Q: You’ve got a stellar reputation for helping numerous retail centers revitalize, reinvent and get back on track.  Where should a center in this position start? 

JDF: Start small. You don’t need a big budget to dramatically improve the “curb appeal” of your property. A few hundred dollars’ worth of paint and a day or two of work by your maintenance staff can make your entrance look brand new. A small investment in landscaping can give a property an updated look and feel. Something as simple as repainting curb cuts with yellow paint or adding lighting to the “eyebrows” above the windows at a mall entrance can dramatically refresh your look. At one mall, we got positive customer comments for weeks by adding $50 of pink dye to one of the water fountains to promote breast cancer awareness month.

Q: If you gathered everyone together to discuss potential changes, who would you want at that table? 

JDF: The lead investors and other important stakeholders, of course, but you might also want to include more junior people as well. Once you have all the stakeholders around the table, make sure everyone – not just the lead investors – gets a chance to speak. This isn’t just about being polite. Sometimes the most junior person at the table has the best idea. Maybe it’s the part-timer in the food court who notices that young moms tend to leave when they find out your center lacks a family-friendly bathroom or a store specializing in gluten-free baby food. If they don’t speak up, you’ll never learn you need to do more to attract and keep this key customer segment.

Q: Do you need to re-staff in order to redevelop a property? 

JDF: No, the people you need to successfully redevelop your property are already all around you. Now is the time to get to know them – or to know them better. The trash collectors might tell you which tenant is tossing out the loose paper that makes your parking lot look like a dump. Someone on the zoning board might tell you about a new municipal parking garage the city would help pay for that could attract new and different types of customers to your mall. A congressman might alert you to a military recruiting center or post office that can drive traffic as well.

And, of course, don’t forget your merchants and customers. Too many center managers spend too much time in their offices. You need to get out and learn the strengths, weaknesses and future plans of every business under your roof. Knowing that your anchor department store underperforms others in its parent company gives you an early warning to line up a replacement in case they close. Finding out which of their departments performs the best (athletic gear or children’s clothes, for example) signals there may be room for another specialty tenant selling that merchandise.  To find out what shoppers want, consider posting an online customer service poll or having your service desk keep a log of customer requests, then pay attention to them: The unfilled requests tell you what customers want but aren’t getting.

Q: Who else should you talk to?

JDF: A great resource is the brokers who sell retail space. To cut costs during the last two recessions, many mall owners outsourced their real estate function to outside brokers. Because the same broker may now represent multiple centers, the best of those brokers has a stronger understanding of industry trends, the market climate in your area and the best practices in retail real estate management. Interview every retail brokerage company in your area and ask them to prepare merchandising plans and creative uses for your center. Challenge them to identify specific, measurable goals and objectives for their redevelopment plans, and press for details such as their fees and whether they are willing to do short-term or temporary tenant placements. Worst case, you’ve gotten an outside perspective. At best, you’ve found a real partner who can creatively and proactively locate quality tenants for you.

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Located just 20 miles from the bustling Raleigh-Durham International Airport, Chapel Hill is also home to a significant Southeastern medical system, UNC Health Care, and to health insurance provider Blue Cross Blue Shield. The city comprises one of the three “corners” of North Carolina’s Triangle region. With the world-renowned Research Triangle Park nearby, Chapel Hill attracts some serious business, medical and technical professionals – and the salaries that go along with that talent. This gives Chapel Hill the distinction of being one of the most affluent and best-educated cities in North Carolina.

With its well-to-do population and vibrant college life, Chapel Hill – coined “America’s Foodiest Small Town” by Bon Appetit magazine – has a hunger for popular American cuisine and a casual lifestyle that encourages a sense of community.  But that community also demands a trendy, energetic vibe, and businesses that don’t have it simply fail.

University Mall had long been a beloved fixture in the Chapel Hill community.  Yet despite its longevity and community ties, as the center aged, it quickly found itself losing business to nearby centers like the Streets at Southpoint, which was gaining popularity among University Mall merchants and shoppers alike.

