Mall redo includes new ownership
David Pratt Photo
FIRST LOOK--Anyone wondering what the "new" mall will look like, take a gander at Sears, where the first glimmer of the new design is taking shape. The modern façade will be applied on the entire mall, with the possible exceptions of Filenes and Macy's, which have yet to decide if they will renovate.
In addition to expansion and remodeling, the make-over of the Cape Cod Mall currently underway will soon include a new corporate management structure promising a new "brand" of shopping experience.
Last week, Simon Property Group, Inc., of Indianapolis, the largest publicly-traded retail real estate company in the country, announced it has entered into an agreement to acquire a portfolio of 14 regional malls, including the one in Hyannis, from New England Development and to assume management responsibilities.
"This acquisition, coupled with our existing ownership of Burlington Mall and South Shore Plaza, gives us a preeminent franchise in the Boston and New England markets," said David Simon, CEO of Simon Property Group. The company purchased the Burlington and South Shore properties just last year.
Newton-based England Development manages but does not own the Cape Cod Mall. However, the Newton company had worked out a deal with the mall's current owners to acquire part ownership following the reconstruction project. After Simon Property Group expressed an interest, New England Development contacted current Cape Cod Mall owners David Mugar of Boston and Davenport Realty Trust to ask if they were interested in being included in the 14-mall portfolio.
Mugar, who bought the mall property in 1967 and currently owns 75 percent of the mall itself, said both the timing and the price were right for the sale. He said that, like many other industries, the ownership of retail malls is increasingly being consolidated under large individual corporations. Simon already owns 243 malls in this country containing an aggregate of 166 million square feet in 35 different states.
The acquisitions from New England Development include 10 properties in Massachusetts, two in New Hampshire, one in Connecticut and one in Virginia. The $17.25 billion deal will be closed in July.
Simon Property Group expects to form a joint venture with institutional investors to acquire the portfolio, with Simon's ultimate ownership ranging between 30 and 50 percent. Stephen Karp, Chairman of New England Development will be invited to join Simon's board of directors.
According to Simon Property Group, the deal will not affect the $10.2 million, 192,000 square foot expansion of the Cape Cod Mall. However, local shoppers will eventually be treated to the "Simon brand" of mall shopping.
"This transaction adds to our Simon Brand Ventures and branding initiatives by delivering a major presence in the country's fourth-largest retail market," said David Simon.
Beginning this month, Simon is launching a nationwide "branding" campaign designed "to create an emotional link for consumers with the quality experience Simon has become synonymous with throughout its 40-year history," according to a company press release. The name-recognition campaign "includes a formal dedication to consumers...[to] deliver the highest possible quality, value and convenience." The branding campaign ads began running this month on ESPN, CNN, and the Today Show on NBC.
Steve Sterrett, senior vice president at Simon, said they're not just branding the company name but rather the entire experience of shopping at a Simon property. The company hopes to create a distinct identity for its malls without losing the local character of the various properties.
Billie Scott, public relations representative for Simon, said it's too early to say what specific changes the new ownership will bring to the Cape Cod Mall, but once the deal is finalized in July the company would begin to transition in their various marketing programs.
These include such things as the newly launched MALLPeRKS shopper loyalty program in which consumers get points redeemable for discounts for every dollar spent at any Simon mall in the country. Consumers can also apply for a VIP Visa card which will provide 2 percent cash back for purchases made within a Simon mall and one percent cash back for purchases made on the card outside a Simon property.
Scott also mentioned the company's "nine point pledge" which is signed by employees of the individual malls and prominently displayed within them. She said that, among other things, the pledge guarantees a clean and safe shopping environment with the best selection of stores.
This Monday, the Simon Property Group also published the first issue of S , a "national life-style magazine targeted to mall shoppers" which includes mall-specific information on events, offerings and promotions. The magazine, which is produced by Time Inc. Custom Publishing, will also feature national editorial content from Time Inc. magazines such as Sports Illustrated, TIME, and In Style , as well as local editorial content, Scott said.
The renovation and expansion of the Cape Cod Mall will increase it to 820,000 square feet and raise the number of stores from 77 to 120. The project includes the expansion of Sears; the renovation of Filene's, Macy's, Footlocker, Olympia Sports, This End Up and Record Town; and the creation of a new 14-screen cinema complex.
The new food court, scheduled to be completed by Memorial Day weekend, will feature McDonald's, Au Bon Pain, Freshens, Sbarro, Ranch One, Manchu Wok, Sarku of Japan and Lindt Chocolates. The current building housing Marshalls will be torn down and the clothing store moved to a location within the mall.
The expansion will also add over 700 new jobs to the mall, which currently employs 3,000 during the summer and the winter holidays and 2,000 the rest of the year. Parking will increase from 3,095 to 3,400 spaces. The entire project is expected to be finished by the first half of 2000.
Additional Simon Property Group information is available on-line at www.simon.com.
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