Tippie business student report suggests ways to bring back declining Cedar Rapids shopping center
Wednesday, May 30, 2012

Business students at the University of Iowa working with the City of Cedar Rapids to revitalize Westdale Mall have recommended the structure be partially demolished and replaced with an open-air lifestyle center.

Portrait of John Gallo
John Gallo

The students were in an Advanced Real Estate class offered by the Tippie College of Business during the spring semester and taught by John Gallo, a member of the college’s finance faculty. Their study examined the fates of several other declining malls in areas that are demographically similar to Cedar Rapids and concluded that the lifestyle center model was the best option for bringing Westdale back to life.

“Our examination of representative Midwestern lifestyle centers confirms the popularity of the open-air/lifestyle centers that mix retail, residential, and office space interspersed by pedestrian walkways and open areas for public events,” the 18 students wrote in their final report. “Our mall sample also demonstrates successful transformation from an enclosed mall structure like Westdale to the lifestyle center.”

A Colorado developer recently announced he is working to purchase the mall and is considering a variety of redevelopment proposals. From a purely economic perspective, Gallo’s students believe the entire mall should be demolished and rebuilt from the ground up as a lifestyle center. However, they said that such a plan would be extremely expensive and require city participation in the form of tax money that isn’t likely to come.

The students’ report notes that Westdale was the dominant mall in the region for years after its opening in 1979, peaking in 1998 when its tax valuation hit $50 million. However, the opening of the Coral Ridge Mall in Coralville that year and a renovation of Cedar Rapids’ Lindale Mall in 2000 started cutting into business.

A general decline in shoppers’ interest in malls and the growth of online retail hurt Westdale further, as did the 2008 recession. Today the mall’s occupancy rate is below 50 percent and many of its tenants are city and county offices relocated there after the 2008 flood that will move out when their permanent offices are completed. The mall’s current tax valuation is only $17 million.

The city has worked to redevelop the mall since 2007 and developers have offered several proposals—including one that also recommended conversion to a lifestyle center—but none have gotten off the drawing board. In the meantime, the report notes the mall’s financial and physical condition continues to worsen.

As models for redevelopment, the students suggest using Eden Prairie Center in Eden Prairie, Minn., or the Randhurst Mall in Mt. Prospect, Ill. Both are older malls built in the 1960s and 1970s that suffered against newer, more dynamic competition and changing shopping habits. The Randhurst Mall was largely demolished and replaced by a lifestyle center that included not only retail spaces but residential and hotel space, too.

The Eden Prairie mall was also largely demolished during its renovation. A second wing was added and the facility was given a more family friendly focus, including nursing suites, a family lounge, and the Twin Cities’ largest indoor play area.

The results were favorable for both malls. Randhurst’s sales jumped from $906 million to $1.4 billion between 2009 and 2011, while post-renovation sales jumped 96 percent at Eden Prairie despite the fact the Mall of America is only 13 miles away.

“We believe a lifestyle center design merits strong consideration for Westdale redevelopment so we generally support the design recommendations in the 2007 studies,” the students wrote in their report, which was presented to city officials and property developers earlier this month. “Any design transformation should, however, retain as much physical infrastructure as possible to mitigate redevelopment costs.”