Less than three miles from UNC Chapel Hill, the once bustling University Mall had, by 2013, become nearly devoid of viable tenants – a sad conundrum for a shopping center in the midst of such potential. Despite its promising location, the previously popular University Mall had become a 1970s throwback – an enclosed neighborhood center masquerading as a regional mall.  Its two anchors were an aging, undersized Dillard’s store, which was not driving traffic, and the highly coveted Southern Season – an inspiring gourmet emporium, yet a destination that created few cross-shopping opportunities. As the recession lifted, the property was left with a high vacancy rate and no clear merchandising mix or marketing strategy.  In short, this mall needed dramatic changes just to survive.

The Situation

In 2013, Madison Marquette was tasked with revitalizing the failing University Mall, a 365,000-square-foot enclosed shopping center and area icon for over 40 years. Just minutes away from UNC Chapel Hill and two large healthcare employers, the center was not maximizing its potentially lucrative central location. With more than 130,000 households within a 20-minute drive of the mall, and nearby average household incomes over $105,000, the location was clearly viable, but was not offering the area’s consumers the attractive mix of specialty stores, commodity offerings, and unique dining and entertainment venues they so craved.

The Challenges

University Mall was a tired, outdated center with increasing vacancy rates that had lost its former appeal among a large segment of the population. The mall’s vacancy was itself a double-edged sword, discouraging shoppers from visiting as well as preventing prospective new tenants from embracing the opportunities the location had to offer. Focus groups revealed that previous marketing efforts had failed, with many university students reporting they were not even aware the mall existed.  While aesthetics and marketing were clear obstacles, perhaps the largest issue was a merchandising problem: The tenant mix was simply not resonating with the affluent locals who had very definite ideas about the “lifestyle” destinations they preferred.

The Vision

From aesthetics to branding and leasing, University Mall needed to be transformed into a destination that matched the unique requirements of the area’s varied consumer base. To start, the mall’s weary façade and entryways were renovated and over half of the center was reconfigured to turn interior-only spaces into exterior-facing ones, giving shoppers easier access and a more open, inviting space. The mall’s interior was modernized with new paint, lighting, skylights, and locally sourced furniture – including soft, comfortable seating that made it an inviting space in which to gather and spend time.

To begin drawing people back to the location, the local public library was invited to temporarily use a vacant space while its own renovation was underway, a move which drove significant traffic – and an educated consumer base – to the center.  Leasing also brought in Kidzu Children’s Museum, which attracted a similar caliber of clientele.  Art lovers began frequenting the mall to enjoy the new arts initiative – custom murals created by prominent local artists, iconic Chapel Hill pictures taken by well-known local photographers, and images from acclaimed artist Tama Hochbaum’s book Silver Screen, all of which were showcased to draw attention to the center’s plans for a new theater. These changes, combined with free Wi-Fi, an outdoor farmers market, ongoing community events and year-round concerts all worked in tandem to forge a new, loyal relationship between the community and the center as it underwent its two-year metamorphosis. To underscore these changes, the outdated University Mall was re-branded as “University Place,” a lifestyle destination more fitting of the wide array of tenants Madison Marquette was working to attract.

The Results

The changes paved the way for Madison Marquette’s leasing team to work its magic.  Underperforming retailers were phased out, select retailers were right-sized and revitalized, and the merchandising strategy focused on sourcing best-in-class local and regional concepts.  An emphasis on art, jewelry, housewares, women and children’s fashion, as well as quick-service and eat-in restaurants culminated in a dynamic and viable shopping destination.  The local and national leasing team at Madison Marquette secured boutique tenant offerings including nationally renowned custom jeweler William Travis Jewelry; Fine Feathers, a distinctive women’s apparel provider; Glee Kids, a well-known local children’s clothing and gifting boutique; and Peacock Alley, the state’s exclusive purveyor of high-end linens, china, home décor and decorating services. Leasing efforts also supplemented the merchandising mix with top-name, traffic-driving national tenants from Aveda Institute to Planet Fitness, and in the former Dillard’s space, the crowning jewel: a brand-new 53,000-square-foot, 13-screen luxury Silverspot Cinema featuring Trilogy, a dine-in restaurant and bar operated by The David Burke Group.

Today, University Place has been transformed into a retail destination that excites and attracts Chapel Hill visitors, residents, workers and students alike. A center that once sat quietly in the shadows has been reborn, and now, as the redevelopment of University Place nears its completion, all the hard work is paying off.  University Place, which at the start of its renovation was tired and unappealing, is now vibrant, energetic and 90 percent leased, the direct result of the de-malling of an aged center.

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