A New Lease On Life
Pembroke Mall, Virginia Beach’s first regional mall, is updated for the 21st century.
Jennifer Orr

About 4 years ago, the owners of Pembroke Mall in Virginia Beach, Virginia, asked themselves whether the small regional mall that they had developed and owned for 40 years was indeed still supposed to be a mall. Pembroke Mall was originally farmland that was purchased in 1964 by the Napolitano and Olivieri families, whose real estate development company is now known as Pembroke Square Associates. The families acquired the property with the intention to develop a regional mall, the first of its kind in the area.

Sears and Kohl’s anchor Pembroke Mall in Virginia Beach, Virginia. The mall’s owner is currently negotiating with national retailers to fill a third anchor spot

“Most of the smaller family-owned malls have found a destiny that either involves bulldozing and total redevelopment or, in some cases, a partial redevelopment where they are converted into hybrid malls — part open-air, part enclosed,” says William L. Toner, senior vice president of Pembroke Enterprises and asset manager for Pembroke Mall.

Pembroke Power Center? Pembroke Neighborhood Center? The owners hired a consultant to help them find the answer and ultimately decided a name change would not be necessary. “It might be a 40-year-old mall, but it still has its future ahead of it,” says Toner.

Restaurants Macaroni Grill and Max & Erma’s have recently opened at Pembroke Mall.

Inside, the mall was completely redone from floor to ceiling. Carpet replaced the brown ceramic tile that was laid in 1981. The tile was actually still in excellent shape, says Toner, but the dark color was not very inviting.

“Rather than try and dig up all that tile, we moved any tile that was cracked, chipped or loose, leveled it and applied commercial carpet in carpet squares,” says Toner. “In doing that, we achieved a number of goals. One, the cost of carpet installation was substantially cheaper than retiling. And, maybe more importantly, because it was cheaper, we have the ability to change it more frequently. Plus it’s much quieter and wonderful on the feet. And that’s a good thing when you’re talking about shoppers. If they are comfortable even in a property as small as this one, they will stay longer.”

The mall’s ceiling and all the lighting was replaced. Some ceramic features were created as well as softer seating areas. And a new food court was constructed.

With its redevelopment of Pembroke Mall, Pembroke Square Associates focused on creating a more comfortable environment for consumers.

The mall has already made a major step in this effort. Two years ago, Kohl’s agreed to join Sears as an anchor, replacing the empty box abandoned by Upton’s. “That brought attention to the property,” says Toner. “We are seeing new activity. Older tenants that wanted to stay are redoing their storefronts and interiors. And for the new tenants that we’re bringing in, we’re setting standards for them to follow that will give this 40-year-old property the flavor of a brand new property.”

In addition to Kohl’s, retailer Pacific Sunwear and two new restaurants, Macaroni Grill and Max & Erma’s, have recently opened in the mall. Foot Locker is scheduled to open late this year.

“Because of Kohl’s, the renovation and the ‘smell’ of new people, a lot of our older national tenants have already stepped up and renovated their stores,” says Toner. Current tenants RadioShack, Zales, Claire’s Accessories and Kay Jewelers, among others, have relocated or renovated their spaces at the mall. The improvements are already having an effect.

“The people who are coming to the mall for the first time in some time because of what they’ve been reading about in the paper are surprisingly impressed,” says Toner. “The traffic is up and for the stores that know how to handle it, their sales are up too.” Toner reports that before renovations began, Pembroke Mall’s sales per square foot were on the lower end of the industry average. And Toner is projecting that in the next 18 months, sales per square foot could reach $300.

Also within the next 18 to 24 months, Pembroke Mall will have a new anchor. Pembroke Square Associates is in negotiations with three national retailers and expects to close a deal by the end of the year. After the new anchor is announced, the developers will start focusing on leasing the surrounding storefronts, which are currently available.

“There is space still available, but frankly we’re not trying very hard to lease it,” says Toner. “Until we know who that anchor is, it’s hard to determine what kind of tenant mix we should really have to be complementary to it.”

The two existing anchors, Sears and Kohl’s, currently define the typical Pembroke Mall shopper, says Toner. The population (as of 2003) within 5 miles of the mall is more than 240,000, with an average household income of $64,223 and a median income of $55,129. In fact, the city of Virginia Beach as a whole boasts the fourth highest median household income among cities of 250,000 residents or more, according to the Census Bureau’s American Community Survey.

Also undergoing revitalization is the area surrounding Pembroke Mall, which has recently been zoned as Virginia Beach’s central business district. An office park immediately to the west of the mall will be upgraded soon with new offices and a parking structure. South of the mall is the city’s Town Center project, which has attracted numerous restaurants including P.F. Chang’s, Cold Stone Creamery and The Cheesecake Factory. By 2008, Town Center developers Armada/Hoffler and Divaris Real Estate plan for the area to encompass 17 blocks of office buildings, hotels, apartments and retail. Town Center has sparked interest in developing additional offices and retail to the area southwest of the mall.

“With the investment that the city is making and the emphasis on creating a central business district, there is indeed a synergy that is occurring,” says Toner. The city has even agreed to build an overhead pedestrian bridge connecting the south side of Virginia Beach Boulevard to the north side of the mall.

The renovations at Pembroke Mall not only address the changes occurring in its neighborhood, but also the changes that have occurred in mall development over the last 40 years. Even though the mall has modernized itself in regards to design and retail mix, the development has not forgotten its roots as a family-owned development. “Pembroke Mall has always been considered as the family-friendly place,” says Toner. And the renovations have not altered that feeling. “We’re still not glitzy. We’ve just tried to create that comfortable environment where people can come in and feel comfortable shopping.”