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September 2nd, 2009Malls buy into retooling

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by Angela Lau

The recession and declining mall sales have spurred a historical change in fashion-oriented shopping centers.

Mall owners are being forced to think outside the big box as retail tenants dry up because of bankruptcies and closures, and are now focusing on nontraditional businesses to fill their growing vacancies, at 7.5 percent industrywide.

They are reaching out to grocery stores, dry cleaners, hair salons, playhouses, community centers and indoor skate park operators, and are considering building children’s play areas and parents’ lounges.

In San Diego County, where the Westfield Group owns seven shopping centers, the company is starting its transformation with Westfield North County Shopping Mall in Escondido, where it has 300,000 square feet of vacant space.

Westfield is negotiating with a supermarket to move into an expansive storefront that once housed Robinsons-May, which closed after Federated Department Stores acquired May Co. in 2005.

If successful, the Escondido mall could be the first in the county to have a grocery store.

But Westfield wants more there. It is considering more restaurants, a housewares store and theaters. H&M, a trendy Swedish clothier, is remodeling some of the vacant space and is set to open later this year.

It is a change that an industry analyst calls “mall-morphosis,” aimed at building miniature town centers where consumers can shop for a week’s worth of food, play with their children and maybe feel relaxed enough to wander over to a jeans shop and spend some money.

“Malls will become more of community center, destination locations,” said Marshal Cohen, chief retail analyst at the NPD Group.

“They are adding restaurants, community centers, playhouses, splitting big stores into slightly smaller stores,” he said. “Some are looking at warehouse clubs, fitness clubs, converting a big store into an indoor skate park (in Los Angeles).”

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