The California skyline is a drab gray. But on the way to his latest shopping mecca, the Block at Orange, developer Laurence Siegel brightens as he stares through the blue-tinted glass of a chauffeur-driven Lincoln Town Car.

"There's something about the California sky," muses Siegel, chief executive of the Mills Corp. real estate investment trust in Arlington. "It is so blue."

Siegel has brought a similar sense of optimism and imagination to the shopping center industry. He helped give birth to the Off 5th-Saks Fifth Avenue discount concept and Bed Bath & Beyond's current big-box stores. He has persuaded numerous retailers to experiment with different formats. He has lured shoppers with the unconventional, adding a zoo, a skate park and a trout stream to his centers.

Even among his detractors, Siegel is hailed as a visionary in the shopping center industry -- something he wouldn't argue against.

"I know retailers. I know shopping centers. I know shopping trends," he remarked during a recent tour of his two California shopping centers. "Part of it is learned. Part of it is innate."

But as Siegel pushes shopping to new heights, the risks are mounting. A cadre of well-financed competitors is mimicking his style. And though Mills's eight giant shopping centers have flourished in prosperous times, the company is more vulnerable to industry downturns because it relies so heavily on retail "experiments" rather than proven retail concepts such as the Gap and Lord & Taylor, analysts said.

The Block, Siegel's first large open-air shopping center, is a controversial project. It has had trouble attracting many popular tenants because of its proximity to other big malls in California. Among its stores are several new experiments for Mills, including Hilo Hattie's Hawaiian gift shop and a Ron Jon Surf Shop superstore.

"I think [the Block] is the most experimental," said analyst David Fick of Legg Mason Wood Walker Inc. "I've visited it three times, and I'm glad it's not their primary focus."

Then there is the sheer size of the Mills malls. Do customers really need 30 movies showing at the Block? How many macadamia nuts, T-shirts and other Hawaiian gifts can you buy at Hilo Hattie's? And does everyone want to walk a shopping center the size of more than 30 football fields?

"Bigger is only better if it's bigger for a reason," Siegel said of his malls, which range up to 2.2 million square feet, almost twice the size of Montgomery Mall in Bethesda. "And we're bigger for a reason."

So far, Mills's performance supports Siegel's assertions. Net income rose 42 percent to $23.3 million last year, while revenue rose 7 percent to $177.3 million. Funds from operations -- an industry barometer for REITs such as Mills -- were up 15 percent to $85.1 million.

The company's eight malls, including Potomac Mills in Prince William County, are packed with some of the best-known retailers. Last year, seven of the malls were more than 95 percent occupied. The Block, which is designed to look like an urban streetscape, was 90 percent filled with retailers a month after opening in November 1998.

More projects are on the way. Over the next three years, the company plans to open two centers in Atlanta and one each in Houston, Nashville, Toronto, Concord, N.C., and Carlstadt, N.J. It has turned its attention back to the Washington area, breaking ground last week at Arundel Mills, near Baltimore-Washington International Airport in Anne Arundel County.

Like Potomac Mills, the Arundel shopping center will include factory outlets, regular retailers and a movie theater when it opens late next year. But it will have a bigger focus on entertainment and a different set of anchor tenants, including Jillian's, a 55,000-square-foot entertainment complex with virtual rides, bowling and restaurants.

Bass Pro Shops, a chain of superstores for wilderness lovers, is negotiating for an anchor space in the mall. Mills has not released the name of the movie theater company because several chains are competing to operate at Arundel Mills.

The mall, which will use a Chesapeake Bay theme in its design, hopes to draw visitors using BWI Airport, and to swipe customers from regional malls in the Baltimore area.

Employees, competitors and retailers say the company's success reflects Siegel's flamboyant personality. His communication skills have been compared to those of President Clinton. In business meetings, the 46-year-old executive might wear a bright orange shirt, sleek black silk shirt or form-fitting T-shirt that shows off his muscles. He is an arm-waving, foot-tapping showman who can barely conceal his excitement when discussing his ideas.

"He's a great salesman," said Robert Taubman, chief executive of developer Taubman Centers Inc. "There are many moments when his salesmanship is wonderful to watch."

In his 25-year real estate career, Siegel has been able to persuade even the most leery retailers, including prestigious merchants such as Neiman Marcus and Nordstrom, to follow him. But in his zeal, Siegel has a habit of overpitching his vision, analysts, employees and former colleagues said.

