May 14, 2018 - Business

Could hotels, office towers and high-end food halls be in SouthPark mall’s future?

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Even though malls across the country are hurting, SouthPark sure doesn’t seem to be.

Charlotte’s preeminent shopping mall is the largest between Atlanta and Washington. Embedded in an affluent part town, SouthPark mall has resisted many of the dynamics that have plagued its industry.

For now, SouthPark has not had any radical renovations in recent years.

But corporate owner Simon Property Group has been pouring millions of dollars into transformative reinventions into other malls in its portfolio. They provide a roadmap for what could happen with SouthPark down the line.

The Agenda scoured corporate filings and investor calls to get clues as to what that would look like.

The answer: Bright shiny office towers, fitness centers, hotels and restaurants that haven’t been seen in the market before.

SouthPark has evolved steadily over the past two decades.

SouthPark mall was built in 1970, but its modern history began in 2002 when it was purchased by Simon Property Group.

The nation’s largest shopping mall operator touched off a decade of significant additions — but none of them were outside the norm for traditional malls.

  • In 2004, SouthPark added a new wing that brought with it the Nordstrom and high-end retailers including Louis Vuitton and Burberry.
  • In 2006, Neiman Marcus opened along with several other luxury shops.
  • A year later, Simon added “The Village,” the separate area with the Crate & Barrel and Cowfish.
  • In 2015, SouthPark added more lounge seating, WiFi and some cosmetic improvements.

When does massive change come? With closed big box stores.

For now, SouthPark’s major tenants are holding strong.

The mall’s 1.6 million square feet of retail space was 98.9 percent leased at the end of 2017, high enough to rank No. 12 out of Simon’s 107 traditional models.

Neither of the two chains hitting Simon Property Group the hardest — Sears and JC Penny — have locations at SouthPark (a Sears location at SouthPark closed two decades ago).

Today, SouthPark mall has the following anchor tenants:

  • Neiman Marcus 
  • Nordstrom
  • Macy’s
  • Dillard’s
  • Belk
  • Dick’s Sporting Goods
  • Crate & Barrel
  • The Container Store

At least half of those companies are going through widely publicized struggles.

Neiman Marcus was bought by a private equity firm in 2013 but continues to struggle. They scrapped plans for an IPO last year and have closed outlet stores amid significant sales drops. The company got a new CEO earlier this year.

Macy’s have closed dozens of locations since 2016. Dillard’s financials have been up and down. Belk sold itself to private equity. Crate & Barrel has closed flagship stores in Chicago and New York.

While Nordstrom, Dick’s Sporting Goods and, to a lesser extent, Dillard’s have remained strong — brick and mortar retail will be a brutal landscape for years to come.

Here’s what Simon is doing at other properties.

Simon owns dozens of malls where Sears and JC Penny locations are closing. Nearly all of them are now going through massive transformation.

In most cases, the shell of the closed stores are being ripped out. In their places, Simon is putting in hotels, massive fitness facilities, apartments and upscale dining.

“We continue to invest in our product with a long-term view of creating compelling, integrated environments or consumers to live, work, stay, play, and of course shop,” CEO David Simon told investors earlier this year.

At Southdale Center in Edina, Minnesota, a former JC Penny is being turned into a massive atrium with a Life Time  Athletic fitness center, a coworking space and an indoor sports complex. There will also be a 146-room Homewood Suites hotel and a Shake Shack (only the second in the state).

Renderings via RSP Architects.

At the King of Prussia mall near Philadelphia, a former Penny department store will become a new wing with a hotel, office space, apartments, restaurants, and, of course, retail.

Simon is replacing a Sears at Ross Park Mall in Pittsburgh with a new dining hall that should have destination restaurants.

Phipps Plaza in Atlanta’s Buckhead neighorhood is replacing a closing Belk’s with a Nobu Hotel and restaurant, a 12-story office building and a Life Time Athletic fitness center.

Renderings by The Beck Group.

“We are a retail real estate company,” Simon says. “But we have the flexibility to think about other investments and other ways that technology can improve our consumer experience without jeopardizing basically the core business.”

You’re starting to see the signs at SouthPark.

This approach isn’t limited to the last few years. Simon invested in building out Symphony Park, which opened in 2002, and completed a bandshell there the next year.

Symphony Park
Symphony Park

The trend toward destination dining can already be seen accelerating at SouthPark.

Two new restaurants — Bulla Gastrobar and Gusto Farm to Street — have announced they’ll open at the mall later this year.

“While retail is ever-changing, we do everything possible to ensure that our offerings are evolving to fit the trends of the industry,” SouthPark mall management said in a statement. “We believe a true experience at SouthPark not only includes finding the latest trends from world-renowned brands, but also making memories through valued time spent at our center.”

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