Kate Bramson/Providence Journal – Providence Place has embarked on the largest renovation project in its history to keep the mall competitive as an urban retailer and fix traffic and parking problems that have existed since it opened in 1999.
More than $20 million in upgrades will include converting most of the former JCPenney department store into more parking for the high-end urban mall, and several other changes meant to improve access and parking. All the work is scheduled to be done before the holiday shopping season.
As brick-and-mortar stores across the country face daunting challenges from increased online shopping and the decline of large department stores, malls are changing strategies and filling some space with non-retail uses, retail consultant Jeff Green, president of Jeff Green Partners, in Phoenix, Arizona, told The Providence Journal.
He suggested Providence Place might consider adding multi-family housing, a limited-service hotel or even office space, an approach taken by one of Metro Detroit’s largest malls, where Ford Motor Co. plans to help convert an old Lord & Taylor department store into work space for about 2,100 employees.
General Growth Properties, the owner of Providence Place, considers such options when a store empties, said Kenneth Labarre, senior director of development at General Growth Properties, who said he sees vacant space as opportunity. But in Providence, he said, General Growth decided new parking was the best use of the vacated JCPenney space.
Indeed, much of the work under way at Providence Place is meant to improve the way motorists arrive, park and find their way into the mall — and find their cars when it’s time to leave.
“It’s all about improving the customer experience and improving the environment,” said mall spokesman Dante Bellini Jr. “This is something that has become absolutely necessary to do to compete as a viable retail mecca.”
The project includes:
- Establishing a dedicated right-turn lane to reduce congestion at the mall’s front entrance on Francis Street.
- Updating and repairing entryways and improving the landscaping.
- Converting two floors of the former JCPenney space into 150 parking spaces to supplement the mall’s existing 4,200 spaces.
- Replacing the entire parking-payment system with new digital equipment to show how many spaces are available, and on which levels, with red and green lights throughout the garage to direct drivers to empty spaces.
- Painting the garage interior white to make it brighter and more inviting than its current “somewhat cavernous, drab” gray appearance, Labarre said.
- In the garage, re-fireproofing all structural steel, replacing the sprinkler system, restoring the structure’s watertightness from floor to floor and repairing concrete casements around columns.
General Growth Properties, a publicly traded real estate investment trust, is the second-largest mall owner in the United States, owning or controlling 122 malls, according to Green Street Advisors LLC, a real-estate research firm. REITs typically control the better-quality malls around the country, the firm says.
Providence Place is considered an “A” quality mall, the third highest of 11 categories based on sales per square foot, according to Green Street Advisors. Such malls have high-end and national tenants, strong tenant demand for space, and high occupancy and sales volume, and are expected to perform solidly for years to come, the firm reports.
Providence Place will be General Growth’s first mall to get the new digital parking system, by Park Assist, which pledges to help the average shopper park 44 percent faster, Labarre said. Some digital tools won’t be available immediately, Labarre said, but General Growth expects to incorporate a smartphone app now in use at the Fort Lauderdale airport, in Florida, that helps people find their car by entering several digits of the license plate number.
Although General Growth didn’t release the costs of each aspect of the project, Labarre shared percentages. Of the more than $20 million, roughly:
- 30 percent will replace the JCPenney space with parking.
- 25 percent will cover Park Assist, including digital message boards, red and green lights and 27 new pay-on-foot kiosks, up from 15.
- 25 percent will improve the “customer experience” in the garage, including the white paint and a different paint color for every level’s entryways to help people remember where they’ve parked.
- 20 percent will go to capital improvements, including the Francis Street turn lane.
The third owner of Providence Place, General Growth doesn’t release financial information on individual properties, Bellini said. But one measure of the mall’s financial condition is the sales tax collected by its roughly 160 stores.
The mall generated $14.2 million in sales tax for the fiscal year that ended June 30, 2015. When adjusted for inflation, that was the eighth best of the 15 full years since the mall opened. Through the first nine months of this fiscal year, sales tax collections were $10.8 million, down 1.6 percent from the comparable year-earlier period.
Bellini said total sales taxes combined with income taxes paid by mall employees generated about $23 million for the state last year.
The state rebates a portion of Providence Place’s sales-tax receipts to the mall owner as part of an incentive package set up when developer J. Daniel Lugosch III and his limited partnership, Providence Place Group, built the mall.
After the $460-million mall construction began in 1997, then-Gov. Lincoln Almond and the state Economic Development Corporation, chaired by the governor, agreed to issue $45 million in “revenue note obligations” to be paid off over 20 years to help Lugosch reduce his $280-million private debt.
As part of that agreement, the mall’s owner gets the sales-tax rebate each year through fiscal year 2020. Capped at $3.68 million for five years, then reduced to $3.56 million, it’s intended to pay off principal and interest owed on the revenue note obligations.
Overall, Bellini said, the mall “is an economic engine to downtown.” It draws millions of shoppers a year (he wouldn’t say how many millions), employs about 2,300 people and is regarded as a top destination for shopping and tourism. (Trip Advisor recently ranked the mall 17th out of 105 things to do in Providence, behind No. 1, the RISD Museum, and the Providence Performing Arts Center, Brown University and historic Federal Hill, but ahead of College Hill and Wickenden Street.)
Because the Rhode Island Commerce Corporation owns the land under Providence Place, the agency had to approve the mall’s latest renovation. When the RICC board of directors did so in April, Commerce Corporation President Darin Early noted that General Growth had been unable to attract a new tenant after JCPenney closed last August, and that it would be “challenging for the foreseeable future” to attract a tenant to the space because of “changing retail dynamics.”
Green, the retail consultant, said large department stores are losing some of their grip as mall anchors. He said he wasn’t surprised GGP hasn’t filled the JCPenney space. The types of stores that could fill 120,000 square feet are no longer expanding into new markets.
Although GGP chose more parking as its solution, it made clear to the Commerce Corporation that the changes would be reversible.
Malls face problems beyond the fading allure of department-store anchors. Traditional tenants, such as Aeropostale, Pacific Sunwear and Gap, also face financial challenges, said Green, whose most recent local work focused on L.L. Bean, which in January announced plans to open in Garden City Center, in Cranston, this summer.
Providence Place has a few other vacancies, including the recently closed Crate & Barrel, which opened in Garden City Center in March. GGP does not disclose the mall’s occupancy rate, Bellini said.
The needs of each space change rapidly in malls today, Labarre said on a walking tour of the mall with Mark Dunbar, GGP’s senior general manager of Providence Place.
“We can only count on change in a retail environment,” Dunbar said. When one store closes, for example, it offers opportunity, such as when Providence Place attracted the No. 1 retailer in the world, Spanish fashion store Zara, last fall, he said.
GGP is keeping the third floor of its former JCPenney space for future retail use. Labarre, Dunbar and Bellini have not named any potential new tenants.
Bellini acknowledges that the use of space in malls is shifting, making it more of a challenge to attract the right stores. But he also said there are indications that brick-and-mortar retailers are coming back — when good, solid infrastructure exists.
“Certain things happen because the environment or infrastructure is improved,” Bellini said, “and good things can occur because of that.”