The mega mall hits middle age

By Steve Gravelle

On July 29, 1998, Coral Ridge Mall, the 1.2-million-square-foot self-proclaimed “shopping playground in the Heartland,” opened just off Interstate 80.

It wasn’t the intent of its owners, but over its two decades, the mall has become a mirror reflecting the technological, economic and social forces disrupting the retail industry. The changes have claimed two of Coral Ridge’s anchor stores, and even its owner.

Twenty years ago, online shopping was more of a curious experiment than a reliable source of goods. Roughly a quarter of American households – about 40 million – enjoyed internet access, and Paypal launched in December 1998. Online sales generated about $2.4 billion the previous year, and Amazon, until then strictly a bookseller, announced its plans to expand its inventory. About 69 million Americans owned a mobile phone, used for calls, text messages and little else.

Back then, if you wanted toys or clothes or electronics, you were likely headed to the mall.

Coral Ridge’s developers, General Growth Properties – the shopping-center powerhouse started in 1954 when three brothers borrowed $1.2 million to develop Cedar Rapids’ Town and Country Shopping Center – decided to go big with its new state-of-the-art shopping center, including not just stores and a food court, but attractions like a skating rink, a carousel, a movie theater and the Iowa Children’s Museum.

Amenities and attractions such as the Iowa Children’s Museum have helped draw patrons to Coral Ridge Mall in Coralville as large malls continue to struggle. PHOTO RACHEL JESSEN

Those attractions have helped keep Coral Ridge from becoming just another fading mall. The museum alone drew more than 181,000 visitors last year, up from about 70,000 its first year, said Executive Director Deb Dunkhase.

“We’re still on an upward trend,” Ms. Dunkhase said. “Being here is an asset for us when it comes to programming. Our shorter drop-off programs for kids are just a couple hours long. Parents can drop off their kids and go to a movie or have dinner.”

“It definitely fits with that entertainment aspect that we want to provide our shoppers,” said Monica Nadeau, Coral Ridge’s general manager. “We find that 91 percent of the users of the museum also cross over to shop at the mall, so they [the museum] are obviously a great draw.”

Ms. Nadeau said about 1,500 people work at Coral Ridge’s approximately 120 stores. She considers its trade area to be about a one-hour radius from Coralville.

“In Iowa, people tend to drive a little bit farther for shopping,” she said.

Coral Ridge’s original anchors included three department stores – Target, Sears and Younkers – and a Scheels sporting goods store. Twenty years on, Sears and Younkers are gone. What has happened – or not – to what had been their spaces at Coral Ridge also illustrates the ways in which malls have adapted.

Great expectations

Vacancy rates at super-regional malls – those of at least 800,000 square feet, as defined by the International Council of Shopping Centers (ICSC) – hit 8.6 percent in the second quarter of 2018, according to real estate research firm Reis. Up from 8.4 in the first quarter, it’s the highest vacancy rate in six years.

Online commerce isn’t completely to blame. Traditional anchor retailers have also been locked in a fierce battle with discount mass merchandisers, big-box specialists and dollar stores – all often located near, but not necessarily at, the local mall.

Online shopping accounted for 13 percent of the retail market last year. That market includes gas and groceries, meaning the online share is significantly higher in some segments, according to Nancy Abram, an associate professor at the University of Iowa’s Tippie School of Business.

“We can’t get our gas online,” Ms. Abram said. “The electronics category is up there over 30 percent, books and apparel are over 20.”

Even the very nature of consumer spending has changed, she noted. While baby boomers have generally been motivated by “accumulating a lot of stuff,” younger generations are motivated more by experiences.

“It’s a different type of environment, and we all spend disproportionate amounts of our money on connectivity,” she added.

Coral Ridge anchors own their buildings and real estate. General Growth bought the 98,000-square-foot Sears store on the west side of the mall from Sears Holdings six years ago and opened four stores in its place: PetSmart, Marshalls, HomeGoods and ULTA Beauty.


“We tore down the building a year ago and built up six new spaces,” Ms. Nadeau said of the Sears space. “Millennials love the off-price stores like Marshalls and HomeGoods, so that’s what we’ve been catering to in that area.”

On the mall’s south side, near the main entrance to the skating rink area, the former Younkers store was occupied this fall by a seasonal pop-up selling Halloween costumes, decorations and accessories.

“The company that purchased [Younkers] out of bankruptcy, they own the building and the land,” she explained. “So we don’t have a lot of control on what happens to that space.”

Ms. Nadeau, who began working at the mall six months before it opened – her interview was conducted while driving down the middle of dirt floors within the mall – no longer works for General Growth, itself a casualty of the changes in retail.

The company filed one of the largest real estate bankruptcies ever in April 2009, emerging 16 months later after creditors had been paid in full. In August, General Growth, owner of more than 120 malls nationwide, was acquired by Brookfield Property Partners for $9 billion cash and interest in the new company.

Retail, restructured

As Brookfield and others look to adapt, legacy malls’ physical features can be a challenge.

“In the malls of the ‘80s and ‘90s, everything was under one enclosed roof and everyone walked indoors,” said Peggy Stover. “That architecture is no longer relevant for today’s consumers.”

Ms. Stover, also an associate professor at the Tippie School of Business, directs its Marketing Institute, where undergraduate marketing majors work with businesses and organizations.

