Mills Malls… And So Much More
The Mills Corporation's retail portfolio grows with a number of regional mall acquisitions and new development and acquisition projects in the U.S. and overseas.
Susan H. Fishman

The company behind all of the Mills-branded retail and entertainment destinations that are sprinkled throughout top U.S. markets has been branching out from its roots. In the last 3 years, The Mills Corporation, an Arlington, Virginia-based, self-managed real estate investment trust (REIT), has acquired 22 regional malls. In fact, the company's regional malls now outnumber its Mills destinations. The company is also developing mixed-use projects in Chicago, San Francisco and the Meadowlands Sports Complex, within eyesight of Manhattan, and has begun taking its acquisition and development business overseas.

“We think there are a lot of synergies between our Mills business and the conventional mall business, and I think we are one of the first developers in the U.S. to understand those synergies and to start mixing and matching those types of tenants,” says chairman and CEO Laurence Siegel. “Many of the other regional mall developers today who have lost department stores are starting to put big boxes into those spaces and cut them up, and are starting to change the mall up a little bit, but we've been doing that for years. And we're doing some of that with the regional malls that we've bought over the last 3 years or so.”

The Mills acquired Southdale Center, the nation's first enclosed regional shopping center, in 2004. The center, located in Edina, Minnesota, is anchored by Marshall Field's, JC Penney and Marshalls and has more than 120 specialty stores, including Crate & Barrel, Guess, Coach and J. Crew, as well as a 16-screen AMC theatre. The restaurant lineup at the center includes The Cheesecake Factory, Maggiano's and P.F. Chang's China Grill.

Southdale Center was the nation's first enclosed regional shopping center and has as much potential as any regional mall in the country, according to Siegel. The center is anchored by one of May Co.'s top producing Marshall Field's, as well as JC Penney and Marshalls. Southdale Center also has more than 120 specialty stores, including Crate & Barrel, Guess, Coach and J. Crew, as well as a 16-screen AMC Theatre and a top performing restaurant lineup, including The Cheesecake Factory, Maggiano's and P.F. Chang's China Grill. The center is located in the affluent southwestern Minneapolis suburb of Edina, Minnesota, and benefits from high visibility and frontage access from four major roadways and convenient access to Interstate 494 and Highway 62. Within 10 miles of Southdale Center is a population of 950,000 with an average household income of more than $75,000.

Southridge Mall, which Mills acquired in 2004, is Wisconsin's largest shopping mall and one of the premier regional malls in metropolitan Milwaukee. The center is anchored by JC Penney, Sears, Kohl's and Boston Store.

“We're looking for malls in major markets that do well today that we think we can improve, some of them appreciably,” notes Siegel. “We're seeking opportunities where we can use our development expertise and re-invigorate these already dominant properties and make them more important in their respective marketplaces.”

Mills Pipeline

The Mills Corp. is developing the Galleria at Pittsburgh Mills, a 1.1 million-square-foot center near Pittsburgh that will have innovative retail concepts, casual dining and entertainment options.

The Mills is developing a retail and entertainment project at 108 North State Street in downtown Chicago, that will offer shopping, entertainment offerings and restaurants, and a state-of-the-art transit station with nonstop service to the city's two airports.

Beyond The U.S.

The Mills' expansion plans are not limited to the United States. The Mills Corp. was the first U.S. developer to successfully develop a large-scale retail property in Europe. The company has expanded into Canada, the UK and continental Europe, where it sees significant growth opportunities through development and acquisition. In western and southern Europe, which has about one-tenth the retail per capita as the U.S., The Mills plans to break ground on about one new project per year, and the company is just starting to explore Asia. The company envisions eventually having about one-third of its portfolio outside the U.S., says Siegel.

At the end of 2004, The Mills, along with Ivanhoe Cambridge, acquired St. Enoch Centre, in downtown Glasgow, Scotland. The center is approximately 715,000 square feet in size and is 98.6 percent occupied.

At the end of 2004, The Mills, along with Ivanhoe Cambridge, acquired a shopping center, called St. Enoch Centre, in downtown Glasgow, Scotland, from Deka Immobilien Investment. St. Enoch Centre, which opened in 1989, is located in the heart of the shopping district of the UK's largest retail market outside Central London. It features approximately 715,000 square feet of retail space and is 98.6 percent occupied.

The center is comprised of two distinct retail components. The first is a six-level retail center fronting directly onto the prime shopping zone of Argyle Street, anchored by a 270,000-square-foot Debenhams department store, as well as HMV, Gap, Top Shop, Virgin and Powerhouse. The second is the main center, anchored by an 81,000-square-foot BhS department store and a 32,000-square-foot Boots, with two levels of in-line retail. Other key tenants include Dorothy Perkins, Burton, The Disney Store, Wallis and O2. The center also includes a refurbished food court that seats 900 and a 750-car parking garage and 111-car parking lot.

In November 2004, The Mills and Ivanhoe Cambridge opened the first enclosed regional mall in Canada in 14 years, Vaughan Mills. At 1.2 million square feet, Vaughan Mills is one of the largest shopping and entertainment centers in the region.

Also late last year, the city of Rome selected The Mills to develop the site of the former Mercati Generali into an 830,000-square-foot urban retail, entertainment and cultural center. Representing the first-ever adaptive re-use of an historical site in the city, the proposed development is tentatively scheduled to break ground in summer 2005. The project, located near the Roman Forum and Coliseum on the former site of the general food market, will reflect the rich culture and spirit of Rome and offer visitors and exceptional mix of retail, entertainment, dining and cultural offerings.

Vaughan Mills in Ontario, Canada, features more than 200 anchor and in-line retailers and many unique dining and entertainment options.

“It's doing exceedingly well,” says Siegel. “In fact, it's probably the best North American development we've done since going public.”

Vaughan Mills features more than 200 anchor and in-line retailers and many unique dining and entertainment options, including Canada's first Hudson's Bay company's Designer Depot, Bass Pro Shops Outdoor World, NASCAR SpeedPark, Lucky Strike Lanes, Burlington Coat Factory, Town Shoes Outlet, Tommy Bahama Outlet and Benetton Outlet. Other major anchors include H&M, La Senza/La Senza Girl, Linens ‘n Things, Urban Behaviour, The Children's Place Outlet, Winners and Home Sense.

The Mills Corp.'s Madrid Xanadú in Madrid, Spain, has become one of the most dominant centers in the country since its opening 2 years ago.

“It probably has become the most dominant project in Spain, just in the last couple of years,” notes Siegel. “Our success with Madrid Xanadú has won us credibility with investors, retailers, developers and local officials throughout Europe, and we have many exciting opportunities to expand in western and Southern Europe.”

Although The Mills sees terrific growth opportunities outside the U.S., many development opportunities in the U.S. remain. The company's portfolio is rich with expansion and development opportunities, according to Siegel. This year, The Mills expects to begin construction of a 400,000-square-foot lifestyle center at Del Amo Fashion Center in Los Angeles, and expansions at Broward Mall in Ft. Lauderdale; The Shops at Riverside in Hackensack, New Jersey; and the Esplanade in New Orleans.