When the Central City Mall opened its doors in 1972, it was a big hit in San Bernardino.
With 52 stores — including anchor tenants J.C. Penney, Montgomery Ward and The Harris Co. — the retail center quickly became a vital part of the city’s downtown core.
But the mall’s promise began to fade in the late 1970s due to a lack of organization and a series of management changes. It was renamed Carousel Mall in 1991, and with the addition of a carousel ride, brighter colors and a variety of other upgrades, it was hoped the revitalized center would attract families and younger shoppers.
But that didn’t work, and the mall’s erosion worsened when the Inland Center mall opened up a few miles away.
“People always want to go with what’s new,” said Mark Persico, the city’s director of community development. “We’re kind of trained like Pavlov’s dog. Consumers shifted from the old mall to the new one. And for whatever reason, Carousel Mall wasn’t able to reposition itself.”
Decades later, the mall is a shell of its former self. A few stores remain open, but come July they’ll all be gone. The property is currently owned by the city and a plan is underway to revamp it as a mixed-use center that will incorporate housing, office space and more restaurants. But a full rollout of that plan is expected to take 10 to 12 years.
Carousel Mall is not alone
Scores of malls across the country have struggled in the face of changing consumer tastes and increasing competition from Amazon and other online retailers that typically sell merchandise for less, and often with free delivery.
That dilemma is reflected in a new report from Credit Suisse, which says that if the current pace of retail bankruptcies, store closures and increased e-commerce buying continues, as many as 25 percent of the nation’s malls will close by 2022.
That equates to roughly 275 mall closures over the next five years.
The report predicts 8,640 retail stores will close this year as compared to the 2,056 that shut down last year. If the closures that have already been announced this year are any indication, that figure is probably accurate.
Radio Shack said it will be closing 1,000 stores, Payless ShoeSource will be shuttering 512 and Sears and Kmart will be closing 246 locations.
Credit Suisse is also forecasting that e-commerce will grow from its current share of 17 percent of industry sales to 35 percent or more by 2030.
Changing consumer tastes
“Consumers have changed,” said Phil Lempert, a Santa Monica-based expert on consumer behavior and marketing trends. “With online shopping there’s no need to go to the mall. All you have to do is get on your mobile device.”
There’s also the issue of perception. Many of today’s malls look old and tired, Lempert said, and people want an experience that’s uplifting — not depressing.
The Panorama Mall in the San Fernando Valley is a case in point. The mall, which currently includes a Walmart and about 70 specialty stores, is looking worn. But Primestor Development Inc. acquired the property about a year ago and the company plans to expand it by 266,000 square feet. In a case filing submitted to the Los Angeles Department of City Planning in February, Primestor said the upgrades will include 132,000 square feet of new shops and restaurants, a 2,000-seat theater, a hotel with 100 to 200 rooms, landscaped plazas and open space throughout the 17-acre property.
But for some shoppers, bigger isn’t necessarily better. Brenda Miles, 61, who lives in Panorama City, said she doesn’t like shopping at malls.
“They’re not fascinating anymore,” she said. “It’s good for the young kids because they’ve got the energy to do that, but I get tired fast and I don’t want to walk a whole mile to go to one store.”
The cost of reinvention
Dave Moore, president of retail properties for The Irvine Co., said it’s all about reinvention.
Irvine Co. owns and operates the Irvine Spectrum Center in Irvine, Fashion Island in Newport Beach and The Market Place in Tustin. All three malls are doing well, but that doesn’t mean they’re standing still.
“In order to remain successful, shopping centers will need to continue to evolve as we have done and strive to do with our centers,” Moore said via email. “We attribute the success of our centers to a variety of factors, not the least of which is that we constantly strive to create lifestyle destinations for our guests.”
That formula appears to be working. Irvine Spectrum Center sees about 17 million shoppers a year and Fashion Island gets about 16 million.
Early last year, The Irvine Co. announced a $150-million reinvestment in Irvine Spectrum Center that will add more than 20 new stores, new landscaping, outdoor seating and shade areas, and circulation and parking-garage improvements. The upgrades are expected to be completed by the summer of 2018.
“We do this through a perpetual focus on reinvestment in our properties and tenants, and an exceedingly high standard of maintenance,” Moore said.
Paseo Colorado undergoing upgrades
Pasadena’s iconic Paseo Colorado mall is also in the midst of a makeover that will bring in several new stores. The mall has rebranded itself as “The Paseo” and it has partnered with Ensemble Real Estate Investments to build a six-story 186-room Hyatt Place hotel at the northwest corner of Los Robles and Green Street. The hotel is scheduled to be completed in October 2018 and will cater primarily to business travelers.
The changes that are planned for Carousel Mall in San Bernardino have been long in coming, but Persico envisions a success story.
“We are working with a joint-venture developer on this,” he said. “Our preliminary plans will include about 750 residential units, including both condos and apartments, and about 350,000 square feet of commercial space. Some will be office space and some will be retail. There is a lot of interest in the residential development community.”
The revamped center will also be tied in with a busy Regal Cinema and the historic California Theater, which are both located just across the street. The theater seats about 1,600 and features a variety of live shows as well as performances by the San Bernardino Symphony.
Regardless of upgrades, the retail industry will continue to shed stores — and that doesn’t bode well for malls.
“We’re in the middle of an extended retail ice age where less capable and less well-capitalized companies are financially failing or declaring liquidation,” said Burt Flickinger III, managing director for the retail consulting firm Strategic Resource Group. “We have 400 percent more retail square footage in the U.S. than what shopper demand dictates.”
Still, Persico figures Carousel Mall will succeed.
“We see a very bright future for this mall,” he said. “We are social animals. People want to get out, walk around and see other people.”
RETAILERS IN TROUBLE
A new report predicts 8,640 retail stores will close this year, compared to 2,056 that shuttered last year. Among the expected closures:
• Radio Shack will close 1,000 stores
• Payless ShoeSource: 512 stores
• Sears and Kmart: 246 stores
• J.C. Penney: 138 stores
• Macy’s: 68 stores
• Guess: 60 stores
• Michael Kors: 100 to 125 stores
• Rue21: 400 stores
• BeBe Stores: 180 stores
• The Limited: 250 stores
• Abercrombie & Fitch: 60 stores
• Wet Seal: 171 stores
• American Apparel: 110 stores
• Staples: 70 stores
• GameStop 150 stores
• CVS: 70 stores
• Crocs: 160 stores