ANCIENT MALL REVEALS HOW HUMANS USED TO SHOP

September 30, 1998
By Cynthia Crossen
Staff Reporter of The Wall Street Journal

FISHKILL, N.Y. - If a single mall can illustrate the quicksilver pace and volatility of the entire retail business, it is the sprawling concrete building that sits on the fringe of town here, about 60 miles north of New York City.

The Dutchess Mall was the first enclosed mall in the largely rural, middle-class county for which it is named. In its heyday it was indeed a duchess, housing a robust mix of regional and national stores, including Waldenbooks, LensCrafters, RadioShack and Foot Locker. As recently as 1994, it was assessed at $22 million.

But in mall time, the 21-year old Dutchess is practically antediluvian. Two years ago, a group of private investors, Hudson Properties LLC, bought Dutchess for $1.2 million. The swift decline in value followed the sudden exodus of the mall's two major anchors, including Jamesway, a now-defunct discount store, and Service Merchandise Co., which closed its store on Christmas Eve of 1996. Now, the Dutchess Mall is on the market again.

There are more geese than cars in the parking lot, and the few people in its corridors are as likely to be recreational walkers as shoppers. An elderly woman pushing a shopping cart is carrying not her recent purchases but her oxygen supply. Only a handful of stores are still operating - a photo studio, men's hairstylist, tobacconist - mostly because they have leases they can't get out of. A sign in front of a piano store says, "Open Weekends Only."

The poured concrete floors are dingy, some of the lights have burned out, and most of the storefronts are shrouded in black plastic and security gates. "I've had people call me wanting to make movies here," says David B. Livshin, president of the mall's managing agent and spokesman for Hudson Properties, as he surveys its ghostly halls. "Some people have suggested that if there's a 'Lethal Weapon 5,' they could demo this place for it."

Like the skeletons of old warehouses and factories that dot the national landscape, the Dutchess Mall is an artifact of a bygone era. Because of its size and location at the intersection of two major highways, it practically shouts to passing cars, "What's going to happen to me?" Obsolete warehouses became artists' studios and residential lofts, factories became restaurants, and sometimes a warehouse or factory would even be converted into a mall. But to save Dutchess as a mall, it would most likely have to be destroyed.

In the two dozen years since Dutchess opened, the retail world has been transformed from a dull corner of the economy to a savagely competitive arena requiring constant innovation. While other malls grew bigger and brighter, adding nice restaurants, carousels and indoor playgrounds, Dutchess stood still. Meanwhile, around it sprouted "big box" stores such as Wal-Mart, Home Depot and Circuit City. Then came the ubiquitous catalogs and the tiny but dangerous on-line merchants.

"Everyone's trying to stand out from the competition," says Malachy Kavanaugh, spokesman for the International Council of Shopping Centers. "Malls have to try to get the most innovative tenants-theme restaurants, theater, virtual reality. Stores are becoming more entertainment-focused. You can't go into a teen to kid's shop without music or videos playing."

The malls being built now are as different from Dutchess as a cross-trainer from a wingtip. Dutchess was built in the "dumbbell" design typical of the era - two anchor stores on either end of the complex, with smaller shops lining the corridor between.

Contemporary malls such as the Poughkeepsie Galleria, built in 1987 less than 10 miles north of Dutchess, have six or more anchors on multiple levels. Most new malls are about twice as big as Dutchess, and they are built on bigger sites. Dutchess has 580,000 square feet on 56 acres. The Poughkeepsie Galleria has 1.2 million square feet on 128 acres.

Dutchess had a small food court, but younger malls like the Galleria may have a dozen places to eat in the food court, in addition to several more-formal restaurants. While Dutchess belatedly added a four-screen movie theater to its mix, new malls today can have as many as 30 screens or an Imax theater with stadium seating. A few new malls are incorporating indoor nature parks with live animals.

There are other differences, too. Newer malls have dramatic pop-out storefronts, while Dutchess's are flush with the walls. The Galleria's skylights make the space seem airy and bright. Large, colorful mobiles hanging from the ceiling make it cheery. The rule of thumb is malls should renovate and reposition themselves every 10 years. Dutchess, mostly because of the financial vicissitudes of some of its lenders and anchors, has never done so.

Finally, most big malls today lease almost exclusively to large, national chains rather than the regional retailers who operated much of Dutchess. This is partly because banks and lending institutions are reluctant to back small or untried stores in spaces with steep rents and costly charges for utilities, insurance and marketing. "They tend to gravitate toward the tried and true concepts," says Mr. Kavanaugh. "That can breed a kind of sameness."

Anyone who lives near Dutchess also lives near several other malls, and enticing a consumer to one specific mall is the marketing problem of the moment. "People want to be in a pleasant atmosphere, but they don't really care about marble floors," says Ed Kellog, a partner with Poughkeepsie Galleria Co. "The retail mix is the most important thing. People want a lot of retail choices....It's the new downtown."

Malls also face a challenge from another evolution in the shopping center concept - the "power center," a collection of big-box stores. Such retail cluster can be found about 10 miles south of Dutchess at the Cortlandt, N.Y., Town Center.

At Cortlandt, there is a Wal-Mart, A Barnes & Noble, and an A&P superstore. "Destination" stores like these usually don't locate in malls: Customers come knowing what they want and leave dragging big bundles, so the stores want to face directly onto the parking lot.

The Dutchess does have three things going for it: location, location and location. Customers who drive 35 miles to a mall want to get off a major highway and be there. Dutchess is at the intersection of Interstate 84 and a major state artery, Route 9. The state building a new $36 million cloverleaf that will dump drivers right into Dutchess's lap. "It's and underutilized and under appreciated site," says Kathleen Sullivan Norat, president of the Dutchess County Economic Development Corp.

So what will become of Dutchess? "the entire property could be purchased and leveled, " says Mr. Livshin. "Or you could strip it back to steel and rehab what's there." Other possibilities, he says, include an ice-skating or hockey rink, an indoor soccer arena, or an office park.

So far none has taken the bait, but that's just a matter of time, Mr. Livshin says. "This was a big deal in its day," he says. "Now someone just has to have the guts to believe in the location. This is the next big intersection.