswoman, notes that retailers tend to cluster with other shops that draw the same consumer demographic.
“The mix of co-tenants, restaurants and retail locations make the Christiana Mall a great fit for the Vera Bradley brand,” she said.
Christiana now encompasses 1.1 million square feet and has run out of room to grow. Chambliss says the mall is now focusing on filling its few vacancies and upgrading the mix of tenants.
In the fall, Christiana will add a Microsoft store to the lineup, furthering Microsoft’s strategy to open 75 stores over the next three years. The retailer will sell computers and software, games, music and phones, as well as offer technical support and personal training on how to use devices.
“We are now in a position where we attract the stores that really get shoppers excited,” Chambliss said.