In the early 1990s, Tom Schneider, vice president of development

for Simon Property Group, flew via helicopter from Tampa to Naples scouting out

potential sites for a regional shopping center. Indianapolis-based Simon, the

country's largest mall developer, realized that with the booming growth rate in

Southwest Florida, the region would soon outgrow its existing shopping centers.

Schneider targeted the south Lee County/north Collier County

area as prime retail property. At that time, the area's only malls were Edison

Mall, built in Fort Myers in 1966, and Coastland Center in Naples, which opened

in 1977. Ten years after his scouting trip, Schneider submitted a proposal to

Lee County to develop Southwest Florida's largest retail center.

Other mall developers were also keeping tabs on the area

throughout the '90s, tracking demographics, looking at road access and studying

shopping patterns. Each wanted to be poised, when the time came, to build the

area's next major shopping facility.

Apparently the time has come. The battle-which has plodded

along for five years because of site acquisitions, zoning issues and permitting

feuds-has already claimed one victim. In 2001, The Rouse Co. of Columbia, Md.,

which had county approval for a 990,000-square-foot mall and 800 homes at Three

Oaks Parkway and Alico Road, decided to pull out. That leaves Simon and The

Richard E. Jacobs Group, and now, possibly a late entry-mall developer Taubman

Centers.

Most local experts agree that the marketplace can absorb

only one of these mega projects, and the one that lands the major tenants will

be the winner. At this point, it's anybody's guess as to which one will

prevail.

Simon has proposed Coconut Point, a 1.8-million-square-foot

town center/urban village that would span U.S. 41 for a two-mile stretch from

Williams Road in Estero to the Bonita Springs city line south of Coconut Road.

Slated for 482 acres, the project would include 300,000 square feet of office

space, 1,200 residential units and 600 hotel rooms to be developed by Oak Brook

Properties. In the midst of obtaining approval from Lee County commissioners

for the project at press time, Simon had already garnered a go-ahead from the

county staff after ironing out concerns about traffic, impact fees and

affordable housing.

The Jacobs Group of Cleveland received county approval in

2000 for Gulf Coast Town Center, slated for a site at Alico Road and Interstate

75, just six miles from the Simon site. It proposes a two-story enclosed mall,

the same size as Simon's, with a courtyard, restaurants, a movie theater, a

250-room hotel, 80,000 square feet of office space and 600 apartments.

These are not bit players in the national marketplace.

With a portfolio of 251 commercial properties (including 75

malls), Simon is the largest publicly traded retail real-estate investment

trust in North America. It is the country's largest owner, developer and

manager of retail real estate, including the 2.5-million-square-foot Mall of

America in Minneapolis.

The privately held Jacobs Group has been developing malls

since 1955, and by 1999 had 38 malls plus office space and hotel holdings. In

the past two years, in what it terms an "estate-planning measure," Jacobs-whose

founder Richard E. Jacobs owned the Cleveland Indians from 1986 to 2000-has

sold many of its real-estate assets. It still owns and manages several malls,

and recently opened Triangle Town Center, a 1.3-million-square-foot regional

mall in Raleigh, N.C. The Triangle Town Center's Web site notes that the

company's next major retail development is Gulf Coast Town Center in Lee

County.

Taubman is reportedly interested in a site owned by

Naples-based Barron Collier Co. on the northeast corner of Golden Gate and

Airport-Pulling Road. Should Taubman enter the race, it, too, would bring

retailing clout. The Bloomfield Hills, Mich.-based company owns and/or manages

29 shopping centers around the country. It is a partner in Orlando's newest

shopping attraction, the 1.2-million-square-foot Mall at Millenia, which opened

in October with tenants including Bloomingdale's, Macy's and Neiman Marcus.

Neither Taubman nor Barron Collier Co. returned phone calls seeking comment.

A Mall World After All?

The mall wars are being waged at a time when traditional

regional malls are declining in popularity. Industry reports show that people

are spending less time and money in malls. Malls compete with online shopping,

catalogs, TV shopping networks, neighborhood centers and big-box discounters

that didn't exist when malls had their heyday, says Malachy Kavanagh of the

International Council of Shopping Centers. "It's an extremely competitive

environment."

There is some truth to the "mall fatigue" theory-that is,

shoppers are just plain bored with malls, which usually look alike and have the

same stores. "Retailing is Darwinesque," explains Kavanagh. "Only the strong survive,

so mall developers gravitate to national chains and proven retailers." The

result is a country full of cookie-cutter malls that carry the same merchandise

whether in Miami or Minneapolis.

