'Mall Repair' in Laurel

Now the anchors are Macy's, Burlington Coat Factory and International Furniture Liquidators. The mall is only about 84 percent leased. Somera Capital and AEW bought it last year for $31 million.

Changing Tastes

Similar stories are playing out across the country. Malls need to change every seven years to remain relevant, said Stan Laegreid, principal and lead shopping center designer at Callison, the architecture firm Somera hired to redesign Laurel Mall. Those that don't can quickly fall by the wayside, posing a new challenge to developers: what to do when they fail.

Particularly vulnerable are regional malls, which generally have two or more anchors and draw shoppers from a radius of five to 15 miles. They have struggled with the popularity of new formats such as super-regional centers, with more than 800,000 square feet and at least three anchors; smaller, outdoor centers that include upscale national chains and restaurants; and power centers lined with big-box category killers such as Home Depot. The problem of the regional mall has become so pervasive that it spawned a new buzzword, "de-malling."

The least invasive option is to refurbish the building and bring in new tenants to draw different customers -- a restaurant or a movie theater. That can give shoppers new reasons to come to the mall, but often it isn't enough to change its reputation, Laegreid said.

Usually, developers have to go deeper. Maybe take off the roof and turn the center inside out, so retailers face the street. Add a few restaurants with outside seating, and a new mall is born.

But in some extreme cases, the best option is simply to tear the thing down and start all over again.

"There may be times in a market where a mall has such a negative connotation that maybe the highest and best use is the real estate under the building," said Jon Eisen of StreetSense, a Bethesda-based consulting and retail brokerage firm. "Sometimes it's better to start from scratch."

Such is the case of Rockville Town Square, at Beall Avenue and Route 355.

In 1972, it was the site of an enclosed mall. The center was never more than 50 percent leased, partly because many retailers already had stores at nearby Montgomery Mall and White Flint. In 1996, the town decided to demolish it.

What is emerging is entirely different. Rockville Town Square, developed by Federal Realty and expected to open over Memorial Day weekend, will be a mixed-use outdoor center that focuses more on restaurants and services than retail. Tenants include Taste of Saigon, Sushi Damo, Lebanese Taverna and Gifford's Ice Cream. It also has a public library and arts center. Most of the retailers are independent stores or regional chains, such as denim and accessories store Cloud 9 Clothing from Baltimore and Bethesda-based Pomegranate & Co., which sells home furnishings.

But Chris Weilminster, senior vice president for leasing at Federal Realty, said the little touches make the biggest difference: wide brick sidewalks, short distances between buildings that make the center walkable, storefront retailers and lots of trees. As of last week, there was only one vacancy left, he said.

It's the same concept the firm successfully used to develop the Village at Shirlington and Bethesda Row. One early sign that it is working in Rockville: Starbucks is open. Venti latte, anyone?