"I think any good leader is going to push the envelope as much as he can," Siegel said. "To get this company to the point where it opens two projects a year has been very difficult."

Siegel grew up in the Philadelphia suburb of Penn Valley listening to his father's retail tales. The elder Siegel was an executive vice president for the now-defunct Wanamaker chain, working out of the retailer's flagship department store in downtown Philadelphia.

"If I wanted to spend time with him, a lot of times I'd have to spend time with him at the store," Siegel said. "I'd be listening to what they buy for the season, understanding price points."

Siegel majored in finance and marketing but was a "kind of lazy" student at Boston University. After graduating, he drifted into the real estate business as a leasing agent, first with Albert M. Greenfield and then with Merrill Lynch.

"The smartest thing I did was stay in one industry," he said. "I learned this industry."

His break came at Western Development Corp., Mills's predecessor, where he was hired in 1981. Siegel's contribution to Potomac Mills, the first Mills project, was substantial. He was credited with bringing in anchor retailers including Waccamaw Pottery, Cohoe's, Ikea and Off 5th.

As a leasing broker in his late twenties and early thirties, Siegel and his rosy outlook stirred resentment among colleagues, who complained about his habit of making promises before he had inked deals with retailers.

"He'd come to a meeting and say, `We'll have a deal with Saks,' " said Herbert Miller, a local developer who was then the head of Western. "But it was like, `Well, they sent you a letter saying no.' "

However, Miller said, Siegel honestly believed the Saks deal would happen. And it did. The retailer ultimately signed on for its first Off 5th store at Franklin Mills in Philadelphia, and has since followed Siegel to almost every new mall, said Philip Miller, chief executive of Saks Fifth Avenue.

"He was one of the first people who had the vision of developing these very large shopping centers with entertainment and restaurants . . . creating a place where families can come and spend a half-day amusing themselves," Miller said.

After he became chief executive of Mills in 1995, several employees and industry experts say, Siegel began to mature. Over the years, they say, his management skills have improved, and he is better able to rein himself in.

Yet some things have not changed. His colorful wardrobe is still at the front of his closet. His optimism can still be so far-reaching that employees wince and try to drag him back to reality. Conservative investors are often startled by his expressive personality.

"I'm used to guys who wear Brooks Brothers suits," said analyst Fick, who was Mills's chief financial officer from 1991 to 1993. "Larry shows up in a pumpkin [color] shirt and a white jacket. . . . People are willing to say he's a salesman. Other people combine that with the pumpkin shirt and say, `I'm not sure I want to invest with the guy.' "

A toned-down version of Siegel, however, might have made a much different Mills shopping experience.

"I think you have to be aware of his personality," said Robert Levy, an analyst with BancBoston Robertson Stephens. "You take his vision and you mix it with the view of the chief financial officer and other people within the organization. He gives you his vision, and that's what you want. I want that out of a CEO."

Siegel is well aware of the persona he portrays. His showmanship, salesmanship and optimism are a part of the company's fabric. His projects, like himself, are larger than life.

"I believe we have great hype," he said. "The problem is every once in a while, I fall into the trap of believing our hype when these projects have so much improvement needed."

Siegel knows that staying ahead of the game is more critical now than ever. His rivals were once content to build ordinary malls. That was until research showed busy consumers are spending less time in their shopping centers. Now, his competitors are copying the Mills formula: Build big, hybrid centers that mix entertainment, restaurants, factory outlet stores and traditional shops. Draw tourists as well as local residents. Make it feel like an "attraction," not a mall.

Mills-like shopping centers in Kansas City, Seattle and San Francisco have not worked well for various reasons, analysts said. But there are others, including Glimcher Realty Trust's large shopping center in Elizabeth, N.J., that hold promise, they said.

Glimcher's 1.3 million-square-foot shopping center will include Off 5th, a Loews 22-screen theater and Bed Bath & Beyond.

Even traditional malls are moving into Mills's territory. They have added factory outlet stores, entertainment and other tenants that once could only be found in malls run by Mills. Siegel himself rarely envies traditional malls. But he was envious when L.L. Bean announced it will build its first full-price store outside of Maine at Tysons Corner Center in McLean.

"It was like I was in college and my girlfriend ran after someone else," Siegel said.

As untapped markets disappear, Siegel is slugging it out with competitors such as Taubman and Simon Property Group. They fight viciously for the rights to build malls in some cities. In other locales, they design and construct malls together.

"It's very bizarre," analyst Fick of Legg Mason said.