Mall shopping originally was meant to be a leisurely

experience, with the department store anchors placed at opposite ends and

shoppers wandering from one end to the other, passing by-and presumably

shopping in-the smaller specialty stores in between. "Consumers don't have time

for that now," says Kavanagh. Consumers would rather park close to their

destination, run in, buy what they need and leave.

As a result, mall developers have reworked their formulas.

At some malls, stores that sell similar products are grouped

together so consumers can go to one section and find everything they need.

Developers are putting more thought into design to distinguish their centers

from the competition. Designers are experimenting with formats such as

so-called lifestyle centers-smaller, open-air centers that tend to cater to

high-end customers with stores such as Williams-Sonoma and Restoration

Hardware. Locally, Bell Tower Shops and Waterside Shops at Pelican Bay are

fashioned in this style.

Developers are incorporating some components of lifestyle

centers into their more traditional enclosed malls. The Jacobs Group's new

Triangle Town Center in North Carolina, for example, includes an outdoor

collection of shops and an all-glass-enclosed Market Street.

Schneider says that Simon's proposed Coconut Point would

look different from competing malls here, featuring some lifestyle center

characteristics. In fact, Schneider says, the term "mall" may be a misnomer.

Although he doesn't have a simple name to describe the Simon project, he

characterizes it as a "mixed-use Main Street development with a regional retail

component." From the street, he says, customers will see nice landscaping,

fountains and attractive entries. Driving into the development will be like

driving along a downtown street with retail, hotel and restaurant space. "Every

time I've gone to make a presentation [to neighborhood or community groups],

people come out saying, 'Wow, this isn't a mall at all,'" Schneider says.

While remaining circumspect about its specific plans for the

time being, The Jacobs Group has indicated that Gulf Coast Town Center will

also incorporate some of the Main Street-style features that many of the newer

malls around the country are adopting.

To be successful, malls also must diversify, says the ICSC's

Kavanagh. Many are now including entertainment components-perhaps epitomized by

the amusement park at Mall of America. They are also looking for retailers that

are thematic or entertainment-driven in presenting their products. For example,

REI has rock walls for consumers to climb; Bass Pro Shops lets you try out fly

rods. "A mall has to be more than just a place to buy commodities," says

Kavanagh.

Targeting Tenants

Perhaps the biggest problem facing malls today is finding

strong anchors. Department stores, which the mall industry has depended on for

30 years, are struggling to survive. Since the 1980s they have lost half their

share of the retail industry to discount and specialty stores, according to the

ICSC. They are no longer huge traffic generators.

Though they are a bit tired, department stores are not a

dying breed, contends Sarah Thompson of the National Retail Federation in

Washington, D.C. "You still don't want to be a mall without an anchor," she

says. "They still do drive traffic to malls."

Through technology and customer service, department stores

are trying to create a better shopping environment. They are also becoming

smaller. Some newer malls are putting in smaller retail anchor space and

devoting the rest of that space to entertainment, movies or dining, notes

Thompson.

Even so, some department stores are failing. The most recent

is Jacobson's, an upscale department store chain based in Michigan. After

filing for Chapter 11 bankruptcy earlier this year, it closed its stores in

Bell Tower Shops in Fort Myers and Waterside Shops in Naples. Waterside Shops

general manager Glen Harrell expects to know by year-end which retailer will

fill Jacobson's space.

The first developer to sign up quality anchors will

determine who wins the mall race, local retail experts say. "The ultimate power

really lies in the anchored tenants," says Craig Timmins, a principal with

Grubb & Ellis/IPC in Naples.

"With a mall of that size, you've got to have a couple of

names people would expect," says Steve Duckworth, director of research for

Integra Realty Resources in Naples. "We can't take on a lot more [retail] of

what we already have," adds Frank D'Alessandro, a Fort Myers-based commercial

real estate broker and consultant. "But these will be anchors new to the area.

We are going to see a different twist."

For now, the developers are keeping mum about prospective

tenants. All Schneider will say is that the anchors at the Simon project "will

probably be a little different. They will be smaller and specialty oriented."

The Jacobs Group will only say it is in negotiations with tenants.

