By Thomas Corfman and Becky Yerak
Chicago Tribune staff reporters
Faced with shoppers who want more choices and some entertainment, longtime shopping centers in Chicago and elsewhere are undergoing face-lifts just to remain competitive.
Some, like Old Orchard, are considering major reconstructive surgery.
The Skokie shopping center, one of the area's oldest malls, is eyeing an expansion and redevelopment to significantly increase its square footage and alter its appearance as it wrestles with department store consolidation and other changes in the retail industry.
"There isn't a list of departments stores all dying to get into Old Orchard. That list is getting smaller," said Michael George, a principal in Oakbrook Terrace-based Mid-America Real Estate Corp. "There's a much larger selection of specialty stores that want to get in."
If the plans are carried out, Old Orchard would be within striking distance of becoming the area's largest mall, with 2.1 million square feet, close behind Schaumburg's Woodfield mall--the nation's fifth-largest.
"Old Orchard is a great center, and it's going to continue to be great, or greater, and that has to do not with size but quality," said Roy Vice, a vice president for development with the mall's Australian owner, Sydney-based Westfield Group.
But like other mall owners, Westfield is facing consolidation sweeping through the department store sector, as well as a proliferation of smaller, specialty stores, typically limited to a particular category of goods.
Under the redevelopment plan, two department store anchors at Old Orchard--Saks and Lord & Taylor--would be converted into smaller, specialty retailers. Combined, the two department stores have about 220,000 square feet.
Additionally, plans call for Old Orchard to add less than 300,000 square feet, he said, an increase of about 15 percent from the mall's current size.
Old Orchard already is one of the area's premier malls. Specialty store retailers average annual sales of $501 a square foot, Westfield said. And specialty retailers pay higher rent on per square foot basis than department store counterparts.
Mall face-lifts abound
But even the successful operators are continuing to give their properties face-lifts, recruiting new tenants and adding new amenities, such as restaurants and entertainment, to lure shoppers.
Shoppers have increasingly turned to off-mall formats in recent years, lured to Wal-Mart and Target by low prices.
It used to be that shopping malls wanted to gather a wide variety of retailers for men, women, teens and children under one roof, offering convenience for time-pressed shoppers.
But time is in shorter supply than it used to be, so developers began featuring retailers in an outdoor setting, allowing shoppers easier-in, easier-out for the retailer of their choice.
In a joint venture, Mid-America last year redeveloped the Brickyard shopping center, an enclosed mall on Chicago's Northwest Side, into an open-air center anchored by Lowe's Cos. and Target Corp.
The redevelopment began after anchor department stores J.C. Penney and Montgomery Ward closed.
The owner of Yorktown Center, an enclosed, two-story mall in Lombard, has already announced plans to tear down a former Montgomery Ward store and replace it with a 200,000-square foot lifestyle center that would include restaurants and a Barnes & Noble Inc. bookstore.
A new outdoor mall also is planned for Bolingbrook, with Marshall Field's expected to open a store there in 2007.
"If you look at all the malls outside of the city, Oakbrook [Center] would rate as the most energized, profitable and high-volume, Old Orchard would be a close second and Woodfield third," said Dan Skoda, a former Marshall Field's president who now heads D&R Consulting in Chicago. "Making Old Orchard bigger would certainly add to the draw."
Old Orchard opened in 1956 and now has 1.8 million square feet of leasable space, according to the 2005 Directory of Major Malls. That compares with 2 million at Oakbrook Center and nearly 2.2 million at Woodfield, which the International Council of Shopping Centers ranks as the nation's fifth-biggest mall in terms of leasable space.
Part of the redevelopment plan includes adding a strip of retail stores along Skokie Boulevard to enliven the street. Westfield would convert a parking lot and garage along the mall's east side into a pedestrian walkway with a row of single-story retail buildings along Skokie Boulevard.
Anchor stores have a say
The mall's anchors, including Marshall Field's and Bloomingdale's, must approve plans for Old Orchard. Those retailers will both be owned by Federated Department Stores Inc. once Federated completes its purchase of May Department Stores Co., which owns Field's.
Nordstrom Inc. must also approve the plan. A parking deck would be built at the mall's south end, in front of the Nordstrom department store, a shopper-magnet since it was added in 1995.
Westfield began presenting the preliminary plans to prospective tenants last week, Vice said.
Westfield's plans are sure to increase Skokie residents' concerns about congestion.
"There are a whole lot of issues that the village would need to look at, from parking to aesthetics to traffic issues," said Al Ragoni, Skokie's village manager. "The details are very important on a shopping center that only has so much acreage."
The operator of rival mall Oakbrook Center said Old Orchard's plans are typical of what's going on in the industry.
"It's not surprising to take out poor-performing anchors and replace them with restaurants and better-performing retailers," said Bob Michaels, president of General Growth, which runs Oakbrook Center. The Chicago-based mall operator recently expanded a Houston shopping center by 180,000 square feet, in an open-air format, to include more restaurants and newer retailers.
Saks Inc. has already announced the closing of its Saks Fifth Avenue at Old Orchard.
Westfield's plan is sure to increase speculation about the fate of the Lord & Taylor store, which many observers expect to be closed in the wake of Federated's acquisition of May.
Westfield has not been notified of Lord & Taylor's closing, said Vice, calling the plans preliminary.
"You have to know all of your options as early as possible," he added.
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