One of Siegel's famous battles, in Phoenix, has been nicknamed "Desert Storm." In the mid-1990s, Mills, Taubman and Simon announced separate plans to build mega-malls in the city. None would budge. "It was like three 4-year-olds fighting in a sandbox," Fick said.

In the end, the three developers formed a partnership to build Arizona Mills, which opened in 1997. Through much of the late '90s, the developers have used these joint ventures as a way of avoiding expensive legal fights and securing capital. Two other Mills projects -- Ontario Mills near Los Angeles and Grapevine Mills in Dallas -- include Simon as a partner.

Developers don't always share the sandbox. In Houston, a partnership between Simon and Chelsea GCA Realty announced plans to build a rival project near a Mills site. After months of legal squabbling, Mills officials broke down last year and agreed to pay Chelsea $21.4 million to ditch its project.

"That was definitely a headache," Siegel said. "We took a lot of criticism for doing that deal, for [making] the payout. . . . [But] we were there. We had a site. We were not going to give up on [this] market in the United States."

Many of Siegel's competitors also have an edge because they are more established and better financed, which helps them weather recessions, analysts said. Since going public in 1994, Mills also has amassed an enormous amount of debt to finance its aggressive expansion. Last year, its total liabilities climbed to $837.4 million.

Its financial arrangements with other companies have helped allay some concerns. Mills has long had a partner in the investment firm Kan Am USA, which owns parts of several Mills shopping centers. In February, Kan Am agreed to provide an additional $750 million over the next five years to fund future development.

Siegel's willingness to experiment, while creating a unique shopping experience, exposes Mills's projects to more risks, some analysts said. Smaller chains such as Hilo Hattie's face more difficulty withstanding an economic downturn than, say, a big manufacturer such as Polo Ralph Lauren and cash-rich merchants such as bookseller Barnes & Noble.

Not all retailers find comfort in the Mills malls. Three department store chains -- Sears, Macy's and Bloomingdale's -- have abandoned Mills projects. Cohoe's also has closed its Mills stores.

Johnny Morris, a Midwesterner and founder of Bass Pro Shops, said even though some of the new, more trendy stores lend excitement to a Mills project, they also add risk. "Developers have to be cautious about chasing after shops that can be just trendy," he said.

Siegel's pet project, the Off Rodeo designer clothing store, also has tried to bring a piece of the Beverly Hills shopping district to the Mills centers. But so far, customers don't seem to be biting, analyst Fick said.

Siegel says he's not bothered by the criticism. The Mills projects, he said, are supposed to be incubators for new retail concepts. What they're not supposed to do is mimic anyone else. Using the same ideas and stores found in regional malls and strip shopping centers would make a Mills center just another place to buy a pair of pants -- not a place to spend a good part of the day.

"Everyone says the U.S. is overstored," Siegel said. "It's much more overcopied than overstored."

Resume

Laurence C. Siegel

Position: Chief executive officer, Mills Corp.

Age: 46

Family, home: split-level home in Potomac with his wife, Sharon, and two children, Meryl, 18, and Evan, 15.

Hobbies: Being with his kids, traveling, watersports.

Car: Ford Explorer in bad weather, red 1995 Mercedes in sunny weather.

Book on his night table: "Undaunted Courage" by Stephen E. Ambrose.

Things about himself he'd change if he only could: His hairline, the ability to stay content. "I always have to be on to the next thing."

Best experience: His children's births.

Worst job: Cab driver in Boston, while in college.

Pet peeve: People who don't give their all.

Favorite clothing store: Saks Fifth Avenue.

Do you really hate shopping? "I really hate shopping for myself. If I'm with someone else, I love to shop. I don't like trying on clothes myself. Maybe it's a bad self-image. I don't know."

A Look at . . .

Mills Corp.

Business: The real estate investment trust (REIT) owns and operates regional retail and entertainment centers under the Mills and Block names.

Headquarters: Arlington

Founded: 1994

Chairman, chief executive: Laurence C. Siegel

President: Peter B. McMillan

Ticker symbol: MLS on the New York Stock Exchange

Employees: 1,018

Local employees: 300

Web address: www.millscorp.com

Source: Company reports, Bloomberg News

CAPTION: Mills's Latest Project (This graphic was not available)

CAPTION: Linda and Jay Genest of Woodbridge enjoy a March 1998 visit to Potomac Mills Mall, the first Mills project. The Mills Corp.'s eight malls, known for their size, are packed with retailers.