Most analysts give Simon an edge in securing tenants because

of its industry clout. Founder Melvin Simon "is considered the emperor of the

mall business," says David Stevens, a principal with Grubb & Ellis/IPC in

Naples. "He has strong ties with tenants like Nordstrom's, Neiman Marcus and

Bloomingdale's. Usually what Mel says, goes."

The sites have been the source of debates among local real

estate experts. Some argue that the Jacobs Group's I-75 location has the

advantage as far as access to and from the mall. The traffic impact at the

Simon site off U.S. 41 will be severe, says D'Alessandro. Furthermore, the

majority of regional malls are located along interstate corridors, and for good

reason. "We lean slightly toward thinking the Alico/I-75 location would draw

more of a mass market in the long run," notes Duckworth. "But with the strong

demographic-folks who now live here from Immokalee Road to Daniels Road-the 41

site is awfully attractive."

Schneider says Simon looked at an I-75 site but decided the

interstate is not a retail corridor. "U.S. 41 is the retail spine of Southwest

Florida. It always has been. Most of the market is on the west side of I-75.

There are 81 active residential subdivisions within five miles of our site.

That's pretty phenomenal," he says.

Size-and Income-Matter

Why has Southwest Florida grabbed the attention of these

shopping center giants? The simple answer is that the demographics are finally

reaching the critical mass needed to support a project of this size. The

combined population of the two counties is projected to jump from 700,000 in

2000 to nearly 900,000 in 2010 and more than a million by 2020.

Although the market is still on the small side for a mega

mall, the quality of the demographics may offset the size. If it weren't for

the high incomes of Southwest Florida residents, many large retailers would not

be impressed by the population numbers, says Integra's Duckworth. For upscale

retailers, the south Lee/north Collier market is appealing because it's home to

an affluent population bolstered by tourists who devote a day or two of their

vacation week to shopping.

Simon, for one, likes the numbers. "This market has 700,000

people in two counties and 300,000 part-time residents, plus tourists," says

Schneider. "And it is certainly fast-growing. After Las Vegas it is in the top

two or three growth areas-and it's high-quality growth."

Most local analysts believe the area will have no trouble

absorbing a mega mall-if not now, certainly by the time it opens, estimated to

be no earlier than 2005. Despite lagging sales in most parts of the country

(partly due to layoffs and the effects of 9-11), Southwest Florida's retail

market has fared relatively well. Research by Integra Realty Resources shows that

in the last quarter of 2001, the retail vacancy rate was 6.7 percent in the

area encompassing all of Collier and Bonita Springs in Lee. Anything under 10

percent is considered healthy, says D'Alessandro.

Adding a mall of that size will certainly have some impact.

Edison Mall will be protected by residents from Cape Coral and Lehigh Acres

while Coastland, which is in a smaller and more seasonal market, may have a

more difficult time, D'Alessandro says.

Simon, predictably, does not anticipate a problem at its

Edison property, nor at Coastland. Its site is 15 miles from the two existing

malls and will offer a different tenant mix. "Any significant addition of

retail will have some impact on the market in general," Schneider concedes,

"but no significant negative impact."

"You can't put 1.5 million square feet into the market and

not have some negative impact on existing retailers," notes Stevens. But, he

adds, the effect may be short term because of continuing population growth.

Wait a year, and the area may experience enough growth to sustain both new and

existing retail.

That Southwest Florida will soon have a new regional mall

appears a sure thing. Considering the growth the region will be experiencing in

the next decade, the big question might actually be: In 2010, will there be one

new mall in Southwest Florida, or will there be two?

Florida's Mall Fever

Florida continues to be a strong market for malls. The state

is second only to California in the number of shopping centers. More than 3,500

centers are located here; 54 of those are considered super-regional malls of

800,000 square feet or larger.

From 2001 through 2004, 35 large malls will have opened in

the United States, according to statistics from the International Council of

Shopping Centers. Seven of those will be in Florida.

Besides the state's newest super-regional, Mall at Millenia

in Orlando (which opened in October), other recently built malls in excess of

one million square feet include Dolphin Mall in Miami and International Plaza

in Tampa. Taubman Centers developed all three projects.

Southwest Florida may well be the next region in the state

to see a one-million-plus-square-foot shopping center. The retail projects

being proposed here by Simon and Jacobs would make them among the largest in

the state, just behind two east coast centers: Sawgrass Mills in Sunrise at 2.7

million square feet and Aventura Mall in Miami at 2.1 million square feet.