“The mall retailers who are still operating within the standard mall format really need to be thinking more of the service function,” she said. “We can’t get everybody into the stores, online shopping is king; how can we make the experience more relevant?”

Coral Ridge was still less than a decade old when an example of the Next Big Thing in retail began development just two miles away. Coralville’s Iowa River Landing was conceived as a solution to industrial brownfields and post-industrial blight next to a heavily-trafficked artery into the city.

“It was the front door for the community and it didn’t look like a good front door,” said Kelly Hayworth, Coralville’s city administrator since 1988.

The Iowa River Landing, or IRL, combines stores, dining, offices, tourist attractions, a hotel and even a medical facility. Terms differ within the real estate industry, but developments like the IRL are often termed “lifestyle centers.”

“Lifestyle malls are more defined as open-air venues that have mixed-use development,” said Ms. Stover. “Something where people can walk outside, they have the combination of retail, restaurants and housing, versus your Mall of America or your large enclosed box.”

The Coralville Marriott Hotel & Conference Center, the IRL’s first major component, opened in 2006. The development’s retail anchor is an 80,000-square-foot Von Maur department store, which opened in 2013 following a contentious decision to leave its former home in the Iowa City Marketplace, then known as Sycamore Mall.

Between the hotel and Von Maur, and within walking distance, are a brewery, restaurants, an antique auto museum and apartments. The $190 million Iowa Arena development will soon bring even more density and activity to the area.

“In the past when it was [just] a restaurant, it really lacked daytime activity,” said Deanna Trumbull, a consultant who handles leasing for city-owned property in the IRL. “This puts residential within the project, it puts offices within the project so it really has activity throughout the day to create a continuous level of people and pedestrians.”

But that still leaves a role for enclosed spaces like Coral Ridge, according to Ms. Nadeau.

“What I’ve been getting from shoppers, especially in Iowa, is that they like the controlled atmosphere,” she said. “At the holidays we see consumers we typically don’t see all year long.”

Both centers can co-exist in close proximity, Ms. Stover said, if each one has well-defined customer, unique experiences and their own personality – something Coralville’s retail scene already has, Mr. Hayworth said.

“They are very complementary and they provide a completely different environment and commercial atmosphere,” Mr. Hayworth said. “The goal is to make people think of Coralville as the place to come to.”

In a bid to do just that, some Coral Ridge stores have added their own outward-facing entrances, allowing customers to enter the store directly from the parking lot – often to collect merchandise they’ve purchased online.

“There are certain stores that believe their customer doesn’t want the entire mall experience,” said Ms. Nadeau. “That’s definitely a trend. It seems consumers are more time-pressed now than ever, so we’ve got pickup areas in front of Target, in front of Scheels.”

“Successful retailers are incorporating online shopping into the customer experience, rather than competing with it,” ICSC spokeswoman Shannon Troy wrote in an email. “Consumers are demanding not just good, but also personalized, customer service. This can be anything from a personal shopper to collecting click-and-collect items from various retailers so a customer only has to go to one place to retrieve their purchases.”

Brookfield, and before that, General Growth, “do research on everything” to stay viable, Ms. Nadeau said.

“We want to look at all uses, from entertainment to grocery to offices, possibly residential, a hotel,” she said. “Shoppers now 20 years later are looking for not only shopping but an experience, an entertainment. I feel we’ve always been a little bit ahead of the curve.”

“That’s really essential that you have that experience,” Ms. Abram agreed. “I went and saw a movie there yesterday, and thought, ‘I wonder if I can still ice skate? I think I might go and see if I can.’”


What about Lindale and Westdale?

Responding to the same retail realities as Coral Ridge Mall’s owners, Cedar Rapids’ two major shopping centers are planning different routes to a solvent future.

Due to the demise of the same two anchor tenants that left Coral Ridge, Lindale Mall is working to stay relevant in the world of digitally driven retail.

Washington Prime Group, Lindale’s owner, “is in active negotiations to transform the former Younkers space,” according to spokeswoman Kimberly Green. She said the company’s effort “demonstrates our commitment to the community, while illustrating our mandate to diversify tenancy and strengthen this property as the dominant town center within the Cedar Rapids area.”

That means adjusting Lindale’s mix of tenants, which has long skewed toward clothing.

“A higher mix of lifestyle tenancy, which includes food, beverage, entertainment, home furnishings, fitness, wellness and services is key to driving traffic and frequency of visits,” Ms. Green wrote. “Department stores and specialty retailers focused on product, service and experience will succeed.”

Across town, what had been Westdale Mall is becoming Westdale Town Center, a fully-realized “lifestyle” center.

“Our competition is not Lindale or Coral Ridge,” said John Frew, president and CEO of Frew Development Group, which is redeveloping the center. “Our focus is on a mix of uses: work, play, dine, shop. It’s a different perspective, and our tenant mix is different.”

In September, the Cedar Rapids City Council approved $21.75 million in refinancing for the project after leasing was slower than expected. Among the tenants signing since 2013 are PetSmart, Ross Dress for Less and a Tru by Hilton hotel.

“It’s a major milestone for the project,” Mr. Frew said of the refinancing. “It allows us a tremendous amount of flexibility.”

The deal allows work to begin this month on two four-story buildings that will have 33 apartments each over first-floor retail space, and Mr. Frew expects work on two restaurants to begin next spring. He’s also working to fill the former Younkers, which could become offices or more residential space if a retail option can’t be found.

“We’re still working on options,” he said. “That’s a big building.”